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Golden rule: trade the trade!

  • #1
  • First Post: Nov 5, 2005 12:26am Nov 5, 2005 12:26am
I was analyzing my trades when price hit my stop and then went to my direction. I was surpized that price went much further of entry point. For example I entered on Aussie at 0.7380 I place stop at 0.7396. My stop was triggered and then price went to my direction, when it reached entry point (0.7380) then it intersected it and collapsed by 60 pips.

Is not this a great finding?

please analyze your trades too, only mine is not enough to say that we have incredible strategy.

It is like rule of war: bomb never hits the place again where it hitted first time
kiss the trend
  • #2
  • Nov 5, 2005 8:43am Nov 5, 2005 8:43am
Sorry 777, I am afraid I didnt understand your post. You saying that you re-entered the same trade at the same entry price after your first attempt at it had been stopped out?

Could you please clarify it for me? Thanks!
  • #3
  • Nov 5, 2005 9:30am Nov 5, 2005 9:30am
Quoting WTB
Sorry 777, I am afraid I didnt understand your post. You saying that you re-entered the same trade at the same entry price after your first attempt at it had been stopped out?

Could you please clarify it for me? Thanks!
Yes quite right! when price reaches again your previous entry point enter there again and place same stop order as you did in your previous trade, where you were stopped out.

Analyze your trades, may be we have great thing here!
kiss the trend
  • #4
  • Nov 5, 2005 9:43am Nov 5, 2005 9:43am
It might depend on what your original entry and relative stop placement strategy is.

My stategy, like many, takes entries off support (or resistance) areas and placing the stop protected (the other side of) by that very support (or resistance). If my stop gets hit, I might enter near the newly created support (or resistance) though the orginal entry point might now become to expensive as my stop placement would be many more pips away.

Suggest you check it over the next 50 times (per system) you trade and see how the results work with your system.
  • #5
  • Nov 5, 2005 3:58pm Nov 5, 2005 3:58pm
Thanks for clearing that out 777.

We all have had trades stopped out by the pip just to see it taking off our way afterwards. Murphy's Law at its best. However, if a stop is properly placed (few pips beyond a significant support/resistance level) and it's hit, it means that that S/R level has been breached, and thus valid no more, making the trade no longer as attractive as it was before.

One of the most often preached mantra in trading is "don't chase a loss". If a trade turns out a losser, I reckon the wisest thing to do is to assume it, analyze what we did wrong, take a deep breath, reload the gun, and ambush the charts for the next oportunity.
  • #6
  • Nov 6, 2005 1:00am Nov 6, 2005 1:00am
Quoting WTB
Thanks for clearing that out 777.

We all have had trades stopped out by the pip just to see it taking off our way afterwards. Murphy's Law at its best. However, if a stop is properly placed (few pips beyond a significant support/resistance level) and it's hit, it means that that S/R level has been breached, and thus valid no more, making the trade no longer as attractive as it was before.

One of the most often preached mantra in trading is "don't chase a loss". If a trade turns out a losser, I reckon the wisest thing to do is to assume it, analyze what we did wrong, take a deep breath, reload the gun, and ambush the charts for the next oportunity.
OK, but sometimes it is false break of S/R levels. This false breaks are confirmed as price go to our direction after hitting stop. May be it is because of insufficient liquidity. In case of Cable you can find a lot of false breaks of S/R levels.
And after all it is very rare when the same thing is happening twice in such short period. I mean if once your stop is hitted and then market went to your direction and you entered at the same entry point there is very little chanse that market will reverse again and hit your second stop placed at the same price.
Just it is like war rule: Bomb does not hit the place where it hitted before.

Furthermore if your stop is going to be hitted again (I have not detected such case yet) then price will go much further above the stop. For example, if you entered again the previosu entry point with 1lot you'd better place stop 2lots.

example: you entered short at Aussie (0.7380), your stop is at 0.7410. Your stop was hitted and then market went to your direction, price reached 0.7380 and you entered the market again and placed same stop at 0.7410. NOw if market is going to hit your stop again entered there long and place your stop now at 0.7380.
kiss the trend
  • #7
  • Nov 6, 2005 3:23am Nov 6, 2005 3:23am
I dunno, I will have to keep an eye on this from now on and see for myself I guess. At this time, it feels to me like trading on action-reaction (aka emotion) rathen than on pure tech analysis.

How you run any sort of backtest 777? how many of your previously stopped out trades that moved right afterwards your direction turned out successful the second time around?
  • #8
  • Nov 6, 2005 5:29am Nov 6, 2005 5:29am
Quoting WTB
I dunno, I will have to keep an eye on this from now on and see for myself I guess. At this time, it feels to me like trading on action-reaction (aka emotion) rathen than on pure tech analysis.

How you run any sort of backtest 777? how many of your previously stopped out trades that moved right afterwards your direction turned out successful the second time around?
Yes I understand that. i learned what is emotion free trading (and I follow it), but this system is not derived from emotion, it is just statistically confirmed and should be taken into consideration.

Yes, I analyzed my trades and found cases when hitting my stop price went to my direction. But remember price must reach the point where you entered at first.

It is just statistics and like rule of war. I want to find out from others if they have such cases in their trading history and if it is so we have one good rule of money management
kiss the trend
  • #9
  • Nov 6, 2005 12:59pm Nov 6, 2005 12:59pm
777, sounds like you just need a bigger stoploss! nothing more frusterating than getting stopped out by a few pips, then the price goes in your direction!

you had a 16 pip stoploss, and your stop was right below the major big figure .7400. get that stoploss on the other side of the big figure, like at .7415 so you dont get stopped out by the magnet effect. there is noise in the market, always, so you need to give your stop enough breathing room so it can handle the market noise.
Relax and be happy.
  • #10
  • Nov 6, 2005 9:24pm Nov 6, 2005 9:24pm
Quoting merlin
777, sounds like you just need a bigger stoploss! nothing more frusterating than getting stopped out by a few pips, then the price goes in your direction!

you had a 16 pip stoploss, and your stop was right below the major big figure .7400. get that stoploss on the other side of the big figure, like at .7415 so you dont get stopped out by the magnet effect. there is noise in the market, always, so you need to give your stop enough breathing room so it can handle the market noise.
When the market reverses at big numbers it almost always overshoots them first. Often as much as 15 pips but more frequently around 5 to 10 pips. I've rarely seen the market stop exactly at a big number.

A frequent scenario is when the market heads toward that big number and comes just a couple pips shy or just comes up an touches it and retraces 5 to 15 pips and then takes another run or two until it punches through to take out the stops on the other side of that big number. If the stop clusters are large enough it can send that market a good ways before the reversal. Normally with gbp and eur it should not break 20 pips beyond the big number if you are going to get the reversal. Of course market strength, volatility, time of day, and a few other things must be taken into account when judging this. Big number plays normally need a good bit of breathing room and a reversal strategy to make them profitable.

FT
  • #11
  • Aug 28, 2007 10:32am Aug 28, 2007 10:32am
This is something that myself and my trading buddies have noticed something regarding stoploss points.

Points
Each broker is basically independant (my broker may offer me a different price than yours)
A stoploss is an "order". Basically, if you are in a buy at 2.0000 and put a stop at 1.9880, then you have 2 "orders" open.

I have watched a hundered times where the market moved what seemed to me an extra 5-10 pips "just to take my stoploss" and then bounced back (typically during low movement times). To see if this was just me seeing things or my order actually moving the market, we've done a couple of things, but the primary is to set a "safety" stoploss of around 100 pips (yes, we daytrade mostly) and keep a mental stoploss in our heads (or put a line on the graph). Since we've been doing this, I RAIRLY see the market move towards my "mental" stoploss.

Suggestion
If you are trading a demo and this happens, re-examine how close your stops are. Since demo doesn't effect the market, your "order" won't move it and thus it's a placement thing.
If you are trading a live account, then put in a LONG stoploss incase of a really quick move, create a mental stoploss and don't look away from your charts. If it hits your point, close the order just like the auto-stoploss would.

Also, remember to include your spread in your stoploss or you may find that you are stopped out by 2-5 pips EVERY time ...

Good Trading!
Bear
Good pips to all ... bye
  • #12
  • Edited 11:07am Aug 28, 2007 10:56am | Edited 11:07am
Quoting Bear142746
This is something that myself and my trading buddies have noticed something regarding stoploss points.

Points
Each broker is basically independant (my broker may offer me a different price than yours)
A stoploss is an "order". Basically, if you are in a buy at 2.0000 and put a stop at 1.9880, then you have 2 "orders" open.

I have watched a hundered times where the market moved what seemed to me an extra 5-10 pips "just to take my stoploss" and then bounced back (typically during low movement times). To see if this was just me seeing things or my order actually moving the market, we've done a couple of things, but the primary is to set a "safety" stoploss of around 100 pips (yes, we daytrade mostly) and keep a mental stoploss in our heads (or put a line on the graph). Since we've been doing this, I RAIRLY see the market move towards my "mental" stoploss.

Suggestion
If you are trading a demo and this happens, re-examine how close your stops are. Since demo doesn't effect the market, your "order" won't move it and thus it's a placement thing.
If you are trading a live account, then put in a LONG stoploss incase of a really quick move, create a mental stoploss and don't look away from your charts. If it hits your point, close the order just like the auto-stoploss would.

Also, remember to include your spread in your stoploss or you may find that you are stopped out by 2-5 pips EVERY time ...

Good Trading!
Bear
WOW you must have a huge account

Stop loss orders often cluster in the same areas (i.e. just beyond significant technical levels) so yours is probably just one out of many such orders around that same area. Often large institutions, the ones whose transactions DO move the market, will try to manipulate price so that it reaches those levels and that those stop loss orders get triggered, moving the market further in their desired direction. Such "stop loss hunting" usually results in a sudden reversal as soon as the stops are cleared, as the move doesn't reflect actual market sentiment and as the large institution takes profit.

If your "mental stop" is working better for you than a market order, then that's great but I would remain skeptical about anyone trying to gun your stops specifically (unless your account is astronomical - you wanna be friends?)
  • #13
  • Aug 28, 2007 5:51pm Aug 28, 2007 5:51pm
Quoting Bear142746
Suggestion
If you are trading a demo and this happens, re-examine how close your stops are. Since demo doesn't effect the market, your "order" won't move it and thus it's a placement thing.
If you are trading a live account, then put in a LONG stoploss incase of a really quick move, create a mental stoploss and don't look away from your charts. If it hits your point, close the order just like the auto-stoploss would.

Also, remember to include your spread in your stoploss or you may find that you are stopped out by 2-5 pips EVERY time ...

Good Trading!
Bear
Thanks Bear for the reminder about the spread related to stoploss. My stop has been missed because I entered orders at full throttle and didn't slow down enough to account for the spread.
I was playing in my demo account recently with a short trade and I set a limit order for profit. Within a minute the price moved much faster than it had been moving triggered my order then just as fast reversed back into the trend channel. I thought, that was very nice now I can go eat dinner! Reading this thread got me thinking. I realized my limit was probably at the same level as many others because it was near 114.00 on USD/JPY. Also, I'm curious, does anyone really know, not just guess, if the brokers order book shows demo orders differently than real orders?
  • #14
  • Aug 28, 2007 7:25pm Aug 28, 2007 7:25pm
Quoting merlin
777, sounds like you just need a bigger stoploss! nothing more frusterating than getting stopped out by a few pips, then the price goes in your direction!

you had a 16 pip stoploss, and your stop was right below the major big figure .7400. get that stoploss on the other side of the big figure, like at .7415 so you dont get stopped out by the magnet effect. there is noise in the market, always, so you need to give your stop enough breathing room so it can handle the market noise.
Very well said Merlin and I notice some brokers hit ur sl then the market goes favorable to your initial pos remember diff brokers have different hi's & lo's
  • #15
  • Aug 29, 2007 5:40am Aug 29, 2007 5:40am
Quoting fierceman
WOW you must have a huge account

Stop loss orders often cluster in the same areas (i.e. just beyond significant technical levels) so yours is probably just one out of many such orders around that same area. Often large institutions, the ones whose transactions DO move the market, will try to manipulate price so that it reaches those levels and that those stop loss orders get triggered, moving the market further in their desired direction. Such "stop loss hunting" usually results in a sudden reversal as soon as the stops are cleared, as the move doesn't reflect actual market sentiment and as the large institution takes profit.

If your "mental stop" is working better for you than a market order, then that's great but I would remain skeptical about anyone trying to gun your stops specifically (unless your account is astronomical - you wanna be friends?)
From what I've seen, you're correct about the large institutions transations. My background is basically a scientific one, so I'm basing what I wrote on what I've seen. A price moving by a few pips to "grab" a stoploss (at the broker level) is much more understandable than the entire market moving a few pips to take it out. It could also be that I'm just seeing things, but I do know that I can typically grow my account by a little each day. There are still many things that cause it to drop including a close physical stoploss (greed is the main one).
Good pips to all ... bye
  • #16
  • Aug 29, 2007 5:43am Aug 29, 2007 5:43am
Quoting fxracing
Thanks Bear for the reminder about the spread related to stoploss. My stop has been missed because I entered orders at full throttle and didn't slow down enough to account for the spread.
I was playing in my demo account recently with a short trade and I set a limit order for profit. Within a minute the price moved much faster than it had been moving triggered my order then just as fast reversed back into the trend channel. I thought, that was very nice now I can go eat dinner! Reading this thread got me thinking. I realized my limit was probably at the same level as many others because it was near 114.00 on USD/JPY. Also, I'm curious, does anyone really know, not just guess, if the brokers order book shows demo orders differently than real orders?

I can't speak for all brokers, but my demo accounts (for automation forward testing) and my live account (same broker for demo and live) DO show DIFFERENT data by a few pips some times.

Bear
Good pips to all ... bye
  • #17
  • Last Post: Sep 30, 2007 4:24am Sep 30, 2007 4:24am
Please can u explain to me how to make use of a robot on a meta4 platform. or simply put how does a robot work on meta4 platfor. i will appreciate it if you can send me a comprehensive explanation note.
[email protected]
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