"never let profitable positions turn into losing ones"

Discussion in 'Strategy Development' started by Gordon Gekko, May 29, 2004.

  1. we've all heard this. i know it all depends on how you trade, but how do you decide at what point you enact this rule?

    right now i think my biggest weakness is when a trade goes my way a decent amount, but slowly turns into a loser.

    obviously you can't say when you're ahead by 1 tick, move your stop to break even. so how do you determine when to do this?
     
  2. I think it's good to do some scaling. You have a sense of how far the trade can go, and if it reaches there then you take some off the table, perhaps 1/3 to 1/2 of your position. At the same time you readjust your stop. If the market moves against you, at least you've locked in some profit. If it goes for you, then your can ride the rest of your position. This strategy helps smooth out the equity curve.
     
  3. Mecro

    Mecro

    Take partials.

    Period.

    If the rest of your size is goin back the other way and has lost more than 50% of original profit, time to just go. You can always re-enter.

    Unless you are building a intraday-daily position, but it does not sound like you do that.

    You are trading ES, no reason whatsoever you should ever let a profitable trade turn into a losing one. You dont have the illiquidity, order flow abuse and price improvement issues that many times force a profitable trade into a losing one.
     
  4. Idoogye

    Idoogye

    If I were permitted to have only one trading rule, that would be it.

    As for where you take profit on a winner, I'd say: once your original risk is gained, move your stop to breakeven; after that just close out the trade with a market order if/when you have given back 50% of your peak profit, that's all. Full stop. :cool:
     
  5. Are you trading contracts with expirate or decaying? What amrket are you trading?

    In sending signals as an advisor and trading on it, I following the 2 contract rule which in short is have two large S&P contracts when halfway followed pull back. So if the full length is not meant (which the market loves to do) you are never squashed.

    -Mike
     
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  7. Grob109,

    So, what is your normal (or average) target compared to your stop loss? What I mean is what is your risk/reward ratio? Please answer in simple English.:D
     
  8. all of these questions are answered with lots of good historical data and back testing. that will give you the answer.
     
  9. risk/reward ratio? :eek:

    Would you not "accpet" 1 point/pip for "reward" because it is not worth the "risk"?

    I wouldn't complain if I had 50 dumb trades per day that always turned to only 1 point/pip profit and I had to decide whether to "take" it or not.

    It is the most "droppable" rule and, the most stupid ever invented by "high end" traders to scare wannabes.

    PS not picking on anybody. just my $0.0000002 on risk/reward ratio :cool:
     
  10. So if you think the stock is going up 1 point, and its up 10 cents, you aren't allowed to give back the 10 cents? How much of the 10 cents do you have to preserve? 9 cents, 8 , 7, 6, SELL!!!!!!!

    And then it goes up the point without you.


    Sadly, it's a rule that really makes no sense and can't be implemented without screwing up the method you use.
     
    #10     May 30, 2004