I usually only trade news when its clear cut as to how it will effect the markets. For example.. the Russian news to me is mute. Thats just a problem they have... wont really effect Europe or US. You have to use your discretion as to when it really is something that can move the market or make a headline. The best piece of news to play was the Yassin killing.. because that was a pure negative to USA. Once the news came out i was itching to get long Euro. --MIKE
Your mind seems as rigid as your stops. What makes money is right, and what loses money is wrong. There are a million ways to lose money, but there are also a thousand ways to make money. There's no need to understand each of them. Let me stop at that.
Hi again, Yes, your are right. When it comes to cut losses and not adding to losers, I'm very rigid. But you are wrong, if you believe, that what makes money is always right. You can make money doing the wrong thing a long time - and have a lot of winners - but one day the price will not come back, and you will be wiped out. But good luck - and good trading.
Random is right. Some of the best traders I know add to losers when they are building a position and use a flexible stop loss. As long as u occasionally take some huge winners you will be ok. Its ok to take some huge losses too.. but they have to be controlled. There is nothing wrong with taking tons of winners big and small.. and occasionally taking a big loss. Actually this is probably the best method psychologically. --MIKE
Hi Mike, I don't believe in this metod, and I don't believe that it works in the long run. The strategy is unsound. I could like to see proof for, that it really works - for more than a few weeks or months. Psychologically I also thinks it's better to take small losses than big losses.
Hi Baruch, I see that you use pretty tight stops of no more than 15 pips or so. I think this is only possible on futures and not in the spot (using fxcm)since spreads are wider and you cannot bid/offer. A few questions: 1. If the price is already above the 50 MA and is coming down, do you have a bid in to buy before it hits the ma or are you looking at selling the violation only? 2. if you bid, how many pips above the ma and how much would you risk? 3. When would you consider the ma violated and sell short? 4. do you move all stops to B/e at +15? cheers
Hi kwai, 1, 2 and 3: I want the whole spread - both in futures and spot - to cross 50MA. 4. Yes, and sometimes before +15 pips. Depending on the market.
"You're doing all the wrong things..." - LOL! Baruch, how long have you been trading for? You seem to think you know what's "right" and what's "wrong" in the markets. Watch out! Fortunately, you're just at the beginning of your journey. As you do this for a few years, you will likely go through some crazy times of invalidation of your own older theories, times of hardship and times of total despair, when nothing seems to fit together. It's those times when you get most inspired to look beyond what the books say and what everyone else does. It's those times that you get some true insights into what the reality of trading really means. One of the greatest realities of trading you will eventually learn about is that whatever the majority of people considers "right", will by very definition, be "wrong", if you want to extract profits. Why is that so? Well, it's simple: The markets are an arena where a minority of people consistently derives a profit from a majority of people. Perhaps at the end of the day, 45% of participants take money off 55% of the others. Or perhaps 5% take money off 95% of the others. It doesn't matter. What DOES matter is the mathematics of this equation. The mathematics logically prohibit a majority to make money out of a minority, since you cannot squeeze blood out of a stone, so to speak. There always has to be a losing majority in order to make others profit. Otherwise, nobody would trade the markets. Once you have understood this, the next point to understand is that the (losing) majority uses similar methods in approaching the markets - namely popular methods - most of which are found in all the myriads of trading books out there. I love some of those trading books, because the are a great reference for what your "opponents" in the market are looking at. Now that you're aware of it, all you have to do is fade those common practices, and you will more likely make money. Matter of fact, it doesn't matter what technique you look at - once a majority of people has adapted it, it will become invalid, and other, minority-used techniques, will become rewarding. Have you ever talked to really good traders and asked them how they think about going with the majority? Matter of fact, the few master traders I know are uncomfortable, no, literally afraid of positing themselves with the majority. When everybody is long, they really sit in the trench and wait for a good place to go short. The quintessence of this wisdom is that the majority (and their beliefs, as portrayed in trading books and here on ET) is usually wrong, and that the only thing that's "right" in trading is whatever generates money. If it generates money consistently, with a decent R:R and / or hit rate, then it is right. In my case, what I do is "right", despite what you say about it being wrong. And I am sure I make more money than you. So, in relative perspective, I am "right", and you are "wrong". Don't forget that while your foolproof trend-following approach works beautifully today, it might just make you give back everything tomorrow, if a ranging mode occurs. Think you're a hero yet? Think again. You will find over time that the markets usually follow what I call the "Pawlow's Dog Pattern". The Pawlow's Dog Pattern is my interpretation of the way "the market" likes to "train" people to certain behaviours, by making them frequently reoccur, until a simple stimulus, such as a chart pattern, or an MA crossover, can trigger you to take action. This "Pawlow's Reflex" will soon manifest as a behaviour pattern amongst the larger crowd, and become a beautifully exploitable pattern for a minority. To our further convenience, the guinea pigs / dogs - once trained - tend to remain with their old methodologies for quite some time longer, giving their money away in the meantime. Eventually, the reflex will fade as a consequence of the pain triggered by large losses, and that's when people change to adapt new patterns, and the whole thing blows up and starts over again... I am sure you are familiar with Pawlow's reflex experiments and theories. If not so, I recommend you read up on it, because it has fundamental implications for market behaviour. I was familiarized with the Pawlow concepts already in highschool. So, the conclusions are: - Don't take things for granted, never judge anything as "right" or "wrong", since in the market, this depends 100% on a minority / majority factor, not logic or anything else. If you think otherwise, you're kidding yourself. There is no academically justifyable set of reasons for any market action. There is only a mathematically quantifyable equation which constantly shifts - to the favor of the most flexible. - Always stay humble. Use the best times to prepare yourself for disasters. The more success, the more humility is required. I hope this gets you thinking a bit. And if it doesn't, then the upcoming losses you will face as a consequence of this inflexibility / bias surely will. Regards Scientist