Help! These breakouts are killing me

Discussion in 'Risk Management' started by Matt Houston, Jan 21, 2012.

  1. Hi,

    Hoping for some advice, I am a total mess right now.

    I have spent years learning about the markets, reading books, reading forums, staring at charts for hours every night after putting in a long days work at the office. I have tried dozens of methods on loads of instruments on every timeframe.

    I came up with a method with is a hybrid of different things I have picked up on, breakouts of triangles with a volatility stop entering at the high of the breakout bar and trailing the resulting trend with a moving average adding positions where inside bars/days occur (see Toby Crabel).

    So I noticed that the were a lot of consolidation patterns in individual stocks taking place the past few months and thought this would be a great time to actually place some live trades.

    Of the stocks I was watching many I didn't trade as they didn't breakout strongly enough or the volume was too low. I took SODA.O gapped then stopped me out. But PMO.L and MSFT.O broke out quite nicely.

    So although they were making slow but steady progress I guess it wasn't enough for me. On Thursday I started to read the market news about how the stock market will be in the doldrums for this year, or that the global economy is on the brink of tanking, and as I watched the indices bob up and down directionless and my two positions going nowhere I decided that I have no business being long in potentially three month long trades in this kind of market, I should be spending my time on shorter term methods, despite all the years of effort I had put in getting this far.

    Well I closed out my positions in disgust and guess what happened the next day to MSFT.O. I fell for the oldest trick in the book. PMO.L was up slightly too, both bucking the trend in the general market. If I had stuck to my plan I would have moved both of these to breakeven now.

    I feel really discouraged. These setups don't happen all the time I have missed a great opportunity, maybe we are going to see a rally in the stock market and I missed the boat. But if another setup were to happen I would probably get the same market gitters...."how can this stock defy the general directionlessness of the market in the medium term, I need to be swing trading, in and out".

    Maybe I am not mentally cut out for this kind of trading...or any trading that matter. I have already been looking at a swing trading method based on the V phenomena, but maybe after a few trades I will get disillusioned with that too. Then swing trading might be physiologically easier to do.

    I don't know I could ramble on for hours. What do you guys think?

    See charts attached.
  2. An IB formed on MSFT which I tried to take but got stopped out. These are less successful than the initial breakouts so I put smaller size on them, but when they work they can add alot to the size of the position, especially if you get a few of them in the trend.
  3. If anybody else trades like this (in this day trading obsessed world I have not encountered anybody who does) please pm me, would love to hear from you.
  4. hkrahra


    Trade SPY ,trade crossovers
  5. Moving average crossovers?
  6. so let me get this straight.....

    you got stopped out on one stock, and the second stock was a good sized winner but you exited prematurely?

    and the problem is ?!?!?

    You can't win on every trade. In fact, expect around a 40%-50% win rate.

    You might also want to consider dropping down to a 60-minute or 30-minute chart. So that if you miss a winning trade, you're not so emotionally distraught because the next trade will be around the corner.

    Also, the broader stock market has been moving up for months so there was absolutely no reason for you to get scared out of your position.
  7. No, it's worse, I had one stop out and exited two good sized winners prematurely but could only post a chart of one.

    I know I can't win every trade, 50% is better than what I had in mind. I guess my problem here is that I did everything right, and I called the market right, but I couldn't stick to my plan and listened to other peoples opinions and bailed and now I feel sorry for myself and am looking to quit my strategy.

    The thing is I have read this from other traders millions of times, and thought "no probs, I will use a simple exit strategy like a MA so there is no indecision about where to exit", and ended up exiting early anyway.

    What it comes down to really is I am a pussy, and I need to sort myself out.

    I get paranoid about shit. You know sometimes I get paranoid, living in Europe as I do, that with the slide towards social democracy private property will be outlawed soon and money replaced with grocery tokens. Yes, that is the seriousness of the problem we are dealing with. Maybe I have no place trading.

    But enough whining, I am going to give this another shot and stick to my plan, no listening to anybody else's opinion, only checking my positions once a day, those are the new rules.

    Thanks for the reply, it's helped.
  8. The other premature exit if anyone is interested
  9. "And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!

    It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it.

    Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance."
  10. you can not be jessie livermore

    then do not try to do that.

    you do not need sit and watch, shut down the computer.

    those little up/downs noises always will shake you out.

    i learned this lesson. so now i do not day trade often. just see the big picture, then line in it, then forget about it a while. it helps.

    i day traded future before, now I just trade options. I can totally ignore those day trader's noises and ride. stop loss placing is kind of nerve-rack thing, it creates loss opportunities because of those day traders' noises.

    in options, I know my risk, no one can take my stop loss and then run in my favor. no such thing. I do not need stop loss.

    the market never moves in pure neat ways, just roughly. in an up trend, there are decent retracement too (to a day trader), in a down trend, there are some nice dead cat bounce rally too, ALL those will confuse a new bie, those little naughty things often will make you exit your position prematurely.

    learn to distinguish true reversal signal and naughty noises is a big gap between a new bie and a pro.

    it takes time
    #10     Jan 21, 2012