Daytrading, specially with tight stops is a losing proposition. Almost all fail. Why not reverse your "approach" and set tight profit targets with loose stops?
Hey folks just turned 50 been doing this a while thought I might put a little out there in regards to trading stops
Random.Capital Registered: Jan 2005 Posts: 619 10-21-08 08:47 PM -------------------------------------------------------------------------------- Quote from austinp: It is most definitely the big one(s) that kill most traders. -------------------------------------------------------------------------------- The "big one" can only kill you if you're over-leveraged. In which case it's not the "big one" that killed you - it's excessive use of margin. With rational position sizing, stops are not only unnecessary, they're counter-productive. >>>>>>>>>>>>>>>>>>>>>>> Random, you are not correct, leverage is not the boogyman. You are stating you are not prepared to be in such a risk taking game that "EMPLOYS" leverage as the very business of futures trading. Without the leverage why would anyone even consider trading futures? Without leverage for the speculators how would we all be enticed to play such a game? The point being simply this: as the words from the music man clearly states..........."You gotta know the territory" . Just trying to help you. http://www.youtube.com/watch?v=JZ9U4Cbb4wg&feature=related After the light bulb in your head enlightens you on what gane you are playing consider this for yourseld . It is about being kind to yourself. http://www.youtube.com/watch?v=RMP80_IMM_s&feature=related PS: Stops are the same even in more wild mkts as long as your GOLDEN entry signals are the same and your risk management is also the same. Do not be afraid, just trade as always but be prepared for some absolutely fantastic winning days. Thats the real beauty of futures, it just gets better, you will amaze yourself and that is a wonderful goal. Be like Diana.
Funny, I recall the long involved debate we all had about this boiling down to the fact that you were willing to wait out trades that are going against you and add to the position if conditions warrant. Must be getting senile.
I don't recall saying that I wait out trades that are going against me. I do stop out of trades but they are manual stops, not hard stops and the part of your earlier statement that I really took issue with was the word, "aggressively." I do scale into trades and I do add to trades that are showing me a loss but I certainly don't do it aggressively. Switch that word to conservatively and we are basically in agreement. AND, I also add to trades when they are heading in my direction, not just when they are going against me. Buy the dips, size up on the eventual turn. That's my gig.
Yea same here, 10 YM points is my "stop" but usually manually closing the trade at 7 or 8. My stop is more to guard against a program sweeping the market against me. I agree though that this is all depends on your strategy. Keep detailed metrics on your trades and figure out how much the average heat you take on winners and what your losers looked like after time X. If you can figure that out you should be able to see what the optimal stop is for YOUR strategy.
I've been experimenting with constant range charts hoping that they would help with determining this. So say I'm using a 3 point constant range chart for the NQ. If my stop is set at 3.25 points, that gives me the range of one full bar to be wrong about but still have it reverse within that area and go in my direction and not lose money.
A three-point stop on a three-point range is asking to be stopped out. 150% of the range is safer, ie 4.5 pts.
I'm talking WITH the trend in this thread. Even when I have the direction right, I still get stopped out on "noise" as soon as I enter... ...hence my thread title "do you have to pick tops and bottoms to not get stopped out?" I've done that. The conclusion I came to was: - you must never ever use a hard stop ever. The only way to exit a position is when the trend reverses. Using hard stops caused me to close out positions that would later go 20, 30, 50+ ticks in my favor, thus SEVERELY affecting my P/L (ie. a 30 tick gain replaced by a 20 tick loss = a difference of 50 ticks in your overall P/L. That's the difference between a profitable week and an unprofitable week). But psychologically I don't like that conclusion, because there were also times where I took big losses. I feel that causes me to go into "buy and pray" mode. But every time I used a hard stop I ended up not making money over the time for which I analyzed data (which was all done by hand and took forever). There was also the fact that using hard target profits of 3, 5, 8, 10, and 12 ticks (ie. anything that wasn't "let it run until the trend changes) caused me to be unprofitable for the time period tested, but that's an entire other thread.