I've been trading for a while and just recently started using buy and sell stops. I will place a buy stop if I think the market will rally....I won't go in at the market but will place a buy stop slightly above the market's price. I kind of noticed that I will get hit and the market's price won't go much more than my buy stop order. The market will then sell off. Do you think it's best to just keep my price of where I want to buy in my head and not use a buy stop but when the market hits that price go in at the market. Any advice would be great
Erm market's not reversing just because they "got you in." But ES does have a tendancy to break the old high/low by a few ticks then retrace.
Although there have been times that traders have run-the-stops, I don't think that this is likely to be a consistent problem. More likely, it is your trading strategy. Buying at the high/selling at the low is the hallmark of a beginning trader. Have you back tested your strategy?
I'm not buying at the high or selling at the low. I actually trade on two accounts and hedge the position. I use buy stops and sell stops. So if silver is $30 an ounce I will place a buy stop at $31.5 and a sell stop at $28.5 I let the market decide which way it will go. If I get hit on both accounts that will be my stop but it will be a floating stop. I can cut one of the positions and still recover my loss. I use technical analysis to enter positions on futures / forex.
I like the strategy of trend following by straddling the market with stop orders in that it allows the market to tell you which way the break-out will happen. Unfortunately, on every back-test profitable system on which I have tried this, it has lowered profits and extended losses so I stopped trying it. When position trading, even when one is right about the direction, the actual cumulative movement over the life of the trade (a few weeks) is not typically much larger than a day's trading range. By waiting until the market extends to hit your stop, one has already given-up a good percentage of the potential profit. Unless the fact that it hit your mark adds a great deal of statistical validity to the trade, one is better off buying at the open/close or on a retracement. This forum has a good number of swing traders and intraday traders who make a living off of betting against position traders. I have bought on a rising market, just to find out that I was the last to think that it was rising, and I have sold on a falling market, just to find out that I was the last to think that it was falling. After consistently losing on discretionary trades, I have focused on systematic trading systems. There are many, many good back-testing platforms available. (Good enough for position simulation at least.) Have you tried back-testing your strategy?
No not at all because you can't back test it. I usually use the average true range for placing my trades. But most of it is based off of instinct. I have a system set up but also use instincts and fundamental analysis to exit positions or let winning trades ride. That's something that can't be back tested
If you are ever trading the ES, I am taking the other side of your trade, but I don't take every new high/low, depends on volume, price action. There is a higher winning percentage of profitable trades by doing this, it is like a reversion back to the mean. Often times any market that jumps out of current price to new high/lows of the day has become momentarily overextended and will retrace so many tics as if it is a pullback, and often it is better to wait and get in at a better price then the breakout price. Depending on some markets, breakouts many times offer slippage which extends the original risk. Also what occurs is the market will continue in that direction till it achieves an area of where you move your stop to breakeven, only to watch the market come back and stop you out, only then go back into original direction, and you watch swearing as it leaves you on the side, LOL. I normally wait for this occurrence to happen to go with trend, but get in at even a better price than the breakout trade and then my risk is much lower. And yes, there are times the breakout trade takes off and leaves without me, but it comes down to knowing the market you are trading. The ES is a very good congestive market, whereas Silver tends to be more wild, sort of similar as Russell. I don't care if I miss a good move, I just concentrate on reduction of risk, there will always be other moves.
sounds like your stops are too tight....recipe for ruin. \for the most part.....anybody complaining of being stop hunted just don't know that unless your trading frog dicks......tooo much liquidity. can you see being stopped out for your 2 contracts when the instrument trades 4000 contracts/minute. please. reverse your idea on when to "buy and sell" sometimes you'll be amazed at the results.