Hey guys, My name is Steve and I just opened my account here. I've been trading for almost a year now. I'm 23 years old and have been interested in the stock market since econ class in high school. I currently have an account with SureTrader and I would say that I scalp more than anything. With working full-time during the week, it's a little impractical to do anything but, as I'm not really able to sit at my computer and wait most days. With still being very new, it's needless to say that the majority of my trades have not gone my way, but each bad trade has taught me a lesson about myself & the markets. My current goal is to continue trading and bettering myself. I still have a tendency to over-trade. With my time in the markets limited thanks to my work schedule, I feel the need to always make use of my time and have a position in something. I've gotten much better with that over the past few months and have been getting back to the basics of just waiting for good setups. I look forward to learning from you guys, and helping others in any way possible as well.
It is important to stay small and set rules for yourself. Maybe that will help with over trading. Set the rules, and read them to yourself each morning. Remember, you don't have to trade everyday. Only trade when you get the set ups you want and the risk reward is there. Run trading like a business not gambling.
Definitely, I'm increasingly learning more about risk management, controlling the emotional aspect of it, and respecting my account.
I can give you exact entry/exit points if you'd like, but one thing I noticed is that I'm not allowing enough volatility. I have been placing my stops too close to my entry point. A common occurrence for me is that I'll read my indicators, find a setup, market sentiment, etc., etc., and place my trade - but with a too tight of a stop. I'll got stopped out and then shortly after the stock will do what I expected and will usually hit my target price as well. I would like to be at a minimum 2:1 risk/reward, but in reality I've been placing my stops at about a 2:.1. And rather than risk getting whipsawed in and out, I usually stay out and watch the stock continue in the direction I had assumed it would go.
It's important to determine your process, position holding time frame(s), and behavioral biases. Quantitative ( invest, trade with objective, empirically derived information and analysis that is replicable )? Discretionary ( using subjective interpretation, instinct )? Long, medium, or or short term ? Anxious or calm personality ( risk averse vs. risk tolerant )? It can be a long journey. James Director, Quantitative research XXX Boulder, CO
I make it an objective to learn from each trade, to track my emotions and rationalize them as they present themselves. I'm very dedicated to becoming the best trader I can be, one step at a time I suppose!
so....what would you have to do to widen your stops? Since at this point based on your writing your main trouble is your stops are too tight.
Establish my risk/reward ratio and stick to it. If I'm willing to risk 2:1, and I see a price target of say, $1, then I set my stop at $.50. Overall I would like to not only get better at planning the trade, but also trading the plan.
the problem with 2:1 or as I like to call it risk to reward so that would be 1:2 is just from a math point of view, (ignoring your superior hit rate) most of the time it is going to hit your one risk stop before it hits your two reward profit. And that creates a real problem for an X:X risk to reward trader.