You pretty much echoed alot of my beliefs right there. Especially because.....my trade management system....I employ a trailing stop...so even a good entry on a bad trade could mean break even. Check my journal every once in awhile and I'm sure I'll give you a few PM's....thanks brol. john
Like Justin Mamis said, "TA is attacked for what people wish it could do". Trend followling like any TA is a risk management tool, not a price prediction tool. Once again, this is why Nickel's demand for a predictive model using trends it downright silly. There is no such model and that is *not* inconsistent with the fact that trend following is valid TA.
The problem is that you are setting your stops according to $$ risk, not according to the price level where the trade has a lower probability of working out. If the $$ risk is too high to put your stop in the right place, don't take the trade. Again, "right place" means it corresponds to a lower probability of the trade working out. You have to do some work to figure out where that is, but you will be very well rewarded for it.
Forget trends TA... how long do you think before us profitable support and resistance traders go broke? I learned much of what I know from Wycoff's book written in 1905 and Magee's book originally published in the 50's or 60's, I think.
Evidently, you have learned very little so far. It is impossible to add value without predicting price.
How long before the rare "profitable" traders of this type can formalize what they are doing, automate it and become billionaires? Answer: never.
Hey I'm new here. Somebody's saying trend following don't work. Nah, it works. I made a bunch a dough past few years with trend following. Works great. Postal
Although i'm sure there are folks making money by predicting price (perhaps you are one of them), i've never actually met one. All the good traders I know use probability instead. Personally I didn't start turning regular profits until I got rid of the prediction framework. Also, there was a long time where I thought I surely wasn't predicting price, but in fact I was. These things are part of the long and painful growing process that an "at home" guy has to sustain. The only way to avoid it is to come up through a professional training program (NOT an internet guru) where they teach the probability framework from the beginning.
In that case, explain how a method can add value without being able to anticipate whether price will move both in the right direction and to a certain minimum extent after the trader has committed to a prospective entry.
My favorite example is a retracement. Being that I study trends in different markets, once a trend is in place I know exactly how much it should retrace and still have a decent chance of continuing on to an even higher high (or low, as the case may be). Thus I enter when price retraces to this point and quickly exit if it continues past for a small loss. I also know exactly how it should behave after I enter, and if it doesn't, I exit. I don't wait around for that stop to get hit. Small loss, small win, big win = adding value to your account. Of course the probabilities change with time, but that's how we earn our money as traders-- by monitoring and adapting-- and that's exactly why you can't flip a switch and make a billion dollars (although i'm sure AMT4SWA is getting close). You can automate to some extent, but as EricP will probably tell you, you still have to do the monitoring and adaptation part by hand.