Todays plan was to trade off from yesterdays retracements. The market did not retrace to these levels, showing continued upward bias. So I modified the trading plan as the market unfolded. 1. Missed the first setup due to doctors appiontment 2. This trade was at a perfect entry. Took only 1 pt. Market gave me 3pts ( after 3 bars ) without retracing to b/e. 3. This trade was purely based on momemtum. Again took only 0.5 pt. Market gave me 3 pts.( after 6 bars ) w/o retracing to b/e. 4. Was a perfect entry, but came out at b/e ( based on price action). Market would have taken out my stop, but if stop was based on technicals rather than trying to come out +ve today, could have had 2pts.( technical stop would have been 2 pts compared to my 1 pt stop loss ) SUMMARY: - Entries were as per my method. ( except 3 ) - Displayed fear of missing out ( trade 3 ) - Displayed fear of leaving money on the table ( exits on 2 & 3 ) - Displayed fear of losing money ( by not having a stop as per my method on trade 4) Combination of these fears let me leave 4 pts on the table today and should have had ONE less trade. ( no trade # 3 )
A matter of style, but on issues like your #4, i'd say there's nothing wrong with stopping for money management rather than technical reasons, as long as you are prepared to re-enter. In fact I have a rule called "IPM" (initial phase management), where as soon as a trade goes a certain number of points in favor I move my stop up to +1 tick, regardless of the technicals. Many times I end up stopping the trade, but then re-entering a short time later. If it turns out to be big move there is hardly any penalty. It was very, very, very hard to get used to doing this, because you can only see the good results in the long run. Mathematically it's the right thing to do. You're getting infinite odds on your bet. So even if you stop it for +1 tick 99% of the time, in the long run you make money with this play. You've got to have a good way to exit for this to work. Earlier this month I had a Yen trade that came within 5 ticks of my stop, then ran on for over 100 ticks in favor. A couple days later almost the same thing-- this time withing 3 ticks of my stop, then ran in favor for over 100. The exit method: trendline break, a la DB. Very easy, no worries, no stress.
Appreciate your feedback peterf. I thought about this a countless times but my problem is on the re-entry. I always think reentry is just a commission away, but the problem is the piont of rentry. I have tried re-entries after confirmation, but most of the time find out that the move is almost done. Well I have to work on this issue. And by the way, I'm surprised you understood the post. It was intended for my monitoring, so i used my sort of decription. Thanks anyways and Good luck dmastah
The thing to consider is the sum of the money lost from "premature" (Money management vice technical) exit and the money saved from all the times the MM exit saved your butt. It is definitely possible to make this a positive number.
Trading day started with no particular bias. On yesterdays close being penetrated, decided to be a bear( this was after my first trade ). EOD trade was to the long side. All trades were triggered as per my method. 1. This buy trade was at a good entry ( lowest tick ) before it moved up 1.5pt after forming a 6 bar ( 3min ) support base. Moved stop loss to b/e. I was sure that if the market tested this low again I would lose my edge because the probability of the market penetrating this low would be high. This is what happened and I was out at b/e. The question on my mind was - should I have bailed out at least half my position at +1.5 pts ? My target for initial exit was +2pts. Given this and also that I had some leeway/time for this trade to workout before it changed its direction, I was happy with the way I managed this trade. 2. This was a sell. The mkt went down 1 pt before it started struggling to move in my direction. Initial target exit was +4pts. On the next bar I exited at b/e. On this trade I did not give enough time for it to work. Exit was purely based on the tape/price action. The stop per my method called for 2.25 pts. This stop was eventually hit ( without any move in my direction ). Again lingering in my mind is if I had made the right decision ( was it the fear of losing money ?????????? or experience telling me to exit before my stop ) 3. This was a sell. Entry was a bit early but exit was to the tick. 4. This was a buy. Entry was perfect in the sense that it was @ the lowest tick, before a 5 pt move. I had my stop moved to b/e( as per my method it was to be 3 ticks below my buy). I have no explanation as to why I made an exit with +0.5pt. This was a low risk trade. The mkt moved up 5 pts without even touching my b/e. Initial Target for exit was +2pts. Summary : Have to analyze the management of trade 2 and certainly trade 4. Did I display any fears today ? and if yes, What fears ???? Looks like fear of losing money and fear of leaving money on the table ???