I just finished reading Tim Bourquin’s interview with author and trader Steve Palmquist over at Traders’ Library. I recommend you do the same. In it, Mr Palmquist discusses, among other topics…
How to Trade in Three Different Markets
How to Locate Stocks to Trade
How Many Positions Are Too Many
What You Can Ask A Fifth Grader About Trading
Determining Profit Targets
How to Place Stops
How is Mr Palmquist’s New Book is the Same and Different From Others in the Market
Automated Trading vs Personal
Here is my favorite question/answer:
TraderInterviews.com: Now, when you’re back testing and then you’re investigating a new system, what do you like to see before you’ll start to put into your nightly scan and start getting signals for you? Is it a 50% win rate or a 40%, 70%? What do you like to see?
Steve Palmquist: Well, it depends. I mean if I tell you that I have a system and it only wins 40% of the time, a lot of people say, “Gee, I don’t want to trade that.” But if every time you win, you get a thousand dollars and every time you lose, you lose a hundred dollars, it suddenly becomes a very interesting system to trade. So it’s not one statistic that matters but it’s the combination. Does it win more often than it loses and is the average winning trade larger than the average losing trade? If those two conditions are true, then I’m interested in the system. Most of the ones that I go through in the book show winning percentages in the 60s and that’s over a period of time through a market condition not each and every trade. Because of the statistic when I enter a trade I have absolutely no idea whether that trade is going to be profitable or not and I don’t particularly care. I’m just following the system. I know that over the long run I’m going to do quite well trading that system, and obsessing over what happens to each trade and watching the five-minute charts is just a waste of time.
Catch the entire interview here: INTERVIEW WITH AUTHOR AND TRADER STEVE PALMQUIST
