132 pip loss today. Ouch.

increasenow · Nov 20, 2009

Quote from AyeYo:

This is why I'm a big advocate of trading WITH the trend of at least two time frames above the one you're using to find entires. My timing may be off on the 15 min, but if the hourly and the 4 hour are both trending in the direction of my trade, there's a high probability that the trade will play out in time.

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so...do you enter on the 15 and look for 1 hour and 4 hour to confirm trend?...do you take the daily chart into consideration at all?

athlonmank8 · Nov 20, 2009

Quote from cabletrader:

I think I understand what you're saying just fine, you like flexibility for when price doesn't do as you first expected so you go looking for reasons to stay in the trade and not take a loss.

You can look at all the time frames, support/resistance, trends, and anything you like......before entering the trade. You need to plan a trade first otherwise how else can you calculate trade size?

I think you misunderstand how stops are decided. They're not some arbitrary dollar value, they're a price at which the trade is either no longer viable or the trading decision was wrong. That could be 10 pips or 100 pips, it doesn't matter, you simply adjust trade size accordingly, but it needs to be calculated in advance. If you enter a trade using levels off a H1 chart and think you might end up trading a daily chart if it doesn't work out then you've got to allow for that in your trade size, you can't do it after, it's too late once you're in.

Having the flexibility that you're wanting by being able to move up to longer time frames when a trade isn't working out means your risk increases. Either you planned for that increased risk and traded smaller size or your risk increases beyond what you originally planned for. The former reduces profit potential, the latter increases risk, totally the wrong way round. The idea is to reduce risk and increase profit potential.

Sure there are ways to trade out of a loss but again that needs to be planned for before entering a trade otherwise you end up with the same problem, over exposure and more risk than you originally planned for. Invariably the end result is lots of comparatively small gains which don't cover the occasional larger than expected losses, regardless of how good your win:lose ratio is you end up losing money.

I see what you're trying to do, I often trade the same way, but I plan for it in advance so there are no surprises, no more risk than I expected, and therefore no pain if the trade doesn't go my way.

I guess the short version of what I'm saying is being flexible is fine, in fact it's often a better approach, as long as it's planned for in advance of taking a trade.

I don't think most traders fail because they're too inflexible, I think they fail because they're too flexible with their money management and risk once in a losing trade!
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you mean average up? Well what a super idea.

I'm sure the majority of the ppl on this site don't understand that concept.

athlonmank8 · Nov 20, 2009

Remember there are 2 axis on the chart. 1 is price. 1 is time. They're there for a reason too.

Stops can deal with both.

cabletrader · Nov 21, 2009

Quote from AyeYo:

Excellent points, all.

I suppose it's just hard for me to quantify how I trade and how I decide my mental stop points. But, you're right, they are planned ahead of time. I do look to make sure that my position is a good play on the 15min and the 1hr. The more time frames that a particular S/R level coincides on, the more probable the trade is, the more confident I feel, and the larger my position sizing is. If I had a pair that's coming up to resistance on the 1d, the 1hr, and the 15min, I use maximum position size. These trades generally easy. When it breaks the wrong way, there is no complex set of levels to catch it, nothing to think about, nothing to analyze. I know it's wrong and I get out fast. These are also the trades I make the majority of my money on, but they are few and far between and the win/loss on them is lower than my average.

The trades I was refering to in the previous post are the trades that I enter purely on 15min S/R to scalp. I do check the 1hr to make sure I'm with the overall trend, but the entry is done when only the 15min hits S/R. These are minimum position size. This is when I use the risk management/mental stop scheme given above.

The beauty of these is how well they come back even when your timing is off. If you're with the trend on the higher time frames you can turn these into winners 80+% of the time. If you have a pair that's operating in a 150 pip range on the daily, the fact that your 15min trade in the middle of the range was off and you're now down 20 pips doesn't really matter. There's an excellent chance it'll come back. In practice, the win percent is very high on these trades, simply because in most cases, you don't have to settle for a loss if you have to balls to stick with it. The daily chop will eventually bring things back your way. If they don't come back your way, you may take a hit that's 2-3x your normal pip loss... but who cares... those hits are so few and far between that the wins greatly outweight them, AND the position size is small so it's an even less significant impact.

Does that make sense?
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Yes, that makes a lot more sense and it's actually very similar to my risk management approach, the flexibility is there but at the same time risk is controlled, it's a good balance.

Whenever I read 'no stops' I get this image of a trade in freefall and huge losses or a margin call if/when price never rebounds! That obviously doesn't apply to you and your strategy.

AyeYo · Nov 21, 2009

Quote from increasenow:

so...do you enter on the 15 and look for 1 hour and 4 hour to confirm trend?...do you take the daily chart into consideration at all?
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Generally I start from the daily down. Goes something like:

- Check daily trend
- Check hourly trend
- Check 15 min trend
- Back to hourly, look for S/R
- Look for same S/R on 15 min
- Find an entry on the 15 min that's with the hourly trend (with the daily is just a bonus, most of my positions don't last long enough for it to matter)

increasenow · Nov 21, 2009

Quote from AyeYo:

Generally I start from the daily down. Goes something like:

- Check daily trend
- Check hourly trend
- Check 15 min trend
- Back to hourly, look for S/R
- Look for same S/R on 15 min
- Find an entry on the 15 min that's with the hourly trend (with the daily is just a bonus, most of my positions don't last long enough for it to matter)
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awesome stuff...but...the daily does show the bigger overall trend...great stuff

increasenow · Nov 22, 2009

bump

ave331 · Nov 22, 2009

Quote from AyeYo:

Let's say I take a position. I plan to make 10 pips on this play. The trade goes against me 10 pips. Whether -10 pips is mathematically over my single trade risk size I don't really care. I'll look at the chart, am I 1 pip off the next support level? Looks like I am. Why on earth would I sell with support so close? Do I sell just because that's my "maximum loss size"? That's ridiculous. I'll hold and see what happens there. I took the play on the 15 min, is the hourly in an uptrend? Yes, it is. Ok, I'll hold and see how the hourly plays out. Oh, look at that, it bounced that support solidly and now I'm break even. Now I re-evaluate again. Will this go higher or was this just a pop before another drop? I'll act accordingly.

Same scenario as above but price doesn't rebound, it blows through the next 15 min support area. Again, look at the hourly, where's next support? Is the hourly still trending up? If it is, I'll hold. If my position is counter trend on the next time frame up, I'll get out ASAP. Worse come to worse, what does the daily look like? Play accordingly.

Another scenario. I take a short at resistance. The pair keeps moving right up through resistance. Look at the chart, where is next resistance? 40 pips away? Fck that. I'm out now at whatever my loss is now, usually very small.

This is why I'm a big advocate of trading WITH the trend of at least two time frames above the one you're using to find entires. My timing may be off on the 15 min, but if the hourly and the 4 hour are both trending in the direction of my trade, there's a high probability that the trade will play out in time.

I've only been trading FX for about six months now, so, as I said, my opinion may change. But, as it is, what I'm doing seems to work well. If I had a mathematical "risk management" based stop, I'd be getting stopped out of winners more often than I'd be saving myself from big losses. It's simply not worth it. Do I have a rough mental stop point? Yes, but it's flexible based on what's happening NOW.

I think the majority of traders fail because they're too rigid. They see "zomg -10 pips!! must get out!!" They're too inflexible to realize that THIS TIME they're dumping the loss 3 pips short of a high probability reversal point. It's all about NOW and what's happening THIS TIME. I don't care about how a fixed loss per trade, I just care about doing what the market tells me to do NOW. When the market tells me I'm wrong, I don't hesitate to admit it and get out ASAP, but I get out smart. I don't just dump at some pre-determined number of lost pips. Inflexibility is the true road to ruin.
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Quote from AyeYo:

I suppose it's just hard for me to quantify how I trade and how I decide my mental stop points. But, you're right, they are planned ahead of time. I do look to make sure that my position is a good play on the 15min and the 1hr. The more time frames that a particular S/R level coincides on, the more probable the trade is, the more confident I feel, and the larger my position sizing is. If I had a pair that's coming up to resistance on the 1d, the 1hr, and the 15min, I use maximum position size. These trades generally easy. When it breaks the wrong way, there is no complex set of levels to catch it, nothing to think about, nothing to analyze. I know it's wrong and I get out fast. These are also the trades I make the majority of my money on, but they are few and far between and the win/loss on them is lower than my average.

The trades I was refering to in the previous post are the trades that I enter purely on 15min S/R to scalp. I do check the 1hr to make sure I'm with the overall trend, but the entry is done when only the 15min hits S/R. These are minimum position size. This is when I use the risk management/mental stop scheme given above.

The beauty of these is how well they come back even when your timing is off. If you're with the trend on the higher time frames you can turn these into winners 80+% of the time. If you have a pair that's operating in a 150 pip range on the daily, the fact that your 15min trade in the middle of the range was off and you're now down 20 pips doesn't really matter. There's an excellent chance it'll come back. In practice, the win percent is very high on these trades, simply because in most cases, you don't have to settle for a loss if you have to balls to stick with it. The daily chop will eventually bring things back your way. If they don't come back your way, you may take a hit that's 2-3x your normal pip loss... but who cares... those hits are so few and far between that the wins greatly outweight them, AND the position size is small so it's an even less significant impact.

Does that make sense?
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Hi AyeYo

You've put the picture very clearly indeed and in very good detail. It seems eerie :eek: but my mental process runs quite the same way, although I wouldn't be able to explain it so well. I guess similar mental process runs in the heads of many scalpers.

No stops on my side and no trailing stops and 99% market orders and I thought I was some oddball . Simply closed positions off if had to attend to some matter, and it helps that mine are short timeframe and short holding-period trades mostly lasting under 1 hour and seldom exceeding 3 hours.

Besides S/R and price action, I do use indicators (another oddball in the eyes of naked traders).

Do you use indicators too? Just curious.

AyeYo · Nov 22, 2009

Quote from ave331:

Do you use indicators too? Just curious.
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For Forex I only use Fibs when they correctly line up with at least a couple existing S/R levels.

For equities I use a 10ma/30ema combination and 3/20 period Williams %r's for extra confirmation on trend entires, although I'm using them less and less as time goes on. Pure S/R is where it's at.

Glad to see I'm not the only person that thinks that way though. Keeps me from thinking I'm losing it.

ave331 · Nov 22, 2009

Quote from AyeYo:

For Forex I only use Fibs when they correctly line up with at least a couple existing S/R levels.

For equities I use a 10ma/30ema combination and 3/20 period Williams %r's for extra confirmation on trend entires, although I'm using them less and less as time goes on. Pure S/R is where it's at.
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Thanks.

Wish you a profitable trading week.