nice post. The "incorrect" entry issue is so real for most people. My focus is on being in the market most of the time and I definitely am trying to front run smart money. Risk minimization is very important as you say; we both want to keep on the right side of the market when we are in. Keeping positioned is my main effort.
quote from grob109 "My focus is on being in the market most of the time and I definitely am trying to front run smart money." Flipping from long to short in uptrends and short to long in downtrends doesn't seem like the smartest way to trade to me either.
those ARE my DEATH trades as well. markets overall have been quite favorable to 'faders' b/c lack of institutional flows pushing breakouts to new levels nice post, Pabst
The are 2 outcomes: a BO and you are correct or a FBO and you are incorrect. What is a FBO? Is it still a big enough retracement to turn around in with a wash allowing you to reset your position in line with the original move as it resumes? The market (eg YM) is just a series of linked intraday gyrations of varying elasticity. So this means you have to understand and work the whole day as a cosy continuum which is where repeated observation and practice assists in building the accuracy of your entries.
In a word, yes. Look at it this way : incorrect would've meant taking that short trade without a fixed stop loss. Even more incorrect would've been letting that trade take you for x points into the negative and not knowing before-hand were you were going to admit to being "incorrect". Thats called gambling and has nothing to do with risky entries. My definition of risk is in not in the decision to go long or short, rather it's in the answer to the question: "How much will this trade cost me when I am incorrect?" Pay attention to my wording here, in all cases I believe I am wrong from the moment I enter and always use a fixed stop loss assuming such. I don't make any assumptions about being "right"... Out of curiosity, how many times a day do you think you are correct in an entry? Do you believe this helps or hurts your objectivity? Personally for me it is the latter. Whenever I think I am right then it becomes even more difficult to divorce my ego from the position when I am proven wrong. So, in general, I guess all my entries are incorrect, some are just less risky than others Mike
I look at it this way. Say I enter long at X, what are the two most extreme scenarios? Either price drops like a rock all the way to my stop and I'm adding to my long as it drops eventually getting stopped out, hence I'm wrong when I'm at my biggest. Or, I'm right and the market doesn't go low enough for any more scale buy orders to be executed and takes off like a rocket, leaving me right but at my smallest. Doesn't seem logical does it? When you scale in as it goes against you the need to be right on the trade is more crucial than when you put that first order in. Think about it.
Its simple. You add to losers when its your strategy Like sacrificing your pawns if you can kill some bishops. If you sacrifice your pawns just because your other pawns got killed and you don't know what the hell you are doing then you will continue losing.
The problem is that this thinking is fuzzy thinking .... "seem logical." If you actually want to know the answer to the question ... should I scale in from this entry point then you have to do the math for your specific situation. Treat each entry within the scaling in as seperate. Evaluate win ratio, win percentage, expectancy, frequency of opportunity all as part of your trade allocation. Only when you do that will you know if the strategy works for you in the context of the market you trade and the type of entries and exits you are using. I could give you an example where it works for me but you probably don't trade the HSI on the timeframe I use so you need to do the math for your specific strategy. Also in a thin market scaling in may be necessary to avoid poor fills as well. If its part of your tested, evaluated, practiced plan then scaling in / buy as it goes down will be a good thing. If you do it to make yourself feel good when things are going wrong ... well ... thanks for the money.