First off, Austin P and I share a lot of the same beliefs about the markets. So what he said is good info. You may also want to look a little deeper. Did you lose a lot of money in the bear market of 01? Was your biggest loss a long trade? Things like this are huge and could severely impact your bias! Assess your long trades and maybe you can get to to the root of the problem. Another thing as well, markets come down a lot faster then they go up. This could also be another issue of needing immediate results. I know this stuff sounds cheesy, but its powerful and crucial to consistent success. I wouldnt listen to wareco's advice either unless you can be a breakout trader. I myself could never do it and it seems like you are not the type as well. Get the trend right and fade the moves against it.. your on the right path. What a time to start daytrading the futures....
I appreciate the guidance everyone! Wareco For trends, I can sell into downdrafts, but have trouble buying into upswings. I appreciate the warning on countertrend trading - tremendous risk - takes guts to step in front of the train. But select traders are fading that extreme price movement -doing it consistently is another matter. HolyGrail That pretty much sums up my day. Didn't give back as much though - sorry to hear that. Austinp That was excellent insight and advice. I agree on all counts. I'm only trading one contract right now, and I take small losses. I am trying to earn while I learn - not an easy task! The issue is lack of confidence in my observation of price action. I'm trying to trade strictly off of price observation, volume, support & resistance, and trend lines. But that is not a setup. "You fear losing money because you lack confidence in the setup. Consciously you acknowledge the trade setups are valid, but subconsciously you are convinced it will lose money over time. The dollar amount must be negligible to lose. The trades must be taken regardless. If the setups are valid as you expect, the emotional reward will be solidified belief system watching the profitable result. Take the trades in a manner that real dollars risked are irrelevant. If the setups are valid, they will prove themselves to your own validation in time. With that, you're trigger avoidance will gradually ebb away." - that is now in my top 5 best advice on ET. And, I'm reading the classic trading psych books. Apex82 You too are absolutely correct. I did lose in the tech wreck, long stocks and, ahem....no stops. Yes, my biggest loss ever in the markets. Gave all gains back (an account that I had tripled) and a little more. Ever since, whenever I go long and have a profit, I invariably give back a good profit and ride it into a small loss. Not so on short trades. And yes, I think there is some need for immediate results - Marty Schartz mentioned this too. None of this stuff is cheesy - it IS powerful and crucial to consistent success. Thanks to the past, I obviously have an issue with going long and winning that way. And I have proven that I don't have the discipline to consistently honor my mental stops and mental exit levels. AustinP and Apex82, what are your thoughts on the placement of stop loss orders, trailing stop loss orders, and exit at profit orders?
MAybe I can finally pay my tuition? Sometimes I regret not bringing my laptop to class. Because I so in love with economics which I know by hard. How do you find elasticity of a demand and supply curve........well, you find the %change in the quantatity divided by the % change in the price.......blah blah blah........ Give me some action.
In my opinion that is something you will have to figure out on your own. Put in the blood, sweat, tears and backtest your strategies. Everyone is a bit different and it depends if your scalping or trading intraday swings. I can tell you for me that I always trade in 2-3 units. I have an initial entry and will take 50% of that off at a predetermined target every time. The next 25% is a further away target and once that is hit I move the last 25% to breakeven and just trail the stop with my market knowledge. I cant explain the feeling of having no fear when in a trade... its almost surreal. The only way I was able to achieve this mindset was to always take some profit off the table. This is just how I trade, it may work for you it may not. The other 2 units would be an add on (not averaging down) and a confirmation to the zone.. ie a breakout reversal bar etc.. Put in the work and before no time you will see every move before it happens.
Apex82 - after trading one lot for the last couple of months in a couple of different contracts, I now know that there is a disadvantage of always having to go all in and all out. No scaling ability, and that has its own set of psych issues like you stated. Thanks AustinP and Apex82 for the encouragement!
<i>"I now know that there is a disadvantage of always having to go all in and all out. No scaling ability, and that has its own set of psych issues like you stated"</i> During dull market conditions, I always trade all in - all out. The swings are so small during dead markets that it's easier for me to just trade both sides the same. Now that volatility is on the opposite side of the spectrum, I often enter in two pieces, all out at once. I'll take a clear entry with 1/2 position, let it work in my favor (not against) and add the second half. Yesterday I began trading a small acount balance of $4,300 using two ES contracts at first. Once a few wins were hit, I added contract size... scaled in. I would still enter two, add two more once the first block had stop at entry=par. Risk on the entire position was -2 contracts, upside leverage was +4 contracts working. By late morning I was up to 5 and 10 contracts in the wild swings. Ending balance on the account was $11,100 and it's up another +$1,600 in the premarket, same strategy. This type of scaling in = adding to positions only works during expanded ranges... it kills during tight, sideways chop. Gotta know your market conditions, right now it's obviously wild.
best to play on both sides. I use volatility indexes and also put/cal ratios to a smaller extent to signal my long and short entries. Yesterday when we opened with VIX up 22% was an extreme reading best indicator to enter long. If another sell-off comes today will be best for long entry once again, but I am also waiting for shorting opportunities next week once the bears are squeezed http://lauristonletter.blogspot.com/
This is more like gambling, their is so much noise the last few days have had dramatic swings in both directions in a matter of minutes, 40 points in 30 seconds. wether you want to admit or not this is gambling.