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HOW TO USE PERCENT ASYMMETRIC FOR NINJATRADER7
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Hi Roger,
Thank you for the Percent Asymmetric indicator + strategy, I will install this indicator tomorrow morning my time.
I will certainly open an account in the PTS member forum.
Yes, I have been reading the user guide on the page referred in your e-mail below.
I use 15 min chart for ES, NQ, YM... please do suggest the setting I should try for 15 min charts and I shall refine going forward.
Best regards,
<>
The settings can be derived from several factors.
1. Your account size can have a large influence on actual settings chosen and here is why.
The percentage setting that produces the highest returns in back testing could be large ( Perhaps around 2 to 5 percent movement on the futures contracts you mention ) .
If you have a large account size that can withstand a string of losses then you could select the percent settings that produced the highest returns in combination with a draw down percentage that fits your stomach (This has to be tested over a large number of years or can lead to misleading results)
For example if the best setting turns out the be 3% on the S+P 500 futures which is trading around 2120 at this time, then that means risking about 63 points x $50 = $3150 per trade. Analysis may reveal something like 6 losers in a row as the worst case in historical testing, which could theoretically mean about $19,000 ( if those 6 are all maximum loss of 63 points instead of partial losses ) could be given back during a bad draw down.
You would expect to have an account size of over $315,000 if risking 1% of equity per trade.
If your account is smaller and you cannot use large percentages due to leaving yourself open to being wiped out then you would have to choose a smaller percentage setting than the optimal.
Instead of trading large actual value contracts such as those stated above, you could experiment with testing of other markets which allow use of optimal percent settings and considering that 1 contract of ES potentially carries a risk of 2120 points x $50 = $106,000 if falling to zero in a long trade combined with a series of atomic bomb strikes all over USA.
Good traders think backwards, and ask themselves what is the worst case scenario that can happen and how likely is that to happen.
To defray that risk a trade can consider diversification in other countries markets and different types of instruments such as stocks, indices or bonds.
EG if you trade some shares valued at $1 and buy a few hundred, you can stand many more losses in a row than you could on the above markets.
2. Equity curve shapes combined with your stomach for draw downs.
Some have stronger stomachs than others. Better traders often have stronger stomachs and those such as George Soros are able to continue added new trades during losing periods without having any second thoughts. If you have a low tolerance for draw downs then you cannot use any settings which produce them otherwise you will be unable to adhere to each signal when it comes. This results in second guessing of signals, not taking signals and quitting a good system without any logical reason other than being incompatible with it.
"Tight traders never make money". This quote refers to when a trader hates losing so much that he puts his stops too close and therefore never allows himself to gets a big winner as he will be kicked out of his trade on the smallest contra trend movement.
3. How many open positions you will have at once and how correlated they are to each other. If you have 10 trades in futures contracts that all move in the same direction you are exposing yourself to greater risk than if you have 10 trades in uncorrelated markets. The percent settings chosen must be considered carefully in these cases.
4. Time frames of charts are less important as this indicator and strategy flips from long to short basis of how many percent the price moves and this means it is a non fractal strategy. If you find you get more than 1 signal per bar then you will need to reduce time frame or increase the percent setting used to avoid confusion when looking at historic signals on your charts.
5. I am not regulated by any official body so am not allowed to tell you exactly what settings to use. In any case I have no knowledge of your account size or stomach for losses.
As a starting point you can test in 0.25 iterations from 0.25 to10% and see what approximate range that the pot of gold is generally found.
As a further guide for setting up strategies, please see "how to test a trading system" which you find on the site map.
Hope this helps you to think backwards to reveal the pot of gold combined with being compatible with your personality.
Hi Roger,
Thank you for the Percent Asymmetric indicator + strategy, I will install this indicator tomorrow morning my time.
I will certainly open an account in the PTS member forum.
Yes, I have been reading the user guide on the page referred in your e-mail below.
I use 15 min chart for ES, NQ, YM... please do suggest the setting I should try for 15 min charts and I shall refine going forward.
Best regards,
<
The settings can be derived from several factors.
1. Your account size can have a large influence on actual settings chosen and here is why.
The percentage setting that produces the highest returns in back testing could be large ( Perhaps around 2 to 5 percent movement on the futures contracts you mention ) .
If you have a large account size that can withstand a string of losses then you could select the percent settings that produced the highest returns in combination with a draw down percentage that fits your stomach (This has to be tested over a large number of years or can lead to misleading results)
For example if the best setting turns out the be 3% on the S+P 500 futures which is trading around 2120 at this time, then that means risking about 63 points x $50 = $3150 per trade. Analysis may reveal something like 6 losers in a row as the worst case in historical testing, which could theoretically mean about $19,000 ( if those 6 are all maximum loss of 63 points instead of partial losses ) could be given back during a bad draw down.
You would expect to have an account size of over $315,000 if risking 1% of equity per trade.
If your account is smaller and you cannot use large percentages due to leaving yourself open to being wiped out then you would have to choose a smaller percentage setting than the optimal.
Instead of trading large actual value contracts such as those stated above, you could experiment with testing of other markets which allow use of optimal percent settings and considering that 1 contract of ES potentially carries a risk of 2120 points x $50 = $106,000 if falling to zero in a long trade combined with a series of atomic bomb strikes all over USA.
Good traders think backwards, and ask themselves what is the worst case scenario that can happen and how likely is that to happen.
To defray that risk a trade can consider diversification in other countries markets and different types of instruments such as stocks, indices or bonds.
EG if you trade some shares valued at $1 and buy a few hundred, you can stand many more losses in a row than you could on the above markets.
2. Equity curve shapes combined with your stomach for draw downs.
Some have stronger stomachs than others. Better traders often have stronger stomachs and those such as George Soros are able to continue added new trades during losing periods without having any second thoughts. If you have a low tolerance for draw downs then you cannot use any settings which produce them otherwise you will be unable to adhere to each signal when it comes. This results in second guessing of signals, not taking signals and quitting a good system without any logical reason other than being incompatible with it.
"Tight traders never make money". This quote refers to when a trader hates losing so much that he puts his stops too close and therefore never allows himself to gets a big winner as he will be kicked out of his trade on the smallest contra trend movement.
3. How many open positions you will have at once and how correlated they are to each other. If you have 10 trades in futures contracts that all move in the same direction you are exposing yourself to greater risk than if you have 10 trades in uncorrelated markets. The percent settings chosen must be considered carefully in these cases.
4. Time frames of charts are less important as this indicator and strategy flips from long to short basis of how many percent the price moves and this means it is a non fractal strategy. If you find you get more than 1 signal per bar then you will need to reduce time frame or increase the percent setting used to avoid confusion when looking at historic signals on your charts.
5. I am not regulated by any official body so am not allowed to tell you exactly what settings to use. In any case I have no knowledge of your account size or stomach for losses.
As a starting point you can test in 0.25 iterations from 0.25 to10% and see what approximate range that the pot of gold is generally found.
As a further guide for setting up strategies, please see "how to test a trading system" which you find on the site map.
Hope this helps you to think backwards to reveal the pot of gold combined with being compatible with your personality.
