nod, i thought you might like this since you and your hubby are musicians. Whipsaws are part and parcel for breakout traders to contend with but if we are "players" in a game of probabilities we take the signals and deal with the results as they are handed to us because we know we have an edge and in the bigger picture (each individual day) we will come out ahead as soon as we get "THAT" intraday trend we are fishing for. http://www.youtube.com/watch?v=LiE1VgWdcQM http://www.seykota.com/tribe/ http://en.wikipedia.org/wiki/Ed_Seykota Trend trading is where the money is at and for sure whipsaws are the #1 reason many new traders get scared away because whipsaws are not traded properly with CONTROLLED losses to get to the days "GRAVY". Gotta admit, i liked the song.
Hog, I completely understand what you are saying here and in fact this has been on my mind through the weekend. Last week I was asked whether Iâd tried Mark Douglasâs 20-trade exercise (choose one equity or future and take 20 trades on it using your particular strategy). I still hadnât at the time, but on Thursday I planned to give it a go, and for the next two days I traded all my short signals on HANS (if adhering strictly to the exercise I probably shouldâve taken ALL my signals both directions, but I was staying in the parameters of how I trade). I missed the opening trade Thursday due to not getting filled before a sharp drop. I took all my other strong signals and only missed two due to a couple breaks away from my computer. As a result of sticking with this plan, I captured a superb 3-minute drop, which provided me with a nice quick profit. To anyone looking at the chart I posted on 3/12, it appeared that I had a magical ability to pick a perfect top and bottom on the most gratifying move of the day, but in reality it was because I was taking all my setups that I happened to catch one of the best moves. I also traded GS that day (my opening trade after I missed the opening HANS trade). I took a short position at overbought (SPY also overbought), exited close to my max loss, then realized HANS was setting up and didnât bother with GS again. Now, say Iâd decided on open that GS would be my equity of choice for the exercise, AND I chose to trade my signals both directions. My opening trade wouldâve been long at oversold. I wouldâve been stopped out at my max loss of $250. Then as soon as GS left a hammer at the pivot off next oversold, I wouldâve been long again. The trade wouldâve moved in my favor and I wouldâve moved my stop to b/e. I wouldâve had two choices when it reached "overbought": Take profits on half and let the other half ride, or simply move my stop to lock in a small profit and let the entire trade ride. Since it still had to test the original HOD at that point, there was no reason to fully exit the trade. Either choice wouldâve kept me in a strongly uptrending trade that need not have been closed out until the end of the day. (Chart attached.) With trading as disciplined as this, it's hard to lose. But what would I (and most traders) likely have done after the initial loss on the long position? Either gone short (and lost again), or abandoned the stock and moved on, despite an even stronger long signal only minutes later. The chasm between intellectually grasping a concept (knowing the right thing) and being able to implement it (doing the right thing) is huge, and building the bridge is sure taking me a long time. P.S. - Enjoyed the song and the 6 essentials!
nod Nice progress you are making. Keep it up and you will be fine. Progress is what this game is all about because this is about correcting the mistakes every new trader makes regardless of their style in the beginning. Myself, with the bias of the +6/-6 which tells me which side of the mkt i should be focused on (+6 = a long bias, -6 = a short bias and also the pivot points bias of are we above or below one or the other, support/resist, are we in a trend day?, etc). Those are clues for me to "WORK" that side of the mkt. In other words, if my bias is long i will work the retraces, channels, ranges etc ONLY to the LONG side of the mkt. For me it is far easier to focus on ONE SIDE of the mkt when the bias in in your favor than trying to WORK both sides. I will not go the other way UNLESS i get a reversal golden signal. That in my opinion makes the job of accepting risk a lot easier than trying to work the wiggles of NOISE. I am a one directional trader, no AC/DC for this guy. HA Just a sidenote: The other reason we all must condition ourselves to "TINY" losses is because if we allow a loss to get "AWAY", it is that much harder to bite the bullet and pull the ripcord to bail out. If we traders are conditioned enough to "SMELL" a loss-------------we should take it before we have to eat it. The larger a loss gets, the harder they are to swallow. There are two major hangups all traders must get past to move to the next level and realize how much fun trading really is. We all know the first is to cut the losses short. The second is as we all are told from day one, keep the winners and WORK the wins. Yes, i know it is easier said than done. BUT, it is no simple statement..........it must be done to move on. Think about it ..........one conditions us to get out of a trade fast and the other conditions us to stay in a trade. No wonder this is a tough game. Good evening. PS: the reason i only work 1 side of a mkt with my so called bias clues is because trading an animal like ES it is impossible to tell if the next 1k order to come in is a BUY or a SELL order from whoever. the order could be for an initial trade or a GET ME OUT trade. Thus i am always thinging a mkt will continue in said direction until proven wrong.........then i will be focused in the opposit direction as the direction the OTHER traders will want to WORK, KISS ... DONE Edward G robinson movie is on Turner Classics. I like that channel,
BIGHOG Always enjoy your posts. One question for you. I truely belive to get to the next stage, one has to take POPs two rules to heart and lose small and win big. But it is dificult to have a bigger position when you are on the right trend in Day Trading since you have to add very quicklty and correctly. POP suggest in Day Trading, instead of adding, you bet big first and reduce position if you smell "loss". How do you do it? Do you add/scale in/out?
I have been reading this post with great interest and am trying to find a balance, keeping my losses at a minimum while maximizing my wins. I have experimented with reducing my position if a trade seems to be going against me. tricky! I will reduce my shares by half, and hold a bit if market still is going against me I will allow shares to hit my stop than I am out. Reducing the damage is crucial, you will lose on certain trades its unavoidable. My big problem is getting frustrated and REVENGE trading! Some times doubling my position when I am down, some call it Dollar Cost Averaging. I have also been experimenting, entering a position in stages.
"Take profits on O'Reilly," Cramer said. "The stock has already had a good run." OMG, I don't whether to be thrilled or scared to death about my ORLY short...
+ $326 Offered 9.45 HOTT, It got all the way to 9.33 and dropped off too quickly for me to enter at market. Covered yesterday's HANS @ 36.35 for a $105 gain, only to watch it die suddenly from there. That always happens when a trade runs against me at first, I impatiently exit earlier than I normally would, expecting a pivot that I can then put on again. Short HANS @ 36.56 overbought. Covered @ 36.29 pivot off oversold for a $135 gain. Covered this one too soon, too, as it tested and broke down the LOD. Since it had established a much lower high on very low volume, I shouldâve expected a test of the LOD and been patient. Lowered HOTT offer to 9.10 as it approached overbought, SPY also overbought, filled. Target of 8.99 came very close end of day, holding. Had a doctorâs appointment mid-morning and missed a nice HANS short, and a great opportunity to add to HOTT. Short HANS @ 36.53 slightly overbought. Targeted 36.30 which was touched but not filled. Rallied into the .60âs then back down where my target was hit for a $116 gain. I couldâve traded this one three times instead of once. I also had a strong suspicion it would test the LOD, but did not want to risk an overnight, hence my conservative cover target. It indeed came very close to the LOD. ORLY behaved beautifully per the daily chart signal from yesterday. My husband, who hijacked my IB portion of the trade when he added to at a great price, closed out the position for a $850 gain end of day. Iâm still holding my Etrade position at much smaller unrealized loss, and expect further retracement to profitability.
Hehe, you made me trade HANS today as well Srsly though - you called it on a short side (right before I had to leave). I should've waited for a really good setup (around 2:48PM) to short. Ever have that feeling that you just have to trade?