I'm not a day trader. At what point do you decide to take your loss? Is it a dollar or percentage amount or does it depend more on price action. Or is it that you are flat at the end of the day? I'm of the opinion that the first loss is the one to take and that you can always re-enter if the price changes direction.
Hello Handle123, If you are not averaging down on losing trades, how do recover from 2 to 4 losses in a row? Thank you
I take my loss when PA has proven my premise for taking the trade in the first place is wrong. That said if the context is right for doing so I can swap to another technique to salvage a trade gone south on me but that is not always the case when my premise has been negated. Sometimes I just have to take the loss then mitigate the damage done in another trade. I don't use a set SL or set PT. I let PA dictate that to me when I should likely take a loss or take a profit. Yes. I am always flat before the session ends win or lose. Taking the first SL that has been set has not worked well for me in scalping unless it is a wide SL and if it is wide and I leave it set until it gets executed without moving it to a smaller SL when PA indicates I just need to exit then I find it very hard to recover. But I find I have to have a wide enough SL for a scalp to have room to develop and work because too often the market will probe deep enough to hit a set SL then immediately go back in favorable direction that would have given me a PT. If I have too tight of SLs that does not allow for probing interbar and intrabar movments then my account suffers too many papercut losses that bleed away account balances. So I use PA SLs and will move them around as PA develops. I cannot know beforehand how deep an institution will press a probe before another institution pushes back nor can I know how strong the pushback will be. Therefore, I try to stay in a trade as long as PA ( which to me involves the price that a market reaches distanced traveled) but ALSO "how" it reached that price. Momentum is part of PA. Sometimes it is better just to slide a SL to get it executed before it gets hit in it's original position and sometimes PA indicates it is better to move it and widen it to stay in a trade because upcoming resistance/support levels are being approached and have a good chance of holding and a probe in the opposite direction may well take place.
Most traders are too dumb and can't do 80 - 95% win rate without averaging down, even with a small TP target. We buy the high and sell the low too often. Trade doesn't even go a few ticks in our favour a lot of the time.
Sounds like a normal martingale equity curve. Sometimes the range falls apart, in the wrong direction!
This actually happens to me all the time, and if you trade those 1:20 risk / reward opportunities like was showed to you in the other thread, one win erases all the losses in the first couple secondz...
I lost my emotions decades ago, I backtest 25 years plus of tick data on 80 plus futures, I come to trading as a business, have small staff now to keep busy running ideas. I have found that over 80 % of time system can recover losses on next signal. As an example: H&S bottom formed of average swing points downtrend, lose on RS breakout of 4 points, BUT does not break lows of head, pattern forms 2nd RS so system goes for more than normal target. No revenge trading here. Sold my entire stock position last year. I have more experience trading futures. Am 68yo, have learned how to control risk in long term trading well. 90% to 98% of long term trading in futures are losses each year however system recovers 98% of losses plus makes overall profit on options. Am almost always early in finding extremes of markets. I never been one to go with the flow of majority of people. Not till age 35 found out I had Aspergers, not good dealing with people, don't understand why people plan vacations for months and yet have no savings. Testing of 25 years of current system, which shuts down when volatility too great, dozen losses in ES occurred of 3 or more losses in a row. Can't negate losing. System generally is consistent of being profitable in 23 -24 hours. 1-3 losing days a year on any one future, system trades 60 plus markets. Targets and risk larger in Energies. When I use to ave down, if I just never ave down, seldom have losing days, but backtesting proved much more profits made by ave down since am usually early. I use to ave down 12 levels. I do have very low losing percentages. I own seats at major future's exchanges, more volume one trades, less fees, use to trade over 10k lots to get cheapest. And 98% of my trading been in 401k LLC. Am very tight with money. Lol, people have mentioned this most of my life, most people not had life I have lived, 3 years in Army as an sharpshooter, then 19 years doing Wet work, one on one, ghost, for our government part to full time in some of shittiest countries in the world. Over 200 parachute jumps, bad back to prove it. I don't have most emotions most people have, no empathy, no joy, but have skills many don't have. I still go to gun range at local military installation and pop cantaloupe at half mile, I be ready if chinese ever invade. Freedom is not free, I could care less of what people think of me. Have been employed by government most of my life. Gives much time to study markets, they more friendly than people. I NOW risk approx $200 to make $50 to $62.50 in ES,, don't ave down as trading other markets looking for patterns. Am strict on my stats.