There’s a Balance to Everything

Cut losses short – and you rack up a ton of small losses and huge commissions/spread costs that bleed your account. Eventually big wins come around to save you. Eventually.

Use wider stops – and when you lose you lose bigger. Therefore you need much bigger wins to break even.

Trade the trend – and you end up buying tons of false breakouts and you realize you never know wtf the trend is. Where was the trend in the Qs at 120 or when GOOG was near 500? Lots of small losses versus few huge wins, more for the investor type.

Fade the trend – lots of small wins versus some huge losses.

All in – you find yourself trying to pick tops and bottoms.

Average in – Average Up and you get shaken out often because you have a bigger position and you can't afford the position to go against you much, price mostly reacts back to your average price. Average Down, and most times you get out at smaller loss or bigger win, but sometimes you blow up your account.

Ride winners – and you see huge profits get wiped out.

Take profit – and you leave your retirement on the table.

Diversify – and all your positions are either too correlated with each other or so non-correlated that they cancel each other out.

Don’t diversify – put all your eggs in one basket and your at the mercy of luck, worked for Bill Gates, Rockefeller and many others though.

Backtest - and you find yourself optimizing your strategy to fit past data.

Don't backtest - and you have no idea which strategies have actually worked in the past.

Abandon a strategy - right when it starts working again.

Don't abandon a strategy - and you blow up when it stops working.



This is why trading is a negative sum game and the players that do survive do so by being insitutional long term long only players, minimizing commissions/spread costs, minimizing the tax bill, and charging a ton of money in fees. I don’t know how some of the guys in the Trader PL thread make money day in and day out, they make it look easy.

 

Well i have to agree to you
I think pll who make money will eventually blow it up or blow their account in the future.
Only the Strongest will survie

 

I think trading is kind of like getting married. Better to just wait for the right one. Weddings get expensive after a while..

 

I think someone has a case of the mondays...
(From the movie office space)

In all serious though, I think you have to pick the combination of those evils, that fits your style best. Most importantly your psychological profile.

 

Great post, chewbacca.

And I agree about the getting married post too.

As a successful former equity swing trader who has just been dayrading eminis (ES only so far) for 4 weeks, I have learned that the best approach to take is to sit on my hands until my set-up presents itself...wait for the right one to come to me (also how I met my wife....set-up on a blind date). I waited for set-ups more or less with stocks, but there was a lot more wiggle room with them and I had winning trades that weren't part of my plan with stocks.

I've been profitable my first 3 weeks of daytrading ES.......although the second week was a close call...almost flat. And the the 4th week is half over and I'm still up. All my losing ES trades happened when I chased it.... so I know for me its all about discipline and sticking to my plan which seems to be the case with futures even more so then with stocks.....and marriage

 

Its the cost of carry that gets you....

Chaos, i like that..."choosing a combination of evils" to suit.

 

Well i have to say for future u need a lot of disciple for stock
u can pass your time watching a couple of stock or even 100 stock
But with futures if u following just 1 i would say u have to wait for the set up and have a lot of patience.

 

couldn't agree more. the problem is that people in their majority treat day trading too literally, trying to trade every single tiny opportunity that arises and can't control the greed factor. I trade ES only, if i make 3 pts in a day when there is real opportunity I have a positive result, others chase 10 points+ and can't stop when they hit a losing streak either. When that losing streak comes upon us our mind can't rationalize, we get too emotional. People are also crazy about compounding, that's just absurd.

How many traders have blown it totally by trading in the chop zone? Probably a healthy majority.

 

Scary.

 

Well, hell, thats a good post.
They are the things that happen.

The good news: if you are aware (and most aren't), you can embark on your problem-solving journey to conquer the market.
Takes time and dedication.