You said your a risk taker and a trading analyst,but then you said the wide stops are essencial.So,basically you place a wide stop and sit and watch how it takes your money away, right?
I think you misinterpret me, which is probably my own fault. My stops may or may not move after every EOD, based on evolution of market context, but not necessarily the most recent price. Initial stop loss is per default wide enough, unless there's statistical reasons for it to be tighter. Instead of "stop loss", the trigger could be aptly named "create loss". The very best trading systems will try to limit losses as much as possible, but might tolerate the inevitable mild drawdowns (no loss yet!). Correct & naive position sizing means a wide stop loss doesn't take any more money away than a tight one, so growth of loss is not a determining factor at all, as it would be with fixed position sizing. I don't really watch or care about live price action for sake of PNL. This, unless price move beyond my stops, I don't get filled or the system doesn't work in anticipated or logical manner. So I do attend to the system regularly, but just to be able to continuously improve. Once one gets this properly, with some initial (huge) effort trading can become extremely simple and peaceful. First in theory, then in practice. However, it usually goes against most everything we've been taught by society, which is mostly founded on fear, domination, black & white half-truths sprinkled with heaps of wishful thinking. As a society, humans today pretty much prefer to destroy and manipulate, rather than co-evolve with our complex environment. This may seem like ignorant mumbo-jumbo, even wasteful and plain silly, and that's because we've got different experiences and attitudes, so need to develop our own trading system, the one that works for yourself. What I've described here will probably change in the future anyways, as a trading engine is an evolution, not one perfect solution. Once I begin scaling up from minimal account size (prototype), I might consider multiple entry attempts, at the cost of trade robustness, predictability and higher timing risks. So for the few that actually understands, I've abandoned all hope, or at least try as much as I can manage to. This might help you reach for the next level in trading, or it can be dismissed altogether. Whatever and however you may make it work will work the way you manage. I believe in sharing ideas, but not copying thoughts and behaviour, which often works in detrimental ways and with unintended consequences.
'Initial stop loss is per default wide enough.' Wrong time frame is used,so you are confused. 'Unless there's statistical reasons for it to be tighter' This is where you adjust.
I think the same way, QXR, it's good to see it from someone else's perspective. Thanks for sharing. Would you mind sharing how you draw your trend lines? Or what they are based on? I use highs and lows separated by time frame but still feel I get caught up in too much noise when price chops. Thanks, FS
Well, I appreciate what you did share! Amazing how different words same concept can paint a new picture.. something clicked
Its a tricky game. Yes if its at support then to get there its counter trend as its got there, so you cant go long as counter trend, but cant short short as its at support, then you end up never trading as you just cant win. Personally i stopped S/R trading, buy at S risk 3 to make 10 sounds great, in reality most lose and when S fails it drops so hard i get slipped and lose 5 anyways Focusing on, jumping in with the move currently, but pretty much has the same issues.
Thank you Xela for referencing that book. I had not read it before. The book has several truisms in it; with mathematical logic often backing them up. It reminds me of Mark Douglas’s last book which has many of the same truisms but explained more in psychological terms. It seems to me at the moment that if a beginner read those two books they would be ahead of the game. There is a lot of ‘analysis’ in Harris’s book. And that is of course very important. But MD talks about 'more and more analysis' never bringing one to the place of knowing a position they take will win or be ‘right’. Harris talks about this also, just from a different perspective. Which may relate to: There are several paradoxes of trading. Some have to do with blending analysis and psychology. Analysis is essential, but more analysis, or analysis used in an effort to be ‘right’, to find the holy grail, can completely derail your confidence and ability to trade. And being a risk manager first, and profit taker second… may be another way of saying that if you keep your loses small your winners will take care of themselves. ...So another paradox could be that if you become a good loser – you win. I have one setup that math logic (analysis) says 1 win in 30 trades will cover the losses of the prior 29 trades and result in a ~net break even. I usually win more often than 1 in 30; yet in actual practice there are runs of losses. So it dawns on me that I need to become a really smart loser – and in that sense a risk manager first, and profit taker second. If I am going to lose more often than not… I’d better be good at it, smart about it. Have a self identity as a shrewd loser. And then when I do get 2 or 3 wins in a row, they are bigger wins and… Another paradox is that winning can derail you more than losing. The key here is, after a few bigger wins grouped together… with each next position I take… it is bringing my mental focus and emotions back to “I want to lose smartly – this is what I’m all about… risk management… and the profits, I know they are there but I push them to the back of my awareness… until the end of the month, or whatever.” So the more you win, the more you think about losing? ................................. The analysis part cannot be done without, but the paradox part in some ways defies analysis. Or seems to at first. Harris's book actually helps you understand it, if you think about it.
Did I miss it somewhere you mentioning what time frame? Because if it is 5 minutes or under then yes you would be hard pressed to often find 3 pts difference in support/resistance levels. Thurs there was only one such instance on 5 minute chart so ... move out to 15 or 30 or longer minutes. But ES is not the market to be learning to trade s/r or any other technique for that matter.