i agree if you see the market the market will always gun for the tight stops that over leveraged players use or are forced to use. the modern education that says max returns with least risk, makes those that follow this strategy a sitting duck
Knowing what I know now about trading stocks and options in all these years trading real monies in the stockmarket, the most important thing that will determine whether you succeed or fail in the markets, be it forex, stocks, options is that you have proper risk management controls in place. That includes stop losses, price targets, position sizing etc. Arrogance and ego are the biggest reasons people fail in the markets. My doctor friend who is a very good doctor but, as a stock options trader, she managed to lose $1,000,000 in the stockmarket. She did not have any stops, did not practice proper position sizing, traded against the trend, allowed arrogance and ego to tell her what to do! Do not be like her! Stop losses, position sizing, price targets are very important if you wish to be successful as a trader. You will find out when you are actually, trading real monies! Paper trading is just make believe! When you have monies on the line, you will trade differently because now, the emotions of fear and greed will be there! You will not think clearly and you will make mistakes!
great question...I no longer employ this strategy on futures for that very reason. Strictly currency markets now
I have a buddy who trades currencies like this as well but he is trading such a small size that psychology does not come into play at all. Also he doesnt exactly live off of his trading either. Its just something he does once in a while. He just doesnt take losses. Will hold a trade for months if need be until it comes back. I personally dont agree with this method but to each their own.
Trends last longer than people think. My doctor friend bought call options on VRX (BHC now) and continued to buy more call options and held on. What happened? She lost 90% of her monies in just that one trade. The downtrend on VRX was very strong and I told her to close her call options and buy put options. She refused! That is why you need risk management whatever you trade! If not, all you are going to need is more monies!
I agree...I traded the euro and was down 15 lots, that's 15k... 3 months of red river (what I call a position when under water), seemed like years lol...but, like true market fashion, she rolled over eventually and dumped a large sum of virtual cash into my virtual account. Now, did I learn from that?...absolutely What did I learn? watch your leverage and scale accordingly
HOGWASH! Paper trading has merit only to the extent it exposes methodologies that DO NOT WORK! "Trading without stops" = the most stupid thing a trader can do. "Trading with targets" = the second most stupid thing a trader can do. You're supposed to "let your profits run, cut your losses short". The percentage of big gainers is small enough... cutting those off with self-imposed "targets" is STUPD!