Failure to understand risk/reward and why you're losing as a trader.

Discussion in 'Trading' started by Laissez Faire, Jan 9, 2025.

  1. deaddog

    deaddog

    High on my list of why traders fail is high expectations.
     
    #321     Jan 17, 2025
    Picaso, Laissez Faire and ironchef like this.
  2. Thank you. But now I'm just pissed that I didn't hold for 6050 and trailed less aggressively as I was literally low ticked on that pullback. :)

    I misread. 65 % sounds good to me. Truth be told, for most would-be traders the number will be red anyway. Best to put it in SPY or similar and live a happy life.
     
    #322     Jan 17, 2025
    ironchef and Picaso like this.
  3. I gave up on it because I couldn't stand the idea of letting a tethered machine enter orders for me. Then I arrived back at essentially the same idea after years of discretionary trading, which fits me better. And yes, there is a lot to gain by just setting a wide trailing stop and letting the position run, but I can't do it. There is a reason my avatar pic is a cat about to freak out. It takes another kind of spirit inside to get the huge money. You need become almost ruthless! A cold hearted collector of the hopes of the crowd, as they pile into something you got first. It's lonely, holding stocks they want to buy.
     
    #323     Jan 17, 2025
    Andrew34 likes this.
  4. Picaso

    Picaso

    Yes.

    Or put it in a x2, x3 leveraged ETF, in 10%-20% chunks (as it moves in your favor), with (a) wide stop(s).

    Or, using the same approach, put it in in ES futures, with a multiple of overnight margin requirements (so you're leveraged x2-5 times, not 20+) and roll the position every three months.

    Or piggy back @Laissez Faire and @schizo and let the money roll in :p
     
    #324     Jan 17, 2025
  5. ironchef

    ironchef

    That is why I think my aiming for 0.25% profit a day is too ambitious.

    Another puzzle I finally understood is, in my sim, I found it very difficult to increase profit % by placing more trades until I realize, it is subjecting to the same random process as noise:

    Theory of large number. It shouldn't go up linearly when you increase the # of trades?
     
    #325     Jan 18, 2025
    Picaso likes this.
  6. ironchef

    ironchef

    You are a smart cookie. :thumbsup:

    Easier said than done.
     
    #326     Jan 18, 2025
    Picaso likes this.
  7. Picaso

    Picaso

    0.25% *on average* on a leveraged, small to medium size account is doable, imho.

    The problem is when you try to pull 0.25% (or 5 points or 500 USD or whatever) every single day, whether the opportunity (for you, your system, etc.) is there or not, again imho.

    Placing more trades is fine, if you get more signals or trade more markets or whatever. Placing more trades just because you didn't reach an arbitrary daily target is pushing your luck, usually not great.

    My profitability and expectancy increased considerably when 1) I stopped needing the money 2) I started skipping days when I wasn't feeling "in the zone" and 3) I stayed in trades longer (enduring bigger open profits drawdowns, but keeping initial risk small).

    Number 3) depends a lot on your style of trading, but I think most people would benefit from 1) and 2).
     
    #327     Jan 18, 2025
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  8. Andrew34

    Andrew34

    I get that. How'd you balance patience with need for quick action?
     
    #328     Jan 22, 2025
  9. I'm usually out in a couple dayz, and then just re-enter if there is another pivot to base it on (the reversal and first continuation pivots are my favorites, just like what Livermore wrote about in his book).

    Another way to deal with boredom and the need for action is having a side project or venture. One thing that is a huge threat, however, is the need to tell otherz about what I am doing. Not when it comes to trading (except on here, long after I'm back in cash). :)
     
    #329     Jan 22, 2025
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  10. Andrew34

    Andrew34

    Do you find it tough to plan when pivots take longer to show?
     
    #330     Jan 24, 2025
    Wide Tailz likes this.