Right, except the amount of considerable right calls you missed, due to unnecessary stop runs that took you out. NN
Well, just as love means never having to say you are sorry, (Love Story, 1970. Yeah, I know I'm old.) having hard stops means never having to say "I'm wrong". Its done. Its over with, move on to the next trade. Decision making is taken out of the equation. Doesn't that make for a more relaxed trading session? It also means not getting jammed with an oversized loss because you didn't think you were wrong. Will a hard stop get hit more often than a discretionary stop? Perhaps, but IMO its easier to find another profitable trade than it is to recoup an over--sized loss. Bottom line for me, hard stop, discretionary stop, hey whatever is workin' for ya.
Now there's a gem. And this is the exact approach recommend by the "professionals" (unless of course, you think Breet Steenbarger is an amatuer (or worse yet, a Piker) - geez, I hope not). How to Take a Loss article by Brett N. Steenbarger, Ph.D
I am looking forward to WTF's next 3 or 4 "free" charts and then I feel I will have an educated handle on this "trader". My gut feeling is he is going to be pissed off....hope I am wrong (no pun intended) though.
Well well well, I was warned against amateurs I just did not expect them to find them in the early hours of the day. Couple of comments. NakedNote, very good stop logic explanation, but this is not your journal so I kindly ask you to stay out, thank you. To the rest of the padawans: Just because it is "easier" does not make it better. The amount of savings I have reduced from trying to reduce my stops as opposed to using fixed stops is easily in the 7 figure range. Reducing losses when you are wrong is actually as hard as looking for the correct target because the difficulty is always in the exit, the entry is easy, any moron can spot good entries. Last word on mental stops vs fixed stops. Harder but better, easier but inferior your pick, your choice. WTF
Obviously, if the entry point broke down you don't hang around to be stopped on a hard stop as you acknowledge you were "wrong" ; so you act.
I don't think that's the exact criteria that WTF uses, (he seems to give his trades more "wiggle room") but you make a good point.
Would you agree that a great exit is also a great entry in the opposite direction? If so, how is an exit different from an entry?
I don't agree in the slightest as I don't enjoy being in a position as the market is consolidating. You see, when price reaches important areas of support or resistance it tends to consolidate, in fact this actually confirms you that the level is of some importance. Unless you can predict the future it is better to exit and re-enter as you examine the price action of the consolidation area A trader thinks better when his position is flat there is no added pressure from required quick reactions or thoughts of capital preservation, this is yet another reason as to why entry is much easier to consider than exit. Just because "a day" makes your theory looks good does not mean the theory has any validity. To conclude, stops also constitute exits they just aren't as appealing as targets because well, you lost money. WTF