I dont think its crazy. I actually do the opposite sometimes. I will put an order in to buy at a certain price if im not in a position while im sleeping, or if im in a position sometimes i put an order in to sell if i make so many pips. But i never put a stop loss.
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132 pip loss today. Ouch.
- Thread starter peilthetraveler
- Start date
I dont think its crazy. I actually do the opposite sometimes. I will put an order in to buy at a certain price if im not in a position while im sleeping, or if im in a position sometimes i put an order in to sell if i make so many pips. But i never put a stop loss.
Quote from cabletrader:
I didn't say you hold positions overnight, my post was in reply to a post from peilthetraveler.
You might want to review your thinking on stops though, and trading itself. Capping 'maximum pain' isn't what stop losses are all about, they're a simple risk management tool is all, and losses should never be painful anyway.
Also by looking at higher time frames when a trade isn't working out on the time frame it was planned on means you're either not planning trades or you're changing your plan mid trade. Neither are a good idea.
My thinking may change in time, but I think the real issue is you're assuming too much and not understanding what I'm saying.
Let's say I take a position. I plan to make 10 pips on this play. The trade goes against me 10 pips. Whether -10 pips is mathematically over my single trade risk size I don't really care. I'll look at the chart, am I 1 pip off the next support level? Looks like I am. Why on earth would I sell with support so close? Do I sell just because that's my "maximum loss size"? That's ridiculous. I'll hold and see what happens there. I took the play on the 15 min, is the hourly in an uptrend? Yes, it is. Ok, I'll hold and see how the hourly plays out. Oh, look at that, it bounced that support solidly and now I'm break even. Now I re-evaluate again. Will this go higher or was this just a pop before another drop? I'll act accordingly.
Same scenario as above but price doesn't rebound, it blows through the next 15 min support area. Again, look at the hourly, where's next support? Is the hourly still trending up? If it is, I'll hold. If my position is counter trend on the next time frame up, I'll get out ASAP. Worse come to worse, what does the daily look like? Play accordingly.
Another scenario. I take a short at resistance. The pair keeps moving right up through resistance. Look at the chart, where is next resistance? 40 pips away? Fck that. I'm out now at whatever my loss is now, usually very small.
This is why I'm a big advocate of trading WITH the trend of at least two time frames above the one you're using to find entires. My timing may be off on the 15 min, but if the hourly and the 4 hour are both trending in the direction of my trade, there's a high probability that the trade will play out in time.
I've only been trading FX for about six months now, so, as I said, my opinion may change. But, as it is, what I'm doing seems to work well. If I had a mathematical "risk management" based stop, I'd be getting stopped out of winners more often than I'd be saving myself from big losses. It's simply not worth it. Do I have a rough mental stop point? Yes, but it's flexible based on what's happening NOW.
I think the majority of traders fail because they're too rigid. They see "zomg -10 pips!! must get out!!" They're too inflexible to realize that THIS TIME they're dumping the loss 3 pips short of a high probability reversal point. It's all about NOW and what's happening THIS TIME. I don't care about how a fixed loss per trade, I just care about doing what the market tells me to do NOW. When the market tells me I'm wrong, I don't hesitate to admit it and get out ASAP, but I get out smart. I don't just dump at some pre-determined number of lost pips. Inflexibility is the true road to ruin.
Quote from peilthetraveler:
My average win though is around 17 pips and my average loss is 21 pips, but of course, my win rate is 72% last time i checked it. Basically you could say that for every 2 dollars i make, i will give 1 dollar back.
That's interesting. We really must trade similarly.
I'm at 76% with an average win of 7 pips and an average loss of 9 pips. fyi, the w/l is small because I only trade a couple hours per day so I'm forced to play short moves because, as already stated, I don't leave positions unattended.
Quote from AyeYo:
My thinking may change in time, but I think the real issue is you're assuming too much and not understanding what I'm saying......
I think I understand what you're saying just fine, you like flexibility for when price doesn't do as you first expected so you go looking for reasons to stay in the trade and not take a loss.
You can look at all the time frames, support/resistance, trends, and anything you like......before entering the trade. You need to plan a trade first otherwise how else can you calculate trade size?
I think you misunderstand how stops are decided. They're not some arbitrary dollar value, they're a price at which the trade is either no longer viable or the trading decision was wrong. That could be 10 pips or 100 pips, it doesn't matter, you simply adjust trade size accordingly, but it needs to be calculated in advance. If you enter a trade using levels off a H1 chart and think you might end up trading a daily chart if it doesn't work out then you've got to allow for that in your trade size, you can't do it after, it's too late once you're in.
Having the flexibility that you're wanting by being able to move up to longer time frames when a trade isn't working out means your risk increases. Either you planned for that increased risk and traded smaller size or your risk increases beyond what you originally planned for. The former reduces profit potential, the latter increases risk, totally the wrong way round. The idea is to reduce risk and increase profit potential.
Sure there are ways to trade out of a loss but again that needs to be planned for before entering a trade otherwise you end up with the same problem, over exposure and more risk than you originally planned for. Invariably the end result is lots of comparatively small gains which don't cover the occasional larger than expected losses, regardless of how good your win:lose ratio is you end up losing money.
I see what you're trying to do, I often trade the same way, but I plan for it in advance so there are no surprises, no more risk than I expected, and therefore no pain if the trade doesn't go my way.
I guess the short version of what I'm saying is being flexible is fine, in fact it's often a better approach, as long as it's planned for in advance of taking a trade.
I don't think most traders fail because they're too inflexible, I think they fail because they're too flexible with their money management and risk once in a losing trade!
Quote from cabletrader:
I guess the short version of what I'm saying is being flexible is fine, in fact it's often a better approach, as long as it's planned for in advance of taking a trade.
I don't think most traders fail because they're too inflexible, I think they fail because they're too flexible with their money management and risk once in a losing trade!
you are contradicting yourself all over the place.
Quote from cabletrader:
I think I understand what you're saying just fine, you like flexibility for when price doesn't do as you first expected so you go looking for reasons to stay in the trade and not take a loss.
You can look at all the time frames, support/resistance, trends, and anything you like......before entering the trade. You need to plan a trade first otherwise how else can you calculate trade size?
I think you misunderstand how stops are decided. They're not some arbitrary dollar value, they're a price at which the trade is either no longer viable or the trading decision was wrong. That could be 10 pips or 100 pips, it doesn't matter, you simply adjust trade size accordingly, but it needs to be calculated in advance. If you enter a trade using levels off a H1 chart and think you might end up trading a daily chart if it doesn't work out then you've got to allow for that in your trade size, you can't do it after, it's too late once you're in.
Having the flexibility that you're wanting by being able to move up to longer time frames when a trade isn't working out means your risk increases. Either you planned for that increased risk and traded smaller size or your risk increases beyond what you originally planned for. The former reduces profit potential, the latter increases risk, totally the wrong way round. The idea is to reduce risk and increase profit potential.
Sure there are ways to trade out of a loss but again that needs to be planned for before entering a trade otherwise you end up with the same problem, over exposure and more risk than you originally planned for. Invariably the end result is lots of comparatively small gains which don't cover the occasional larger than expected losses, regardless of how good your win:lose ratio is you end up losing money.
I see what you're trying to do, I often trade the same way, but I plan for it in advance so there are no surprises, no more risk than I expected, and therefore no pain if the trade doesn't go my way.
I guess the short version of what I'm saying is being flexible is fine, in fact it's often a better approach, as long as it's planned for in advance of taking a trade.
I don't think most traders fail because they're too inflexible, I think they fail because they're too flexible with their money management and risk once in a losing trade!
Excellent points, all.
I suppose it's just hard for me to quantify how I trade and how I decide my mental stop points. But, you're right, they are planned ahead of time. I do look to make sure that my position is a good play on the 15min and the 1hr. The more time frames that a particular S/R level coincides on, the more probable the trade is, the more confident I feel, and the larger my position sizing is. If I had a pair that's coming up to resistance on the 1d, the 1hr, and the 15min, I use maximum position size. These trades generally easy. When it breaks the wrong way, there is no complex set of levels to catch it, nothing to think about, nothing to analyze. I know it's wrong and I get out fast. These are also the trades I make the majority of my money on, but they are few and far between and the win/loss on them is lower than my average.
The trades I was refering to in the previous post are the trades that I enter purely on 15min S/R to scalp. I do check the 1hr to make sure I'm with the overall trend, but the entry is done when only the 15min hits S/R. These are minimum position size. This is when I use the risk management/mental stop scheme given above.
The beauty of these is how well they come back even when your timing is off. If you're with the trend on the higher time frames you can turn these into winners 80+% of the time. If you have a pair that's operating in a 150 pip range on the daily, the fact that your 15min trade in the middle of the range was off and you're now down 20 pips doesn't really matter. There's an excellent chance it'll come back. In practice, the win percent is very high on these trades, simply because in most cases, you don't have to settle for a loss if you have to balls to stick with it. The daily chop will eventually bring things back your way. If they don't come back your way, you may take a hit that's 2-3x your normal pip loss... but who cares... those hits are so few and far between that the wins greatly outweight them, AND the position size is small so it's an even less significant impact.
Does that make sense?
dude...that is totally awesome trading!!...what do you trade mostly Eur/Usd etc.Quote from peilthetraveler:
Actually between that 132 pip loss and 227 win, i was just barely up. I had 3 lots with the 132 pip loss and 2 lots with the 227 pip wins, so in reality it was like i had a 60 pip win really.
But between 4:18 am and 10 or 11am, I added another 116 pips so it was a pretty good day.
On a normal day, i usually win or lose 30-50 pips over the course of the day. My average win though is around 17 pips and my average loss is 21 pips, but of course, my win rate is 72% last time i checked it. Basically you could say that for every 2 dollars i make, i will give 1 dollar back.
but..no matter how your enter...you do always set a manual profit limit order...correct?Quote from peilthetraveler:
I dont think its crazy. I actually do the opposite sometimes. I will put an order in to buy at a certain price if im not in a position while im sleeping, or if im in a position sometimes i put an order in to sell if i make so many pips. But i never put a stop loss.