Well the truth is that usually stops are hit at the least favorable times (during vertical oversold/overbought conditions). Realizing one is wrong but waiting for the retrace to reduce the loss in a market that is constantly plotting gyrations is a probable good exit strategy when wrong; provided once has an emergency stop on top of that.
A stop on a stop, eh ? Interesting. No question, if your first stop gets hit, more often than naught, the price movement is likely to reduce the loss from that of a hard stop. However, what is the logic to employe ? Seems to me like a Chandlier exit would be appropriate then.
Might be due to my style. I use a combo of simple TA, buy low sell high, average down, and get out when wrong, especially, reversing. I don't have a problem reading an uptrend or a downtrend but chop I do, so basically formulated a style that will defend myself against chop by ways of simple dollar cost averaging. Anyone can trade a trend, the problem is when price is messy. Another problematic is when price is trending and dollar cost averaging is done against that trend. Anyway, you get the idea.
Why not just write it off. Chop happens. It's part of the business. This thread is like curve-fitting a system. Your strategy should be at a point where it's good enough to weather any kind of chop.
Hi Macattack: You are learning failure. If you wish to keep your GF, then don't play with charts. This is not the coin flip mentality going on. At 20 ganes she will have a p < 0.05 and have the right to tell you to quit trading. Set your self up with a glue stick and scissors and print and chop up this thread. One two sheets use the titles: skills and limitations. Paste all chopped substantive comments one chop at a time. The non substantive stuff, chuck. Right now at this moment, you have a low valued skills/ limitation ratio. As each post comes into this thread: print, chop and paste and recalculate your skills/limitation ratio. On weekends, you recut and repaste the two lists so they are ranked as priorities. Your job is to convert short term memory items to long term memory and AT THE SAME TIME shift overcome limitations to new skills. In ten days, you can add the 10 GF failures to 10 new skills moved from the limitations. Then you have a p < 0.05 and you can then decide to quit trading in a more knowledgeable way. Reading facts does not help you learn. See how long it takes you to never use that chart setup again. Here is a limitation to overcome. Make your chart (5 min, see wrtrader) such that the rightmost side is clean and always available for bars to form in. Then project the Right Trend Line all the way to the price values. Also add a Left trend Line. Price is now contained. When price stops moving right to left, then note volume falling. When volume bottoms, you see the price BO'ing out of the RTL. Reverse. This is one rule for all trades. CW people like you can learn this before they quit.
Hello Daring, jack hershey has just replied to a thread you have subscribed to entitled - How to Avoid Getting Whipsawed in Chop? - in the Trade Management forum of Elite Trader's message board. Yet I don't see his message, PRAISE IGNORE! Now please don't quote him!
EXACTLY ! and tight stops make this highly probable. Bottomine: for systematic trading, tight stops are not good...at all.
the thing about whipsaw is, you get long, then you get short, then you get long again, and finally it has nothing more to do with making money, it is just a matter of preserving your mental sanity. It's one thing to preserve your account balance. It's another thing to preserve your mind. That account balance won't do you much good if your mind is shot.
In the end is about detecting if the market is trending or trend-less, as one requires one set of tools and the other a completely different one, should you choose to dabble with it....staying out is also a position.