how do you handle the strategy lose trade

Discussion in 'Strategy Building' started by flyingforget, Apr 11, 2008.

  1. if you have a system which performs better

    how do you handle the lose trade

    reverse your position?
     
  2. if you reverse just because the trade is giving you some heat it could just as easily go back in the original direction again and you end up with 2 losses instead of 1 (or even possibly a winner) that is extremely frustrating and should be avoided

    either be patient and set a stop and wait for the stop to be hit or the exit signal to occur.

    another approach is that if at some point during the trade its in the red and your conditions for entry no longer exist, you can punch out before it hits your stop

    only reverse if the conditions for entry are now replaced by conditions for entry in the other direction. but likely this will not happen very often
     
  3. Depends on how your system operates. 8/10 times your system will stop you out with no change in direction.

    But there are exceptions. Personally I would not reverse immediately after closing your pos. This is because your stop doesn't necessarily represent a change in direction. Just an exit point based on the underlying trend.

    The strategy I use would not immediately fade so I'm biased of course :).
     
  4. 1. Never fade a system, unless it's tested to be significant.

    2. Whether to cut, reduce weight or keep a system depends on the contingencies and the market condition surrounding the system.
     
  5. get flat