AHG - Profitable Strategy for Struggling Traders
- Thread starter Anekdoten
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A. If you are still around. I noticed in one of your old post in a different thread, that you should never allow a winner to become a loser. I think we all appreciate that, but how much to be ahead before going to a break even has always been a moving target for me. Seems if I move to a be when up 2 points, I seem to get a lot of 2 point reversals, back to my stop, then back to trend, so I am not consistent in that area. Do you just play each trade as it unfolds or move to be at a certain time. Not to beat a dead horse on this subject, just trying to better understand what seems to me to be an important concept to have under my belt.
Don
Don
You cant stop every winner from becoming a loser. Are you going to exit a trade because it goes a tick or two in your favor then reverses? Of course if it moves significantly in your favor it would be foolish to let it turn into a loser. The question seems to be "how much". I think this must be decided by volatility. In this market two points is tight. I have doubled my normal guidelines.
The stop should be strategically placed below or above resistance.
It is your job to make an effort to get the good fill close to it.
If using 50% fib retracement, watch the 61.8% area as stops, etc.
Risk management at all times.
Assuming long, when the price runs in your favor, consider placing stop below the low of 2-3 last bars, reverse for short.
Placing at break even is just a common saying, using the lows of previous bars is much more astute.
Hope it helps.
Anek
It is your job to make an effort to get the good fill close to it.
If using 50% fib retracement, watch the 61.8% area as stops, etc.
Risk management at all times.
Assuming long, when the price runs in your favor, consider placing stop below the low of 2-3 last bars, reverse for short.
Placing at break even is just a common saying, using the lows of previous bars is much more astute.
Hope it helps.
Anek
In my opinion, this is where scaling out really pays off. I think 2 pts is sufficient in a normal market, but the ES now covers 2 pts just wiggling around. Hence, it is important to reduce size and widen your stop. Scaling is great because you can bank a portion at 2 pts and let your stop play out. Generally, after the ES move 2.5 to 3 pts in my direction and then comes back to my entry, then I don't want to be in the trade anyway because eventually it is likely to reverse. I scale out always. I know others argue against it though. My crystal ball doesn't work as well as theirs though.
In my studies I concluded that scaling out only helps the psychological factor, releases the pressure of securing profits. Remember, you can always get back in a trade.
Yet, a simple strategic trailing stop does the same.
My main problem with scaling out is that when you get stopped before your first target, you lose on your full lot.
However, if your first target has a good ratio in comparison to your stop, then by all means, scale out til your heart stops pounding.
Money management is very personal and I don't think there is only one way to do it properly. It all depends on what is right for you and your style.
If you need to release some pressure when trading with multiple positions, scaling out can help tremendously.
If I had to pick one, averaging up is hard to beat once you get good at reading the market.
In fact, due to averaging up it has been years since I had a losing month because a good day erases multiple losing ones and then some.
Hope it helps, but don't forget to research deep within yourself which style fits you best.
Trading comfortably is important.
Anek
Yet, a simple strategic trailing stop does the same.
My main problem with scaling out is that when you get stopped before your first target, you lose on your full lot.
However, if your first target has a good ratio in comparison to your stop, then by all means, scale out til your heart stops pounding.
Money management is very personal and I don't think there is only one way to do it properly. It all depends on what is right for you and your style.
If you need to release some pressure when trading with multiple positions, scaling out can help tremendously.
If I had to pick one, averaging up is hard to beat once you get good at reading the market.
In fact, due to averaging up it has been years since I had a losing month because a good day erases multiple losing ones and then some.
Hope it helps, but don't forget to research deep within yourself which style fits you best.
Trading comfortably is important.
Anek
Anek, you are saying that you take an entry, hold the full boat and then wait for a second setup through a retracement to add more? Is this correct?
I'm interested in learning about how you average up. Thanks.
FT71,
My initial entry is minimal in size as I have no real evidence of how strong the new trend really is. Naturally this assures me that if I'm mistaken in my analysis my losses are very small.
Once I see strength developing I use retracements to further increase my position always using the same stop (a change of a trend, a break of support/resistance) on every single add.
As the trend keeps running, and new areas of S/R are marked, the stop is moved over and over as the adds start piling into the play.
When I get lucky to catch a beast of a trend I might go as far as to using full leverage as I add positions on retracements but always securing profits on the vast majority of the adds. This gives me the freedom to trade monstrous contracts without an ounce of fear and responsibly.
They say trading should be about small losses, break evens and small to huge winners, this is exactly what averaging up promotes. Needless to say on extremely choppy days you end up with multilpe small losses. In the long run though, it's an indisputable winner as far as money management goes.
Anek
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