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KastyG
Registered: Apr 2012
Posts: 516 |
04-28-12 11:16 PM
Quote from AAAintheBeltway:
Brilliant insights that apparently are hard for many to accept.
Most methods will work in one particular type of market. They will lose in others. For example, buying breakouts or new yearly highs in stocks will work in an all-out bull market. It will destroy you in a down market or range bound market.
cutting losses short, and letting winners run works in all markets.
losses get cut shorter when range bound, and winners don't run as far.
the concept remains, valid still
edit: allow me to clarify, range bound is different than choppy. With choppy you take your comeuppances.. till the trend emerges ...it always has...let it run
unless you're HFT, then the bounds of sane trading are
breached..no such thing as a trend or range or chop.
all reality is reduced to a series of 0000 & 111's 
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icarus618
Registered: Mar 2001
Posts: 987 |
04-28-12 11:55 PM
Quote from AAAintheBeltway:
Brilliant insights that apparently are hard for many to accept.
Most methods will work in one particular type of market. They will lose in others. For example, buying breakouts or new yearly highs in stocks will work in an all-out bull market. It will destroy you in a down market or range bound market.
Is "buying breakouts" really a method? Do you really need a method to buy a new yearly high?
If buying breakouts will work in a bull market and "destroy you in a down or range bound market," then maybe the method should deal with when you should be buying breakouts and new yearly highs. In other words, the method is what allows you to discern when you are in a bull versus down or range bound market.
Regarding brilliant trading insights:
Everyone knows and can easily accept cutting losses short and letting profits run. The hard part is in doing it. Why? Because it is unclear to people what constitutes a "loss" to cut short and a "profit" to let run and for how far.
If I enter the ES long and the trade immediately goes 2 ticks against me is that a loss to cut short? Yes? No? Maybe? If yes, do I cut it short ASAP or do I wait to see if it comes back 2 ticks to my entry or even a tick in my favor as it does MOST OF THE TIME. And if I wait and the trade comes back +1 tick in my favor is that a profit I should let run? Would it be a mistake to cut the trade for +1 even though initially it was -2 and I wanted to cut my loss short? What if the trade started out +1 and then went to -2? If you don't like using ticks in the example, substitute in points.
Reciting adages is easy: Sell higher than you bought. Buy lower than you sold. Well, okay, but how do I know it's going higher or lower or just staying flat? If I knew that I wouldn't need a method.
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KastyG
Registered: Apr 2012
Posts: 516 |
04-29-12 12:02 AM
Quote from icarus618:
Is "buying breakouts" really a method?
Great point! You cut right to chase! That's no "method", that's a reckless gamble at best.
Thanks for your clarification, you summed it in a few
a "method" is not anything that comes to the mind, and is applied without forethought
when you think about it's pretty stupid to buy any random breakout, the obvious is fade it
and thats why most fail
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KastyG
Registered: Apr 2012
Posts: 516 |
04-29-12 01:19 AM
Quote from satchel:
Reckless gamble?
New all-time highs are to be bought on breakouts - one of Livermore's rules.
Isn't it common knowledge that most breakouts fail?
Then, why buy one on that basis alone?
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