Usually time frame dictates amplitude. Toggle the interval to find some big waves, catch a pullback, and sit. Often times the trend will explode, and just sit back and let it ride. When it falters and slows, reversals are usually close by. Risk:Reward is critical. VIX dictates operational timeframe. Higher VIX = smaller time frame. Visa versa. Large time frames can be used to gauge direction and lower for entries. I refer to both, but usually, don't need too. The key is to get into the habit of trading BIG waves. Stop going for peanuts. Over time, this messes with a traders psychology. Repeatedly hauling in big scores calms the psyche and liberates it from that cycle of worry.
I think here you make a strong assumption that each entry on a trend trade is manged separately... as if entries are independent trades. Suppose the price is $20 and the trader thinks this is a likely start of a trend, the price can move to a likely target of $50. The initial stop-loss is 5$. The trader wants to limit risk at $500. So, the trader buys 100 at $20 and sets stop to $15. Suppose the price has risen to $35. The target is still $50 but the volatility increased. So, the reasonable stop-loss is now $10. If the trader buys $100 more at this price and moves the stop on the whole position to $25, the trader still risks to loose the original $500 on the whole trade (2 entries combined). As a whole trade concerned, the trader risks $500 to make $4500 if the tragte of $50 is reached. Suppose the trader missed the initial entry and is going to buy at $35. Then with the same risk of $500 (and a reasonable stop loss of $10 per share) a trader can only buy 50 shares. If the target of $50 is reached, with the same risk of $500 on the whole position the trader will only make $750 compared to $4500 with early entry and scaling-in.
Can you STFU already. Everytime I read one of your posts its the same shit 'gyrations this gyrations that -- maximum swings open to close and you end by saying your methodolgy should exploit these swings' Do you cut and paste the same post over and over? Rant over -- Carry on :]
I only skimmed through the responses but somehow I get the impression weâre not sure⦠======================================================================================== My simple minded answer⦠1.) Enter a position 2.) For what ever reason the trader gets a read this move will be a âbigâ one (big not equating to long term â thatâs swing trading, or investing⦠and requires different approaches) 3.) Scalp a portion of the position and leave the remaining to run. Okay run where⦠To your various âalready definedâ target areas (yes identifying them can be done) Okay how do I define theseâ¦. 1.) Measured moves 2.) Value areas 3.) Pivots 4.) S & R lines from previous PA Take you pick⦠So now what⦠Monitor PA and see if it keeps supporting your initial readâ¦, remain in the position if it doesâ¦, exit remaining position if it doesnât But I donât feel like sitting there â then enter a trailing stop (the setting of which youâve already determined by testing on the stuff you trade⦠and selected so it is not routinely taken out â by the typical pull backs â during an average dayâs PA) Nothing glamorous â or complicated⦠But then neither am I⦠RN
Interesting point. But, Van Tharp... whom I used to visit with (a decaded ago) when he came out to San Diego to visit his son had educational material which made the case for trading profits more aggressively... I have not looked at it for a while but I believe it smoothed returns. I am pulling this from memory but I believe the point was it reduced portfolio heat. I did not take his classes on the subject but he did share some of the concepts with me.
I trade three timeframes intraday, swing and long term commodities, so each for me have different ways to trail for "runners" as I generally take profit along the way. For longer term trades, I found what worked best for me, as soon as I could get to breakeven stops, from daily bars, I would revert to weekly charts as I use monthly, then weekly for deciding on long term trades. I use either RSI or MACD looking for weekly divergence's, and wait till near the close of Friday, and if the close is beyond last weeks high if I am short, I get out. My protective stops stay at Breakeven stops so I don't get whipped out of little correction. Does it work every time, nothing works every time, I sometimes lose chunks of profits, but it does allow me to catch some monster trades, which makes up for the others.
You're basically talking about trying to catch the meat of long-term runners, Turtles-style. Therefore, why not use some of their exit techniques to help you stay in the trade? ... MA signals, std. dev. multiples, and the like. No matter what you use, obviously you can always get back in if you see something that suggests you bailed too soon ... this is the beauty of trading.