DislikedTighter entries lessen risk while magnifying profit. This is just as true for a swing trader as for a intraday trader. I'm a position trader, but I still make tight entries when I can.Ignored
Maybe on a single trade basis and if the trader is using discretion on each single trade.
It very much depends on the phenomenon a trader is trying to exploit. My partner an I have carried out hundreds of statistical tests over quite a huge sample of trade setups. One of them was a break-out strategy that had a 20 pip stop and a 60 pip target on each trade.
We found that the model hardly broke even over 100s of trades - then we did an experiment in which we swapped the values (20 pip target and 60 pip stop for the same setup).
The results were quite astounding, because over the same amount of trades the model proved to be highly profitable. The moral of the story for us was that you cannot constrict price movement too much - because the amount of times (even with a positive RR of 3:1) stops were hit before the target was reached (negative win-loss ratio) turned the model into a loser.
As I mentioned in a different thread: a fine balance is needed in the application of risk (or stops).
regards
daytrading
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