It's all about the relation between a trade size and your account size as a whole. If you're too nervous with 16 cars it does indicate that your current psychology is not yet to support this trade size comparing to your account size. At the moment you have built up your account bigger enough then the 16 cars will become as 1 or 2 cars and then the 64 or 128 cars will become a very stressful size and so on.
The fear is there and since 16 is rarely in play I am dealing with it by exiting at 2 1/4 point instead of holding it for more. Happened to me yesterday in the last hour. I could have waited and easy bank another 5 points per car but I bolted like a bold eagle the minute I got my golden 2 1/4.
You must become one with price. There are times for quick targets and times to let profits run, especially when the market has clearly trapped one side with conviction. As a trader you must determined when you are clearly in control and when you are fighting hurricane forces, where you must exercise caution. TV
<i>Well, I am thinking what is going to happen if this thing is going to hit my circut breaker and I am going to be - 16 cars. paranoid, you betcha."</i> Saxon, you are asking how to think like a methodical trader when in reality you are trading like a martingale gambler. With all due respect, there is no way for you to gain confidence to hold trades for distance when you condition yourself to buy falling markets / sell rising markets. Inwardly you know that max exposure risk means big loss when the tape surges dead straight against you. Also, you have learned repeatedly that counter-direction trading means profit swings are usually small (with some exceptions) before the directional action resumes course against your fades. Fade traders by very nature operate from a core base of fear. You see that manifest itself via excuses to exit working trades by scaling out partial when three blips in favor, etc. Fade trading = lack of confidence in the open trades. No way to change the emotional core beliefs when trading that style.
The perfect thread. !00% of the posts refer to the entry price. 100% of the gamblers posting are in Anxiety and fear. Is there a corrolation for this sympathetic behavior? None of the entry strategies are based upon a price value; All of the exits are based upon a price value. Anyone see something to think about? Why is an entry determined with one method? Why is the exit determined with a foreign method compared to the method of entry? 100% have decided to go into a fear status to complete their exits. Why can't any of these people consider being parasympathetic while trading? The answer is because they do not know what is going on in the market when they are in the market. The only time they know something about what is going on is when they are approaching the time that they take a chance and gamble on an entry setup. Studies show that these kinds of traders are at a 50% of the required 0--2 level in their brains while in the market.
Wow i am being pissed at by both Austin and Jack at the same time. Not a good day for me not a good day I tell you.
but since I am at the desk let's re hash the old pros and cons definition: Originally, martingale referred to a class of betting strategies that was popular in 18th century France.[1] The simplest of these strategies was designed for a game in which the gambler wins his stake if a coin comes up heads and loses it if the coin comes up tails. The strategy had the gambler double his bet after every loss so that the first win would recover all previous losses plus win a profit equal to the original stake. As the gambler's wealth and available time jointly approach infinity, his probability of eventually flipping heads approaches 1, which makes the martingale betting strategy seem like a sure thing. However, the exponential growth of the bets eventually bankrupt its users. The concept of martingale in probability theory was introduced by Paul Pierre Lévy, and much of the original development of the theory was done by Joseph Leo Doob. Part of the motivation for that work was to show the impossibility of successful betting strategies.
Moreover, it has become impossible to implement in modern casinos, due to the betting limit at the tables. I wonder why is that? Why would they limit a client to bet using this system. Wouldn't allowing him to keep on doubling flash all his money???
Also, I think the flip of the coin example is flawed. When one flips a coin the chance of tail is always 50%. When market dives 20 points the probability of it diving another 20 points is not equal to probability of it bouncing up 20. The more the market goes one way, the more there is a chance it will snap back and re track its movement. Therefore, if one goes against the trend with 1 contract ES at market - 20 points and then then another at market at -40 and then at market - 60 doubling the cars. The market would have to be at - 60 points and the position would be 4 contract at 60 points below the starting point of the trading session. At this point the probability and historiacal data would suggest that the market would re trace enough to take profit and be in the + and not fall another 60 points.
however, if the market were to go down another 60 points, one would continue doubling at 20 point intervals which would bring the position of 32 contracts long at -120 points which would be the equivelent of a 1100 to 1200 drop. Now in order to be able to hold over night and not get a margin call one would have to have around 250K in the account. So I say with 500K one could pull it off. My problem is I do not have 500K. Love to all!