Do you think monitoring your trade too much can be hazardous? | Forex Factory

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Do you think monitoring your trade too much can be hazardous?

  • #1
  • First Post: Jan 11, 2016 11:54am Jan 11, 2016 11:54am
I noticed that often times I would have the urge to get out of my trade when I'd be down certain pips, but as I stuck through with the trade my initial analysis / reason for entering the trade played out the way I wanted it to, and if I had caved in to my earlier emotions of getting out the trade I would have lost money instead of gained... So my question is this, do you think it is better to place your entries, stop loss, and take profits and then walk away and do something else until the trade closes? Share your thoughts!
  • #2
  • Jan 11, 2016 1:45pm Jan 11, 2016 1:45pm
Quoting 88Forex
I noticed that often times I would have the urge to get out of my trade when I'd be down certain pips, but as I stuck through with the trade my initial analysis / reason for entering the trade played out the way I want... So my question is this, do you think it is better to place your entries, stop loss, and take profits and then walk away and do something else until the trade closes? Share your thoughts!

It depends on your trading style and strategy. If you scalp, you may need to keep watch of your trade but if your style will benefit from longer price movement you will have to leave your screen. Besides, the time frame you trade matters: a very short time frame like 5 min will require your being glued to your screen while a longer one like 4-hour offers you greater latitude to do other things.
Do your homework, follow the footprints of smart money
  • #3
  • Jan 11, 2016 8:01pm Jan 11, 2016 8:01pm
I agree with Keenpips post, I would add however that it depends on your emotional maturity as a trader as well. If you tend to close trades too early a lot of the time, perhaps you should try a "set and forget" approach where you set a TP and SL then walk away from the screen. Conversely, if you tend to be a bit more lackadaisical with trade management then perhaps it's time to force yourself to be a bit more proactive... I think it depends a lot on the individual. For example I tend to close trades too early if I'm not keeping on top of my emotions. I don't quite set and forget, but I do set defined exits and only differ from them if my conditions for entry change somehow.
Understanding yourself is synonymous with understanding the markets.
  • #4
  • Jan 11, 2016 8:05pm Jan 11, 2016 8:05pm
I would add that the book "Hedge Fund Masters" by Ari Kiev discusses this issue in great detail. I found it very helpful in my journey.
Understanding yourself is synonymous with understanding the markets.
  • #5
  • Jan 11, 2016 9:49pm Jan 11, 2016 9:49pm
Quoting mjrsaunders
I would add that the book "Hedge Fund Masters" by Ari Kiev discusses this issue in great detail. I found it very helpful in my journey.
Thank you for your recommendation. I will definitely take a look at that book!

Yeah, I think the set and forget approach suits me better because I've tried scalping and the noise just messes me up too much in those short time frames. Been doing a trend following strategy on the H1 chart with S/R and volume and so far with managing my emotions, I haven't been wrong yet... but I am always prepared for when I may be wrong. Haha. The trick is to know when you're wrong. Forex is interesting.
  • #6
  • Jan 12, 2016 12:58am Jan 12, 2016 12:58am
Quoting 88Forex
{quote} Thank you for your recommendation. I will definitely take a look at that book! Yeah, I think the set and forget approach suits me better because I've tried scalping and the noise just messes me up too much in those short time frames. Been doing a trend following strategy on the H1 chart with S/R and volume and so far with managing my emotions, I haven't been wrong yet... but I am always prepared for when I may be wrong. Haha. The trick is to know when you're wrong. Forex is interesting.
I hope you find it as useful as I have.

Interestingly, you'll hear a lot of people proffer the advice that new traders should stick to higher time frames initially as they are easier to trade. I'd say this is sound logic however the problem is that it is more important to understand the reasoning behind the statement.

It's actually really simple; success in trading is about 80% psychological and 20% one's methodology. Trading with longer time frames arguably makes it easier to manage your emotions as you're not really "on the clock" in terms of making rapid decisions. The flip side to this of course is that you can be prone to reconsidering trades if you overthink them. That's a really easy trap to fall into with longer-term trading.

A particularly great example is if you've spent 2-3 days with a trade going against you but not quite to your stop. On the next day it comes back slightly in your favour and you close it to avoid experiencing more emotional pain. The day after that the trade ends up working out but you've already closed it because your emotions are telling you to avoid pain. This it totally applicable to short term trading as well but I think it's more pronounced in mid to long term trading as the amount of time you potentially spend enduring that emotional pain is greater.

I'd actually say the trick in forex isn't to know when you're wrong, but rather to just accept it when you are without punishing yourself with negative emotions. Sounds like you're on the right track though . When you inevitably run into a situation where you are wrong just do your best to learn from the experience and don't let yourself get down about it. One of my favourite trading adages is that the best traders are the ones who "know how to lose." Lose well my friend!

Mike
Understanding yourself is synonymous with understanding the markets.
  • #7
  • Jan 12, 2016 4:16am Jan 12, 2016 4:16am
Do you think monitoring your trade too much can be hazardous? No, I don't.
Do you know what is going to happen? No, you don't.
This is a good post, it is not about breakout, it is about monitoring your trade, it is about knowing that you don't know what's next >> http://www.forexfactory.com/showthre...84#post8493684

Alex
  • #8
  • Jan 12, 2016 8:26am Jan 12, 2016 8:26am
Quoting 88Forex
I noticed that often times I would have the urge to get out of my trade when I'd be down certain pips, but as I stuck through with the trade my initial analysis / reason for entering the trade played out the way I wanted it to, and if I had caved in to my earlier emotions of getting out the trade I would have lost money instead of gained... So my question is this, do you think it is better to place your entries, stop loss, and take profits and then walk away and do something else until the trade closes? Share your thoughts!
Monitoring trades can be hazardous. Not monitoring trades can also be hazardous.

Run a backtest and find out which works better for you.

Remember that the most money is made in the sitting and waiting. You could stand to benefit by including into your trading plan a list of things to do instead of tampering with winning trades.
  • #9
  • Jan 12, 2016 10:34am Jan 12, 2016 10:34am
I would say it could be. "Paralysis by analysis" comes to mind. That doesn't mean one shouldn't do their homework...but one should also subscribe to their own ideas and rock solid strategy, not the opinion of others online
  • #10
  • Jan 12, 2016 12:23pm Jan 12, 2016 12:23pm
Simple, never trade what you can not lose! Like Mike said, 'set-and-forget' mindset is key. But it means you are not worried about a trade turning against you. The anxiety comes when you fear losing what you have staked. So, use the SL you can safely ignore and trade on the lot that is far within your discretionary capital.

KP
Do your homework, follow the footprints of smart money
  • #11
  • Jan 12, 2016 2:26pm Jan 12, 2016 2:26pm
My 2c worth: It's better to plan each trade ahead of time, including any predetermined SL and TP levels, when your emotions are less compelling. Then, unless you have evidence that market probabilities have changed while the trade is in progress (e.g. new S/R zones have formed), there's no valid reason to adjust your original trade plan. That being the case, then to whatever extent the exit is likely to be influenced by your emotions, you're better off by walking away from the computer.

I've found the old adage that "if one doesn't have an exit plan, then exits are made out of either fear or boredom" applies to me. Having a predetermined plan removes any spur-of-the-moment guesswork from my trading.

I believe that one reason traders lose money is that they base their exits on their P/L, which the market takes no cognizance of. A real edge can come only from exploiting non-randomness in market behavior.

On a light hearted note, the biggest (albeit demo) win I've ever had came as the result of non-monitoring. I was teaching a friend how to use MT4, and showed him how to place a trade using a script that I'd written, which I then completely forgot about. When I happened to return to his house several months later, I discovered that the trade was up around 1400 pips! So profitable trading can be incredibly easy, LOL.
  • #12
  • Jan 13, 2016 3:15am Jan 13, 2016 3:15am
Quoting hanover
My 2c worth: It's better to plan each trade ahead of time, including any predetermined SL and TP levels, when your emotions are less compelling. Then, unless you have evidence that market probabilities have changed while the trade is in progress (e.g. new S/R zones have formed), there's no valid reason to adjust your original trade plan. That being the case, then to whatever extent the exit is likely to be influenced by your emotions, you're better off by walking away from the computer. I've found the old adage that "if one doesn't have an exit...
Absolutely David (hello, how are you?!) I believe your stop loss should be at a point where if price were to reach it, it would invalidate your original analysis. Until then, it ain't over till the fat lady sings!
  • #13
  • Jan 13, 2016 3:53am Jan 13, 2016 3:53am
Quoting hanover
My 2c worth: It's better to plan each trade ahead of time, including any predetermined SL and TP levels, when your emotions are less compelling. Then, unless you have evidence that market probabilities have changed while the trade is in progress (e.g. new S/R zones have formed), there's no valid reason to adjust your original trade plan. That being the case, then to whatever extent the exit is likely to be influenced by your emotions, you're better off by walking away from the computer. I've found the old adage that "if one doesn't have an exit...
This is good point but it goes against traditional trading approach - trade what you see NOT what you expect. If we plan and predict our trades then we miss this mantra...
  • #14
  • Jan 13, 2016 5:23am Jan 13, 2016 5:23am
It depends on your positions horizon and on how you define the market as proving your position correct.

If you are in and out within minutes - would you leave your position unwatched for hours?
If you are in and out within days - would you watch your position every 30 seconds?

As for setting up entry, stops, targets...again its relative (everything in life is relative - there is no right or wrong way...only the way that works).

Personally i have no medium/long term conviction on any trade i put on. Cero. Unless the market proves it.

There is a huge difference in my emotional behaviour/attachment/results between trading a position and...

1) Expecting to be 'proven' correct.

2) Expecting to be 'proven' wrong.

Expecting to be proven wrong allows me to be less emotionally attached to any given position, unless the market proves otherwise.

We cant predict whats going to happen next, all we can do is be objective and let the market prove us correct.

In the end i personally see trading as a losing proposition, where the ultimate edge is a small loss, tagged with 'pushing' your winners for long term results.

Some would call this a campaign or scaling in/out, ebbing and flowing with the market.

Not to mention it can also be used intraday, as any position i take with two basic ideas:

1) its a scalp, unless the market proves otherwise.
2) its a test, to see if the market proves it correct.

Why would anyone go to war without knowing what they are up against?

So long story short, it depends on what blends better with your method/approach/system, providing it is objective (rational) and scalable.
  • #15
  • Jan 13, 2016 5:52am Jan 13, 2016 5:52am
Quoting 88Forex
I noticed that often times I would have the urge to get out of my trade when I'd be down certain pips, but as I stuck through with the trade my initial analysis / reason for entering the trade played out the way I wanted it to, and if I had caved in to my earlier emotions of getting out the trade I would have lost money instead of gained... So my question is this, do you think it is better to place your entries, stop loss, and take profits and then walk away and do something else until the trade closes? Share your thoughts!
Yeah man definitely monitoring your trades constantly (unless you're scalping) will cause you to "fear" losing your unrealized profits and this will make you close and take out your profits way too early.
Try to adopt the "set and forget" attitude towards your trades. Set your TP walk away from the screen.

When I first started trading I was always babysitting my trades, taking a few pips whenever I was in profit and watching my trades reach my original TP area then kicking myself for it.

Watch this video it'll help you develop your set and forget mindset. All the best bro.
Inserted Video
  • #16
  • Last Post: Jan 13, 2016 7:55am Jan 13, 2016 7:55am
Quoting 88Forex
I noticed that often times I would have the urge to get out of my trade when I'd be down certain pips, but as I stuck through with the trade my initial analysis / reason for entering the trade played out the way I wanted it to, and if I had caved in to my earlier emotions of getting out the trade I would have lost money instead of gained... So my question is this, do you think it is better to place your entries, stop loss, and take profits and then walk away and do something else until the trade closes? Share your thoughts!
I agree with KeenPips.
There are several solutions. Really sitting near screen more nervous especially on small time frames. I myself at first couldn't find the right balance between continuous monitoring of the market and absolute ignore until TP or SL. Even if don't pay attention to trading strategy or the amount of money in account, my opinion is that it's necessary to monitor.
Not always. Otherwise, you may miss important events to add order, etc. Or if you trade in many currency pairs and is a sharp move against you, time to close rest orders before hitting stop loss.
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