Advantage of looking at your trades as a Sequence vs one shots

[easymon1]

To discuss this in generalities is fine and dandy, but the difference between running trades for Invesco and what the good day trader is doing are Miles apart.

The context of the trades is night and day. Nimble is not the name of the Invesco trader when they are trying to pick up a load of small cap stocks for their fund.

That's where we try to help them out. lol. For a good day trader, imho the mundane three are paramount.

Impossible to state any better than said by Robert Morse.
1) What triggers a buy or a sell to open?
2) What triggers an exit?
3) How do you size your trades?
the mundane three
---

Now add onto the mundane three if you want but your stats just got extra gnarly to compile in anything remotely resembling the 'truth'. Trow on dere, "What triggers a buy or sell to add, etc etc etc".
Why not enter on Setup Trigger all in all out, set a target or two, set a stop and go look for more trades.

If your method uses less mundane, less mechanical, more imaginative trading, then that's out of my wheelhouse fer sure.

dogman has that testable mechanical system of his and scaling in would be akin to hiring Jackson Pollock to finish this Picasso.

Simple can be Beautiful

What would you say belongs in a solid trading plan?
A big tip of the hat goes to Robert Morse
https://www.elitetrader.com/et/thre...solid-trading-plan.340340/page-4#post-5031706

 

[Math_Wiz]

I set up a sequence of 2-4 buy stop OTO conditional orders ahead of time.

For example if it's at $21.8 premkt I might have 3 orders, with buy-stops at 22.2 22.6 23.1

Nice Ken. Are they all equal size?

 

[KCalhoun]

Nice Ken. Are they all equal size?

Depends.... usually small first entry, larger 2nd 3rd

 

[Math_Wiz]

Depends.... usually small first entry, larger 2nd 3rd

Wow, backwards from what I would have guessed, haha. I thought second entries would be smaller due to seemingly larger risk. But if the stock is moving in your favor, perhaps you are right to enter with larger size on your second and third tiers. We move on to stops. Would you use trailing stops in this instance?

 

[Illini Trader]

Depends.... usually small first entry, larger 2nd 3rd

Are you sure about that? This sounds to me about a plan to lose all your money fast.

 

[tiddlywinks]

"What triggers a buy or sell to add, etc etc etc".

That is either a self-imposed rabbit-hole or it is not.

There are many "answers" that can be determined at the time of the INITIAL trade entry... Adds can occur at...

• At various Hz levels, fib or s/r, for example.
• When/if open profit is equal to or greater than X.
• When a scheduled news item is released.
• When/if some market internal does X.
• This is not an exhaustive list in any way.

Or go down the rabbit-hole of a "new" setup and trigger for an add to an existing trade... Let the (limited value) testing begin!!

Personally, I am all-in, all-out, flat eod. I would much rather book a profit/loss and put on a fresh trade, even in the same direction. It is worth a few shekels in fees and commissions to stay in sync with the market being traded, and is mentally relaxing with my risk in check.

 

[KCalhoun]

The main goal in doing multiple trades is to minimize upfront risk / cost of stops for initial entries that fail.

These initial trades either stop out small or produce an unrealized profit, that's used for the main trades in the sequence, your 2nd/3rd entries.

Amateur one shot: buy 1k shares at 22.6, gets stopped out 22.2 for $400 stop.

Vs

Experienced trader: buy 100 shares at 22.6, gets stopped out 22.2 for $40 stop. Re-enters 2nd time at 22.6, this time it works, scales in 200 shares at 23.1 and again 200sh at 23.4, sells all at 23.9

That's how I trade

 

[Math_Wiz]

Quite interesting, Ken. Thanks for sharing.

Are your three-tiered trades primarily swing trades?
Do you often triple-tier your daytrades?

 

[KCalhoun]

I scale every trade if possible for both swings and daytrading

 

[deaddog]

The main goal in doing multiple trades is to minimize upfront risk / cost of stops for initial entries that fail.

These initial trades either stop out small or produce an unrealized profit, that's used for the main trades in the sequence, your 2nd/3rd entries.

Amateur one shot: buy 1k shares at 22.6, gets stopped out 22.2 for $400 stop.

Vs

Experienced trader: buy 100 shares at 22.6, gets stopped out 22.2 for $40 stop. Re-enters 2nd time at 22.6, this time it works, scales in 200 shares at 23.1 and again 200sh at 23.4, sells all at 23.9

That's how I trade

Lets do the math;

Firstly you are only trading a total of 500 shares so lets assume the amateur trades the same amount.

On the first trade the amateur loses $200.

If you are going to enter again why wouldn't the amateur? There has to be a set-up for you to re-enter so lets assume you both get the same signal.

Second trade; the amateur trades his 500 shares and exits where you do and makes 650 less his initial loss of 200 for a days profit of 450.

Where as the Pro only makes 390 by scaling in less his initial loss of 40 for a days profit of 350.

Us amateurs are going to have a better equity curve.