Quah, i know what you're saying. you're saying, when a web site doesn't come up right away, if you don't wait for "page cannot be displayed" then you never know for sure the message was going to come up. true, it could just be really slow. but i still think it's better to exit a less than perfect trade than to hold on to it, hoping it comes around. yes, there is a chance it could go your way, but why wait around with a loser? why not move on to another trade which may go your way right away? POP addressed your exact point: "ALS - Yes, but who is to say a position which was not proven correct turns from a bad position to a correct position? POP - That is the kind of thinking most traders have. They fear being wrong when they get out and that the market will show them they should have stayed with the position. If they don't take early losses it becomes more difficult to take a loss as it gets larger. However, the market assumption you must make is that big losses will eventually take you out of trading. My rule one is to address the swiftness needed in keeping your losses as small and quick as possible. It won't always prove to be correct but you will stay in the game this way." http://www.webtrading.com/phantom/chapter5.htm
Aha. "less than perfect trade" vs. "loser". Aren't those two totally different things? The main problem is this - you don't know if a trade is a winner or a loser until you exit. Think Mr. Market. I don't disagree with anything you are saying - all I'm saying is IMO there are no hard and fast rules to play by. You exit when you think it is time to exit, period.
Don't most of your good trades go your direction right away? Mine do. I still may make money when I wait around, but waiting around too long, especially in a sideways trade, is a signal that I am loosening my disicpline. For that matter, especially when the market is trading sideways, any medium or large order can wreck the equilibrium and cause a loss. If you are waiting to see which direction things are going (the case where some traders think the trade is not a loser, yet, but is not yet a winner) wouldn't you be better off getting out, and getting back in when there is some direction either way (given you have a directional trade on)? Generally speaking. The opportunity cost alone should dictate that one should be out of a going nowhere trade. The costs of: time, mental energy, maybe trading capital for some non-pros, all of these are notwithstanding a real loss. Even if the trade turns out a winner, you are still better off entering at that point, rather than some point in time when you had to sit there a wait for it at the same time you are in a position, risking capital. Its much better to sit and wait without being in the position. Additionally, being out of a trade gives you the objectivity to reverse yourself (your position) if that is the most appropriate response to the market's behavior. Good trading is relatively effortless. Any other type of feeling to me while I am trading is an indication that I am wrong or not seeing things as objectively as I need to in order to trade well.
Screw the back testing!!! Use stops! Now, if you are in a trade and you can smell a shit storm in the air then a shit storm is a coming....bail out, do not wait for your stop to be hit. There are many times when I'm in a position going against me that I change directions with my trade way before I even get close to my original stop.
Jack's stuff on wash trades and reversing Reviewing Jacks' commentary it seems one has to be well versed in flaws to perform a seamless trading style. I tried to come up with a pic to match the comentary here, not sure how accurate it is.....
What an impressive thread this has been. And on a topic of the utmost importance. I think the important thing about long stops or even no stops is that you have to wear the loss situation, which besides being expensive is also very tiring psychologically. You end up buggered after sitting for a couple of hours in the red wondering and hoping for a break even. You seldom ride through a drawdown and then keep riding the subsequent win. You're just that thankful of getting out flat. Moreover you then generally give it away for the day...you're done. I've found that I'm most comfortable with very tight stops. I trade the way I drive fast. The tight stop is a warning beep that tells me to correct...that is get out . A long stop is like waiting for the car to spin out and so suffer possible damage to car and driver's mental attitude (loss of confidence). That doesn't mean that you lose on the set-up, but rather that, after correcting you are free to get back in, albeit two or three ticks later. You focus less on the set-up (the TA of it all) and more on your actual seat of the pants driving feel. Are you gunning hard and fast, and recovering quickly, unmindful of a couple of slip and slides along the way? Then the game is really enjoyable to play...and your tally of points for the session is only revealled at the end of the day. I usually run on a two point stop and the lowest brokerage costs I can find. Off course I chase the most liquid markets; that's where the most money is swishing around. By the way these are not the confessions of a scalper....I don't have any set profit targets but simply ride the trade for as long as I can. I once read a survey of the relative efficiency of stop losses. The trade was taken at the open and exited at the close of trading for the day. The period surveyed was over ten years. The stop loss parameters went from a one point stop to a twenty point stop. Guess which parameter worked most profitably over that period with, by the way, a below average drawdown....the one point stop! And this held true for all sorts of random entry trials that were also tried, such as buy on Monday's open and Sell on Tuesday's open and vice versa. Sell Mon and Buy Tues. Other trials involved alternate days and even intraday trades such as buy 11am sell 2.30pm etc. The next best parameter was the 2pt stop. From memory the profit factor for a 1pt stop was 1.6 for a 2pt stop, 1.3 and then the PF fell away quite sharply to an average of .5 for the rest. The test did not involve a no stop parameter which was a pity. Gordon G's assertion that a no stop-loss trade is the most profitable is very interesting, but could be a total blow out for the day when the market doesn't return. A statistical run of several days within a cluster of weeks like that would result in an unacceptable strain on one's emotional well being not to mention one's capital base. I've been down that road and I don't like it. That's when you find out how heavy a mugging the market can dish out to you...while you look haplessly on and feebly say, "this can't be true, my system says it can't happen!" "The real sequence of bad runs is always greater than the theoretical potential." you can call that Matt's law of disappointment. In the mean time adjust your swivel chair, watch the tachometer and go for it.That was Pop's first injunction before he even mentions his first Rule 1#. His second injunction was to defer to a higher calling than simply making money.
HUH?! :eek: :eek: :eek: do you..... really............. think trading is THAT complicated... ??! If so.. why? Good luck bro Ice
close the thread?! yeah, let's close this one and keep the mrmarket one open. keep all the other useless ones open, too, but close this important one. why don't we let the ET community decide when it no longer has something to add? when no one has anything to say in this thread, it will fade away on its own. in the meantime, you guys can just not click on this thread if you feel that everything has already been said. if you don't like what's on the radio, change the station; don't ask for the station to be shut down. if you ask for it to be shut down, you get what you want, but those that disagree don't get what they want. if you simply change the station, you get what you want AND THE OTHER PEOPLE DO, TOO.
Hey wait I liked his idea of closing the thread with a quote from one of my posts.....that was really cool. Yeah....we can close the thread with that one. Good trading next week to all.