nkhoi, i'm glad you posted that. i have your thread linked on my desktop right now. i like what that thread says. that's the trouble with trading. you try so hard to come up with something. then you read something like that and think, "what the hell am i doing?" i'm going to make a clear example of a conflict i have. here's a quote from what you posted, nkhoi: after all the shit i've tried, it wouldn't surprise me if just about any idea can give you a profit, and the key is not allowing losers. one of the best things i've ever read regarding trading is right here: http://www.webtrading.com/phantom/chapter5.htm phantom of the pits talks about a whole new way of dealing with losers. IT MAKES TOTAL SENSE TO ME, however, many times when i discuss this, people say it's bullshit. so then i'm left wondering if i should work on adding pop's ideas into my trading or not. i've said in the past that i get stopped out to death. so maybe i should implement some pop rule 1 ideas. instead of setting a stop loss and always taking a certain loss, maybe i should also set expectations for my trades and get out if the expectation is not met....not just when my stop gets hit. i think this makes sense, but then i will wonder if i'm really just creating MORE ways to get stopped out? even right now, i can't decide which way to go. here's something that has always bugged the hell out of me. you enter a trade, put a stop somewhere and say you have a trailing stop for gains. in order to take a loss, it only has to move against you a certain distance...but to get a gain it is much harder. if you don't have a target, it has to move far enough in your favor so that when it falls back to get taken out with the trailing stop, you still have a gain. for explanation purposes only, check this out: let's just say you have a 2 point stop loss. and when you have a gain of 2 points, you trail your stop 2 points. it's easy to get a loss! it just has to go against you 2 points! but to get a 2 point gain, it has to go your way 4 points because you won't take the profit til it falls back 2 points! this is the type of situation that kills me. so i think about reversing this. or maybe adding in pop rule 1s to have other ways of taking a loss. then i'll go back to wondering if i should just tweak the concept and still go for the bigger gains. this is the type of mess i'm in.
hey you know what, keep my journal in chit chat. i like it better here. nobody has a reason to bug me about trades.
here are some more issues..... if you had to pick an entry, wouldn't you want to get in at what you think is an extreme OR at a point which you believe many other short term traders are getting stopped out? i will give an example of each. if you wanted to enter at extremes, couldn't your entry be based on TICK? why would you go short when tick is at -1000? in this way, i think market mechanics have merit. the other example could be when traders are screwing up. i can think back to how i traded a few years ago. so many times, when i swing traded, i'd put a stop under the day's low. maybe i should look for stocks that were strong the previous day and enter long if they take out the day's low. i know that's where i've been stopped out a lot. but then on the other hand, there are guys trading simple macd indicators. i won't name names, but there are some guys which say trading macd crossovers works for them. so which is it? and does it even matter? in nkhoi's post, a guy claims just about any system can produce winners, it's about controlling the losers. so then, if that's the case, do my entry ideas even matter?
Any system can produce winners in the hands of a successful trader, because he has something you dont. Instinct. I think its bullshit, that its all about cutting your losers. Its more subtle than that. You can backtest cutting your losers, and this alone will not make you profitable. Period. These guys have developed a very advanced, runtime, feel of the market, or the stocks they trade, that they may not even be aware of. I believe I could give them any bullshit system, MA X-overs, or simply tell them to trade reversals using B-bands, and they would profit. But the new trader wont. Then they shake their heads and say... "But it works! I do it all the time". Then you point to an example which failed, and they say "oooooooh well.... I didnt take *THAT* one because of so and so... " And thats just it... they have a hundred of these "so and so" reasons that only come with years of experience, which they fail to mention when trading a "simple system that works". peace axeman
Hmmm, I feel like trying that! That would be an interesting experiment...Maybe I will experiment on the ES one day this way... The only thing you can't take away is my squawk....But I can let go of everything else....maybe....hmmm....interesting... nitro
Gordo, I don't know if you will understand what I am saying in this reply, but I wager that if you copy it and look at it down the road, you might some day understand fully the point that is being made. Being an old fart, I grew up in the era of human potentials movement. EST, Esalen Institute, turn on/tune in/drop out, I'm Ok/You're OK, Re-birthing, Power Animals, Sweat Lodges, Crystals, Pyramids, TM, Astral Traveling, Eckankar, Inner Child Workshops, etc, etc, etc. I would visit friends who were on the same journey, and they literally had thousands of self-help books and quasi spiritual techniques. They would go to weekend seminar after weekend seminar, return from each seminar with an "I understand fully now" attitude. I called them seminar junkies. You are probably too young to recall the network marketing boom, the multi-level path to riches. Every month or so, there was some new multi-level program, and a chance to work your down line for fun and profits. What I observed was that NEVER, NEVER did anyone just stop and master one of these techniques, programs, or business ventures. They gave it a half hearted shot, and then went on to the next. I have seen the same with people in relationships, preferring a serial relationship process-----moving from one person to the next, and when it got tough.....simply finding someone new to focus on. This process doesn't work. This is your problem. You have a resistance to finding one proven trading process and just sticking with it and making it work. Here is a story that helps to illustrate the point from a different perspective. The story is from the wise ones in India: <b>One day a man traveled a far distance to visit his brother. Both he and his brother were of the Hindu faith, which includes many different forms of the One God. The traveling brother had a very deep relationship with one form of God, and had devoted himself fully to the development of that relationship, forsaking all other forms of God in the process. He had obtained a very close relationship with his Beloved God, and had attained peace and tranquility that never left him. He was traveling to see his brother to share his good news. When he arrived at the house of his brother, he was greeted by the servant who told him that he had to wait, as his brother was doing Puja to Vishnu (Puja is an act of worship, and Vishnu is a form of God). The traveling brother waited and after some time the servant came up to him and told him that he would have to wait as his brother was now doing Puja to Ganesha (Ganesha is another form of God). The traveling brother sat and waited patiently and again the servant came to him and told him that he would have to wait, as now his brother was not doing Puja to Siva (Siva is another form of God). This pattern repeated for hours and hours, and the traveling brother was informed time and time again that he would have to wait while his brother did Puja to Lakshmi, Ram, Durga, and many other forms of God. Eventually, the brother finished all of his Pujas, and went looking for his traveling brother. He could not find his traveling brother anywhere. Finally he found his brother in the back of his estate. They exchanged greetings, and the traveling brother asked his brother, "What took you so long? You kept me waiting for hours and hours." The brother answered, "I was doing my worship to all the different forms of God. What did you do while you were waiting?" The traveling brother replied, "I have been digging a well, come see." The two brothers walked for some distance, and finally came upon an area of land that was full of holes about 1 foot deep. "What have you done!" the brother yelled. "Why have you dug all those holes on my property." The traveling brother calmly replied, "I have been digging a well." The brother was angered. "Don't you know that in order to dig a well you have to pick a spot and dig deep until you find water." The traveling brother smiled. "Yes, I understand, do you?" The brother thought for a moment. He stepped back and looked at his traveling brother, and he saw that there was a glow about him, a radiance. "You have found God, haven't you!" The brother cried. "Yes" the traveling brother said. "How did you find him?" the brother asked. "Well, I didn't find a well with many shallow holes, and I didn't find God in many different paths, and I didn't find God in many different forms. I found one form of God, and I surrendered to him and looked for no other's Grace. I single mindedly, and wholeheartedly perfected my surrender by focusing on only one solution, and when my surrender was perfect my beloved God appeared and embraced me." The brother had learned from his traveling brother. To dig a well, you dig deep until you find water, you don't give up until you have done all that you can. To have success in material or spiritual world, you have to make commitments and keep them. And most importantly, like the wise men of India say, "The well doesn't go to the thirsty." Dig deep Gordo, you will find what you are looking for.
Gordon, Without getting into a lot of detail....and you brought up many issues that could be discussed with a TON of detail (and I would bet disagreement), again, I would strongly suggest you boil down all the thoughts you brought up (extreme tick, previous days action, taking out lows, etc.), to a few basic "rules" and just trade by these "rules". Whatever the criteria you use. Keep it as simple as you can though. Try and be totally consistent with your entries. (You can't be totally consistent with exits, so at least get half the game under control to start). As far as trailing stops...you are exactly right in your example. 2 points down, and you are out. To come out with the same winning trade you had when you put in the stop, you would need an additional 2 points in your favor, then a 2 point drop to get taken out where you were. So yeah, trailing stops should be more of a "concept" than an actual tactic. Only time I ever used trailing stops were if I had a significant positive mark in a position and had to leave for something urgent like golf or a funeral, or an equally important or amusing distraction. Otherwise, I used trailing stops about as often as I used any other stops. Which is to say virtually never. When you are a professional trader, you are watching your positions. At least you should be. You are watching how they behave relative to the market as a whole, relative to the industry groups they are in, the time of day, the index futures, turns in market internals (trin), and whatever other factors you may consider to be relevant. When all these things factor into your decisions, then you will have developed your trading instinct. Making decisions based on more factors than you are even consciously taking into consideration. So yeah, I use stops, but they are ALWAYS mental stops. For all the obvious reasons. For instance, I prefer to use limit orders of course. I certainly use market orders when I need to. But I will avoid market orders whenever possible. And so my feeling on stop orders is primarily due to my feelings about (and observations of) market orders. (Listed stocks more so than nasdaq.....). After all, a stop order really is, in essence, pretty much really a market order executed under the worst circumstances. Stops on nasdaq stocks have their own drawbacks, certainly. But usually more a factor of bad execution due to fast movement and lack of market than bad fills like on listed being a factor of "fuck you spreads", and the evil doer specialists. So hard stops (in equities) are, IMO, a non professional tool for a daytrader. And even more so recently since we have gone to decimalization. You know what happens on market orders on listed stocks. Watch a penny spread cost you 60 cents. Or more. Happens all the time. And since a stop order becomes a market order.....well you get my point, I hope. Of course if you are using stop limit orders, that's a different thing entirely. But I don't think I have ever known a daytrader to ever use these. There are enough ways of getting stuck without intentionally putting your neck on a chopping block! So as Axeman said so accurately, it is really about "instinct". When you have it, you know when it's time to get out. That is why the hard stops don't work. And that is why experience does work. And unfortunately, the price of experience can be high. Luckily for you, you can pay the high price in TIME instead of MONEY (to a degree). Either works. It's the mistakes that you remember that add up to worthwhile experience. Which pays off as "instinct". And what about your mom? Peace, Rs7
Yeah, and the EST people were ANNOYING seminar junkies Thankfully it seemed to wear off eventually. I guess they "got it" and then "lost it". Came as a relief to me not to be "rushed" by my friends that wanted so insistently to "help" me Great story about digging the holes. Very apropos to Gordon's trading dilemma. Peace, rs7
What system are you trading? post one (ONE!!) trade in the form of a graph, where and why you went in and exited, then we'll know what you've been doing. Otherwise this will all be complete waste of time by being an exercise in tautology.