Now every trader knows, that the secret to survival, is knowing what the throw away, and knowing what to keep, cause every trades a winner, and every trades a loser, and the best that you can hope for is to die in your sleep.
One thing that was especially hard for me to overcome, which often had negative impact on my bottom line: Never let directional bias cloud your otherwise good judgment.
Giving it back is worse. Was that a trick question? But if the real question is "how should stops/exits be managed to optimize gains and prevent giving it back?", then you quantify the results with probabilities of different outcomes and keep track and keep adjusting. I keep track of each trade and record measurable inputs so I can do analysis later. It's boring as crap, but after 100s of trades, I have a sense of what the right answer for me is. Still working on "optimizing". Would love to hear exit strategies of others. And why do you say that directional bias is not an input? Should exit strategies be the same for trend vs RTM trades? Keep trading. J. Scott
In one of my trading books, I'm too lazy to go search for it, the author talks about just this. He said that missing a move when your trading system gives you a signal is so painful because you asked the market to tell you what it was going to do, it told you, then it did it, and you didn't take advantage of it. It makes you feel like an idiot. I agree completely. Giving all your profit back is just a small, easily correctable flaw in your system. If you find yourself giving all profit back a lot, lower your target. Be quicker to put some money in your pocket. We are talking about psychology not profit maximization here. Bringing home $100 every single day guaranteed is a lot easier on the mind than maybe taking home $2500 once a month, maybe having to go a few months before you hit that win. That's why I'm a wage slave again these days and out of the sales game.
I believe the answer is yes. With-trend you target a new high or low beyond the previous one. You scale out part at that level or stay in the trade until the trend breaks down. RTM or counter-trend you need to take at least partial profits at the rising or falling 20-period MA. That's a magnet for trend followers to enter or add to position with the trend. I failed to take profits on two counter-trend trades in CL today and watched a collective $550 reverse and stop me out near b/e for a few dollars gain. I let my bias override what the pure price action was telling me.
Every trader on earth, of all account sizes and years (decades) of experience still struggles with that. Everybody, no exceptions... just a basic flaw of human behavior. Best we can hope to achieve is some degree of self-control. More times than not
In my career I've had many more days of up substantially early = less (or none) later than I've had little or none early and up substantially later. Reality check: there is no way to backtest, quantify, curve-fit or idealize profit results thru all market cycles and conditions. Everything we do is one big compromise across endless degrees of market variance. <b>One fact holds fast for all markets, all-time: </b> A few days offer no chance for meaningful profit. Thin left end of the normalcy market bell-curve. Most days give one to three chances for meaningful profit: Fat middle chunk of the normalcy market bell-curve A few days offer umpteen chances for meaningful profit. Thin right end of the normalcy market bell-curve. Moral of the story? Up substantially early, do not give it all back. Quit too soon... start again tomorrow. Each day has a finite degree of available profits to any of us, according to any individual approach. Anyone who opts to trade all day every day has to deal with navigating all parts of the bell-curve. +50 cents CL per day, four days out of five will pay the bills. Ditto +4pts ES. Keep the losses contained, quit too soon before giving it all back and let time add up the cumulative days from there
Once I told myself this, I started being more patient waiting for setups (maybe too patient), also more patient with my trades. As for my 2nd ES trade today, the one that I shorted @ 1194.00, went 4.5 pts in my favor in about a minute, had me licking my chops with glee (5 lots), then went all the way back through my 1193.75 stop in about another minute: I've been told I was Greeked
I've had that happen to me literally, literally 100+ times since year 2007. From then thru early 2009 it was no big deal: +8pt ES to +20pt ES profit trades were common. Back then. From middle 2009 thru present, opportunity is a lot less frequent. Gotta book at least +2pt of that when it goes past +4pt... I've learned repeatedly the hard way. Today's 20.75 index point, 2.66 mil contract ES session is what I consider "normal". Whether we see a steady diet of this or back to the <10pt all-day choppers is unknown. But if indeed this is the new norm once again, good times are here to be had for all edit: just to be clear... I was talking about the v-turn stopped out trades part happening 100s of times. As for the "greeked" part, that's something only familiar to Sal's tranny gang :eek: