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What i learned today

  • #1
  • First Post: May 18, 2006 3:06am May 18, 2006 3:06am
figured i would put my journal in here so i could write down all the stuff i shouldnt do.

If you think of anything i shouldnt do, feel free to add it


What I learned today:

Don't add to a position that is doing well, it just cuts your profits in half.
  • #2
  • May 18, 2006 3:30am May 18, 2006 3:30am
Quoting witchazel
figured i would put my journal in here so i could write down all the stuff i shouldnt do.

If you think of anything i shouldnt do, feel free to add it


What I learned today:

Don't add to a position that is doing well, it just cuts your profits in half.
You are so very right, but it could be worse.

I wish that that is all it did in my case. Almost every time that I have done it, it was like the kiss of death and a trade that had been doing extremely well would all of a sudden turn around and lose all the profit it had been making. Once that happens to you a few times, you learn not to do it--it is the ultimate jinx. It is like when you comment on how nice a day it is, and no sooner do you do it but the dark clouds roll in and it starts pouring.

Maybe it only works that way in my case because I know of very good traders who seem to be able to do it and improve their profits by doing it. It just does not seem to work for me. And no, I do not mind your having a good laugh at my expense. Enjoy.
  • #3
  • May 18, 2006 7:23pm May 18, 2006 7:23pm
Quoting witchazel
Don't add to a position that is doing well, it just cuts your profits in half.
Sorry to say this, but I think you are wrong on this one...The concept of pyramiding or adding to a winning position is the ultimate way to make money on the few occassions when you are on the right side of the market...

Usually you don't add to your position on breakouts, you add to your position on retracements & only when the trend is strong enough....

If adding up to your position cut your profits in half, then you should know that you might be judging the trend incorrectly or you are adding up at the wrong price points....

In plain simple words, when you are right in your view about the market, grab as much money as you can from being right, and when you are wrong about the market, lose as little money as you can afford to lose....


Thanks,

Nader
  • #4
  • May 18, 2006 8:11pm May 18, 2006 8:11pm
Actually after reading more stuff on this boards i think it might be a problem caused by gftforex.

if you buy a pair at 100 then later add another at 110 it actually puts you in for 2 at 105. you cant have multiple orders in the same pair. so if i go in at 100 then get to 110 and add i actually double the odds for me to go back and lose everything
  • #5
  • May 19, 2006 3:23am May 19, 2006 3:23am
Quoting witchazel
Actually after reading more stuff on this boards i think it might be a problem caused by gftforex.

if you buy a pair at 100 then later add another at 110 it actually puts you in for 2 at 105. you cant have multiple orders in the same pair. so if i go in at 100 then get to 110 and add i actually double the odds for me to go back and lose everything
In such a situation we remember the very wise statement of Jim which says, never let a winner turn into a loser....


Thanks,

Nader
  • #6
  • May 19, 2006 5:21am May 19, 2006 5:21am
Quoting witchazel
Don't add to a position that is doing well, it just cuts your profits in half.
Other people say that you should start with a small amount, and when you see that the currency or stock is behaving like you expected, you can add more money to your position.
  • #7
  • May 19, 2006 7:52pm May 19, 2006 7:52pm
I just left GFT. There platform started lag spiking after a few good wins and customer service stinks.

Any way. Adding to a position is something thats not for beginners. Especially if you still belive you can jinx the market.

But if you must add....when you get a signal to add check the next 3 higher time charts and make sure the price isn't approaching a significant level of support/resistance.

And try using an 8 ema as an exit signal. And as an add position signal.I have seen the price move 50 pips on a 5 min chart and not close the other side of the 8 ema. And when it did it reversed just as fast. On any time frame. A close on the opposite side of it signals to exit. And don't worrie if the price keeps going. This will keep you from losing your profits.

Don't try to take "all" of the projected move (thats just plain greedy) Just take a small portion of it. PLan a 40-70 pip move on a 4 hr chart( in the direction of the daily.) wait for a 4 hr signal and just take 10-20 pips.

Remember this too. If the price moves 10-20 in your favor and then returns to your entry, YOU MISSED IT TRADE IS OVER AND GET OUT!!!!! wait for the next signal. Otherwise its gambling. Because by this time the indacaters are facing the other direction. (holding breath, crossing fingers, and wishing don't work.)

Plan your trade and trade your plan. planning planning planning over and over untill you can see charts in your sleep.

Know the market your trading....each currancy pair moves with different charictoristics. Learn 1 first. then 2 no more than 4. But I belive all you need is 1.

Don't enter on the antisipation of a signal ! ! ! ! ! I have to slap myself on this one alot. I don't lose much cause of the 8 ema exit method.

Cann't find something thats not there. If you don't see a trade......................... ITS NOT THERE YET ! ! ! patiance!


I could wright a book for you but I'll stop here.


Dave
  • #8
  • May 19, 2006 10:06pm May 19, 2006 10:06pm
Quoting xxDavidxSxx
I just left GFT. There platform started lag spiking after a few good wins and customer service stinks.
What I said and the quote above too. Plus the position averaging.

Lou
  • #9
  • May 20, 2006 2:11am May 20, 2006 2:11am
witchazel

Generally speaking, i don't see anything wrong about adding new trade to the already existing position. Of course, this is subject of correct risk/reward analysis.
I will give you one example when adding to the position seems me to be appropriate. The price moves in my favor, say 80 pips. For some reason i missed profit taking at resistance level the and price reverses against me. after retracing fib 25-38% my trade is still alive (it didn't hit SL since it's still below fib 50%) and candlestick formation suggests that price turns again in my direction. also other tech indicators extention suggest that there is potential for additional 50-60 pips move. in most cases adding to the position at this point proved to be correct decision and increased profits.
  • #10
  • May 20, 2006 10:51am May 20, 2006 10:51am
Six of the biggest mistakes anyone can make in the Forex market:

1) trading without a system

2) not following one's system

3) trading with a system that doesn't work

4) entering into a trade without a pre-determined stop or exit strategy

5) not adhering to one's stop or exit strategy (changing one's trading plan), based on the assumption that eventually the market "has to turn around" , or because one doesn't want to take a loss

6) Exiting a winning trade out of fear of losing what one has made.

For a long time I was an extremely efficient losing trader. My accounts went down so fast that it amazed me. My virtual accounts would go from $50,000 down to zero in record time!

I figured that if I created a software package to reverse all my trades behind the scenes, then I would become a super successful trader. I envisioned seeking out the worst traders in the world, and harnessing their negative capability with my trade reversal software, sticking them in a room and telling them to do their very best, and then sitting back watching the profits roll in.

I still think it is a very good plan.

The reason is that the logic of the typical trader is the exact opposite of what it should be. They enter a buy trade at exactly the moment that they should be entering a sell trade. When they see the market raging off in one direction, they enter a trade in that direction. But by then the trend is over, and they immediately go into losses. And then they hold onto their losing trades until they become huge. Meanwhile if they happen to get into a winning trade, then they exit their winning trades as soon as they are up 5 or ten pips.

A perfect system for liquidating accounts!

So people should do the exact opposite of what they usually do. But this goes against their naive logic.
  • #11
  • May 20, 2006 1:12pm May 20, 2006 1:12pm
Quoting itme
Six of the biggest mistakes anyone can make in the Forex market:

1) trading without a system

2) not following one's system

3) trading with a system that doesn't work

4) entering into a trade without a pre-determined stop or exit strategy

5) not adhering to one's stop or exit strategy (changing one's trading plan), based on the assumption that eventually the market "has to turn around" , or because one doesn't want to take a loss

6) Exiting a winning trade out of fear of losing what one has made.

For a long time I was an extremely efficient losing trader. My accounts went down so fast that it amazed me. My virtual accounts would go from $50,000 down to zero in record time!

I figured that if I created a software package to reverse all my trades behind the scenes, then I would become a super successful trader. I envisioned seeking out the worst traders in the world, and harnessing their negative capability with my trade reversal software, sticking them in a room and telling them to do their very best, and then sitting back watching the profits roll in.

I still think it is a very good plan.

The reason is that the logic of the typical trader is the exact opposite of what it should be. They enter a buy trade at exactly the moment that they should be entering a sell trade. When they see the market raging off in one direction, they enter a trade in that direction. But by then the trend is over, and they immediately go into losses. And then they hold onto their losing trades until they become huge. Meanwhile if they happen to get into a winning trade, then they exit their winning trades as soon as they are up 5 or ten pips.

A perfect system for liquidating accounts!

So people should do the exact opposite of what they usually do. But this goes against their naive logic.
do you need a method?
  • #12
  • May 21, 2006 2:45am May 21, 2006 2:45am
Quoting xxDavidxSxx
Don't enter on the antisipation of a signal ! ! ! ! ! I have to slap myself on this one alot. I don't lose much cause of the 8 ema exit method.

Cann't find something thats not there. If you don't see a trade......................... ITS NOT THERE YET ! ! ! patiance!

Dave
I still fight with these alot. Oh look its gonna cross! whoops.....

Another thing i found is you need a micro account. i started with a full account the risk is just to great, i just keep bouncing around my starting equity. I think you might be able to do a standard with about 20k but then you could do a micro and just get more lots.
  • #13
  • Jun 8, 2006 4:40am Jun 8, 2006 4:40am
I don't know where I got this but I do like this:
when a trade is a win and you want to add to it you add no more than half of your initial position. if your position was 10 lots, then add another 5.. and if the trend is strong and it gets further in your favor then add 1/4 off your initial postion and so on. the trick is simple, when the trade turns against you, you won't give away too much of your profit.

I also do some averaging out. If I open a 10 lot position and it turns in red, I take half of the position out with a loss and see what happens. so that if it went wrong a long way, then I wouldnt loose that much. It also frees up margin if I decide to "sit it out".

maybe I'm wrong but thats just me. I am always open to suggestions.
  • #14
  • Jun 8, 2006 4:49am Jun 8, 2006 4:49am
I use a similar technique to what you just described.
Always wait for the opportune moment… just be careful not to miss it.
  • #15
  • Last Post: Jun 8, 2006 4:56am Jun 8, 2006 4:56am
Quoting witchazel
figured i would put my journal in here so i could write down all the stuff i shouldnt do.

If you think of anything i shouldnt do, feel free to add it


What I learned today:

Don't add to a position that is doing well, it just cuts your profits in half.
I dont think its wrong to adding to a winning position AS LONG AS YOUR MARGIN OF RISK REMAINS THE SAME.

If you have a 2% max risk per each trade, you can add as much as you want as long as you adjust your stops for the winning lots and keep your risk exposure unchanged.
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