I typically don't run with stop losses. Last week, my portfolio went down, then up, like it should have. I lost nothing. Now, those who had stop losses 1/2 the way down, and didn't repurchase at lower prices, those guys lost big.
RN, It seems a number of people -- you included -- are equating an entry without a specific setup with "zero risk management". I did not intend it to be construed that way. BTW ... I have followed your posts with interest and respect over the past year. You not only shed light on subjects you do so without adding to the heat of our conversations. Not easy on ET ... lol.
This gets to my previous point - everyone talks about setups, but no one can agree what they are. It's a meaningless term. One individual person could have a meaningful definition, but the term doesn't convey that same meaning to anyone else except by accident. Personally, I have an overall strategy that includes aspects of loss minimization. But the core of that strategy is knowing how to read the tape in whatever I'm trading. When I think it's going to go up enough to be worth it, I'm long. Ditto down/short. When I'm wrong (or just fail to be right), I'm out. When it goes my way, I'm out when it stops. That's ultimately all there is to it. Is that a setup? Who knows...
I understand set-up is when you can explain (and put into a pegeon hole) why you enter a trade. It can be "on a pullback of a trend" or "after the price hit the revious low but didn't fall through". There may be setups that you can't describe. So, you may think there is no setup. First come sintuition, then rationalising it. Another possibility is trades based on fundamentals. Here the reasons for entering a trade can be sufficiently unique so that they can't be assigned more a specific "generic" description than "good news" or "bad news"...
Enrty without a set-up? That would be deciding to enter at 10:00 am on a coin flip. I guess that could be conidered a set up. Are you referring to an impulse trade where you have a gut feeling or when you chase an entry after you missed a set up?
SN Thank You for the kind words â I read you posts with great interest as well⦠------------------------------------------------------------------------------------------- As to entering without risk management â HA HA thought soâ¦. You see based on other posts youâve made I figured you a trader, and as such, assumed you always know exactly how much youâre risking with each trade... I see by your response I was correct In reading your initial post in this thread I also figured you were using a set up â but not identifying it per se â because⦠Other than succinctly identifying where we would be wrong (and obviously exiting there) â what more does a sound set up require⦠reallyâ¦. I would respond nothing⦠So what youâve describe in your initial post â is the essence of good tradingâ¦. Trade what you see (not what you think), while always knowing exactly where you would be wrongâ¦. Or to paraphrase your words â I saw price going down â I shorted it â Iâll exit when it stops going down â oh and I make money doing this ------------------------------------------------------------------------------------------------------------------------------- Okay youâve admitted youâre trading on instinct 5% of the time â pretty sweet, stress free, and profitable â isnât it⦠Now on to the next step â 10% (just please - please.. never forego the importance of the point where weâre wrong) Something to ponder my friend⦠RN
The concept of a setup is mostly absurd is an absurd statement. Everything below is courtesy of Stockbee: As I have said many times setup selection is the key. Unless you are able to define a good setup for yourself your trading is not going to progress much. Unless you define a setup you cannot train procedural memory. Many traders with intention to become profitable traders would blow up their account before they can define a setup which works for them. Every successful trader has a setup or a bunch of setup they trade day in and day out. They become expert in their setup. Setup is the controllable part of trading the external market is not.