Today I caught the trend reversal on the YM at a pretty decent spot. The trade began with an extremely conservative 1 contract size because price action was hinting reversal but I wanted better confirmation. Well, long story short (no pun intended hah!) as the intraday swing started working well and internals were giving more confirmation of market weakness I began adding....and adding, and more adding.... protecting most profits by adjusting the stop accordingly. Well, the outcome was simply, phenomenal. It was such a pleasure to ride the trend while strengthening the position with more cars. Think about it, if the trade goes wrong from the start, the loss is minimal. However, if you were right, you have an opportunity to make it even better. Of course certain measures must be taken but I highly, HIGHLY recommend more traders look into this. It's the best money management out there for riding the trend, bar none. It also gives your peace of mind because if things go wrong and you protected yourself accordingly you still got a very good chance of coming out ahead half way through the trade. It forces you to stay in the trade with the trend and enforces getting out when the trend direction does not cooperate. One could argue that heavy cars from the very beginning would be an even greater profit and this is true. However, if you are wrong, and sometimes we are because the market tricks us, your stop loss can be potentially monstrous and this game is all about risk management. The biggest problem is adjusting yourself PSYCHOLOGICALLY to be able to perform this money management technique. See, when we start a trade we want to be right from the start, we took it for a reason, so why not start big, or hell, add if it goes against us for an even better position (supposedly) ? We are so right we need to win big! Wrong! You don't know if you were right until the trade is actually closed. That's the whole point of this thread. Small losses, huge gains, stay with the trend, never against it, what else could you ask for ! It's a beautiful thing. Good fortune and Neet the Machine, continues to kick more ass than the Karate Kid behind Jeniffer Lopez !
It can happen, I'm not perfect, but it's not very probable as my methodology is all about small losses, medium to big wins and decent accuracy. I also have personal max loss limits that simply say "Game over for today" when hit, no second chances, no revenge trading. I even quit for the day when I get it wrong three times in a row to further protect myself and my capital. This means my aim is off, maybe I'm tired, maybe the stars not aligned correctly, whatever.... if its not my day, its not my day but preservation of capital above all else. Everyday I remind myself that there is always risk involved and I constantly test myself and my own personal psychology to make sure I do what needs to be done when the time comes. Until the time comes, I'm celebrating with pride and sharing tips here and there to help. Daytrading is a lonely profession I like to share the plays with fellow traders to initiate in some form of communication, I hope this is alright with you. Good trading
Actually, Neet seems to have found a money management method that works for him. The fact is, you need to use what fits you psychologically - and Neet is doing that.
It's funny you say that TJ but as I have said in many threads I strongly believe in Karma. Wish more did in here because there are some talented fellows in ET but sometimes they hold back in fear that their secret recipes might be stolen when the secret recipe is right there inside us all. Good trading.
A similar technique, called shorting up, if applied this last week, intraday, had outstanding results as well. The new found volatility is providing those traders with proven techniques, a reasonable account size, and pre-defined, proven money management skills to shine. Good trading to all, Osorico
Osorico, Never heard of shorting up, at least the term. In principle it sounds like averaging up or scaling up but on the short side as the price goes lower. If that's what it is, that's exactly what I did. However, if it's something different I would appreciate if you could post or direct me to a link where the money management technique is detailed. Thank you and good trading. Neet
Term I learned on OTC trading desk years ago. I guess I misunderstood your term averaging up... I took it to mean you were adding while playing the bounces. And in YM the bounces were worth playing. Shorting up means exactly as it sounds... Scale in shorts on the bounces. Not the same as an add to an already working trade. Cheers
I gauarantee you that if you make that trade continuously going forward with the same support from your indicators of choice you will get crushed. Enjoy your success while it lasts.