Really good advice in this thread, despite the joking title. When I stopped micromanaging each trade I turned from a breakeven trader into a winning trader. Do not try and get too clever with stops etc just to avoid losers. Losing trades are a part of the system, treat them like business overheads. I pretty much never move stops now and I do very well. If I am getting unsure of a trade and losing confidence in it I get out of 50%+ of the trade at a good level, rather than the mugs game of trailing stops into stupid places to 'lock in profits'.
How can we be dumb-humble traders when we write such brilliant plans? We all know we are smarter than the plans we write. It is simple. I need to be right at any moment with the chart on the screen. It outweighs my puny plan and its rigid rules that stifle my imagination and creativity. I have battled with this every day for the last decade of swing trading. Itâs those the stupid plan rules that shackle me. I say to myself âHow could I have written that as an exit. That is not going to work on these trades!â And, then a drawdown hits and the plans set ups and rules seem even more ready for the garbage bin. But then somehow the bottom line succeeds. I accomplish my goals. I realized âGee, the plan worked?â And the battle begins again.
I use a max stop loss (except when I completely lose my mind, which tends to happen on Fridays), and a minimum target 1:1. Lately I've been taking a lot of hard targets because my trading instrument has been rangy and choppy, but if there's a key level in play such as a previous high/low in a trend, I'll look to hold the position for more than minimum target. If a setup is forming but there's a reason why I wouldn't expect to get at least a minimum reward equal to my max stop, I'll usually skip the trade and wait for a higher probability setup or a higher probability entry based on the same setup. So for example if there's a solid support base forming following a very strong move down, or price is leaving slightly higher lows (ascending triangle), and I'd normally buy the break of the range high or the resistance shelf off the higher lows. BUT if there's a previous support level from earlier that could likely become resistance and that level limits my expected profit to less than my minimum, I'll either wait for the next setup, or if I take the trade, I'll move my stop to break even immediately if there's very little follow through on the move. For a while I was targeting 2x my max stop but I was watching so many good profits evaporate in the chop that I decided to take a lot more hard targets, and look for more entries, instead of holding a position through retraces.
I'd like to add a little to my previous post. What's important isn't the R:R ratio by itself, but in relation to the statistical edge of your setups. My setups have a win rate of about 70%, so a R:R of 1:1 produces a solid result, especially since I allow trades to run when key breakout levels are in play, rather than using a fixed hard target on all trades. Geez' setups have a win rate of just under 50% I believe, so his fixed 2:1 ratio produces a very good result. Some folks trade setups that have a 90% win rate, and they can profitably trade with a negative R:R. The important thing is to do your homework to study the outcome of your preferred setups over time and through varying market conditions (chop, trend, range) to determine the proper R:R to use. The most important thing is to then be sure to trade all the setups so you get the edge you're counting on.
If you think it's hard, you are smart. unfortunately you will go broke, and you can't help it. Wait, there is a cure: Outside medical treatment. remember the trader at Steve Cohen's SAC who sued his supervisor for forcing him to take female hormone drugs and turn into a "woman"? We all know women's IQ is generally lower than men's (OK, I know it's not a politically correct statement. But you have to look at the ratio of males/females at science departments of universities across the world, most of them, teachers or students, are males), so women have a better chance at trading than men. Just look at Nodoji and you'll understand why she succeeded much earlier than men. Some men who registered on ET at 2005 are still struggling, but Nodoji is happily raking in dollars every day. The point is, turn yourself into a woman by taking female hormone drugs, but then your wife may not like it and leave you. Think about it, you keep losing money and go broke, your wife will leave you anyway. Either way, your wife will leave you: 1. you turn into a woman and become rich. 2. you go broke and remain a man. I think the choice is obvious, if I were you, I go for choice 1.
You basically just eliminated the need for any of these people to read any books on how to trade. I have read so much drivel over the years and you basically just stated anything that matters in 4 sentences. Great Stuff as usual ND!