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question for the veteran traders

  • #1
  • First Post: Oct 11, 2006 12:05pm Oct 11, 2006 12:05pm
So let's say you have a trading system. You have the rules for entry, exit, s/l, and money management and so on. So you enter your trades.

Now you have multiple postions open. You have observed them from day to day. One day all of the positions are up hundreds of pips, the next day it retraced a bit, then the next day it's up a little bit. Basically everyday it fluctuates. But the system you designed hasn't told you to exit yet.

Do you guys think that monitoring your trades AFTER you opened them have negative psychological effects on the trader?!?! Because after seeeing the trades up for many pips, you think 'oh man, i would get some gooood money if i close all of them now' But then you think 'wait, it could go higher, i need to stick to the rules and not follow greed.' Then the next day the trades went down and you think 'damn it! i should've closed all of them. Now I'm freakin nervous of what the trades might do'

So I need veteran traders out of their experience to tell me how to deal with such incidents. I have a system that implements moving s/l if price makes higher highs using fibs. But I don't know if i should just close these trades for a handsome profit or follow the system. I know no system is perfect but if i keep closing the trades out of FEAR that it might retrace and possibly end in breakeven or slight loss, how would i know if this system wil ever work? How would I know by closing trades early that I am cutting my profits in the long term?!?!?

I don't know if it would affect me more seeing that the market moves up even more after i close my trades for a profit, or leaving the trades open and follow the system and get stopped out for small loss or breakeven. I just don't know

I only have traded my system for 2 days , But i have been trading for close to 3 months. I have discovered that I am more of a trend following rather than a range trader. Up to this point, i am down close to 20% drawdown. Mainly because I haven't stuck to any rule or system. But i think my money management skills are improving given that I have made over 1000 pips in loss and only couple of hundred pips in profit.

so before i babble more, someone please post their opinons, pep talk, or something!
  • #2
  • Oct 11, 2006 12:43pm Oct 11, 2006 12:43pm
I'm not a "veteran trader" but here's what I would do:

Open 2 demo accounts
Account 1- trade your system by the rules to the letter
Account 2- take the same trades as you did in account 1 but take your profits and move your s/l however you deem neccessary

Do this for a month and then compare which method gave you a bigger gain
Shootist - Have Pip Shooters Will Travel
  • #3
  • Oct 11, 2006 4:32pm Oct 11, 2006 4:32pm
A good question Hilmy83, I had the same issues when I was starting out, I found one very very easy solution to the problem:

Hide any reference to pips or money value from your trading platform, this means hide your account balance window and orders area when you are not using it (no observing is not using).

It is amazing the power of seeing a profit in $$ has on the mind, when placing a trade, there are no numbers to look at to effect your mentality, just some bars/candles on a chart and whatever indicators you may be using, this is what you base your entry on. During the middle of the trade the same thing should happen, watch price, not your account balance and you will hopefully make your decisions on what the market is doing, not what number your account has reached. I know it sounds simple, but it worked for me until I had my discipline to a level that was needed. I check my balance each morning that's all, and only cause I want to keep a tabs on Money Management.

Finally, if you are watching your trade constantly, try to check on it a little less often, the constant noise that makes up a market move can have the effect of you trying to find reasons to exit a trade, instead of seeing a reason.

My current price on the GBP is an example of a market tempting us to exit with a small profit, yet the strongest moves come out of congestion, so why exit when the potential of profits are so large and I can lock in break even or a very small loss with a huge potential for reward:

http://img267.imageshack.us/img267/746/gbpusdrz5.gif

You can quit and they won't care, but you will always know.
  • #4
  • Oct 11, 2006 6:31pm Oct 11, 2006 6:31pm
Quoting Akuma99
A good question Hilmy83, I had the same issues when I was starting out, I found one very very easy solution to the problem:

Hide any reference to pips or money value from your trading platform, this means hide your account balance window and orders area when you are not using it (no observing is not using).



Akuma.....excellent suggestion.....I was actually contimplating permanently closing my account summary box and minimizing my open position box, just so I could see what trades were open and being able to use a close function on them on demand..............this came after a lot of nailbiting today, knowing I was in good short trades with the EUR and GBP, but have to wait out the pre-FOMC consilidation.

It's tough to sit there watching negative daily P&L in raw currency intervals, especially as I've been lucky enuf to grow my account balance and increase lot sizes...I think your idea confirms that this would be a helpful psychological tool!!

Thanks,
Jim
  • #5
  • Oct 11, 2006 6:39pm Oct 11, 2006 6:39pm
I think that's some great advice...One thing I have done is define types of trades. I have a trade I expect to hold for a month (or longer). I hold it until I have a reason to exit. Then, I have classified other trades that I exit when I'm "happy" w/ the profit....may not be for everyone.
  • #6
  • Oct 17, 2006 5:29pm Oct 17, 2006 5:29pm
Quoting TheRumpledOne
Remember you can always exit PART OF YOUR POSITION and LOCK IN PROFIT.

Let's say you are up 50 pips, exit 50% of your position to lock in profit.

Then move your stop to breakeven on the remaining 50%.

Then if you find yourself up 100 pips, thenn exit 50% of the remaining position and move your stop up to the 50 pip profit level.

And so on...

Change the numbers to fit your trade.

It is called SCALING OUT.

SIMPLE!
My 2 cents ....

Scaling out can also be using to reduce your position in bad trades too. Some people don't like to take their losses. So, you can work on Scaling out profits on one position and scaling out a loser position too. If you decide to Scaling in and out of positions, don't get caught in the trap of wondering ... "What if I left the whole position to run?" ... because you will end up the same place you started. Scaling out of trades also helps with the emotions of trading as well.

Happy Trading 2 U ..........
If it is not broken, fix it until it is!
  • #7
  • Oct 17, 2006 6:06pm Oct 17, 2006 6:06pm
Quoting Pipex
My 2 cents ....

Scaling out can also be using to reduce your position in bad trades too. Some people don't like to take their losses. So, you can work on Scaling out profits on one position and scaling out a loser position too. If you decide to Scaling in and out of positions, don't get caught in the trap of wondering ... "What if I left the whole position to run?" ... because you will end up the same place you started. Scaling out of trades also helps with the emotions of trading as well.

Happy Trading 2 U ..........
Fucking genius. How obvious is that? I've sat on positions that were clearly loosers, but I figured, well it hasn't hit my stop loss YET... I'm so doing that. I already scale out so to speak, closing 50% and moving s/l to b/e. Never thought about doing the same for bad positions. Thanks.
So far so good.
  • #8
  • Oct 17, 2006 6:11pm Oct 17, 2006 6:11pm
The problem is that you haven't back/forward tested your system long enough. If you had, you wouldn't have a worry about missing pips or whatever, because you'd know that your system works fine and anything you breakeven on or lose will be ok because you'll make more in the long run.

Breaking even is a win. It should be considered a win. Any time that you breakeven, be happy.
Mr. Trend
  • #9
  • Oct 17, 2006 7:49pm Oct 17, 2006 7:49pm
Breaking even is a win?

Does breaking even pay the bills? No. Does it increase your account? No. Breaking even is nothing, neither win nor loss.....nothing.

As to the original posters query, have a target before you place your trade and manage your risk accordingly.

a roguetrader
  • #10
  • Oct 17, 2006 7:50pm Oct 17, 2006 7:50pm
Breaking even is a win?

Does breaking even pay the bills? No. Does it increase your account? No. Breaking even is nothing, neither win nor loss.....nothing. Certainly nothing to be happy about.

As to the original posters query, have a target before you place your trade and manage your risk accordingly.

a roguetrader
  • #11
  • Oct 17, 2006 8:22pm Oct 17, 2006 8:22pm
Quoting RogueTrader
Breaking even is a win?

Does breaking even pay the bills? No. Does it increase your account? No. Breaking even is nothing, neither win nor loss.....nothing. Certainly nothing to be happy about.

As to the original posters query, have a target before you place your trade and manage your risk accordingly.

a roguetrader
Yes, breaking even is a win. And that's the problem with new traders -- they are so concerned about how much they are going to make...

If you are not losing money, you should consider that a win.

To take it a step further, if you are breakeven after your first year of trading, you should consider yourself very successful.

Until you start thinking that way, you'll continue to lose money on a consistent basis.
Mr. Trend
  • #12
  • Oct 17, 2006 8:44pm Oct 17, 2006 8:44pm
If you learn something from getting breakeven, that's definitely a win...a non-monetary win that might be valuable in the long run...
  • #13
  • Oct 17, 2006 10:20pm Oct 17, 2006 10:20pm
I agree, since this is a prediction game, making money is always luck, losing less money is a skill that we all can control.
But I also am learning that staying out instead of jumping in onto missed upportunities is a successful move in of itself. I missed two trades yesterday that went profitable today. Man, it's hard to not just jump in and get whatever pips you can get, but you have to control yourself.

I am realizing that there is a difference between a pip chaser and a pip maker. Pip chasers go after every single pip they can get. They get nervous whenver trades go against them, and they close out trades early so they can save their precious little profits. But pip makers know to trust their systems and be disciplined when trading. They focus on controllling losses more then they are on maximizing profits. And breakeven is considered a winning trade for them.
I try to remind myself that no matter how good systems are, they can never capture every move to the last pips. Rather, I need to be satisfied capturing profits in the first place. And as always, keep the losses short and small
  • #14
  • Oct 18, 2006 6:48am Oct 18, 2006 6:48am
Quoting hilmy83
I agree, since this is a prediction game, making money is always luck, losing less money is a skill that we all can control.
But I also am learning that staying out instead of jumping in onto missed upportunities is a successful move in of itself. I missed two trades yesterday that went profitable today. Man, it's hard to not just jump in and get whatever pips you can get, but you have to control yourself.
...

There should be no luck involved in trading. If you're entering a position, hoping that you will get lucky and make some money, then you are doing something wrong. I enter positions expecting to win. Most of the time, I do. If I feel that a position would not be good, then I don't enter, period. When it comes to my money, I don't want to rely on luck.
So far so good.
  • #15
  • Oct 18, 2006 8:07am Oct 18, 2006 8:07am
Quoting paul2
There should be no luck involved in trading. If you're entering a position, hoping that you will get lucky and make some money, then you are doing something wrong. I enter positions expecting to win. Most of the time, I do. If I feel that a position would not be good, then I don't enter, period. When it comes to my money, I don't want to rely on luck.
There is luck in trading. Nobody in this face of the world can predict where the price will go. How many times have price went against fundamental analysis? HOw many times have prices went against recognizable technical patterns and indicator readings!?!? So in essence, making profits is luck. Sure you rely on your indicators and trendline and what not, but who to say that price must obey 'your' rules?
But on the other hand, you are in control of one thing and one thing only
and that is EXITS. YOu can exit your trade whenever you want, either in profit or in a loss. Exit rules that produce profits and minimize your losses is what separate the winners and losers.
  • #16
  • Oct 18, 2006 11:09am Oct 18, 2006 11:09am
Quoting hilmy83
There is luck in trading. Nobody in this face of the world can predict where the price will go. How many times have price went against fundamental analysis? HOw many times have prices went against recognizable technical patterns and indicator readings!?!? So in essence, making profits is luck. Sure you rely on your indicators and trendline and what not, but who to say that price must obey 'your' rules?
But on the other hand, you are in control of one thing and one thing only
and that is EXITS. YOu can exit your trade whenever you want, either in profit or in a loss. Exit rules that produce profits and minimize your losses is what separate the winners and losers.
I think you missed one key element of what I posted. You have control of whether you enter a position or not. Don't open a position and hope luck is on your side.

Quote
They call you lady luck
But there is room for doubt
At times you have a very un-lady-like way
Of running out

Frank Sinatra
So far so good.
  • #17
  • Oct 18, 2006 11:14am Oct 18, 2006 11:14am
Quoting hilmy83
There is luck in trading.
Do the casino owners in vegas rely on luck? No, they rely on probability. Trading is no different; you just have to be on the right side of the probability. If you think it's luck, you'll have more fun losing your money at the dog track.
  • #18
  • Oct 18, 2006 11:33am Oct 18, 2006 11:33am
Quoting paul2
I think you missed one key element of what I posted. You have control of whether you enter a position or not. Don't open a position and hope luck is on your side.
No, i think you missed what I am trying to say. When you use the word 'expect' it makes it sound that you are 'hoping' . To me, both words are pretty much mean the same thing. And we all know how dangerous hope can be in trading.

Yes, there are ways to gauge the probability of whether price will make a specific move, but my point is that, we need to focus on what you can 'control', which is risk more than what you can't which is 'expectations' of potential profits. I don't open positions and hope that lady luck will move price my way. Once I open it, I am more focused on if I can minimize my risk based on the next closing price.

i've just been reading up on mark douglas and van tharp. Now I have a totally postive outlook on trading.
  • #19
  • Oct 5, 2014 10:35am Oct 5, 2014 10:35am
If you know the trend and you have a profit target you shouldnt worry.price will retrace and price will fluctuate .if you find yourself fearing then concentrate on the daily chart and other higher time frames
  • #20
  • Apr 8, 2017 2:08pm Apr 8, 2017 2:08pm
Hi Ilmy at the end of all these threds it will be very intresting to describe your self in 10 words!? Who was the strongest parts wich have send you in these stage/
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