Not my style but what the heck different strokes for different folks. Have accepted that I don't care if I miss money on trades which require a level of risk greater than I'm willing to accept.
my stop loss is when i lose 1/8th of my daytrading capital. :eek: thats why I only use 1/8 of what I use thruout the day on these plays. I buy options at the close, and if it goes against me, I buy NQ at the open. Roughly tho, my stop is 1203 on the nq's.
I sold my puts for a nice gain. I still have calls.... all worthless . And i bought some more, as well as a few contracts of nq. Will sell everything I bought today when we take out the hod... calls from yesterday get sold when we touch 1150. we'll see how it goes.
I remember a thread not to long ago about averaging. Most people thought averaging was a losing proposition. Some thought it could be done profitably if done right and for the right reasons. I use averaging every time my gap play goes against me... as long as I still think i'm right. :eek:
doubling down has very negative emotions attached to it for me. It has never worked for me and I've decided not to do it anymore.
the negative effect comes from putting everything into a loser. for me, the play is not yet a loser because i made money on the options spread.... at todays low, I was just at break even. I like to diversify alot as well, so even when i am doubling down, it's not all my money, it's only a small portion... i trade multiple time frames... i trade different instruments, like options, futures, stocks, currencies. I trade different strategies. I even buy and sell cars part time!!! When you diversify alot, it helps neutralize the whole psyche thing. Also, i never double down on something when i realize i made a mistake in buying it in the first place, i only do it for specific plays. Like this gap play, because it gapped down instead of up, the play is that the price goes back to yesterdays lows minimum.
Also, there are ways of doubling down that produce no extra risk. Here are the methods I use for doubling down. If first buy is on NQ @ 1500 and NQ goes to 1590, I will put on an option spread (buying calls and puts with a 1/1 ratio) while the price is @ 1590... this essentially limits my loss to 10 nq points on the NQ position... the loss on the options is only the premium... but if it goes up, I make more profit because of the spread. So essentially, I am doubling down for profits, not for losses... I am accepting a 10 point loss or better. If first buy is an option spread, my second buy is usally an NQ position, and hence I will have a tight stop on it.