Thursday, 13 August 2015

More flexibility is needed...

First of all I like to thank all readers for the nice feedbacks about the debate with Cassini. It seems that he has nothing more to write since he doesn't bash me anymore. Well, that were my last words about him. Trolls live from feeding them, so no more talking of this topic.

This week I traded not that intense like before. Mainly I watched the markets and made a kind of virtual backtesting. I recognized that there is a big potential with flexible stakes. Before I didn't consider the combination between the absolute risk and the liability. The best example was the match between Isner and Johnson. Big John was a break down, and there was almost no downside risk anymore. It was the perfect opportunity to scalp for a service hold of him, especially when he was 0:15 behind. With this scenario you had around five ticks risk, and you could make five ticks profit. That's an amazing risk-/reward-ratio, because the chance that Isner holds the serve - even when he loses the first point - is at least 70%. On the other side five ticks are not a big swing, so a small stake doesn't bring much money. In this scenario a rise of the stake makes sense.

Beside I have to be more patient. It's better than some months ago, but I still take a lot of times only the second best opportunity. I recognized that often better value is coming, when you are patient. In general I would say that I trade now more freestyle (intuitive) and less like a (mathematic) robot. Of course everything is still inside the strategies, but with more flexible stakes and stop losses.

With the defined risk-/reward-ratio I feel okay. In general I risk one tick to win one. To cover the commissions and the hedging costs, I need a hit rate slightly above 55% to be breakeven. With this setup I should not have too long losing streaks, and if I have a bad run, it doesn't take forever to return in the green zone.

5 comments:

  1. I heard a rumour that Cassini has had a nervous breakdown after he discovered that his trades over the last 12 years were all imaginary .

    A person living in the USA is not allowed to trade on an exchange and Cassini has been tracked down to a place called California which last time I checked was in the USA.

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  2. It's all about finding a trading setup suited for your personality and knowledge, in order to minimize your mistakes. Then apply it over and over again until it becames boring! Of course, easier said than done :)

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    1. Yes, there are a lot of components to find the best suited setup. In general I feel a trend to more flexibility. I saw some videos of Caan, it seems that he is trading very intuitive. It takes time until I will be a bored trader ;-)

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