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question: crossing over to winning side

  • #21
  • Apr 5, 2011 1:55am Apr 5, 2011 1:55am
Quoting djarum11
(...) i know the trading signals i like but again, after learning everything from elliot wave to ichimoku to Fibs to jeez everything else, trading is not something whereby i see a signal and pull a trigger. it is much more complex than that... it is not black and white, it is full on grayscale... so i see small opportunities and take them, realistic that they will be short profits only. (...)
Take the signal you like best, create a trading plan around it, and then backtest it until you fully trust it (backtest for example the last 1000 signals). If you are not happy with the results, create a new trading plan and backtest it again.

Then trade only this signal and trade it only according to your plan. Journal whether you followed your plan or not.
Define a personal punishment for the case when you did not follow your plan (doesn't matter whether it was on a winning or a loosing trade).

After you are profitable trading this one signal, feel free to add another one to your arsenal.



--------

Quoting djarum11
i refuse to turn myself into a monkey that hits a button when the screen turns green or red.
Hey, you might become a very wealthy monkey..
..
  • #22
  • Apr 5, 2011 6:29pm Apr 5, 2011 6:29pm
Quoting Slicktick
Take the signal you like best, create a trading plan around it, and then backtest it until you fully trust it (backtest for example the last 1000 signals). If you are not happy with the results, create a new trading plan and backtest it again.

Then trade only this signal and trade it only according to your plan. Journal whether you followed your plan or not.
Define a personal punishment for the case when you did not follow your plan (doesn't matter whether it was on a winning or a loosing trade).

After you are profitable trading this one signal,...

you are talking about getting it down to a science and not playing it by ear (the latter is my inclination). i do appreciate the disciplined approach you're talking about and getting back to basics.

the contradiction is, how to develop a trading plan that suits the trader, which for me is discretionary (e.g. i see buyers coming in based on XX candles/VSA/etc techniques, so i go long. rinse, repeat) vs. narrow the focus only to specific signals and wait for them (which feels foreign to me).

i am definitely going to do more simulation like you suggest, at least as an exercise to try to learn if A. i truly do not need the crutch of specific signals/setups, or B. i haven't narrowed my system down enough into specifics.

truth is, i am always looking for my strongest signals anyway. so i suspect i need to systematize my trading more. 1. identify specific signal 2. trade to specific TP with specific rule for SL.

thanks
  • #23
  • Apr 6, 2011 1:05am Apr 6, 2011 1:05am
Quoting djarum11
i suspect i need to systematize my trading more. 1. identify specific signal 2. trade to specific TP with specific rule for SL.
Hi Djarum, I was like you once and could never get profitable consistently. The thing is consistency is the only thing that matters in forex. And the only way to get consistent is to obey specific signals. But not obey blindly (like a monkey as you said)...and this is where your feel for the market counts a huge deal. You wait for those specific signals in a larger context - the context is really about your feel for the market. If the context is not there the signal doesn't count.

I was labelled a 'spontaneous trader' by Van Tharp's test - I think that might be you too (this is the test - http://www.tharptradertest.com/default.aspx?question=1) - I'm attaching the 'spontaneous trader report' I got at the end of the test. And you see how damning he is about us with regards to becoming profitable traders. We only have one out of three most important factors in a trader's capabilities.

However, as I was with my coach when I saw this and already had resolved to become consistent, I could see the value of all the methodical techniques my coach had. Eventually after almost exclusively focusing on that part of my development (as it was so underdeveloped), everything just blossomed...not because I ignored the spontaneous side of me and only became mechanical, but because I used the spontaneous (I like to call it intuitive) side of me for the right purpose. I used it to see relationships between time frames, elements on my main window and the indicators - the fuzzy environment. And I used the methodical side to zero in on precision in my practice. They worked together like a treat.

Take for example the issue of journaling, which I can see you are frustrated about. I was too, it seemed that there was all sorts of useless annoying details to input that bogged the whole thing down and didn't give me a clue of anything on review except how much I'd won or lost. But the right journaling really is the key to self improvement.

My coach got me to simply take a screenshot at the time of entry and another at the time of exit - and any other screenshots of better entries and exits at the time they appeared. And then write any notes I felt I wanted to remember about how I was thinking or feeling at the time. That is all that was needed (all the rest is recorded in the trading station platform, you don't need to duplicate it). The screenshot can take in all the time frames you are looking at when you make your decision, it's nice and visual, and it tells you about the moment of your decision. It is much better than a look-back snapshot after the trade is over, which doesn't tell you how you are making your decisions in the moment.

When you review your snapshot journal over the weekend you immediately see what was good or bad about those entries and exits...you write your comments. If you do that for every single trade it becomes a one minute operation to record the trade, and a couple of minutes to assess it over the weekend. Then after a few weeks you easily see patterns in your own trading...where you jump in or out too soon for example. And you can see the conditions that make you do that. Very quickly you can change yourself ... you just resolve the next time such conditions present themselves you are going to behave differently. Within a short time you do change. It's that simple.
Attached File(s)
File Type: pdf Spontaneous-Trader-Report.pdf   226 KB | 1,956 downloads
  • #24
  • Apr 6, 2011 1:21am Apr 6, 2011 1:21am
Quoting djarum11
you are talking about getting it down to a science and not playing it by ear (the latter is my inclination). i do appreciate the disciplined approach you're talking about and getting back to basics.

the contradiction is, how to develop a trading plan that suits the trader, which for me is discretionary (e.g. i see buyers coming in based on XX candles/VSA/etc techniques, so i go long. rinse, repeat) vs. narrow the focus only to specific signals and wait for them (which feels foreign to me).

i am definitely going to do more simulation like you...
don't forget the quote from Einstein: "Insanity: doing the same thing over and over again and expecting different results."

Even if you like playing the market by intuition, you have to accept that apparently it doesn't work. You need to adapt your approach. So, if I were you I would not cancel out other ways of trading just yet.
  • #25
  • Apr 6, 2011 1:23am Apr 6, 2011 1:23am
Quoting javapips
that's why some peoples said that trading is "a psychology game".... Technic/skill or strategy is only a part of trading...,not the most important thing but we do we need that.. they said that psychology is take more part in trading..to let the profit run is not an easy way...it's need not only a strategy but also self control...,one more time Self Control..correction in the market is a must, we can't avoid that..


"you'll know that to lose your position is something
nobody can afford; not even John D. Rockefeller."

--[i]taken...
correction

the best of the best of the best

THE BIBLE
  • #26
  • Apr 6, 2011 1:52pm Apr 6, 2011 1:52pm
Hey,

How about trading longer time frames with smaller position sizes?

In the beginning you may find it easier if you trade off 4 hour or daily charts so you only have to watch you charts once or twice day. Once you have checked your charts and have your orders in, switch off your screen and come back to it the next day or something like that.

The other thing you can do is take smaller position sizes so that the losses don't scare you as much. This will allow you to walk away from your screen without worrying. Once you start to experience success it will make it easier for you to do the same thing with larger sizes.

You said yourself that it maybe down to experiences, so why not give your memory new experience, positive ones.

So in a nutshell, to start with trade smaller sizes on longer time frames.

To give you an example of how walking away from the trades and letting them take care of themselves can be a positive action, I recently took some long USDJPY, EURJPY positions which currently sit 500+pips and 600+pips profit respectively.

Does that help?
  • #27
  • Edited 5:25pm Apr 6, 2011 5:06pm | Edited 5:25pm
Quoting Lovinit
I was labelled a 'spontaneous trader' by Van Tharp's test - I think that might be you too (this is the test - http://www.tharptradertest.com/default.aspx?question=1) - I'm attaching the 'spontaneous trader report' I got at the end of the test. And you see how damning he is about us with regards to becoming profitable traders. We only have one out of three most important factors in a trader's capabilities.
big thanks for this link..this test was helpful to me. it labelled me an 'independent' trader, which means i am very conceptual, think and make decisions in relative isolation, and ignore my feelings too much. a few points in the report opened my eyes and i think it's cool that he offers this free service just to get your mind thinking. but i got the most out of the links to his articles- this in particular spoke to me- http://www.iitm.com/Trader-Test/Bein...king-Money.htm

seems i need to set a predefined max loss level no matter what, and move on after it is hit, vs. trying to save a bad trade. but i do have at least a ~50% success rate of recovering sour trades when i feel my original analysis was good, but perhaps my timing was wrong or the mkt is being a little extra volatile. and i do feel that with discipline and a cool head, trade rescue can be a successful part of a system. hence i'm still conflicted on this point.

the downside to trade rescue/managing a losing trade vs. closing it out is that it ties up capital for new trades, and when not done with discipline & clarity, clouds up your head and gets emotions involved, which is no good. clearly i need to eliminate the possibility of big losers, because those few trades have really ruined my balance sheet in the past.

what the article does is get your head off of being right and focused on overall big-picture expectancy of your system, like a business owner looking at overall costs. being right 90% of the time doesn't mean squat if the losers are 10x the wins. i will be more willing to have strings of small losers, with no emotional attachment. as long as they are small. from now on i won't care about winrate so much, which clearly shouldn't be the main focus in good trading.

is it a bad idea to have a defined stop level, and a rescue criteria for when to manage the losing trade vs. stick to your stop? e.g. i will exit at -10pips on every trade unless i see xxxxx signal (indication of turnaround coming), in which case i will allow a max drawdown of 20pips before closing the trade. ?

i've enjoyed reading Van in the past. i try to be constantly reading... which might be trouble for the heady, isolated 'independent trader' type i suppose
Attached File(s)
File Type: pdf Independent-Trader-Report1.pdf   527 KB | 1,410 downloads
  • #28
  • Apr 6, 2011 5:20pm Apr 6, 2011 5:20pm
Quoting Micardo
Hey,

How about trading longer time frames with smaller position sizes?
i try to do this but i am a fast-paced type A personality, so it becomes one more obstacle to deal with to try keep my head in a longer term mindset. eventually i end up trading from smaller TFs, usually after i take profits on an H4 signal too soon. it's an A.D.D. type of thing. also longterm trading requires a larger stop. with a small acct balance this is not always practical.

also i would like to work toward limiting market exposure. of course, if your stop has already been moved to BE or better, then there really is no exposure in the trade anymore.


it all depends on discipline. i'm not sure if it's better to try to change one problem area at a time, or compile all of the best disciplines that i should adopt, put them all in a plan, and then be overwhelmed at trying to execute and stick to all the new rules i've created for myself.
  • #29
  • Apr 6, 2011 6:39pm Apr 6, 2011 6:39pm
Quoting djarum11
i try to do this but i am a fast-paced type A personality, so it becomes one more obstacle to deal with to try keep my head in a longer term mindset. eventually i end up trading from smaller TFs, usually after i take profits on an H4 signal too soon. it's an A.D.D. type of thing. also longterm trading requires a larger stop. with a small acct balance this is not always practical.

also i would like to work toward limiting market exposure. of course, if your stop has already been moved to BE or better, then there really is no exposure in the trade...
Question for some?

Do people believe that the price action/patterns, the information provided by what you see on a 15M chart is extremely different from that on a Daily or Weekly chart?

If you answered Yes then I challenge you to print off a bunch of random charts without the price axis and time axis and different crosses and see if you can spot which is which. To make it more challenging have someone else do it for you.

I used to think there was a huge difference but theres not. Each blank chart (only candles/bars etc) looks the same, the difference is naturally in the speed of each trade and the waiting time for signals. You will get far less signals on the daily for setups than you will on the 15M. The other noticable factor will come in with spread costs which on higher TFs with larger formations the spread costs are quite so massive as opposed to scalping were the spread costs are significant in your risk measures.

In saying that there is also nothing wrong with taking the long term bias and incorporating in your smaller TFs.

I personally struggled with smaller TFs to make profit because I was looking for the 400-500 pip win off a 20-30 pip risk. It is a nice thought but seldom happens and can be very very frustrating. Long tails are nice but as are smaller gains off smaller risks. The calculation base for each TF is the same. If you risk X% and are looking for 2:1 or 3:1 the difference, as mentioned is in the speed that that trade will mature.

RT
  • #30
  • Apr 6, 2011 10:41pm Apr 6, 2011 10:41pm
Quoting djarum11
big thanks for this link..this test was helpful to me. it labelled me an 'independent' trader, which means i am very conceptual, think and make decisions in relative isolation, and ignore my feelings too much.
Well done Djarum, 2 out of 3 ain't bad. Looks like you won't have to do that much to change yourself...compared to me..lol

Yep, cut those losers short...the first priority of trading. The problem as you've said is that you are balancing the possibility of managing a trade out of loss into profit, with the idea of cutting the losers off before that possibility emerges. But that will mean you do get stung very badly when the losers just go too far. It doesn't work. Personally I set my stop loss and look for my profit target before I get in a trade, and only if I know I have a 3:1 reward risk ratio do I enter the trade...and many times I have a 5:1 or more ratio. So I really don't mind if my stop gets hit, I don't try to manage the trade. I do my analysis on the best placement of my stop, so that I get the right level for how many times my stop gets hit over a series of many trades. Over time, as I get used to each particular pair I'm trading, my sense of the best stop placement improves...I develop a sense of the volatility, and the personality of that pair in relation to the optimum placement of my stop. I don't have a fixed stop loss for every trade, but I have a fixed reasons of what I must take into account to place my stop (volatility, support resistance levels etc). Once I place my stop on an individual trade it's fixed, I never move it. I don't get psyched about it during trading, price either hits my stop or goes to target. Similarly with the target...I'm only concerned with the optimum placement of the target. The beauty of seeing things like that for me is that I use my analytical skills for the most efficient purpose...which is to establish the system expectancy that Van Tharp talks about. That way trading is a breeze.
  • #31
  • Apr 6, 2011 10:55pm Apr 6, 2011 10:55pm
Quoting djarum11
i'm a fast, technical market reader, using price action & volume to identify buying & selling pressure/ob&os conditions. i love the language of the market, reminds me of reading music & doing audio, and how it is teaching me to become more disciplined and be realistic. i have paid dearly in the last three years for this experience, and as i open up more and more to the learnings i have more success as a result.

i have a strong winrate and lots of wins, but small gains because i tend to exit at first sign of a possible change in hands. i figure...
“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!” – Jesse Livermore
The Thief of Wall Street
  • #32
  • Apr 7, 2011 2:16am Apr 7, 2011 2:16am
Quoting Razor_trader
Question for some?

Do people believe that the price action/patterns, the information provided by what you see on a 15M chart is extremely different from that on a Daily or Weekly chart?

If you answered Yes then I challenge you to print off a bunch of random charts without the price axis and time axis and different crosses and see if you can spot which is which. To make it more challenging have someone else do it for you.
Hi,

It is not that I necessarily believe the charts look different it is more to do with being able to get up and walk away from your trades, to stop screen watching and hence letting your emotions get in the way.

A chart is a chart is a chart... regardless of time frame or instrument. The difference however is on the slightly longer time frame you are trading the sentiment and fundmanetals whereas on the shorter time frames you inevitably get a little more noise.

Additionally on the shorter time frames you have less time to think and plan which for a newbie is just another factor going against them.

I understand what everyone is saying about personality but at the same time one must understand their reason for playing the markets. Do you want to have fun or make money? You may be surprised but I would imagine a good percentage trade because of the excitement and adrenaline rush rather than to create wealth.

Do you know what I mean?
  • #33
  • Apr 7, 2011 2:30am Apr 7, 2011 2:30am
Quoting Micardo
Hi,

It is not that I necessarily believe the charts look different it is more to do with being able to get up and walk away from your trades, to stop screen watching and hence letting your emotions get in the way.

A chart is a chart is a chart... regardless of time frame or instrument. The difference however is on the slightly longer time frame you are trading the sentiment and fundmanetals whereas on the shorter time frames you inevitably get a little more noise.

Additionally on the shorter time frames you have less time to think and plan which...
My thoughts exactly. Once I stopped looking for the rush, which was the first feeling when I encountered the markets, I actually progressed and really tried to find a consistent method. Now trading is actually the boring part. For me, the exciting part is doing new research on behavioral patterns and fundamental analysis.

I also agree with you on the longer-time frame things. In the shorter time-frames you have nothing on your side, except the technicals. Commissions, slippage, spread, random events,... are all against you. You don't have any fundamental bias you can base your trades on. Now on the longer time-frames you have these things to a much lesser extent. And you can base your trades not only on technicals, but also on fundamentals. And if you hold trades overnight you even get interest on certain pairs.

The advantages are just so overwhelming on the longer time-frarmes. Took me a while to realize that. A year ago I was still a 5 min to h1 trader, now I trade the weeklies for the reasons specified above.
  • #34
  • Apr 7, 2011 4:34am Apr 7, 2011 4:34am
Quoting Micardo
Hi,

It is not that I necessarily believe the charts look different it is more to do with being able to get up and walk away from your trades, to stop screen watching and hence letting your emotions get in the way.

A chart is a chart is a chart... regardless of time frame or instrument. The difference however is on the slightly longer time frame you are trading the sentiment and fundmanetals whereas on the shorter time frames you inevitably get a little more noise.

Additionally on the shorter time frames you have less time to think and plan...
I agree with the bulk but the get up and walk away still applies to the shorter time frames. It is no different to trading the dailies and not having the discipline to come back tomorrow instead most say this but check there trades 5-6 times a day still questioning there choice.

I am a believer that if you cannot walk away there is a price that is too much in play. Most of the time it is the risk. If your not comfortable with the cost of loosing then you are emotionally involved, in all other respects you should be able to walk away with your targets set. I personally have an alarm that sends me a text and I can make adjustments if the trade is well in my favour. Saying that I also trade the longer term breakouts for longer gains but I have noticed there is little difference in overall losses and gains. 300 pip gain for a 100 pip risk is close enough to 60-20 (spread cost though as mentioned do impact more on those risks).

In the end you need to find that niche that works for you. I have been a daily weekly kind of person for a long time but still love the challenge of disecting hourly data to see if I can find a trade that offers a steady payout with a decreasing risk factor.

Take care

RT
  • #35
  • Apr 7, 2011 3:01pm Apr 7, 2011 3:01pm
so many good ideas are coming thru on this channel... thanks everyone for the advice and positivity.

i am already implementing a more solid trading plan. i identified a strong edge/setup that i like, with specific entry rules. i have found a compromise for stop loss: like LovinIt my stop is not based on fixed #pips but on a setup that invalidates the trade [on M5, M10, or M15]. i'm not sure how to work in a variable for volatility.

likewise the time to exit a trade will be based on a clear setup/signal from the market on specific timeframes. there is still room for interpretation here but it is getting much smaller than how i have been trading.

now i must backtest and demo this piece before adding in other setups into the mix. and see if i can get the rules even clearer.


i also want to actually test the 'extended trade' idea whereby if price goes against my position on lower and lower volume, i stay in the position until a return to my entry area [or better, according to developing market signals]. i know that many here would discourage this but i am not convinced that being 'off' in my entry timing invalidates the trade. if i enter and start to see the mkt float away from my position on lower and lower volume, in my experience it will usually retrace (based on a VSA signal that is more exact than how i am describing it).

the idea to test is whether i should stay in he trade, since it is not incorrect, but early. or write off the loss immediately, as most are advocating here. i.e. which method causes more losses on average? volatility and shakeouts bring up the same issue/decision. i.e. what if you are right but get stopped out? or do you always account for a certain amount of volatility? i would like to hear how people handle this.



it would be great to have a fixed SL level in pips....to know that i will only be stopped out x# pips on a trade, that would make MM easy. and with some trade data, projections are possible. perhaps over time averages will appear from my data if i can stick to my plan, and i can use this for analysis.

cheers all
  • #36
  • Apr 7, 2011 3:24pm Apr 7, 2011 3:24pm
Quoting djarum11
so many good ideas are coming thru on this channel... thanks everyone for the advice and positivity.

i am already implementing a more solid trading plan. i identified a strong edge/setup that i like, with specific entry rules. i have found a compromise for stop loss: like LovinIt my stop is not based on fixed #pips but on a setup that invalidates the trade [on M5, M10, or M15]. i'm not sure how to work in a variable for volatility.
you can make that ATR based or behind an S/R level.

Quoting djarum11
i also want to actually test the 'extended trade' idea whereby if price goes against my position on lower and lower volume, i stay in the position until a return to my entry area [or better, according to developing market signals]. i know that many here would discourage this but i am not convinced that being 'off' in my entry timing invalidates the trade. if i enter and start to see the mkt float away from my position on lower and lower volume, in my experience it will usually retrace (based on a VSA signal that is more exact than how i am describing...
You know why I would discourage this, cause it teaches you wrong habits. In the end you will be one of those guys who will hold on to losers and is so happy when you are at b/e again. Sooner or later you will maybe stop using stop losses and then at one time you will go so phenomenally bust, that you didn't know where all the money went.

I just think with that approach you are teaching yourself a wrong mindset. There is a reason why people say, cut losses and hold on to winners. It shouldn'be the other way around.
Quoting djarum11
the idea to test is whether i should stay in he trade, since it is not incorrect, but early. or write off the loss immediately, as most are advocating here. i.e. which method causes more losses on average? volatility and shakeouts bring up the same issue/decision. i.e. what if you are right but get stopped out? or do you always account for a certain amount of volatility? i would like to hear how people handle this.
As George Soros once said: "It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."
In other words, yes, if you cut losses short, you win-rate will drop, dramatically. But that is how trading is, you will lose most of the time and win only a small percentage of time.
If you got stopped out, you were not right, as easy as that. As far as volatility is concerned, it depends how high you want your win-rate to be. If you take too much volatility into consideration, your win-rate will increase of course, but your profitability will drop in general.

I know, probably not what you want to hear, but that's how I see it.
  • #37
  • Apr 7, 2011 4:28pm Apr 7, 2011 4:28pm
Quoting Custos
...
In other words, yes, if you cut losses short, you win-rate will drop, dramatically. But that is how trading is, you will lose most of the time and win only a small percentage of time.
If you got stopped out, you were not right, as easy as that. As far as volatility is concerned, it depends how high you want your win-rate to be. If you take too much volatility into consideration, your win-rate will increase of course, but your profitability will drop in general.

i appreciate this perspective and it raises the question of optimizing the winrate vs. profitability balance. somewhere there is an optimal stop loss, based on ....what ? and then position size is determined from there.

i agree also that moving a stop encourages bad habits, perhaps even if it is built into your plan to move a stop once and only if the position still looks promising by analysis. i.e. if this was accounted for ahead of time as a 2-phased approach to stops, factored into the MM. similar to exiting a loser early before stop gets hit if there are clear signs of being wrong (which i do). but the MM must be worked out ahead of time for the larger stop level. maybe i'm just complicating it. but this helps me think through the options and wrap my head around a method and philosophy.

or no stops- i studied StevieB's hedging method of a couple of years ago (on demo) and of course the concept was fascinating but it blows up at some point. i learned that you must have an exit plan of some sort for wrong trades, especially if your account is relatively small.


that said....determining stop losses- there must be a more scientific way..

there is some kind of signal that will invalidate the trade. the stop is placed somewhere just beyond this region, past recent S/R. then a potential TP is identified, which is based on how previous patterns have played out (experience) and speculation. will you let the trade reach completion? that remains to be seen. so then of course if this trade would bring at least say 2:1 or 3:1 R:R then the trade is taken. stop and exit levels are not adjusted at all, ever. the trade plays out. this is the classic way.

besides scaling in & scaling out, which also work well for many traders, have any seasoned traders improved upon this classic approach i wonder? are there measurable factors for optimizing
  • #38
  • Apr 8, 2011 1:20am Apr 8, 2011 1:20am
Quoting djarum11
i appreciate this perspective and it raises the question of optimizing the winrate vs. profitability balance. somewhere there is an optimal stop loss, based on ....what ? and then position size is determined from there.
well, that is where a backtesting program comes in handy, cause you can let the computer optimize the your stop loss. Of course you got a problem of over-optimization, but that's a totally different issue. And the stop loss selection should be based on the max profit you can achieve with it. Cause that is what counts, right?

Quoting djarum11
i agree also that moving a stop encourages...
well, if you want a bigger stop loss level, then I would lower the position size to accomodate for that stop loss level. It is my belief that in general you will do better when you never move your stop loss level, except when you move it tighter to the entry.

Quoting djarum11
or no stops- i studied StevieB's hedging method of a couple of years ago (on demo) and of course the concept was fascinating but it blows up at some point. i learned that you must have an exit plan of some sort for wrong trades, especially if your account is relatively small.
well, I don't know about his method, but what most people don't consider are the charges (spread, slippage, commission & rollover fee) that applies to opening a new position to hedge another. Hedging might be more viable when there are no costs associated to it, and even then, you will soon lose sight over what you actually wanted to do. It just makes trading a bit more complicated.

Quoting djarum11
there is some kind of signal that will invalidate the trade. the stop is placed somewhere just beyond this region, past recent S/R. then a potential TP is identified, which is based on how previous patterns have played out (experience) and speculation. will you let the trade reach completion? that remains to be seen. so then of course if this trade would bring at least say 2:1 or 3:1 R:R then the trade is taken. stop and exit levels are not adjusted at all, ever. the trade plays out. this is the classic way.
yes, I personally would never adjust the exit and stop levels. Some adjust the stop, but I prefer always having a fixed R:R. If you take profit too early then your initial R:R calculation will not be reached. If you do that on every second trade, then you will have troubles maintaining profitability. Cause you need the profits to cover for your losses.[/quote]
  • #39
  • Last Post: Apr 8, 2011 3:23am Apr 8, 2011 3:23am
Quoting djarum11
i'm not sure how to work in a variable for volatility.
I measure the recent wicks and tails on candles for volatility, and add that plus spread beyond a couple of key s/r levels.

Quoting djarum11
i am not convinced that being 'off' in my entry timing invalidates the trade
Wouldn't it be better to fix your stop and try and use the information when you do and don't get stopped out for post trade analysis to make your timing better each time? Otherwise you are using a flexible stop to allow for sloppy timing...

The other thing you can do to improve your timing is take snapshots at entry and then another at the better entry, count how many candles you got in too soon (or late) plus any other observations...see over time if you can observe a pattern in how you are entering, then make a change to improve what you are doing. If you are getting in early over and over then that says something about your analysis and psychology (actually both tied together). Once you identify it and acknowledge that it happens you can correct it.

Good to hear you are getting your plan together...
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