Mack Marked Trades Profit Target Data

[ahwilliams30]

While studying Mack's trades I kept track of the signal bar size and maximum profit target achievable for most of his trades over the period of March to July 2023. The image shows the total profitability, win rate, and expected value per trade of the various targets. With such drastic increases in profitability why not go for larger targets? Obviously the increased profitability comes at the cost of win rate so it is purely a mental game choice? Of course, this data doesn't take into account possible runners as these are hard to determine on static charts.

[ahwilliams30]

Edit: I realized there was a slight error in one of the calculations making 1 pt scalps not have an expected value of 1 pt. Here is the corrected image.

[_strange_]

This is probably the most hotly debated and viciously contested subjects in all of human history. Tribes have been warring over this for thousands of years, killing each other in the name of their tribal leaders by the millions. Group 4 ticks, the purists, torture and malign anyone who dares question the orthodoxy, while the various other more modern and flexible tribes swear to an adjustable profit target that varies with volatility.

The reason Mack goes for 4 ticks no matter what is because he is essentially a flawless chart reader who hates losers. Ultimately the reason is psychological, as the evidence is overwhelming that higher profit targets net more profits and thus a more forgiving user experience.

Almost nobody goes for 4 ticks anymore because the math is too unforgiving and the market is too volatile.

What I have noticed is that people without skill will swear by 4 ticks because their "win rate" is higher (yet still overall unprofitable traders) because the alot of times a crappy trade will hit your 4 tick profit target before going the wrong way.

What your data shows, and what almost everyone completely misses, is that the RIGHT trades in the RIGHT areas and in the RIGHT direction almost always net a large number of points. The objective is to consistently find these areas and trade them with confidence and without hesitation, and do this consistently over long periods of time. And this is the challenge, this is why its so hard.

Its not the "win rate" but the trade selection and consistency. If your trade selection is good most of the time, you can go for much more points and the data proves this, but people who try this and find that they are losing even more money than before falsely come to the conclusion that the reason they are losing money is because they are going for too much profit. They miss that their selection is wrong and inconsistent in the first place, basically lying to themselves and deceiving their mind and dooming themselves to failure, rather than being honest with themselves and understanding what they are doing wrong.

Higher profit targets will net a small hit to your win percentage but profit factor rises dramatically. but only when you can find the right trades to take. As you have noted almost all of the trades Mack marks (!!!!!!!!!) generate many many points.

I am not a representative of anyone but myself here but I go for 1:1 on all trades with a few extra little rules and I can tell you that rarely is a losing trade due to going for more than 4 ticks. Its almost always because its a bad trade. This is just one area that the individual will have to explore on their own and find out what works best for them.

Im sure Eric will be around to direct you in a better way, but I wanted to share my thoughts and experience on this as ive spent a stupid amount of time studying it like you are and an even dumber amount of time arguing with people about it.

[eric-pal]

This is an excellent question and goes to the heart of what makes this training and course different.

Trading is a skillset that needs to be built, however an individual who decides to be "self taught" has neither a roadmap or understanding of what that skillset is or what needs to be developed. WOW ->>>> THAT REALLY MAKES IT MUCH MORE DIFFICULT AND LESS OBTAINABLE. Why, because of unconscious incompetence. If one doesn't know what to study, or what makes a difference, especially in this trading field, does one think they are going to just stumble upon it? Most will say no, but in truth it is yes. Which then begins the search of discords and forums and . . . . Endless searching without closure.

If you note how we are measuring success in evaluating the market, it is very different too. It isn't searching for trades but the evaluation of how the system is implemented and the ability to match against some of the system selections (specific Mack marked trades). Not all of them of course because seeing probability is a skillset that needs to be developed. This builds an understanding of how the market moves, reasonable places to execute, and skills of observation (also beware of magnetic move fakeouts please). None of these things relate to $$$$$, but skillset.

So, emphasis is placed on finding good criteria within the market for opportunity. The analysis which you present makes the case that one is finding the right trades. That IS THE SKILL THAT NEEDS TO BE DEVELOPED. What you will find, as Strange has outlined, is that when you are operating with how the market works, in the right places, there is good opportunity. This is what Mack marks, and we are selective in criteria to build the appropriate skill as quickly as possible, so one can then expand after seeing some critical aspects (most of the time these aspects are things the developing trader never considered as they begin to search for patterns - secret patterns - things that no one else will be able to figure out and find - - - -NONSENSE). Tick charts offer a specific benefit.

By working with 1/2 ATR as the minimum scalp size, you can adjust sizing to meet market volatility, and maintain 75%. But this isn't the only aspect one may use. 1:1 becomes very possible, and thus reducing to approx 55%, if the characteristics of the market are appropriate - not stale slow markets, not tight trading ranges, but areas where runners may occur or trending markets.

This then gets into the larger aspect. With good consistency, which the drills of the course strive to build, runner management, especially in trending markets, becomes very helpful. Identifying areas where this may happen become useful. The market ebbs and flows, and is a language. The course builds the skill of language development through each module.

Hopefully helpful and good trades to you!

[shoikan]

So the starting recommendation is to start at 1/2 ATR?

Since starting the course in Jan I reverted back to doing Mack's 4 ticks. Would you recommend holding a runner as well?

I really struggle at dynamic sizing as sometimes the move happens and my speed to prepare my take profit is too slow. Same with sizing the available room to scalp out before a high/low/support etc. I look hilarious busting out a measuring tool preparing for trades a lot of times.

[eric-pal]

A good question.

Here is what you missed beginning this year. . . . Volatility significantly contracted. To the point where 4 tick became more reasonable.

Let's say the ATR=2. What does that mean? It means the average bar size is 8 ticks. A scalp would be 1/2 the size. But what if the ATR=4+, as it was a great portion of 2020 (march) - 2023? Well, if you are imperfect, you have problems mathematically. If you are not a 90%+ trader, how does one become a 90%+ trader "today". . . Right -> not going to happen.

This comes back to individual's ability to read context and the market. If they are able to catch the beginning of breakout moves (not the breakout please), or read when that 2nd bar will complete well in their direction of choice (meaning matching well against Mack's markings), a lot "opens up" for potentials and possiblities.

NT offers OCO orders where your target and stop losses are placed on order initiation. Definitely worth looking into that (Ninja Trader has good training). Can preset for 4 ticks, 6 ticks, 8 ticks. That is enough. Some simply use 4 and 8 templates.

The market is ALWAYS CHANGING. The trick is to build sufficient skill to recognize when things do change (noted sometimes the market can do unusual things for up to 2 weeks or a little more), and if necessary adjust. Using the ATR allows for natural progression with the market, while maintaining approx 75% probability reads.

Runners can change the math. However, runners often begin from areas of lower probability. It is a different discussion.

Hopefully helpful and good trades to you!

[shoikan]

I had a follow up question about using ATR. Is there a size related to ATR where a potential signal bar is just too big? I'm always looking back in my trade journal and wonder if I should have some sort of max limit on risk.

Any suggestions would be appreciated, I feel like some of my past trades I've definitely taken on too much risk.

Thanks again,

[eric-pal]

First, one needs to be careful of the atr during news reporting times as the value potentially may significantly change.

During the remainder, I would have caution around signal bars 2x-2x+ the ATR. The reason being the signal bar may be a magnetic move into resistance (which happens most often during trading ranges). Review a few charts to confirm.

Good trades to you!