Knowing how far a trade can go

Discussion in 'Trading' started by MONEY4NOTHING, Jun 30, 2009.

  1. Of late, I tend to NOT put on a position unless I have an idea of how far the price can go...of course, this gets revised continuously after the trade is made. I have missed some good trading opportunities due to this compulsion.

    Do other successful traders on ET share the same trait?

  2. truth is ...... you never know how far its going to go.
    (or at least i dont).

    my trading is mostly identifying entry........ i do put in targets at support or resistance areas based on the performance of stock and the underlying index- but after that its all management.

    i use trailing bars and then trailing pivots once the position is going in my favor - this allows you to catch huge moves when you dont expect them- sometimes really huge-

    thats the only way to really boost your sharpe ratios!

    happy trading!
  3. I have absolutely no idea.....but I have noticed that it helps if you look at the resistance on higher time frames to get some sort of idea.
  4. how far?

    long 100%*margin loss

    short +∞ loss.....

  5. I take multiple factors into account before I set the target & make a trade (I trade only index futures):

    a) S/R
    b) Order flow(Bid/Ask Volume)
    c) Price action
    d) Volume
    e) Gut feel

    Based on the above I try to guess/predict the minimum price movement (in my favor, of course) before entering the trade. After the trade is made, I keep revising the targets based on the above 5 factors.

    If I cannot guess/predict the minimum price movement, then I tend not to put on a trade even if n indicators & S-R scream GO. Earlier I used to place a trade when I felt I had good chance of success, now I need a quantitative feel of the success before I place the trade.