ER2 Leading Indicators?

Discussion in 'Index Futures' started by swcom, Oct 22, 2005.


  1. no --- the method i use helps to maintain a higher win/loss ratio for the periods when price is range bound. the trade management method i use keeps the "unrealized" losses fresh in your tabulating DOM P&L to monitor and work back to profitability. the only threat you have to the position with an "unrealized" loss is a price action breakout beyond a s/r level --- as long as price stays range bound then you have a high probability of price at some point returning to the levels where you initiated the trade {and this does happen very often}. So if i am working "scalps/position basis improvements" around my position with the "unrealized" loss while i am at the same time holding a hedge for a possible breakout then i am actively managing the potential loss of the underwater position.

    it is a psychological play also in my opinion --- once you realize the loss then it is too easy to write that trade off as a loser. when you actively manage an "unrealized" loss then you are more committed to returning the position to profitability ---- you do not let yourself off the hook so easy as to say, "that was a losing trade -- next". No, this way you have to work harder but the return is the reward -- it keeps you fighting to make the position profitable and that is my take on this management style for me.
     
    #51     Oct 26, 2005
  2. nkhoi

    nkhoi Moderator

    exxactly, one when you get off a horse, it is hard to get back in the saddle.
     
    #52     Oct 26, 2005
  3. bighog

    bighog Guest

    Try this, but it seems so simple many quants will ignore it...HA

    Set up a 5 minute chart of ER2 if that is your choice. Plot the mov avg cross of say the 9 period crosses the 19. Also plot the days pivot points. There now is the system.

    You have the crosses to get on board the trends. the pivot points are to be used as support and resist points and for trading the ranges if the trend is in a range day as i call them.

    We all know moving average crosses will toast your account in rangebound markets, knowing the difference will only be gained from OJT, on the job training, commonly referred to as experience...have fun, but be wise....:D

    ------------------------PS, i read the part about "WORKING" a loser back to profitability. Even if it is a hedge( Racks up commission costs and still need to make 2 seperate decisions), it would not be necessary if the entry had been better pre-planed.

    Here is a bad trade: go long in the middle of a range, assuming you will get out at resistence, remember it is a range trade, but also it is common knowledge rookies think that a trade like that will bust out the top of the range and shoot the moon.

    But, "RATS", the price goes down and you are still quite a ways from support, to reach support you can not stomach that so what is your best choice at this moment in time? Kiss it Good By!!!

    The problem was not the loss, the problem was the entry spot, poor choice = poor results. Then as soon as you bail, the price shoots for the moon....:)
     
    #53     Oct 26, 2005
  4. bighog

    bighog Guest

    Here is another thought on hedging a loser. Do not do it.

    If a trade is put on and it is not working within a certain amount of time, treat it like a bad date. Take the bag off of the dates face and "SEE" what you are dealing with. Dump the date and review your mistake why you took the bait in the first place. Hedging is not learning, it is an ego trip.

    If it works for you, then fine but it will never get you a Noble prise....:p

    time to watch the ball game, Hope i get some sleep tonight....:D
     
    #54     Oct 26, 2005
  5. i fully recognize the beneficial aspect of not realizing losses. everytime i have to take a loss some of my confidence dies. i really would benefit a lot from a method of not having to realize losses.

    logistically, i am not able to trade two accounts, i work for a firm with proprietary software, so no can do. so still looking for an anwer..
     
    #55     Oct 26, 2005

  6. actually ask the institutions if they take small stop outs all day long or if they hedge "unrealized" loss positions with a definitive trade management plan. :)


    this is not about ego or pride --- this is about increasing the win to loss ratio to increase profitability. this is a "profitability" game and we as traders need to develop whatever edge when can to increase our personal profitability --- that is the bottom line.
     
    #56     Oct 26, 2005
  7. bighog

    bighog Guest

    Macroevent,

    Point is well taken. BUT!!!

    Spreading a loser in general is not a common tactic in a well planned trading strategy for your average persons learning curve to become a winner

    Which should come first: learning to take small losers for what they are, or, spreading losers and injecting hope into the game?.

    A trader should be reducing risk, not increasing it. Now if you want to increase risk by injecting a shot of hope into a losing position and then taking its pulse try this OLD fashioned way.

    Double up the loser, then you only need 1/2 way back to get to even. Is this a variation of the same thing? Is it viable?

    My point is, if you "THINK" you can fanagle a loser back to life why not make the job 50% easier...thanks....:D

    This is not a tactic i recommend, but yes i have used it many times.
     
    #57     Oct 27, 2005
  8. bighog

    bighog Guest

    Macroevent,

    Point is well taken. BUT!!!

    Spreading a loser in general is not a common tactic in a well planned trading strategy for your average persons learning curve to become a winner

    Which should come first: learning to take small losers for what they are, or, spreading losers and injecting hope into the game?.

    A trader should be reducing risk, not increasing it. Now if you want to increase risk by injecting a shot of hope into a losing position and then taking its pulse try this OLD fashioned way.

    Double up the loser, then you only need 1/2 way back to get to even. Is this a variation of the same thing? Is it viable?

    My point is, if you "THINK" you can fanagle a loser back to life why not make the job 50% easier...thanks....:D

    This is not a tactic i recommend, but yes i have used it many times.
     
    #58     Oct 27, 2005
  9. bighog

    bighog Guest

    OPPS, i forgot a very important point in using the "half way back' tactic on a loser.

    If it goes further against you, you then must face reality and kiss the whole thing goodby. the attempt to reverse the lose has failed, the trade has failed, your tactics failed. GET OUT

    This game and losers go together, part of the strategy. There is only one answer for those who think there will be no losers: Go flip hamburgers, it is more fun, and more profitable.

    Spreading losers is not cool. Spreading a loser and double up are totally seperate. Spreading is hoping and praying, both useless in trading. Double up is a tactic, depends on ones experience and feel of the trade, again if it does not work right fast, get out right fast.

    Speaking of losers, how about those Astros?......:D
     
    #59     Oct 27, 2005
  10. losers are those who do not believe!
     
    #60     Oct 27, 2005