When would chasing a trade be worth it to you? | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Brokers chasing you for negative account balance 863 replies

If You Didn't Need the Money Would You Still Trade? 15 replies

Successful Automatic Trading - Like Chasing Bigfoot? 48 replies

Can someone answer question about Brokers chasing stops? 7 replies

250 EMA chasing (couldnt think of a name) 5 replies

When would chasing a trade be worth it to you?

  • #1
  • First Post: Edited May 30, 2015 3:52am May 29, 2015 6:30pm | Edited May 30, 2015 3:52am
You got your entry order ready at point A and tp at point B. However, price is 5% away from filling your order.
5 minutes later, price is consolidating in an area 5% away from your entry.
10 minutes later, price is 10% into the direction of your analysis.
15 minutes later, price continued and is now 30% into your direction.
Would you take this trade? If yes, when would you take this trade?
  • #2
  • Edited May 30, 2015 1:22am May 29, 2015 7:00pm | Edited May 30, 2015 1:22am
I personally would not chase a trade.

I'm a firm believer in planning a trade, then trading your plan.
Follow me on twitter @FxLester
  • #3
  • Edited 8:13pm May 29, 2015 7:52pm | Edited 8:13pm
If you have a regular problem that your order are not getting filled then it's possible someone is stepping in front of your order or if its a bucket shop it may be the market maker knows you would make profits and thats less profit for them. In that case using some EA to keep the order from being sent to broker might be a solution (pros call this "execution algorithm"). The problem with sending your limit orders to market makers is that market makers can selectively fill the orders when it suits them. (this is no bs, jpmorgan just published disclosure document saying they do it)

Now flip side of that is, if your "execution algo" is always doing things that the market maker doesn't like, if they have ability, they may try whatever they can to not trade with you. Eg. bucket shop might close account etc or on some places market maker could choose to not show liquidity to you etc. Atleast this was so in past. (I think this would mostly involve larger profitable traders who are using methods that hit the market makers bottom line too much)

If you had your order in long ago (say yesterday) and price then goes near and this happens often then the solutions are finding other broker or using that EA (or trying some sort of "hide" feature if your broker has one but not sure that's good enough to really hide if your broker is also market maker). I don't have proof but reading broker reviews it sounds like some may be more likely to get your fills than others.
  • #4
  • May 29, 2015 8:05pm May 29, 2015 8:05pm
Quoting fxjesus
market makers can selectively fill the orders when it suits them. (this is no bs, jpmorgan just published disclosure document saying they do it)
I think you might be confusing market makers with liquidity providers.

With regards to limit orders, yes you need to wait until price trades through with the ask to get filled on a limit buy or vice/versa. However, this is not so much a problem for retail traders with smaller accounts.

Front running is as old as the hills. It's been around forever and will continue to do so. However, it's more a problem for larger traders trying to fill large orders. Large orders, iceberg orders and the like sent through to liquidity providers themselves will result in the problem you mentioned with JPM and the like with the recent US Sec & Exchange investigation.

Back to the question at hand by the OP.

Setting limit orders is a balancing act. Getting the price you want at the cost of not getting filled at all. Getting a better price will inevitably result in less fills. The polar opposite is to get filled via momentum and getting filled at stop orders. You will always get filled, at the cost of a worse price. The choice is yours and what works for your strategy and personality.
Follow me on twitter @FxLester
  • #5
  • May 29, 2015 8:28pm May 29, 2015 8:28pm
Quoting FxLester
{quote} I think you might be confusing market makers with liquidity providers.
Well how do you define them? Market makers provide the best quotes and 'lottery ticket' sellers get credit. Since buying/selling underlying is buying 'lottery tickets' which requires margin deposit, my understanding is the liquidity of the traders/commercials gets reserved through clearing and is in the hands of the 'lottery ticket seller' which is the market maker. So since at that point the market maker essentially has the liquidity in their disposal, they are the liquidity providers.

Another interpretation is that the less informed/longer tf participants are the liquidity providers.
Yet another interpretation is that traders are market makers, just on a different timeframe. (as opposed to buy and hold investors - though I'm not sure if buy and holder selling 'lottery tickets' is still a buy and hold investor or just 'smart money').

For all retail traders the key question is: When does ones profitable idea turn into a highly likely worthless lottery ticket. I would say it probably depends on where you entered - so if you enter where the smart money enters then you have better probability of riding their coattails.
  • #6
  • May 29, 2015 8:50pm May 29, 2015 8:50pm
Quoting fxjesus
{quote} Well how do you define them? Market makers provide the best quotes and 'lottery ticket' sellers get credit. Since buying/selling underlying is buying 'lottery tickets' which requires margin deposit, my understanding is the liquidity of the traders/commercials gets reserved through clearing and is in the hands of the 'lottery ticket seller' which is the market maker. So since at that point the market maker essentially has the liquidity in their disposal, they are the liquidity providers. Another interpretation is that the less informed/longer...
This is getting off topic from the OP's original question.

I get a sense you've spent a lot of time in Sonic/VSRPA with your defintion of MM's.

If you are trading with a market maker broker they don't get their quotes from liquidity providers (e.g. JPM, Goldman Sachs etc.). They provide the quotes themselves. They are, in essence making the market and hence the name. This is known as "B booking".

With various STP/ECN model brokers they have the ability to pass their trades onto liquidity providers and hence the quotes are taken from LPs such as JPM, Goldman etc.

I am not disputing front running that front running can occur on micro accounts on someones little MT4 platform. What I am trying to say is that the front running you cited with the recent US Sec & Exchange investigation JPM etc. more occurs with large orders filled not on puny retail platforms but over the telephone, directly through the the LPs. This was the conclusion of the US Sec&Exchange investigation as I understood it.

I think at the end of the day, you and I may just be arguing semantics as you seem to be taking a broader defintion of MM's.
Follow me on twitter @FxLester
  • #7
  • May 29, 2015 9:12pm May 29, 2015 9:12pm
Quoting FxLester
{quote} I get a sense you've spent a lot of time in Sonic/VSRPA with your defintion of MM's.
When I go to google and type define:VSRPA this thread is first hit. So I still don't understand your definitions but I'll reiterate mine:

A "market maker broker" to me is a "bucket shop". Broker is something that acts on agency basis and market maker is essentially a profitable trader (buy low sell high - makes a spread in other words - and hedge/close losing trades somehow). This isn't a "broad definition". As it's one I have sourced from market makers (the real ones, not bucket shops marketing staff).

I don't think there's any such thing as a "liquidity provider" beyond those who take risk in the markets. Banks and such try to make spread and minimize the risk they take. That's because the smart money doesn't work for banks. If the banks took risk they'd be losing money. Thus it follows that banks are not liquidity providers. They tried that (carry trade etc) and lost a plenty I've read. (OK maybe there's some banks who don't mind losing here and there and thus providing the liquidity but I doubt it's universal and for sometime the banks were supposedly reducing prop-fx stuff)
  • #8
  • May 29, 2015 10:15pm May 29, 2015 10:15pm
Quoting fxjesus
{quote} When I go to google and type define:VSRPA this thread is first hit. So I still don't understand your definitions but I'll reiterate mine: A "market maker broker" to me is a "bucket shop". Broker is something that acts on agency basis and market maker is essentially a profitable trader (buy low sell high - makes a spread in other words - and hedge/close losing trades somehow). This isn't a "broad definition". As it's one I have sourced from market makers (the real ones, not bucket shops marketing staff). I don't think there's any such thing...
This is all semantics now.

If you want definitions, Investopedia is a good place to start.

Good luck.

Safe trading,
Lester
Follow me on twitter @FxLester
  • #9
  • May 29, 2015 10:44pm May 29, 2015 10:44pm
Let's keep this discussion to purely on chasing a trade instead of getting filled on your orders.
Both of these are totally different topics eventhough both are somewhat correlated with each other.
  • #10
  • May 29, 2015 10:55pm May 29, 2015 10:55pm
Quoting stan255
You got your entry order ready at point A and tp at point B. However, price was 10 pips away from filling your order. 5 minutes later, price is consolidating in an area 10 pips away from your entry. 10 minutes later, price is 10% into the direction of your analysis. 15 minutes later, price continued and is now 30% into your direction. Would you take this trade? If yes, when would you take this trade?
Bro, it all depend on your strategy and research. If u are confident tp will be hit, it doesnt matter where you enter. The gap between tp or sl will eventually affect how much u get and how much u lose. If your tp target is 50 to 100 pips away, 7 pips shy of ideal entry point A is ok, but if your tp target is small, entry will be crucial. I will also take into consideration of price momentum and session if point A is reachable within the time i am monitoring and enter when i deem fit. I will also plan my lot size to scale in if point A was hit. There's more to consider depend on ur trading plan and how you view the market.
The only winner is the one who survive the longest...
  • #11
  • May 30, 2015 12:04am May 30, 2015 12:04am
I think where we enter our trade is damn important.
Entering when price is 20 pips away from our ideal entry vs 40 pips away, our risk is 2x as much.

Here's a follow up situation.
Our ideal entry at point A wasn't filled and price went 40 pips in our direction.
We think to ourselves "Shit, we're going to miss this ride" and we entered 40 pips late from our ideal entry.

Assuming this 2 scenario happened.

Scenario #1
Price retraced to our entry point and price went another 50 pips in the other direction. We're down 90 pips now.

Scenario #2
Price continued in our direction and hit our tp (Hurray!)

If scenario #2 were to happen, a noob will be thinking he's so smart and begin chasing trades because this trade worked out so well eventhough he entered late.
He would be praising himself and thinking to himself "I'm following the trend, bro. That's why it worked out."
In reality, from what I've seen (not some theory bullshit) following the trend is just 1 side of the equation, risk is the other side. Trends retraced or reverses.
It might retraced 100 pips or 2500 pips, we don't know.

On the other hand a pro will be thinking was this trade worth the risk?

The thing about confidence is we're all confident that your trades will work out if not why would we take them, right?
In reality the market always doesn't go in our favor based on how we feel or how much analysis we did.
The main point of this thread is to see when chasing a trade becomes worth while based on what we're risking not how we feel when taking the trade.

To be honest, I'm still unsure on what I would do in this situation (hence I opened this trade) and would like to get some feedback from more experienced traders on when would they chase a trade.
  • #12
  • May 30, 2015 12:16am May 30, 2015 12:16am
Market dont move to where you want, it move as it is. Defining risk depend on ur strategy. I dont know how u define Pro, but for most who need to trade profitably, need to find low risk trade to get an overall positive account.

If u are asking these kind of questions, you most likely not found the system u need or done enough research for your own system.
The only winner is the one who survive the longest...
  • #13
  • May 30, 2015 12:26am May 30, 2015 12:26am
how often are these happening? If they don't happen often, who cares. There will always be another signal the market will always developed different setups, the sooner you can let these go, the sooner your insight into the market will improve.
There is only one sort of discipline, perfect discipline. This entry would go against your strategy, so what's to say you don't do something different at another time ?

There is always another signal, patience is a must.
Learn, a forex trader must, unlearn and relearn he will.
  • #14
  • May 30, 2015 1:16am May 30, 2015 1:16am
Quoting COGSx86
how often are these happening? If they don't happen often, who cares. There will always be another signal the market will always developed different setups, the sooner you can let these go, the sooner your insight into the market will improve. There is only one sort of discipline, perfect discipline. This entry would go against your strategy, so what's to say you don't do something different at another time ? There is always another signal, patience is a must.
This!
Follow me on twitter @FxLester
  • #15
  • May 30, 2015 1:36am May 30, 2015 1:36am
Quoting kinspk
Market dont move to where you want, it move as it is. Defining risk depend on ur strategy. I dont know how u define Pro, but for most who need to trade profitably, need to find low risk trade to get an overall positive account. If u are asking these kind of questions, you most likely not found the system u need or done enough research for your own system.

I personally think depends on situation.In strong trend like EU down missing 20 40 even 50 pip is nothing when you target could be 200-500pips such from recent 15 to 109
I trade daily weekly charts so missing 20pips is irrelevant.Important factor is "Do you have the EDGE" that's whole different subject but related.If the Edge is rationally and realistically defined then over series of 100 trades one should be in plus money.Without EDGE one is throwing darts so even if limit is filled there is no guarantee trade will be profitable.
Regards
In trading, you have to be defensive and aggressive at the same time
  • #16
  • May 30, 2015 1:56am May 30, 2015 1:56am
Quoting Davit
{quote} I personally think depends on situation.In strong trend like EU down missing 20 40 even 50 pip is nothing when you target could be 200-500pips such from recent 15 to 109 I trade daily weekly charts so missing 20pips is irrelevant.Important factor is "Do you have the EDGE" that's whole different subject but related.If the Edge is rationally and realistically defined then over series of 100 trades one should be in plus money.Without EDGE one is throwing darts so even if limit is filled there is no guarantee trade will be profitable....
Yes true, especially when EU have a daily range of above 100 pips.

But some traders have a misconception that having good R/R relate to having a good edge, but eventually to find out they get hit by SL more often than hitting their TP. I think it's appropriate for someone to research relevant information on the pairs they trade, and their expectancy from their systems, while looking at possible movers that cause the price to react in some circumstances.
The only winner is the one who survive the longest...
  • #17
  • May 30, 2015 2:05am May 30, 2015 2:05am
Let me confuse you even more...

For those picking tops and bottoms, breakout entry would be chasing, but is it?
  • #18
  • Last Post: May 30, 2015 4:00am May 30, 2015 4:00am
Quoting grin
Let me confuse you even more... For those picking tops and bottoms, breakout entry would be chasing, but is it?
I would define "chasing" when your tops or bottom entry target weren't hit and price reversed and closed multiple bars and half way to hitting your tp in the favour of your direction. An entry in this situation would be chasing imo after multiple bar close in your direction.

For breakouts, multiple bars close after the breakout point would be chasing.

If your plan is to enter after a bar close in the direction of your trend in this reversal zone or a breakout point then I don't see that as chasing.

It would be better for this discussion to be in % instead of pips as each of us have different tfs we trade in. A 10pip in m1 is alot while it isn't in a d1.
0 traders viewing now