Hi, I've been a lurker on this forum for quite some time and I've just recently started trading myself (less than 1 month ago). I thought I would make a post about my experiences and where I'm coming from, just in case anyone has any advice or my experience matches with anyone else's. So first off I am 23 and trading 1 YM contract on a $14k account. I'm still at a net loss overall. I make intraday trades only and I actually only trade the first 1.5 hours per day. My rationale for only trading the open was originally that there seems to be the greatest volatility during the first 1.5 hours and hence the best opportunities, but since the system I've ended up using is based on mean reversion (essentially playing retraces and bounces off of bollinger bands) now I am questioning whether this is the best timeframe? Given my system it's probably no surprise that I tend to be successful when the market is in a range-bound mode or when a lot of retraces are happening, although even here my strategy still needs work. I think in order to trade a mean reversion system well you need to trade every bounce (e.g. either keep a position open or reverse it) rather than doing what I am currently doing, which is taking profits once I feel the move is over, and then 90% of the time not opening a reverse position because I can't find an entry price I like. Comments? However, my main problem is that I am adapting very slowly when the market begins to trend. In other words there will start to be a large move against me and I will just hold my position, thinking that I just got in too early, and I will keep thinking that up until the moment that my stop gets taken out. Prior to actually trading I never thought that trends would be a problem, but they are a really big one for me! Has anyone had the same problem with not being able to exit/reverse their positions once a trend begins developing? I know in hindsight it always seems obvious that it was a trend and not a bounce, but I'm just wondering how most people first realize something is potentially a trend and not just a bounce? And...even if I do realize a trend is forming, any comments on whether is it a winning play to close out the position immediately prior to my stoploss hit, or would it be better to first confirm the trend by waiting for my stoploss to be hit, and then reverse after the hit? (FYI I'm generally using about a 10 point stop, sometimes a bit more if increasing it will move it beyond a S/R level) OK, if you read this far, thank you and please add your response, I'd really like to know what you have to say.
If possible you should try and back-test this system, I have a feeling that you will find that you should be buying when you are selling and vice versa. As to waiting until your stop gets hit, isn't that the point of your stop? You have identified it as your uncle point so if a trade starts to go againist you that is where you get out. If you start second guessing yourself and getting out before your stop is hit you will be whipsawed to no end. I think you should keep your entries (or maybe do some research and reverse them) keep your stops and work on exiting profitable trades, this is the most important part, in my opinion. 5yr
One more thought, the system you are trading now probably has a higher percentage of winners than losers, so you think it would be a bad idea to reverse your entry points. The system I am proposing would lower your winning percentage but your winners should be much larger than your losers. A high winning % system may be "easier" to trade but probably isn't the most profitable.