Thanks for this as well. Yes, I have read that book. It's excellent. And while I don't deny that I am human and have emotions, I also have reason to believe that I have a reasonably highly developed sense of self-knowledge, and I do make it a practice not to trade if I suspect my emotions might get the best of me. But, again, thanks for the reminder. Y'know, I'm losing interest in the discussion on stops because I see something more interesting at work here -- namely, the compulsion to jump to a conclusion without teasing out even rudimentary data points upon which to formulate questions that might lead to answers upon which conclusions -- hypotheses, really -- might be drawn. In this brief thread, I've seen it come up at least three times, from risktaker, bitstream, and now from another ET veteran whose posts offer much -- you. For example, in your first paragraph, you state: By not using any stop at all you are basically admitting that you can not handle the feeling of being wrong. This might be a defensible hypothesis if you asked, first, whether all my losing trades came as a result of stops being hit. If that were the case -- and then I were to say, "Fine, I'm not going to use stops at all, then" -- you could reasonably deduce that I did have some problems in the admitting-I'm-wrong department. The fact is, however, that most of my losses came because I pulled the plug before my stop was hit, and in most of those cases, had I not pulled the plug, the stop would have been hit anyway, and THOSE cases were, more often than not, sure-fire big-time losers that never would have recovered -- or would have recovered only after entry signals in the other direction, in which case I would have closed the trade anyway. Now, given this information, do you still believe I am suggesting that I cannot handle the feeling of being wrong? Then there's this: All a STOP does is tell you when you were WRONG with zero emotional bias. I would agree if we were talking sugar, or some other rolling/trending vehicle. But the chop-socky es? My point is not that stops have protected me from my own inability to admit the errors of my ways, but that they have set me up as target practice, with everyone else, for the stop runs that do not obviate the underlying validity of the pre-existing signal. Implicit in this statement is the contention that I am able to distinguish between a adverse conditions that support the pre-existing signal, and those which invalidate it, with significantly better than even-odds -- a contention which, admittedly, has not been proven. The market is always right. I'm sorry to say this, but if I hear that line again, I am going to vomit. If the markets were "always" right, there would be no volatilty, as perfect knowledge would support fair-market equilibrium at all times. That means, of course, there would be no traders and, worst of all, no ET. The markets are not always right, any more than Mt. St. Helens is always right. The markets, the planets, your geraniums -- they all just are. They exist without thoughts, preferences, emotions...or opinions. I realize this may come off as a "you say potato" exercise in hair-splitting, but I wonder if this "markets are always right" chestnut reenforces a subconscious notion that the markets are some kind of tyrannical god to which we must genuflect, and I wonder if this attitude forces traders into a daily prostration before the tyrant-deity as their resentment builds, hour-by-hour, day-by-day, to pressure-cooker levels. The result? Well, of course, there's the acid-laced punchbowl of ET. But, at a deeper level, I wonder if this pathology nourishes a tendancy to jump to conclusions that aren't quite warranted. To be "right." After all, everybody deserves to be "right" now and then. And when you're dealing, day-after-day, with that manic-depressive man-child, Mr. Market, that, God help you, is always "right" -- well, damn if you don't have right to be "right," too. I dunno, just a thought. Oh, and not to beat the horse to death but you also state: please at least enter some kind such as 10 ticks away or so, because although I was not trading ES at the time, I have heard stories of those who were when it jumped 30+ points in under a minute when the surprise rate hikes went on. My opening post on this thread states that I will employ a 10 point "catastrophic" stop to guard against emergencies involving lost connections, etc. Again, thanks for all your posts. I really mean it. I've learned much from them.
Whew! I am so glad to know that madmummy is still available! I'm switching now! p.s. i don't use indicators. much.
Maybe it is not so much an issue of using something other than your 10 point "world has come to an end in my trade" stop - but rather money management. If you have a 10 point stop, then you have a stop. - Sounds obvious, but so far, most everyone here is arguing your use of stops or not using stops when in fact you already have one. My thought is to consider how much (%) of your account would be drawn down by a 10 point hit/contract stop. If this is not too much for you then go ahead and trade. This should NOT be a psychological decision though... something like... Yeah, I can take a XYZ$$ dollar hit to my account and be OK. It should really be a calculated answer based on hard numbers and a risk management system that maximizes your returns and minimizes your draw downs over the long term.
Exactly. Mind you I have never had a signal that would ask me to endure a 10 point m.a.e., so I have no intention of letting that stop get hit. The 10 pointer is just there -- just in case -- to minimize the possibility of, say, a 30 point whopper. I chose 10 points because it is double the amount of the m.a.e. I've so far encountered on any legitimate signal. Why double? I trade one contract per $10,000/margin, so 10 points loss translates to a five percent maximum drawdown on equity for what experience so far has led me to assume would be a "black swan" event. That's the logic-in-progress, anyway
uh? u are just interpreting my post: what I said is that nobody when starting out should aim at making a living from day 1, because ain't gonna happen, on futs and on stocks. I was referring to the low leverage of stocks and obvious difficulty of achieving decent returns with an undercapitalized account...but this obstacle ought to be not of any concern for a beginner anyways because he should be aiming at protecting his money until he finds an edge...after that his objective should be to compound returns and increase the leverage. also I cant' understand how u can find an edge employing a strategy with 1:1 r/r. on stocks u don't risk 50c to get 50c, because the ranges allow u for a much better proportion. spy is an etf and can't be compared to single listed issues.
ok,u perceive 'bitterness' because u don't like to here how things really are. I won't be here arguing with u and your choices, after all it's your money and your career..and I am not accusing anyone of not having enough resources...I just find it odd that someone with enough capital to trade stocks would decide to lower his expectations and trade the toughest instruments around. The statements I make reflects intense studying, observation, and my personal experience as other traders' alike: I saw coutless newbs wipe out their entire account several times over and never saw 1 of them being able to master futs trading. I am not saying futs are impossible to trade but u can't expect to beat the best algorithms and brains with zero or little experience.
I think the same can be said for just about any market. Trading any markets for a living with little experience is unlikely.
what risktaker said is 100% on the money. Trend, Understand that and you will understand. Futures is not a trading vehicle, it is close to a scalpnig vehicle. If you try to trade something that will flip back on you 5 minutes later, that wouldn't work well would it? How big of a stop do you need? Does it work with the R/R if you use a bigger stop? Only very experienced traders can PROFIT from futures, You can use it as a learning tool, but do not expect to PROFIT LARGE From it unless youa re very experneiced. Almost 95% of the rich people in the financial world made their money from STOCKS. Not from futures. They use futures to HEDGE. Why? Money is in the sitting. If some people can make ---consistent---- money from the futures, its either because they are SCALPING or they just have exceptional EDGE/Stats/skills. I do not. And so do most other traders as well.
Tortoise, before I respond to you other post, did you miss this post or just do not care to give us any general insight of your background ?