Adverse change in equity as a result on some of these FX pullbacks must be alarming for position traders How do you prevent these moves against you, how do you monitor positions (and act) given that FX trades 24/7 while you might be asleep ?
I guess you can't...it's all playing probabilities and anything can happen in FX/trading in general, and I guess you have to be comfortable with the kind of size you put on.
Actually FX is the most tame. Commodities and stocks are far worse. But I'm somewhat confused by your question. Are you referring to people who buy the high tick? Or people who sit through ups and downs? Or just giving back open p&l? I'm not really sure. Personally, to me, the whole idea behind trading is selecting the right product at the right time with the right size. This is why I "avoid" chop and noise and focus on things that are meaningful. Some people just want to trade oil or nat gas or the ES or TSLA. I never understood that. One has to endure the absolute worst of conditions to get to the best conditions. I rather focus my time and effort where there is the least amount of traffic and get in on "rare" moves. This is what ACD does for me.
Yes, it's the same number line but I've added a lot of work and research to it. If Mark's number line was a small pamphlet, mine is a 300 page novel. It's just years of work stalked on top of each other. But the foundation underneath belongs to Mark.
I'm just curious, as perhaps I missed something, is there a particular move you are referring to? I haven't seen any outlier moves lately. Maybe I missed something out there in FX land. Let me know what you see that is moving so much that has you concerned. It might not be on my radar.
Nothing out of the ordinary I meant the ups & downs of open P/L from 150+ tick pullbacks, peak to current While large pullbacks are understandably natural (mean reversion!), can be gut wrenching. I know I can't be the only one Just conflicted at times in whether to mix timeframes (daily & intraday), trading around the position You don't have the same issue of mixing timeframes to protect your equity, even though you might be in the trade for longer than intraday? Of course, every plan can change on a dime but you know what I mean... If so how do you cope - do you just let your equity curve swing wildly? Trade around the position? ("A up" might be well & good to lean on but there can be a lot of air above it)
I guess I'm still confused here. You are talking about two different time frames. A 150 pip move is nothing is you are "sized" correctly for a longer term trade. If you are using intra-day sizing then yeah, that would hurt. But you are talking about 1% moves here on position trades. If that is painful it's probably because you have waaaaaay too much size on. The nice thing about FX is you can pretty much customize the size you want. There really is no excuse for being positioned too big. I think position sizing is something most trades ignore when they are starting out. There is this idea that if you like a trade, to trade it as a big as you can. But that is silly. The money should be made by being involved in lots of trades over the course of a year. Not going so big that a 150 pip pullback is causing you stress. I mean that's the avg daily ATR in most yen pairs. So it's not even an outlier, you can EXPECT that move EVERY single day. LOL. That means EVERY day you will be in stress. That's one recipe for a short trading career. I don't know what it is about FX guys and why they trade as big as they do. I mean I know you get 50 to 1 leverage but you need to trade FX the same way you trade nat gas or oil. Regarding trading around your position, you absolutely should do that with FX. But I use the various A levels. So the weekly and monthly levels give you great opportunities. And yes, you can trade intra-day with FX using the daily levels as well. Since you have 3 time zones you get a lot of great two way action which you should take advantage of. What you should NOT do is over trade. Take legitimate trades against legitimate levels. And if you are scared either get smaller or get out.
Perhaps gut wrenching was the wrong phrase Just hate giving back unrealized profit is more the issue - as in dang "how could I let that happen?" Very rarely stressed unless I'm in the hole. LOL
I think ultimately stress comes from uncertainty. Not from uncertainty in the market, but rather uncertainty in your decision making. If I know EXACTLY what I'm going to do and WHEN I'm going to do it, I don't have any stress. Because your actions are planned out. In the past, if I shot from the hip and asked questions later, I would feel stress from not knowing what my course of action was going to be. Psychologists have studied this extensively. For example, people are prone to have more stress awaiting an important medical test result because they "don't know" what it is. Once they find out it's cancer, surprisingly despite the bad prognosis, people often are relieved and deal with it. It's the "not knowing" that causes the stress. What you need to do is make sure your decision making process is FIRM. Again, this is how I use ACD. I know EXACTLY how I enter trades and why I am entering them. And I know EXACTLY when and where I'm getting out. There is no stress because it's routine. It's only when you deviate from that routine do you find stress. Don't think of your trade in terms of p&l. Think of it in terms of a process. If it's process oriented then you are NOT giving back p&l, you are executing a process. The trade has an entry and an exit. Upon exit, you have a result. That result is one of many results you will have. The sum total of your results will equate to how effective your process is and how efficient you are at executing it. It's really that simple. And if it's NOT that simple, you need to MAKE it that simple.