rolextrader gets the big prize this year for his post. it's one of the most valuable things said on this forum in 2008. you NEED to identify those non-random situations... and thank god, if you look for human emotions on a chart, you'll find those situations too.... big up rolextrader.
"Cutten" said it perfectly in a very brief reply. "reduce the size and widen stops". Instead of 1000 shares (or 10 contracts) use 300 share size (or 3 contracts). If stop was say 90 cents ( or say 9 Ticks) change it to $1.8 ( 18 Ticks). In futures, if you are not capitalized enough to trade multiple contracts ( at least 2-3) - chances of success are slim because you can't scale in and scale out. Don't give up, you will find a solution that fits your personality.
First of all, this is my first post. Anyways, the approach I found best corrected the same problem I had was twofold: 1.)Very small initial position with excellent entry price. 2.)Hard stops where I am assured my trade thesis is wrong. I wait for excellent entry prices - meaning, I don't catch falling knives nor do I stand in front of rallies. I've found that if a price has been somewhere, it's highly likely it will be there again to give me a chance for an entry before going somewhere else. I use a small position that I don't mind losing 5, or even 10 ticks on. However, if I'm in at the price I waited for, it's usually no more than 4 ticks. I set my stop right after I'm in my position at the point where my trade thesis is wrong. I don't change it. After that, it's about adding to your winner, and carefully managing your position with trailing stops. Lather, rinse, repeat. You'll have a series of small losses on consolidation days, and you'll put yourself in the position to catch the big winner on a trending day.
work on your entry point. if your entry point is better the stop loss your taking becomes a none issue
Good post! If I recall correctly, one trader in the book "Market Wizards" followed a similar strategy in bond futures. Start small, add to position and move stops along the way.
Best advice here! (Forex is worst advice here FWIW) Adding to that, add small increments in size to your winners as they prove themselves while then narrowing your stops each time you add, and don't be afraid to get back in a trade - with small starting size - you were stopped out of if it turns again.
Finally someone who also shares the same true view of how the stock market actually opeprates, and how you make money consistently, not just lose little bits everyday.