Once thing that I\'ve learned since I started this journal is that is much easier to apologize for something that to explain something else. So I apologize for being so negative, I\'m trying not to be, but if I\'ve given you this perception, I\'m truly sorry. even though I am open to various suggestions I can\'t try all the suggestions at once, and they are often contradictory too thank you for your comments.
Some traders backtest to determine the performance potential of a method. While others backtest to determine what trading instrument to trade. You fall into the latter because accordingly to you, you already have a profitable trading method. In fact, you've stated you have several methods. Thus, backtesting for you is to determine what you should be trading and not what method you should be using because it should be obvious you'll be using your profitable method or your best trade methods. It's not uncommon for top traders to have more than one trade method for different types of market conditions to help minimize drawdowns. That said, you mentioned in your opening statement that you wanted to only take high probability trade setups along with other things after that statement to imply you have profitable trade methods but the problem is your discipline in executing the trading plan involving your profitable methods. Thus, you can't call something "high probability" unless you've have already tested the methods and have some sort'uv statistical data result to support such a belief that you want to only trade your high probability trade methods. What's confusing to me is sometimes in your thread you imply you have a profitable method and the problem you're having is the discipline. In contrast, other times in your thread you imply you're still designing your method and because of such I think others have been making suggestions about things you should be looking at while trading (e.g. s/r)...as if they too think that you're still designing a method and they just want to give you some possible suggestions of tools to use. ******* Therefore, here's a direct question...please answer with a YES or NO...do you have a profitable trading method and is this thread "trade journal" about your discipline problems in executing that profitable method (you yourself is sabotaging the method in real trading conditions) ??? ******* If you answer YES to the above...if I were in your shoes I would be making every effort to determine what's the best trading instrument for that profitable method via backtesting it and simulator trading the method on many different trading instruments. As for the merits of backtesting...you should get as much historical data as possible and review each and every chart via your trade method...computer code or the manual test. If you don't have access to historical data...you need to do such going forward via accumulating your own data (downloading quotes and charts). As to the merits of computer code...if your method is coded...use it and test the method. If your method is not coded or you think the method can not be coded, you can still test your method but manually. Obviously manual testing requires you to be honest via no fudging of the trade method rules to make something look more profitable. Last of all, I'm always suspicious of trade journals of struggling traders that say they have high probability trade methods while not posting any images of what it looks like on their monitors...as if they don't have a profitable method or it's not tested because they're still designing the method. Thus, there lays the discipline problems because the pressure in real trading is due to knowing the method isn't ready to be used. Mark
I see some of your points, like it\'s easier mentally, but not all, why are the stops random if it is under previous swing low and I\'m buying off HL double bottom?
Redneck, You talk too much A fixed stop is infinitely more random than a stop based on evolving market conditions and volatility. Do you use a fixed profit target as well? I could imagine that it could work for a trader that only trades a very specific setup. A scalper approach. But for a dynamic trader, one surely has to be dynamic in stop placement as well? Do you use the same stop during a financial crisis as you would during a slow summer holiday? Do you use the same stop on a breakout trade as you would trend trade? I know that there are many times I anticipate a certain action, but I know that a 1 point move against me would negate that action. An example would be a breakout trade. It simply does not make sense to wait for a fixed 2,5 point to get hit just for the sake of the stop getting hit. Other times, I know that I may have been a little early when I entered around a swing high or low. Here, I would give the market the opportunity to retrace some before it proves me wrong. Thus, a wider stop may be allowed. Another example would be if I anticipate fast momentum and the market simply falls asleep around my entry. No way I`m going for lunch with a 2,5 point stop in the hope that something happens. Exit ASAP and re-evaluate. I was wrong. The risk is of course defined in advance and controlled by the number of contracts or shares that are traded. Attached is an example of how this could work risking 2,5% per trade on a $15 000 account. With this approach, the idea is to increase/decrease size as the account increase/decrease in order to ensure a fixed percentage risk per trade. Personally, I would be looking to decrease my risk per trade as my account grows (hopefully), but that`s hardly relevant for the question at hand. I`m curious, Redneck. What instrument do you trade and what is your fixed stop? Target? Thanks, LF
Find out what your max loss would be in points. Problem solved. Personally, I chose 5 points as a weekly target because I would be able to make a living on those profits trading 5 contracts. A realistic and reasonable target IMO. This time around though, I will increase very slowly to 5 contracts. I will probably stay with one contract for a long while and resist the temptation to size up. You say that two weeks seems so long and I do know the feeling. Well, consider what the alternative is? You might lose your ass and risk not being able to get back in the game for a long while? Provided that you don`t give up after that? You really have to get a longer perspective on this. Focus on trading consistently with one contract. Increase your size in time. Personally, I just re-evaluated my own plans and it seems like I just might have postponed buying that mansion for at least a year I did have a daily max loss and a weekly max loss, but I`m re-evaluating those numbers. Currently, I`m using three maximum losses in a row as my cut-off point for the day. Remember, BL. Taking your time and doing things properly although it seems slow at times, may turn out to be the fast way. Good luck
My wife says the same thing My stops are deliberate (fixed), my entries are deliberate (has cause), but my entries also adapt to the direction of PA, stops do notâ¦. And no I do not use a fixed profit target - PA dictates the target(s) Volatility â I may have entered, and exited for a profit, or a loss â by the time another figures out their variable stop Which bodes this question⦠How do we ever know what volatility will be, so we can determine the appropriate random stop before hand You psychic I do not scalp, most of the time⦠(although sometime I gota get out of dodge cause things changed) How about explaining why a âdynamicâ trader, needs a âdynamicâ stopâ¦. What exactly tells you this trade requires a .05 cent stop⦠and that trade will require a .20 cent stop Like I said my entries are deliberate (have cause), but evolve as price evolvesâ¦, my stops are set in concrete so I know exactly how much each trade could cost me.. During the crisis is precisely when I could think of no better tool for a beginner, or me, to have - a set stop loss We would know exactly how much each trade could cost (although slippage was higher than normal during that period) Price was moving really fast at times, and the last thing a trader needed to be thinking about was how much they âcouldâ lose â I knew â within a few pennies My mind, my fingers, and my actions were not nearly quick enough to keep up with the market when it was moving lighting fast â less to think about the better â then and now. Yes â but remember I have two from which to choose B/Oâs are born from a range, trends are defined by one I typically day trade one of these four - LVS, RIMM, AIG, POT Not going to discuss my stops any more than I already have â took too long to find the optimal settings⦠================================================================= Like I said; profit target is what PA dictates â and identifying targets is not that hard Price does whatâ¦, trends, then rangesâ¦, trends, then ranges ================================================================== Hereâs the bottom line, I provided my reasoning because BL wanted to discuss There are as many ways to trade as there are traders Heâs trying to find his way, why not give him some âspecificsâ so he can evaluate them and make a semi informed decision Heâll still need to trial and error it/ them to see if he can create a working approach =================================================================== I would also ask you address this please; How about explaining why a âdynamicâ trader, needs a âdynamicâ stopâ¦. What exactly tells you this trade will require a .05 cent stop⦠and that trade will require a .20 cent stop Thanks RN
BL You posted 2 losses back to back, one for $270.., the other for $420 â almost double I took that to mean your stops are all over the radar I donât know anything more than what you tell me â and I assume nothing⦠A stop just below the previous swing low could be the answer.. if you're building context, then using PA 100% of the time to enter, and set your stops But then why was just below the double bottom not the stop?? Sorry Iâm not a mind reader⦠And I still question why the 2 losses are so far apart in $ amount I strive for smooth equity curves, up and down - because if I have a spike either way - I am not managing risk appropriately (eta please don't confuse a winfall with a spike - sometimes the stars align and price moves in a way we're able to benefit from) RN
---my current broker shows my daily pnl when I place the trade and my trade pnl when I close it, so it\'s always in my face. I\'d like to focus on points, but see $$$ all the time. Need to check if the new software I\'m testing has an option to see PnL in points instead... thanks!