yes it's discussed in the FAQ and on the Blog, also do a blog
search for profit target under my posts and you will find some
discussion on this
I have also talked about how I plan to do some worth with
more sophisticated profit targets that come into play
after a certain time, or adapt to price, or would only take partial
profits, or do a combination of things; but I have not started that
and it will take some time to do. Otherwise it's best not to
over think it or second guess trades because you are just guessing
without basis and statistics to support it.
I"m running some profit target scans on the system: I'm
currently running 3 profit targets to scale out at 30%, 20%, 20%,
and then keep the final 30% until the final exit. Maybe the
system will come up with selling 30% at a 3% target, 20% at 5%, 20%
at 8%, and the rest is a runner, who knows.
What I expect from the results is for the % winning trades to go
up and for the total profit to go down (since you won't have all
your money in the big runners).
The one logistical problem with having multiple price targets
for BPT is that these targets could be hit at any time during the
day and we could NOT send out email notifications in real time.
However the solution would be to just tell you to set GTC
Sell Limit orders ahead of time so that they just execute
automatically, because again we could not send you real time alerts
intra day if a 2% or 3% target was met..
Posted by lessarda on 29th of Jun 2011 at 01:41 pm
Still fine-tuning it, but on this trade I took 25% off over 25%
gains (on a gap it was over 37%) and am 50% out now at a 50%
target. So far it's just an arbitrary target, like the Stock
Trader's Almanac 'always sell half on a double' rule.
Looking at the historical data from Tumbler's work, the average
return with the 20 contracts parameter is about 36% (with the
assumption of 5% off per round-trip for commissions/slippage); if
you change that to a constant $ investment, it's about 37%. So
maybe something like 20% / 40% / 60% / 80% or 30/40/50/60 targets
for each 25% sale would fit the historical results better. Or half
out by 40% and wait for the signal on the rest.
What I suspect with the historical options trades, given my
experience so far, is that many of them hit 50% gains or more at
some point, even if they ended up lower in the end -- especially
because of overnight gaps. So if this is the way the market works,
why not have sell targets to catch the spikes -- especially if they
exceed the long-term average of the system? You may miss a few 200%
gains, but I suspect you will also turn more 10-20% gains into
40-60%, which would raise the overall average return.
The trending indicator keeping the system in the trade has to go
negative in order for the system to close out this trade (unless a
profit target was hit).
I already talked about this a week ago when I said that the
trending indicator went positive
So, is there a profit
Posted by ascr on 29th of Jun 2011 at 11:13 am
So, is there a profit target to this thing or what? Not that I'd mind a 15%-er. But golly this is looking like a sweet trade right about now.
yes it's discussed in the
Posted by matt on 29th of Jun 2011 at 11:42 am
yes it's discussed in the FAQ and on the Blog, also do a blog search for profit target under my posts and you will find some discussion on this
I have also talked about how I plan to do some worth with more sophisticated profit targets that come into play after a certain time, or adapt to price, or would only take partial profits, or do a combination of things; but I have not started that and it will take some time to do. Otherwise it's best not to over think it or second guess trades because you are just guessing without basis and statistics to support it.
I"m running some profit target
Posted by matt on 29th of Jun 2011 at 01:10 pm
I"m running some profit target scans on the system: I'm currently running 3 profit targets to scale out at 30%, 20%, 20%, and then keep the final 30% until the final exit. Maybe the system will come up with selling 30% at a 3% target, 20% at 5%, 20% at 8%, and the rest is a runner, who knows.
What I expect from the results is for the % winning trades to go up and for the total profit to go down (since you won't have all your money in the big runners).
The one logistical problem with having multiple price targets for BPT is that these targets could be hit at any time during the day and we could NOT send out email notifications in real time. However the solution would be to just tell you to set GTC Sell Limit orders ahead of time so that they just execute automatically, because again we could not send you real time alerts intra day if a 2% or 3% target was met..
I am doing this with options positions...
Posted by lessarda on 29th of Jun 2011 at 01:41 pm
Still fine-tuning it, but on this trade I took 25% off over 25% gains (on a gap it was over 37%) and am 50% out now at a 50% target. So far it's just an arbitrary target, like the Stock Trader's Almanac 'always sell half on a double' rule.
Looking at the historical data from Tumbler's work, the average return with the 20 contracts parameter is about 36% (with the assumption of 5% off per round-trip for commissions/slippage); if you change that to a constant $ investment, it's about 37%. So maybe something like 20% / 40% / 60% / 80% or 30/40/50/60 targets for each 25% sale would fit the historical results better. Or half out by 40% and wait for the signal on the rest.
What I suspect with the historical options trades, given my experience so far, is that many of them hit 50% gains or more at some point, even if they ended up lower in the end -- especially because of overnight gaps. So if this is the way the market works, why not have sell targets to catch the spikes -- especially if they exceed the long-term average of the system? You may miss a few 200% gains, but I suspect you will also turn more 10-20% gains into 40-60%, which would raise the overall average return.
Kept the targets intact and am out 75% @ 75%...
Posted by lessarda on 30th of Jun 2011 at 04:06 pm
Profit target is about 10%
Posted by James_Roe on 29th of Jun 2011 at 11:31 am
Profit target is about 10% and I believe has only been hit once or twice in the history of the system.
As always you should do what makes you comfortable, but the system will be in this for a while to come.
Why do you say the
Posted by RM686 on 29th of Jun 2011 at 11:43 am
Why do you say the system will be in this trade for a while to come?
The trending indicator keeping the
Posted by matt on 29th of Jun 2011 at 12:03 pm
The trending indicator keeping the system in the trade has to go negative in order for the system to close out this trade (unless a profit target was hit).
I already talked about this a week ago when I said that the trending indicator went positive
Good to know. Thanks James.
Posted by ascr on 29th of Jun 2011 at 11:40 am
Good to know. Thanks James.