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  • #561
  • Feb 10, 2023 4:13am Feb 10, 2023 4:13am
Quoting JensG
{quote} Interesting. Can you elaborate on that? Do you tend to exit too early or too late? Getting out too early is a typical symptom of feeling uncomfortable with money on the line while being too late is often easier fixable by baking a more straightjacket-like exit approach into the strategy.
I've read a quote some time ago that stated something like: "The brain is an amazing machine that works perfectly all life and it stops working when you open a trade".
I think this quote resemble a bit what i meant: after i open a trade i seem to lose the lucidity and it can happen either that i close the trade too soon or i keep it open when i shouldn't (this happens mostly when i try to recover a previous losing trade). And this is valid for both TP and SL.

Though i don't feel too bad when i close it early (it's still profit), what it makes me a bit angry is when i reduce the stop loss to reduce an eventual loss and i get stopped out just before the markets move in my favor (i know it happens to every one but i still can't get over it).

I often try to think about what makes me feel like this and i guess it's because of the past experiences that accumulated and developed my behaviour because i never had a guide/mentor and i had to learn by my previous mistakes.
I still need to learn how to control emotions properly (which probably is the hardest part of trading).

Don't get me wrong, i'm doing not bad overall and kinda successful but i'd really like to not struggle so much all the time during trading.
  • #562
  • Feb 12, 2023 4:41pm Feb 12, 2023 4:41pm
Quoting TheProtege
one thing I am curious about Jens. you mentioned the level around 130.20 was what you were eyeing as a minimum target. What would have kept you in the trade when there was some indecisive action there? There was some reversal-like price action with a tiny "micro level" break. additionally this level was a well tested previous resistance turned support correct? couldn't we apply the same logic you had for the short trade to this level? was there something else that would keep you from exiting or even considering a long there (ping-pong action)?
I generally do not use take profits. The whole idea of tying the end of a trade to certain price ranges is almost always foreign to me. I just tighten my stop loss. First from the fixed -10 pip, then into a range that avoids having to go out with a loss, and later I look for the sweet spot between setback risk and reward maximisation. But we'll get to that.
Specific to this bet: I generally give a little more room to a short bet that started from a good (i.e. external resistance) and, on top of that, takes place in a market environment that tends not to be steep and clear, but rather is repeatedly interspersed with slight disruptions.
Additionally, I always wait for the initial price action. So even if I talk about an early entry, that doesn't mean that I jump right in at the resistance or out at the support or even reverse positions there (ping-pong), but always slightly below or above this price range. The price action basically gains meaning (or not) for me through its location and the previous price behaviour (legs).

Quoting TheProtege
there is kind of what looks to be a range around 130.05-130.20. wouldn't buying in the middle also be risky around that area? And when youre "riding it to wherever it goes", are we basically letting price make higher-highs/higher-lows and when price makes a lower-high than before that would be your exit point? hope the questions make sense. thank you again for sharing!
I have cut out this fictitious bet here as a graphic so that others can follow it better. Besides, I'm losing the overview myself ;-)

Attached Image (click to enlarge)
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You're right, the area between .050 and .200 is not without problems, and you can see very clearly how the trend is slowly weakening. However, when I spoke of "buying in the middle", I didn't necessarily mean it literally, especially since initially you can't know where the price will go and consequently where the middle will be. When I talk about "buying in the middle", I only mean that you don't always have to catch the outbreak of a pattern (or anything very close to it) and such channel-like patterns are a prime example of that. If there is no outer "major" resistance in the way, you can usually jump on (in an upward channel) without any problems shortly after the second low or so, i.e. when the initial price action seems to confirm the previous main direction. This is another case that you can catch quite easily with buy-stop orders, by the way.

I hope we can discuss the handling of such channels in greater depth at some point. In general, however, I don't have a rigid exit procedure, but I try to learn a little. My positive stop loss prevents too big setbacks and I have no problems riding such a wave series even by jumping on and off several times. Depending on whether I get the impression that the respective "waves" are big enough for this or the pattern moves upwards with rather moderate volatility. However, and that's where we come back to the first bet, I rarely bet on a general reversal of a channel, i.e. on a breakout against an imaginary line that roughly connects the highs or lows. This requires a price range that I consider to be, how shall I put it, authoritative. Some channels can also be played on both sides and thus I can indirectly profit from a reversal through stop-loss management without actually relying on it to happen to prevent a loss.
I hope that shines a light on the thoughts that are forming in my head: It's not about making some huge bet, not about the trade of a lifetime. It is much more an assessment of possible exit options, the search for the net and double bottom, a what-if game, so to speak, that first starts with risk minimisation and later, with a bit of luck, turns into milking a random coincidence all based on lots of hours of screen time.
  • #563
  • Feb 17, 2023 3:10am Feb 17, 2023 3:10am
Quoting JensG
{quote} I generally do not use take profits. The whole idea of tying the end of a trade to certain price ranges is almost always foreign to me. I just tighten my stop loss. First from the fixed -10 pip, then into a range that avoids having to go out with a loss, and later I look for the sweet spot between setback risk and reward maximisation. But we'll get to that. Specific to this bet: I generally give a little more room to a short bet that started from a good (i.e. external resistance) and, on top of that, takes place in a market environment that...
Sir. JensG i'd like to ask you what do you do in these 2 cases:

1) After your stop order gets triggered, if the price doesn't seem to move anytime soon and it ranges tight in that zone for like 30m-60m, do you look to exit from the trade around BE or do you wait until price goes one way or another? (tp or sl)

2) As soon as your stop order gets triggered the price starts to go in the other way, you wait for it until it reaches your SL or you try to exit the trade earlier before it reaches your fixed 10pip SL?
I ask this because sometimes price goes deeper than entry point before turning and go in our direction.

Thanks.
  • #564
  • Edited 8:40pm Feb 17, 2023 8:24pm | Edited 8:40pm
amazing - thank you Jens for the detailed response!

My key takeaways were:

1) on why you didn't get out or reverse positions at your minimum target (~130.20) when there was indecisive action

  1. you use stop loss orders for both entry and exit. Sort of a manual trailing stop loss method you've devised to use in your own way.
  2. you would give a trade like this one more room because it was a key resistance level and the previous leg wasn't clear. I think you've mentioned you try to make as much of your trading decisions based on the previous leg as possible so this makes sense.
  3. the reason why you wouldn't reverse positions at that minimum target is because the price didn't move enough in the direction that you would consider it a real direction change

i'm not really sure what you mean by "wait for the initial price action", "price range", or "price gaining meaning through location and previous price behaviour" but i suspect it has to do with those micro-levels and how you decide where to place your entry.

2) on "buying in the middle" and riding the trend/deformed channel up

  1. you didn't mean buying in the middle literally, but more so that you don't have to catch the exact beginning of a channel. You can jump on after the 2nd or whatever low after the price action is confirming a turn and there are lack of levels in the way.
  2. you can go in an out multiple times in these channel like movements. You can even take both sides of the channel if the legs are long enough and price action supports it.
  3. you don't really bet on channels to reverse and your positive stop loss is setup deliberately to prevent price from turning too much against you. Incidentally this stop loss also gives room so that if a channel does reverse, you're able to ride the move.

Quoting JensG
I hope that shines a light on the thoughts that are forming in my head: It's not about making some huge bet, not about the trade of a lifetime. It is much more an assessment of possible exit options, the search for the net and double bottom, a what-if game, so to speak, that first starts with risk minimisation and later, with a bit of luck, turns into milking a random coincidence all based on lots of hours of screen time.
this was very helpful, thank you! It sounds like you have plans for where to take this conversation next after the initial post so I will eagerly await what is to come.
  • #565
  • Feb 17, 2023 8:48pm Feb 17, 2023 8:48pm
Quoting jojofx
after i open a trade i seem to lose the lucidity and it can happen either that i close the trade too soon or i keep it open when i shouldn't (this happens mostly when i try to recover a previous losing trade). And this is valid for both TP and SL.
i completely understand this. I think practice will be key here. The more you get used to the movements and how to react the easier it becomes.

Quoting jojofx
what it makes me a bit angry is when i reduce the stop loss to reduce an eventual loss and i get stopped out just before the markets move in my favor (i know it happens to every one but i still can't get over it).
dealt with this too and again, practice and learning from what went wrong is going to be really important. for me going from static charts to watching price action live I expected the bars to be more straightforward, but there can even be so much up and down action in a single long up or down bar.

if you notice you're getting kicked out too early and then price goes your way, you've identified your problem. Now the question is what will help?

For me, it was initially giving my trades more breathing room. I would immediately tighten my stop as soon as price starting moving a couple pips in my favour. But at some point I had to accept that I'm getting kicked out on good trades and im ok with a larger loss to give price the chance to go towards my target. I've also noticed that if price takes you out too early but then starts turning again, you can just re-enter. It seems to work really well once you get used to it.

Quoting jojofx
I still need to learn how to control emotions properly (which probably is the hardest part of trading).
definitely think trading psychology is underrated and not talked about enough. I've found studying this with books like Trading in the Zone is generally helpful to keep us aware of our thoughts and feelings and how we can shape better trading habits. Of course, experience is also extremely important too.
  • #566
  • Feb 18, 2023 6:16pm Feb 18, 2023 6:16pm
Quoting jojofx
1) After your stop order gets triggered, if the price doesn't seem to move anytime soon and it ranges tight in that zone for like 30m-60m, do you look to exit from the trade around BE or do you wait until price goes one way or another? (tp or sl)
In principle, I don't have a problem with waiting and I am familiar with the situation that the price doesn't really get going and stagnates. However, 30 to 60 minutes is definitely a long period of time and a few things come to mind:

 

  1. Does it make sense to watch the trade for that long? Are there more worthwhile charts that I now have less time to focus on?
  2. Is my side at least slightly dominant?
  3. Is the release of economic or political news imminent? I'd rather not be caught up in one. After all, we are usually dealing with relatively small individual profits here, which makes tail risk in the simplified sense of unusually large losses a critical weak point. I just remembered a losing bet from 2014, when Putin annexed Crimea and the market could be stirred up by fragments of speeches alone. We have a very similar situation today and have had it before and in between. Be it Brexit, be it Trump, be it the so-called Euro crisis or just any stupid election.


Quoting jojofx
2) As soon as your stop order gets triggered the price starts to go in the other way, you wait for it until it reaches your SL or you try to exit the trade earlier before it reaches your fixed 10pip SL? I ask this because sometimes price goes deeper than entry point before turning and go in our direction. Thanks.
My -10 pip SL is an emergency stoploss. I have never waited for this to get triggered. The stoploss at -10 is set automatically because for me it is a loss that I can recover relatively easily, and at the same time this distance is far enough to avoid being triggered accidentally. The purpose of this stoploss, therefore, is not of a trading nature, but more like a safety net against technical problems such as internet or power failures, a fire alarm in the building (happened) or diarrhoea (to name a still outstanding reason to lose a bet ;-) ).

Quoting TheProtege
My key takeaways were
All correct. Excellent summary!

Quoting jojofx
{quote}I've read a quote some time ago that stated something like: "The brain is an amazing machine that works perfectly all life and it stops working when you open a trade". I think this quote resemble a bit what i meant: after i open a trade i seem to lose the lucidity and it can happen either that i close the trade too soon or i keep it open when i shouldn't (this happens mostly when i try to recover a previous losing trade).
The context in which this happens is often important. Brett Steenbarger had very helpful texts on his website, which I, unfortunately, can no longer find. If you often close trades too early with a small profit, the question is whether you were just looking for the good feeling of booking another profit or whether the constant risk is driving you crazy. My personal advice would be to cover up any information about money on the display. The important information is not in the profit column when it swings between profit and loss within a fraction of a second but on the chart, in the price action within the pattern you're betting on.
Wanting to sit out a trade after a loss until a profit is made sounds like the classic revenge pattern. It is obvious that the combination leads to the maximum unpleasant result of large losses and small profits.
  • #567
  • Feb 27, 2023 4:50am Feb 27, 2023 4:50am
Good morning folks. Apologize for late reply but i was out city last week and didn't bring my laptop with me.

Quoting JensG
The context in which this happens is often important. Brett Steenbarger had very helpful texts on his website, which I, unfortunately, can no longer find. If you often close trades too early with a small profit, the question is whether you were just looking for the good feeling of booking another profit or whether the constant risk is driving you crazy. My personal advice would be to cover up any information about money on the display. The important information is not in the profit column when it swings between profit and loss within a fraction...
Yes i think this is the exact analysis. There are some days that i just look to make a small profit, just to end the day "positive" but sometimes, for example, all the small profit made in like 3-4 days, are too small to cover a losing day. Though the losing days are becoming less the more time i spend on charts (like TheProtege said: pactice and experience is the key). I admit in the past that "revenge pattern" is what made me get in a losing streak: after a losing day, the next days wanted to recover at all cost but this just led to more losses. I guess taking 1-2 day off after this happens would be the best.

Quoting JensG
My -10 pip SL is an emergency stoploss. I have never waited for this to get triggered. The stoploss at -10 is set automatically because for me it is a loss that I can recover relatively easily, and at the same time this distance is far enough to avoid being triggered accidentally. The purpose of this stoploss, therefore, is not of a trading nature, but more like a safety net against technical problems such as internet or power failures, a fire alarm in the building (happened) or diarrhoea (to name a still outstanding reason to lose a bet ;-) ).
May i ask if you have a screenshot of a situation where you realized you were in a bad position and got out manually of the trade to cut your losses? For some reason, for me, it's hard to choice to close the position before it reaches SL because a lot of times it happened that it went in my direction right after closing it, without giving me the chance to get back in and it drove me mad

Quoting TheProtege
For me, it was initially giving my trades more breathing room. I would immediately tighten my stop as soon as price starting moving a couple pips in my favour. But at some point I had to accept that I'm getting kicked out on good trades and im ok with a larger loss to give price the chance to go towards my target. I've also noticed that if price takes you out too early but then starts turning again, you can just re-enter. It seems to work really well once you get used to it.
You are right TheProtege, i think giving more breath room to a trade would be a nice solution and probably less stressful. I got this habit to put really tight SL (just 1-2 pip before previous high/low) and sometimes it's counterproductive. I'll try to "fix" my habit and learn to give the trade more space!

Cheers.
  • #568
  • Feb 27, 2023 7:45pm Feb 27, 2023 7:45pm
Quoting jojofx
May i ask if you have a screenshot of a situation where you realized you were in a bad position and got out manually of the trade to cut your losses?
I'll make you a screenshot with an explanation at the next good opportunity. But I would like to take the opportunity in advance to explain the mechanics, because that way I can explain the basics without constantly pointing out the specifics of this one situation worth explaining that may now arise tomorrow or the day after.

I pull the plug when the bet no longer makes sense.

Just to take an example that has happened on a regular basis and also works in line with the thread's strategy. Let's say we have different resistances with some distance between them. Now I see that the price action is hinting at a reversal at the lower resistance and I make a short bet. After a short while and a bit of fighting between bears and bulls, the price breaks through to the upside and I am now -7 pip in the loss where the price will soon meet a new potential resistance. It simply no longer makes sense to hold on to this bet here, because even if the price now turns further above at one of the upcoming resistances, two fundamental problems arise for me:
I can short again at a better price further up and have much more profit potential in the best case.
But the lower resistance could now have become support in a less fortunate case, so even if the price turns again in the short term, I need additional luck to go out with a profit.
You realise: it simply makes no logical sense to hold on to this bet. Especially not when you consider that broken minor resistances usually indicate that the movement has quite a lot of steam at the moment.
The goal must always be that the sum of many individual bets must be positive. If you hold on to this one bet at this point, you are only frantically trying to avoid booking a loss but risking a bigger loss in return and giving up a possible better bet. Your current losing bet gets in the way of a better one!

Quoting jojofx
For some reason, for me, it's hard to choice to close the position before it reaches SL because a lot of times it happened that it went in my direction right after closing it, without giving me the chance to get back in and it drove me mad
If this happens often, something is wrong with your entry positioning. Instead of thinking about the exit strategy just yet, maybe wait for a little more confirmation from the price action and go in a tad later.
  • #569
  • Feb 28, 2023 2:27am Feb 28, 2023 2:27am
Back to the basics!

Attached Image (click to enlarge)
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The short horizontal line was my SL
  • #570
  • Feb 28, 2023 6:32pm Feb 28, 2023 6:32pm
I kinda like this losing bet (on GBP/USD today). Well, granted, I do not *really* like it, but it is a good example that meets my criteria for a losing position that is worth explaining and shows my thinking and decision-making process.

Attached Image (click to enlarge)
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The dotted lines explain that it was a bet on a forming bearish channel. The white line was approximately my entry and the red approximately my stoploss. Now you can also see here what I mean by a bet and what I mean when it no longer makes sense. For me, a bet is first of all a specific pattern, and this one simply did not materialise. My exit was quick because it became obvious on the basis of three criteria that it would no longer make sense to hold on to the position.

 

  1. If we look at the legs purely geometrically, it was obvious at the stoploss position that the formation of a downward channel had become very unlikely. To see this, I really don't have to wait for it to grow into a 10-pip loss.
  2. Instead, the middle, around which the price had been hovering for quite a while before, became a support zone (which also wasn't unlikely from the get-go).
  3. If we look at the price action of the blue bull candles that broke my bet, we also see that this support zone seems to be quite stable, because the dominance of the bulls is obvious.

As a take-away, the following may be useful: If you think in patterns, the question of whether a bet is worth holding on to becomes, in most cases, a downright simple, quickly discernible and logical decision. With increasing experience, i.e. screen time, you can always pay a little more attention to your "gut feeling". For beginners, on the other hand, the systematic approach is likely to be more purposeful. For people who fall into psychological traps, the corset of a strategy is also a useful template for action.

  • #571
  • Mar 1, 2023 3:55am Mar 1, 2023 3:55am
Quoting JensG
If you hold on to this one bet at this point, you are only frantically trying to avoid booking a loss but risking a bigger loss in return and giving up a possible better bet. Your current losing bet gets in the way of a better one!
Yes, this is the real truth (at least in my case). Deep inside, when i refuse to close a losing position, it's because i want to avoid a loss and, as i said in my previous post, my mind is not lucid to realize that it's much better to close a small loss that can be easily recovered later rather than keep it open and get a bigger loss. I'll write this statement of yours down and read it every day!

Quoting JensG
If this happens often, something is wrong with your entry positioning. Instead of thinking about the exit strategy just yet, maybe wait for a little more confirmation from the price action and go in a tad later.
It doesn't happen that often but still happens more than i would like. It's just that i'd like to have full control over my decisions rather than let my previous experiences dictate my actions withouth thinking
Anyway i already started to follow this your advice from the time i've read you use stop orders instead of market orders. As soon as i've read it i started to try using stop orders too and i have to say that i find my entries much more fit because few times prevented me a loss and other times avoided that situation in which price instantly goes against you as soon as you open the trade, before turning back in your favour (and it causes me unnecessary stress).
  • #572
  • Edited 4:58am Mar 1, 2023 4:26am | Edited 4:58am
Quoting JensG
I kinda like this losing bet (on GBP/USD today). Well, granted, I do not *really* like it, but it is a good example that meets my criteria for a losing position that is worth explaining and shows my thinking and decision-making process. {image} The dotted lines explain that it was a bet on a forming bearish channel. The white line was approximately my entry and the red approximately my stoploss. Now you can also see here what I mean by a bet and what I mean when it no longer makes sense. For me, a bet is first of all a specific pattern, and this...
One thing that i started to do not much time ago is that i keep another platform open with the same market i'm trading at moment so i can watch the chart clean (withouth orders,sl,tp lines), i noticed it helps me have a more clear view of what is going on and if i'm in a wrong trade, now though, i have to learn and force my self to click that close order button when i'm wrong. After all, when i analyze the past week/month journal it's clear that i'm doing much better when i keep my loss small (even if they are more frequents) because this allows me, at least psychologically, to not get too mad and recover from it easily.

Your analysis of this losing trade makes perfectly sense, esepcially when you talk about the fact that we always have to consider if there is dominance of the bulls or bears, and thus we don't have to wait the full SL to be triggered to realize that we are in a losing trade.
Also i like the fact how you always try to consider only clean markets, with clear support resistances and clean movements, not too messy or choppy.

Bytheway i checked the chart and the market turned bearish right after the next leg in your screenshots. Hope you was able to get back in

Quoting JensG
As a take-away, the following may be useful: If you think in patterns, the question of whether a bet is worth holding on to becomes, in most cases, a downright simple, quickly discernible and logical decision. With increasing experience, i.e. screen time, you can always pay a little more attention to your "gut feeling". For beginners, on the other hand, the systematic approach is likely to be more purposeful. For people who fall into psychological traps, the corset of a strategy is also a useful template for action.
Yes, i guess keep sticking to my strategy's rules and keep making experience with it, is what will make me improve more and especially develop those "gut feeling". Because after hour and hours spend watching charts, subconsciously, we know what is most likely to happen. The fact is either if we choose to "listen" to it or deviate from it and make our emotions dictate the decisions.


Sir. JensG i can't thank you enough for all the insight and knowledge you are sharing and the time you spend to explain in details every circumstance. I really appreciate it!
  • #573
  • Mar 1, 2023 9:19am Mar 1, 2023 9:19am
Quoting jojofx
One thing that i started to do not much time ago is that i keep another platform open with the same market i'm trading at moment so i can watch the chart clean (withouth orders,sl,tp lines), i noticed it helps me have a more clear view of what is going on and if i'm in a wrong trade
That's an interesting suggestion. I had a related discussion with a friend the other day about how distracting small details in the UI of a software can be.

Quoting jojofx
now though, i have to learn and force my self to click that close order button when i'm wrong.
You don't have to close the losing trade manually. If you drag and drop your stoploss, e.g. from my recommendation of the initial -10 pip to -6 or so, you can directly check this level against the critical areas of the pattern you are betting on, based on the line drawn by your trading platform. It's really simple that way to see whether the trade still makes sense. Basically analogous to the entry, where you use the line to check against support & resistances or microlevels, except that the goal is no longer to find the entry, but the point at which the pattern can actually no longer materialise.

Quoting jojofx
Sir. JensG i can't thank you enough for all the insight and knowledge you are sharing and the time you spend to explain in details every circumstance. I really appreciate it!
You're welcome. You can call me Jens by the way, that's my first name (a common northern German and Danish name). The G is because that's the first letter of my surname.
  • #574
  • Mar 2, 2023 3:00pm Mar 2, 2023 3:00pm
Nice to meet you Jens, my name is Francesco.

Quoting JensG
{quote} That's an interesting suggestion. I had a related discussion with a friend the other day about how distracting small details in the UI of a software can be.
Yes, sometimes trying to watching a clear chart and "forgetting" for a second that i have an open trade on that market, it can make me check the situation from another, lucid, point of view. It helps sometimes.

Quoting JensG
You don't have to close the losing trade manually. If you drag and drop your stoploss, e.g. from my recommendation of the initial -10 pip to -6 or so, you can directly check this level against the critical areas of the pattern you are betting on, based on the line drawn by your trading platform. It's really simple that way to see whether the trade still makes sense. Basically analogous to the entry, where you use the line to check against support & resistances or microlevels, except that the goal is no longer to find the entry, but the point at...
I do this mostly when the trade is in profit: i trail the stop onward but not always i'm able to do it succesfull, most of the time it closes the trade just before keep going in the direction. But as i said before, i'm ok with it since is still a profit (especially when it allows me to recover a previous loss). I believe that in future, when i will have more experience on recognizing those microlevels and when money will be less of an issue for me, i will feel more calm and comfortable during a trade and maybe just let it develop properly.
Though, most important i have to follow your advice about reducing the SL size. I admit that sometimes, when i'm not sure of the SL i should use, i tend to increase the size of the SL instead of reducing, even if just few pips, but it's still a bad behavior that i need to fix.
  • #575
  • Mar 26, 2023 1:12am Mar 26, 2023 1:12am
Quoting JensG
{quote}My -10 pip SL is an emergency stoploss. I have never waited for this to get triggered. The stoploss at -10 is set automatically because for me it is a loss that I can recover relatively easily, and at the same time this distance is far enough to avoid being triggered accidentally. The purpose of this stoploss, therefore, is not of a trading nature, but more like a safety net against technical problems such as internet or power failures, a fire alarm in the building (happened) or diarrhoea (to name a still outstanding reason to lose a bet...
Do you have a set percentage of account loss for this emergency -10 pip SL? Being a beginner myself, I only want to risk 1-2% max of my account on a trade. That would normally be just past a recent high or low/micro structure. But with a big -10 pip SL on M1, 1-2% would cripple potential profit target amount. My confusion, or just gap of knowledge to the idea, is that this is how much I'd want to risk when figuring a normal SL as my factored risk of a trade. Not in figuring an emergency SL % of the account. I like the idea of starting with a wide breadth emergency SL and then putting it closer to were it is in line with market structure, and then further as a manual trailing stop into profit. It makes a lot of sense both functionally and psychologically to me. It also allows for quick entries without having to take time to plan SL and TP in fast moving M1. Just enter the price of the Stop order and you know it's a 10 pip SL. TP is fluid and will be sussed out as the trade evolves.

I just am trying to figure what percentage of a loss to factor into the -10 pip initial set emergency SL. How much (in pips) should I factor for the ideal SL (invalidating-trade-idea-setup SL, not emergency) that I'll inevitably move the emergency SL to? So basically, if I was to have a "mental" 3-4 pip SL at 1-2% of account, would I make the emergency -10 pip SL 2.5-3.33 times that percentage? Perhaps I'm over thinking it. It's the only thing in this thread that's grinding my gears before implementing these strategies.

Usually I'd never have a set SL for every trade as it'd be custom for every trade based of previous structure/action. That was on larger timeframes and margin/spread just isn't as much of a factor with wider SL's and TP's. Set emergency SL's make tons of sense on M1 chart scalping though. I've been finding the larger time frames hard to trade due to just loosing my attention span/motivation while waiting. Even when setting alerts it's hard to get back into the groove of the initial setup after hours to days+. M1 to M5 is much more flowing and intuitive even though it's all fractal in nature. So I'm happy to find this thread.

Lastly, thank you so much Jens and Veni for the amazing thread! It was a bit vague in the beginning, but that kind of helped by not dumping tons of info all at once. I've read every post over the last 3 days at work. I'm excited to put what I learned here to practice. Also interesting, to me at least, the last post before this one was made on my 41st birthday. LOL. Also, I made an account to FF just to pose these questions to you. Thanks in advance, especially for your detailed and clear responses. I really appreciate this thread even sans a response! Positive pips to all!
  • #576
  • Mar 29, 2023 6:58pm Mar 29, 2023 6:58pm
It got quiet around here recently. Just to keep the thread active until Jens can get back to you, i'll share what i've been doing..

Quoting Donny3rd
{quote} I just am trying to figure what percentage of a loss to factor into the -10 pip initial set emergency SL. How much (in pips) should I factor for the ideal SL (invalidating-trade-idea-setup SL, not emergency) that I'll inevitably move the emergency SL to? So basically, if I was to have a "mental" 3-4 pip SL at 1-2% of account, would I make the emergency -10 pip SL 2.5-3.33 times that percentage? Perhaps I'm over thinking it. It's the only thing in this thread that's grinding my gears before implementing these strategies.
Mate I think you are overthinking it. From what I gathered, the emergency stop loss is just there to protect from, well, emergencies. Maybe your broker cuts out or your computer crashes. Idk. But it is the worst case scenario and not the norm. From what it seems like, though Jens can correct me, it's rare to actually have a trade reach the emergency stop loss. Usually the trade will be cut beforehand when the reversal no longer makes sense.

Quoting Donny3rd
{quote} But with a big -10 pip SL on M1, 1-2% would cripple potential profit target amount.
I am currently taking 2% risk based on the -10 pip emergency stop. So if I have a 5 pip (plus spread and commission) winner, I'm up 1%. But a loser might also be cut at -5 so again, I'd be down -1% on that one. Not 2% because I would do my best to cut the trade when it no longer makes sense, not waiting for it to hit my emergency stop. It's all relative, i wouldn't expect the risk percentage per trade to be the deciding factor of crippling your profit amounts (unless you're overleveraged to begin with though this shouldn't matter on 2% risk). What would cripple your potential profit is what Jens already mentioned, bad entries or what not.

If 2% risk per trade based on the -10 pip loss is too little for you, I don't necessarily think there's huge danger in raising it a little higher if your gains are outweighing your losses and/or what you make on your gains are larger than what you lose on your losses. Of course, that is something for you to decide.

Maybe I am misunderstanding what you are asking. If you are asking what the most likely pips per win is so you can base your risk on that, then based on what I've seen I can tell you it's variable. Some days have more volatility than others. Some pairs have more volatility than others. Maybe the closest you can get is looking at the average length of the legs, but again this can change during the day so it's hard to put an exact number out there. Maybe Jens can give a better estimate just based on experience.

Quoting Donny3rd
{quote} Lastly, thank you so much Jens and Veni for the amazing thread! It was a bit vague in the beginning, but that kind of helped by not dumping tons of info all at once. I've read every post over the last 3 days at work. I'm excited to put what I learned here to practice.
Heavy plus, thank you jens and Veni for sharing what you have here. It's been so transformative for my trading. Jens also big thanks for sharing that losing trade. I think there's plenty we can learn from your losers just like we can from your winners. I was even caught off guard by how much room you had given that trade and it helped me further fine-tune my exits on bad trades to not get taken out early.

Quoting Donny3rd
{quote} Also interesting, to me at least, the last post before this one was made on my 41st birthday. LOL. Also, I made an account to FF just to pose these questions to you. Thanks in advance, especially for your detailed and clear responses. I really appreciate this thread even sans a response! Positive pips to all!
I know it's late, but happy late bday! I hope it was great mate. Cheers.
  • #577
  • Mar 30, 2023 4:51pm Mar 30, 2023 4:51pm
Quoting TheProtege
Maybe I am misunderstanding what you are asking. If you are asking what the most likely pips per win is so you can base your risk on that, then based on what I've seen I can tell you it's variable. Some days have more volatility than others. Some pairs have more volatility than others.
You weren't misunderstanding anything! Your answers helped a lot (still looking forward to Jens reply though ). They way I learned is to figure the risk first before reward. Also to base your target on structure and if you are going for 1:1 RR or 1:2 RR etc to not take trades where the price action structure wouldn't support those targets (i.e.: taking a trading right before S/R or if S/R is before your 1:1 or 1:2 TP target.) This was also concerning intraday/day trading and not so much scalping. I know the speed and volatility of scalping makes it a bit more discretionary than plannng entry, SL past recent S/R, Tp 1-3 times that distance. Doing that robs my patience and gives me decision fatigue even when not scalping. I like it in theory though. The set it and forget it nature. But scalping needs more breathing room and the spread can also make tight SL's harder. Again the speed on the M1 charts doesn't leave enough time to plan tighter stops anyway. I like the set -10 pip emergency SL. 2-4% sound good. Will just have to try it all out to see what works for me. Thanks again!

Quoting TheProtege
I know it's late, but happy late bday! I hope it was great mate. Cheers.
Thank you! It was a good one. The wife and I saw one of my favorite comedians, Jimmy Dore. Then the next day we did a nice mountain hike on Boulder Canyon trail in the Superstition Mountain of Arizona.
  • #578
  • Mar 31, 2023 6:54am Mar 31, 2023 6:54am
Almost all my trades run into the stoploss, but only in emergencies where I am unable to act, it is -10 pip. That's why it's an emergency stoploss.
The stoploss stays at -10 pip for maybe one or two minutes. After that, it moves to a closer position where I assume that the bet no longer makes sense. For the time being, the bet in post #570 can serve as an example. Why is this SL at -10? It is generated automatically, so I needed a set number. It is generated automatically because it makes sense. A stoploss is outsourcing risk to the broker. It is true that the broker can only execute it if the market conditions are right, i.e. if there is a counterparty. See the Swiss franc in January 2015. Internet, computer failures and all the other things, however, are no longer my problem. Ever had a bet open when the fire alarm goes off in the building? It's nice to have one less thing to worry about. I lived opposite Canary Wharf in London for a while in 2014. Every midday my mobile phone's internet would go down for about 20 minutes if I remember correctly. The mobile internet was my backup line. Precisely because of this emergency nature, it is also really irrelevant whether the -10 is 2% or 5% of the account. It just has to be a distance that makes it unlikely to be wiped out directly by ordinary volatility, and at the same time close enough not to push me into disaster.

So to recap:
-10 pip is set automatically and then manually pulled to a closer position where the bet no longer makes sense. This is followed by manual trailing of the price, which I will explain here in the next few posts.

I will explain some bets here in the next few days. Both winners and losers. My aim is to explain the basic idea of each bet and, if the examples allow it, also the recognition of good situations to increase the position. At the same time, I would like to lay the foundation for explaining manual trailing of the price here, at least as I practice it.

Oh and of course, also from me a belated congratulations to you Donny and best regards to Arizona.
  • #579
  • Mar 31, 2023 3:52pm Mar 31, 2023 3:52pm
Quoting Donny3rd
{quote} They way I learned is to figure the risk first before reward. Also to base your target on structure and if you are going for 1:1 RR or 1:2 RR etc to not take trades where the price action structure wouldn't support those targets (i.e.: taking a trading right before S/R or if S/R is before your 1:1 or 1:2 TP target.)
yes I agree - this is very common advice and still sound. It doesnt really make sense to go short if there is a support level right below. The good thing about taking reversal trades near a S/R level is we already tend to get a healthy dose of R/R just because of where you are positioned within a leg and its following reversal. Think of a V, and then think of where a reversal entry should be. Based on this strategy our entry would be slightly above the bottom point of that V (the bottom tip plus some confirmation distance based on micro levels).

I don't necessarily calculate out R/R on my trade, but I can still eyeball out where my trade is, where the next S/R level is, and where the top or bottom of the S/R level I am trading is. But one thing I'm not totally clear on is how Jens decides a "likely minimum target".

Quoting Donny3rd
{quote} This was also concerning intraday/day trading and not so much scalping. I know the speed and volatility of scalping makes it a bit more discretionary than plannng entry, SL past recent S/R, Tp 1-3 times that distance. Doing that robs my patience and gives me decision fatigue even when not scalping.
Im new to this strategy, but not new to the 1m chart. The problem with deciding your reward will just be double or triple your risk and setting and forgetting is it doesn't really fit the nature of the market. There's never a guarentee that if price goes in your direction, it must hit at least 3x what you had risked. when trading this way, it's very common to see price start going your way only to turn around and go back to your stop. And the worst part? You didn't catch any of that.

What I find fascinating is Jens manual stop loss trailing which seems to handle that problem by trailing price to milk what you can from a move, not with some arbitrarily value like 5 pips, but instead based on volatility, candle lengths, etc. To me, this feels less of a gamble/hope and more like following the adage "cut your losses short and let your winners run".

Not saying you can't make money with set and forget and I like the idea behind it. But there is some tradeoff there between accuracy/possibly profits and attention span.

Quoting Donny3rd
{quote} Then the next day we did a nice mountain hike on Boulder Canyon trail in the Superstition Mountain of Arizona.
love that area!

Quoting JensG
{quote} See the Swiss franc in January 2015. Internet, computer failures and all the other things, however, are no longer my problem. Ever had a bet open when the fire alarm goes off in the building? It's nice to have one less thing to worry about. I lived opposite Canary Wharf in London for a while in 2014. Every midday my mobile phone's internet would go down for about 20 minutes if I remember correctly.
This is very nice to learn the whole idea behind the emergency stop loss and its distance. Puts things into perspective. Thanks for sharing!

Quoting JensG
{quote} I will explain some bets here in the next few days. Both winners and losers. My aim is to explain the basic idea of each bet and, if the examples allow it, also the recognition of good situations to increase the position. At the same time, I would like to lay the foundation for explaining manual trailing of the price here, at least as I practice it.
Really looking forward to it. I've been wondering about what your thought processes are like when taking a bet and what signals you are seeing, your explanations will help shed a lot of light!
  • #580
  • Mar 31, 2023 6:06pm Mar 31, 2023 6:06pm
I just finished reading this whole thread and it's very candid and insightful! I very much relate to a lot of what you went through, especially in the first posts. I was kinda sad the thread ended lol. I said out loud "NO! I want more!" So I just want to say thank you and perhaps you could make an update on how you've progressed since then. Sorry if I'm necroing a dead thread. I just had to give my thanks. There's some great practical and psychological info in here with amazing contributions from the likes of Jens, Veni, and MichaelSch. Thanks everyone. This'll be one a re-read in the not to distant future for me.
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