Hi Flashboy, The scientist made some really excellent points in what he said to you. I assume you have a good trading plan, and from time to time you just get reckless and deviate from it? This is something that does happen and is in fact a kind of self-sabotage. I know, I've done it too. There is only one way to prevent it as well. Your method needs to have a number of elements in it. 1 Clearly defined entry points, that have tested in as having a good probability of success. They will not all win. some will go against you straight away, others will go a little in your favour and then fail. 2 A clearly defined failure point for the trade. i.e. the point at which it is clear that the trade is not going to succeed and therefore must be abandoned immediately. This will not be an arbitrary stop level measured always as the same number of ticks, but will be defined by the setup and the market as it presents itself at that time. 3 A clear set of targets for taking profits. I say a set of targets, because every set-up will have a range of probabilities associated with different levels of profitability from the same setup. Again, since no 2 setups are ever quite the same, the profit targets will vary slightly and wil not be totally arbitrary as measured in ticks. 4 From this information you will have a profit/loss ratio available to you for this particular trade. It needs to be better rather than worse and to give yourself the best profit opportunity versus the risk you are taking. 5 When calculating p/l ratio for the trade, it needs to take into account the possibility of exiting the trade by taking partials at various stages in the trade using multiple contracts to do this. 6 You need to know the probability of a successful outcome otherwise there is no point in placing the trade. i.e. playing with the odds in your favour. this does not guarantee the trade will be successful, but if say 70% or whatever (a decent number) of trades with these characteristics succeed, and the risk/reward is at an acceptable level, then you have a trade you can take. Without even 1 of these items present, then the trade is improperly planned, or unplanned, and has a significantly lower probability of succeeding. Enough improperly or unplanned trades will drive you out of the market eventually. Another point to consider is that there are times of the day that no trades should be placed at all. If it is one of those times (like 1 min before a scheduled news release etc.) then an embargo on taking positions should be in place. Also, markets have particular time ranges and or general conditions that are more conducive to set-ups being successful than others. This has a bearing on the successful outcome of the trade. Most importantly, If it doesn't conform to the above - dont take the trade. It was only when I started to approach taking trades in that way that I became consistent. Hope this helps. Best Natalie
Maybe using a physical stop loss order would have prevented most of that loss?! As far as using "stops" I always remember the "hot air balloon" scenario, it goes something like this, "immediately after the take off if you think the balloon is in trouble you better jump out otherwise the higher it gets the harder it is to jump!!" The same goes with getting out of a losing position, that is why I think placing a physical stop loss order immediately after entering a position may not be a bad idea after all ...IMO
Even if I am actively managing the exit with a limit order (doing 'no stop' scalping for example), I have a hard stop beyond that so in case I can't get out, I'll still get stopped out. If you have a system that allows for bracket orders, this type of order setup is fairly automatic. If you exit on the limit order, then your stop gets cancelled. As Livermore says, if you are trading for a reversal pivot and the market goes against you, there is a good chance it will go past you by a lot.
flashboy, just becareful not to blow urself up tomorrow. a scratch or small profit is what u need to recover mentally . say to urself that u will take ur time to make it back no matter how long it takes. it will be alot quicker than u think good luck
Flashboy, Manage your daily P&L stop-loss with as much care and attention as you manage your trade-level stop losses. Your daily cut-off is just as important as your trade stop losses and deserves to be used with the same discipline. Its your second line of defence against doing stupid things. Q1
I simply don't understand how people trade without using bracket orders. Under which type of trading you will not be able to use bracket? TM Trader
Many platforms do not offer bracket orders or have bracket orders that are not flexible enough to be useful.