Stop losses. Are they the tools of winners or losers?

What I meant by that statement was no prediction as in your analogy below from your session on Friday . I try not to predict or have a buy or sell side bias . On the day ...Like shorting a market 2 or three times in a row when all they are doing is lifting the offer ...because I think they should be going lower. Markets don't cheat traders ..I don't always see price activity for what it is because of an opinion of what the price or direction should be as you illustrated in your post. I trade the ES one of the worst for whip saw action Ive been caught in a few ......I trade with just a DOM ,2 charts and a real time spread sheet for very simple calcs .


I was trading gold GC DEC this friday, I got up at 4:30am pittsburgh time, I saw 1133, that is the number I noticed it as a strong support, I should buy it (I did not). then I waited and waited, the market just shoots then down, it struggled around 1143~1137+, it went down to 1137+ several times, did the market try to tell you: we will break down? no, when I put a resistance line, I saw a triangle pattern, I kind of tried to short the moring low (it went there three times), but the market cheated or fooled, set up those short sellers, I saw the market actually tried to break up, I bought it in the dip to the morning low at third time dip to the morning low. if you have a stop loss, maybe just one tick, you are out and you missed the wagon.

the market will not tell you anything, the only thing you can do is trust yourself or judgement. if the market is shooting, does it tell you it is peaking? no, it may continues its rally or just at the time you buy, it stops and retraces! the trick part is your sound objective analysis or judgement.

I saw NQ dec did the same thing afternoon.

 

Watch what happens when people "average down" in leveraged trading. Everything looks fine, and then the wheels fall off on an occasional disruptive market move.

I have seen dozens of systems do this from people who were convinced they had it under control.

If you have not been trading long, you should do some research on this site about the opinion of experienced traders towards those who value "averaging down."

 

" because I think they should be going lower" that is a prediction in my view. you still have this judgement and then go for the trade.

"I don't always see price activity for what it is because of an opinion of what the price or direction should be as you illustrated in your post. " then you are letting the market to tell you? but the market betrayed your "because I think they should be going lower" view.

I know what you try to say: do not have an pre-set opinion to influence judgement, try to be objective. that is not practical. since the market at any give time, it gives out two confusing signals: the ask/bid, always have someone to buy and sell! if the market can tell you something, why they do not wait, if the morning low sell guy knows the market will not go lower, why so stupid to sell? they do not know what will happen next minute! if you follow this seller's action, you lost too.

trading needs intelligence. also self trust, confidence. do not panic if you are really wrong.

 

I was being sarcastic. Learning to trade without a stop is like learning to use a gun with the safety off at all times.

 

2 equity curves trading with some of the tightest stops i've used in my life.


http://www.elitetrader.com/vb/attachment.php?s=&postid=2562494

For the amount of time I was putting in, this style wasn't worth it though. I will say that.

 

FWIW

I agree with both of these gentlemen – and no they are not contradicting each other

Having clear and concise “context”– in all matters trading related – and NEVER violating that context – is absolutely vital in “all” matters trading related


You can leg in/ average in – and make a hellofa lot of money – done in the proper context YOU establish – as Jprad states

Using the very same methodology – without context – is a disaster in the making - and you WILL blow up – as TZ states


Trying to apply generalities – then use them in any meaningful way – in anything trading related – is useless imho


None of us trade the exact same way – none of us view the market in the same exact way – none of us are identical..

We must all establish our own clearly defined framework in which to trade - then trade within that framework always


Just a dumbass trader’s opinion – nothing more

RN

eta - It's why I've always maintained exit when the trade fails - who after all defines when a trade has failed - YOU

 

Thanks, I am ignorant to the futures market, so hopefully I can learn from this thread.

I have been trading at least long enough to have discovered the pitfalls of averaging down. What I was trying to say is the poster I was quoting said he ran a small fund, so I assumed he is well financed. If he was to allocate a set amount to the trade, he could calculate his worst case risk (0), and know that he wouldn't blow up the fund, were it to come to fruition. I think in the case of a commodity, especially oil, that this makes sense.

Again though, I have never traded futures, or even looked into them really. I know that contracts expire, does that force you to eat the loss, or can you roll your position to the next one?

 

Averaging down implies two things to me. Either you were impatient on your entry and could have gotten the better price if you had just waited, or you are wrong. The only time it really makes sense is with spreads, where a further deviation means a better price (as long as it reverts to the normal relationship of course).

 

Correct me if I am wrong, but I think that's how the LTCM blew up.

 

I think your view is too limited.

For instance, my signals are rare but they are offer great R:R. What's the problem then ? Problem is I hate missing them.

Things like, "Oops it took off without me", is not acceptable because of their rareness, therefore, I'm forced to get in early, and will of course, use "better" fills as opportunity.

Need an open mind when talking trading I think.

ESD