5 Golden Rules of Trading

[cabletrader]

Quote from Pippi436:

You yourself are in a habit to point out that very fact to the shills quite often, so i humbly ask to excuse my skepticism.

Yours truly,
P.

Ah but the difference is I'm not selling or promoting anything, I'm just sharing ideas which are totally free.

If you like using stops and fail to see any alternative then that's just fine and dandy with me, it's not my money you're spending!

(ps 'yours truly' sounds a bit gay, all it needs is a few xxx's, try 'yours respectfully' or 'yours sincerely'....or even 'up yours' would be better!)

 

[deaddog]

Quote from cabletrader:

Well darn it fella, fire some of it over in this direction, I'm a poor daytrader!!

It's out there for the taking. I'm wrong quite often.

I've been waiting for decreasenow to start posting some extreme trades, I'm pumped and ready to roll!

Me too: That Cat His Extemeness has quite a following.

 

[Alex55]

Quote from cabletrader:

Enjoy your stops.....the market and your broker appreciate your generous donations I'm sure!

But when do you decide to close a bad trade?
You can be caught in a shortcovering rally and loss all you have.

I remember a story from a trader who didn't use stops as well, and did quite well for a long time..but one very bad day lost 80%..(he simply couldn't get out anymore when he saw a 20% drop..and decided to wait for the jump back which never came).

 

[cabletrader]

Quote from Alex55:

But when do you decide to close a bad trade?
You can be caught in a shortcovering rally and loss all you have.

I remember a story from a trader who didn't use stops as well, and did quite well for a long time..but one very bad day lost 80%..(he simply couldn't get out anymore when he saw a 20% drop..and decided to wait for the jump back which never came).

hehe, I can see you guys don't catch on too quick, I've explained it at least three times already!

If you can't understand it from the post excerpts (with links) below then I doubt you ever will so you're probably better off just using whatever it is you use, like I said before it might not be suitable for everyone and it definitely requires some thinking on your feet which evidently some people are unable to do!



Here, "...I'll only use a stop in an emergency if I can't trade my way out of a loss or my risk percentage is hit..."

Here, "....At worst if it all goes wrong then I close everything when my overall risk is reached....."

And here, "...There should never be a situation where there's a risk of blowing up, that would demonstrate a lack of risk, money, and trade management, and the discipline to adhere to it. Like I said before, if the worst happens and my overall risk threshold is reached I'll have no hesitation in closing everything to limit loss...."



Hope that helps but somehow I doubt it!

 

[deaddog]

Quote from cabletrader:

hehe, I can see you guys don't catch on too quick, I've explained it at least three times already!

If you can't understand it from the post excerpts (with links) below then I doubt you ever will so you're probably better off just using whatever it is you use, like I said before it might not be suitable for everyone and it definitely requires some thinking on your feet which evidently some people are unable to do!



Here, "...I'll only use a stop in an emergency if I can't trade my way out of a loss or my risk percentage is hit..."

Here, "....At worst if it all goes wrong then I close everything when my overall risk is reached....."

And here, "...There should never be a situation where there's a risk of blowing up, that would demonstrate a lack of risk, money, and trade management, and the discipline to adhere to it. Like I said before, if the worst happens and my overall risk threshold is reached I'll have no hesitation in closing everything to limit loss...."



Hope that helps but somehow I doubt it!

Sounds like a pain stop to me.

How do you know when you have reached that point?
Are you relying on your experience in reading the market or do you have a dollar limit that you are willing to lose on one trade.

When you say "have the discipline to adhere to it" I read when that point is reached you bail. Thats kind of like having a stop is it not.

Or are we talking about the same thing. A stop doesn't necessarily have to be a hard stop. It can be based on price action.

 

[cabletrader]

Quote from deaddog:

Sounds like a pain stop to me.

How do you know when you have reached that point?
Are you relying on your experience in reading the market or do you have a dollar limit that you are willing to lose on one trade.

When you say "have the discipline to adhere to it" I read when that point is reached you bail. Thats kind of like having a stop is it not.

Or are we talking about the same thing. A stop doesn't necessarily have to be a hard stop. It can be based on price action.

All answered in my previous posts pretty much.

Losses should never be painful if the calculated risk was acceptable, it's only when risk runs out of control through poor planning or lack of discipline that there's potential for pain from perhaps damaging or unsustainable losses.

People come into the market with preconceived ideas about what they should and should not do according to conventional trading wisdoms and well-worn trading mantra. I'm not a trailblazer by any means however from my own personal experience I've found other less conventional approaches can be equally effective if not more so. I'm an intraday trader and find picking short-term direction quite challenging so I needed to come up with something to compensate for my lack of ability when it comes to accuracy!

Like I keep saying my approach might not be suitable for some people but no-one has the monopoly on profitable trading strategies, my ideas are just one of many many ways to profit from trading.

 

[Alex55]

Quote from cabletrader:

[BHere, "...I'll only use a stop in an emergency if I can't trade my way out of a loss or my risk percentage is hit..."

Here, "....At worst if it all goes wrong then I close everything when my overall risk is reached....."

And here, "...There should never be a situation where there's a risk of blowing up, that would demonstrate a lack of risk, money, and trade management, and the discipline to adhere to it. Like I said before, if the worst happens and my overall risk threshold is reached I'll have no hesitation in closing everything to limit loss...."

Hope that helps but somehow I doubt it! [/B]

No it doesn't help if you don't revail your numbers used for your risk-percentage....
Just summing up these rules (which I do agree upon) doesn't mean anything without your definition of "risk". I get the feeling it's dynamical and depending on your frame of mind and mental-state....or isn't it ?

 

[cabletrader]

Quote from Alex55:

No it doesn't help if you don't revail your numbers used for your risk-percentage....
Just summing up these rules (which I do agree upon) doesn't mean anything without your definition of "risk". I get the feeling it's dynamical and depending on your frame of mind and mental-state....or isn't it ?

Let me ask you a question, why do you think my risk percentages are going to be relevant to you?

As for my definition of 'risk'. Although in theory anything can happen to price I make a clear distinction between risk and price volatility. Shaking out weak positions is the nature of the game and it needs to be taken into account in my experience. Currency values are notorious for overshooting and (intentionally) excessive moves, that might mean a stop loss triggering to one trader and an opportunity to another. I think it makes more sense to be 'another'!

 

[Alex55]

Quote from cabletrader:

Let me ask you a question, why do you think my risk percentages are going to be relevant to you?

Not especially for me alone but for all readers of this thread. We like to learn from other traders who "claim" to be profitable and/or learn from other's mistakes.

 

[Alex55]

Quote from cabletrader:

Currency values are notorious for overshooting and (intentionally) excessive moves

On that I fully agree.
Drawing trend-lines in Forex-charts will show more falls break-outs than other instruments (index-Futrues, or Stocks). Very probably because there is no central Exchange to quote the real Forex price.
So for Forex you will need Stops far below break-out-lines or get burned.