Always Amazed at How Thin this Game Is

[EPrado]

I go half in, then the other half later on, if the better price isnt looking counter trend.

Is that the same, works for me.

I lowered my margin from 200:1 to 50:1 and both positions i keep near that so no 3rd or 4th position, 2 is fine.

Taking an educated guess on future market direction is sadly always thin.

It's not exactly the same as what I was talking about. What I am talking about is guys who buy ES at 2030. Then just have resting orders to buy more at 2025 and 2020 regardless of market conditions. So if they are buying into a free fall they will be setting themselves up for a lot of trouble. That's the trade which can wipe someone out because the sell off could go for another 30 handles without stopping for a minute. I heard some real ugly stories of guys who traded like this on Aug 24. Bought pre open at like 8:30 am edt. Had bids all the way down. Got filled, then stuck on the first limit down. Then were wiped out when ES went to the second limit. Lost everything. Now the Aug 24th thing might only happen once every few years, but when it does you can basically end your trading career by doing this.

My only real question about legging in as the market goes against you is what happens when your timing is great and the market goes your way instantly......you will always be holding a much smaller position because you never had the opportunity to get in at a lower price. That's the main problem with averaging down. Your bigger position will always be the ones you are down on.

But what you are saying.....buying ES at 2030....it goes to 2020....then buying more on the way back up at lets say 2025 is in my opinion a much smarter way to get the better price then just putting resting bids in on the way down. Also buying a second time is not nearly as risky as doing 3 or 4 times as the market goes down.

 

[Turveyd]

The 2nd position not filled issue, was why i stopped doing that, wasted a lot of time and money being greedy, better off with 2.

Tried 8sl on dax death by a 1000nd cuts, upped to 16 half position size, doing much better fit to keep my greed in check.

 

[Cswim63]

Thanks man. At the end of the day it comes down to how a guy wants to trade. I am more of a base hitter/do less trades guy. You need a certain mentality to do this. Not for everyone. Is a lot of watching the markets and waiting. Seeing the opportunity and hitting the singles and doubles. Works for me.

I have traded on desks surrounded by guys who love buying ES down 10 handles, buy more down 15 handles...more down 20 handles...take huge risks and sometimes get carried out on a stretcher. But I have seen some of these guys have huge scores when they catch it right. I couldn't trade that way. I have had a friend or two taken out of the trading game completely trading this way.

One of the traders in Market Wizards said it perfectly....you get what you want out of the market. Some guys want to be taken to the top of the hill, then to the edge of the cliff. Over and over again.

I could go on and on about this type of behavior--adding to losers. It means breaking my trading principle, which is to stay on the right side of the market. Yes I will add to a position within a range. And I'll buy or sell the first retracement after a breakout. But if after a period of time I find I'm fighting with the market, I get out and reassess. Usually my body tells me first--my back aches, my mouth is dry and I can't think clearly. Often I'll reverse, and I generally feel like a weight has been lifted. If it doesn't it means I'm still not in harmony with the market I'm trading. So I'll just get out and wait for the clouds to lift. It's a amazing how a few hours can change your perspective, especially in the currencies. If I trade this way, even if I lose I feel like I've been responsible and get a passing grade for the day. --Swimr

 

[EPrado]

I could go on and on about this type of behavior--adding to losers. It means breaking my trading principle, which is to stay on the right side of the market. Yes I will add to a position within a range. And I'll buy or sell the first retracement after a breakout. But if after a period of time I find I'm fighting with the market, I get out and reassess. Usually my body tells me first--my back aches, my mouth is dry and I can't think clearly. Often I'll reverse, and I generally feel like a weight has been lifted. If it doesn't it means I'm still not in harmony with the market I'm trading. So I'll just get out and wait for the clouds to lift. It's a amazing how a few hours can change your perspective, especially in the currencies. If I trade this way, even if I lose I feel like I've been responsible and get a passing grade for the day. --Swimr

Adding to losers works great, until the one time it doesn't. You can wipe out 9 good days of trading with one horrendous day. The guys I have been around who do and stay in the game usually have a TON of capital to trade, whether they are trading their own PA or trading for a firm. So they will take insane risk at times because they most likely will survive the hit, but even guys I know who do trade the huge amount of capital sometimes come close to the death punch (Aug 24th). I base my opinion on this way of trading mostly on what I have seen take guys out of the trading world over the last 20+ yrs. This way of trading by far outweighs other reasons.

I agree with you 100% on flattening out a position if something doesn't feel right. If you don't you can do some serious damage. I have seen guys get stubborn, go into pray mode, then eventually get clobbered and exit. Then what follows can be real bad. Seen guys break keyboards in two, punch holes in screens, saw one guy lash out at another trader which lead to a fist fight in the bathroom outside our office, and finally.......about 15 years ago had the guy sitting next to me puke all over his keyboard after taking a huge hit. Worst part...was right during lunch. I had to throw out my perfectly good Italian Sub because of the "splash".

But worst part is after taking a huge hit psychologically it can take guys a long time to trade well again. They start second guessing and overthinking everything. Sometimes they recover in a few days, sometimes never. I have been there. Every trader has.

 

[Cswim63]

Adding to losers works great, until the one time it doesn't. You can wipe out 9 good days of trading with one horrendous day. The guys I have been around who do and stay in the game usually have a TON of capital to trade, whether they are trading their own PA or trading for a firm. So they will take insane risk at times because they most likely will survive the hit, but even guys I know who do trade the huge amount of capital sometimes come close to the death punch (Aug 24th). I base my opinion on this way of trading mostly on what I have seen take guys out of the trading world over the last 20+ yrs. This way of trading by far outweighs other reasons.

I agree with you 100% on flattening out a position if something doesn't feel right. If you don't you can do some serious damage. I have seen guys get stubborn, go into pray mode, then eventually get clobbered and exit. Then what follows can be real bad. Seen guys break keyboards in two, punch holes in screens, saw one guy lash out at another trader which lead to a fist fight in the bathroom outside our office, and finally.......about 15 years ago had the guy sitting next to me puke all over his keyboard after taking a huge hit. Worst part...was right during lunch. I had to throw out my perfectly good Italian Sub because of the "splash".

But worst part is after taking a huge hit psychologically it can take guys a long time to trade well again. They start second guessing and overthinking everything. Sometimes they recover in a few days, sometimes never. I have been there. Every trader has.

It seems to be premeditated, in a lot of cases. I took a self-sabotage quiz years ago. Scored pretty well in some areas, average in others, then poorly in a few. I knew I couldn't trade until I dealt with the worst ones. After twenty years they are still there--being organized and having a poverty/prosperity consciousness. I've been able to improve on both but they are still there. Plus I've discovered other weaknesses through trading, such as a tendency towards perfection. You can survive in the rest of life with it--you might be a good carpenter but a pain in the ass to be around. But its deadly in trading. That's why you see so many traders average their losers. It's endemic in society. We are taught all sorts of ideas. We must score a C or better to be accepted. A's are better. Losing is for losers. Once you have a position you defend it otherwise you look stupid. Looking stupid is bad. Only first place is what we really care about. Try to fit in. . .Supply meets demand at the intersection of these two lines. OK enough already.--Swimr

 

[EPrado]

It seems to be premeditated, in a lot of cases. I took a self-sabotage quiz years ago. Scored pretty well in some areas, average in others, then poorly in a few. I knew I couldn't trade until I dealt with the worst ones. After twenty years they are still there--being organized and having a poverty/prosperity consciousness. I've been able to improve on both but they are still there. Plus I've discovered other weaknesses through trading, such as a tendency towards perfection. You can survive in the rest of life with it--you might be a good carpenter but a pain in the ass to be around. But its deadly in trading. That's why you see so many traders average their losers. It's endemic in society. We are taught all sorts of ideas. We must score a C or better to be accepted. A's are better. Losing is for losers. Once you have a position you defend it otherwise you look stupid. Looking stupid is bad. Only first place is what we really care about. Try to fit in. . .Supply meets demand at the intersection of these two lines. OK enough already.--Swimr

"Plus I've discovered other weaknesses through trading, such as a tendency towards perfection. You can survive in the rest of life with it--you might be a good carpenter but a pain in the ass to be around. But its deadly in trading. "


Great point. Trying to become "perfect" will lead a trader to a bad place. He will end up getting greedy and not taking winners, hold onto losers way too long, switching strategies way too often, and changing/tweaking his strategy on a day to day basis. All very very bad.

 

[Cswim63]

I'm always amazed at how thin the difference between winning and losing is. Trading is a game of ticks. How many times did I scratch that trade, only to see it go 10-12 ticks immediately thereafter? How many times did I hold on to that 8 tick winner, only to see it become a 6 tick loser?

I'm still in this game and my worst enemy is me. Continue to grind, continue to stay disciplined, continue to stay positive!

"Plus I've discovered other weaknesses through trading, such as a tendency towards perfection. You can survive in the rest of life with it--you might be a good carpenter but a pain in the ass to be around. But its deadly in trading. "


Great point. Trying to become "perfect" will lead a trader to a bad place. He will end up getting greedy and not taking winners, hold onto losers way too long, switching strategies way too often, and changing/tweaking his strategy on a day to day basis. All very very bad.

Just pulled out my copy of "The Hour Between Dog and Wolf" by John Coates. Basically if you look at sports and nature, our reaction time alone doesn't explain our successful response to threat or opportunity. There just isn't enough time once our brain processes the stimulus. He also discusses the role of hormones in trading especially testosterone and the chemical dopamine. "Animals exposed repeatedly to incontrollable stressors may pathetically fail to leave the cage in which this experiment was conducted if the door is left open."

 

[EPrado]

Just pulled out my copy of "The Hour Between Dog and Wolf" by John Coates. Basically if you look at sports and nature, our reaction time alone doesn't explain our successful response to threat or opportunity. There just isn't enough time once our brain processes the stimulus. He also discusses the role of hormones in trading especially testosterone and the chemical dopamine. "Animals exposed repeatedly to incontrollable stressors may pathetically fail to leave the cage in which this experiment was conducted if the door is left open."

One of the things I always have done during an extended draw down is reduce size. Because after a while of getting beat up you will become gun shy and stop pulling the trigger on trades. Probably similar to the dog in cage thing. Even if you are trading big size, there is absolutely nothing wrong with cutting your trade size drastically during a draw down. This way it keeps you in the game/pulling the trigger. To completely stop trading during a draw down IMHO is a mistake. Hell, if you are a futures trader just go down to trading 1 lots. At that point it's not about the money, it's about psychologically getting back on track. You would be surprised at how good it feels to have a winner on a tiny one lot even if you normally trade 100 times that size. Because putting together a few tiny winners will reinstall (this is absolutely the wrong word...but you get my point) the belief that your strategy is successful.

 

[Cswim63]

One of the things I always have done during an extended draw down is reduce size. Because after a while of getting beat up you will become gun shy and stop pulling the trigger on trades. Probably similar to the dog in cage thing. Even if you are trading big size, there is absolutely nothing wrong with cutting your trade size drastically during a draw down. This way it keeps you in the game/pulling the trigger. To completely stop trading during a draw down IMHO is a mistake. Hell, if you are a futures trader just go down to trading 1 lots. At that point it's not about the money, it's about psychologically getting back on track. You would be surprised at how good it feels to have a winner on a tiny one lot even if you normally trade 100 times that size. Because putting together a few tiny winners will reinstall (this is absolutely the wrong word...but you get my point) the belief that your strategy is successful.

Basically I agree to this point. I trade forex now. Part of the reason is money mgmt. I've traded futures but I couldn't cut my position low enough to match my capital position (POOR!). But even on a tiny tiny 1K lot with a pip loss, I find the trade is still in my head and I just don't want it there. Why? Could be wrong time of day(dead), or I'm just tired and cannot manage ANY position and I know it. It just depletes me even if I'm right. It's the big downfall of discretionary trading. It really can be a lot of work. I try to limit my physical exposure to the market. The biggest risk is burnout--ive found it costly.

 

[Cswim63]

Basically I agree to this point. I trade forex now. Part of the reason is money mgmt. I've traded futures but I couldn't cut my position low enough to match my capital position (POOR!). But even on a tiny tiny 1K lot with a pip loss, I find the trade is still in my head and I just don't want it there. Why? Could be wrong time of day(dead), or I'm just tired and cannot manage ANY position and I know it. It just depletes me even if I'm right. It's the big downfall of discretionary trading. It really can be a lot of work. I try to limit my physical exposure to the market. The biggest risk is burnout--ive found it costly.

The funny thing about these threads--the peoples most able to benefit from the discussion they started is nowheea to be found.