You had a great year 2020. What triggered your trade entries then?
As a consistent profit day trader...
- Thread starter Leob
- Start date
Well, as been said many times, it's easy to do well when the market is on an uptrend, and I did. 75% of my trades were TSLA and all I did was to cash in every so often before jumping back in, without much concern for entries and exits.
I'm grateful for that year but 2021 has been the true trading lesson, trying out various methods against my tolerance levels. I am learning a lot (I appreciate the help) and my various questions are a continuation of that journey.
What I look for are repeat costly mistakes, which are always about mistiming entries or exits. When I go back and analyse, I'm often at a loss as to what I did wrong, yet repeats tell me it's not a fluke.
I have several examples of buying shares of a dropping stock, only to see it tumble further, then holding on to the shares for weeks until the stock finally surges well above my original entry, invariably 24 to 48 hours after I'd exited out of frustration or need for cash.
The alternative scenario is setting up a sell trigger $X or % above my entry before going to sleep, then seeing in the morning that the stock went to the moon.
I suppose I'm looking to find out if this is common occurrence among traders or if am I doing something wrong that I need to correct.
Scalping or intraday trading are a way to minimize these but which I find generally quite stressful to micromanage. Yet, the delayed gratification of swing trading can be just as taxing on the psyche.
In the last months, as I've come to understand that I don't need to trade every day, I've been gravitating towards fewer stocks, down to 3 to 6, 2 to 4 that I swing trade (5 days to 3 months) and 1 or 2 that I day trade (1 or 2 days max) although not all are clearly one or the other and do as they please (hello MSTR!).
By doing this I familiarize myself with the stock on a macro level, with its pace on a chart level and then on entries and exit at the trading level. It has helped me recover a lot of the losses I incurred earlier this year but I'm not out of the woods just yet with 6 weeks to go.
I wont say "stupid trades" but there are some trades that are just x-factor plays. Meaning, your rigid system won't give a "buy" signal, but based on fundamentals and other factors it is a profitable play.
RR should be at least 2:1, otherwise you're befriending too much risk. Unbeknownst to some of you, risk is not your friend.
I completely agree i would even say 3:1. It can be hard for even experienced traders to have the accuracy level for 1:1 never mind beginners.
How are these x-factor plays spotted?
What triggers a buy or sell to enter?
Maybe you should have titled this thread 'As a day trader...', I mean, removing the 'consistent profit' part...
Personally, I've automated everything. I only need one manual intervention per week (thanks to IB Gateway resetting during the week-end).
Machines don't do stupid thing, unless they are programmed to.
They don't lack of discipline either.
I'm using the IB Gateway. There is an option for 'Auto Restart'.
All my scalp/day trades are inverse as far as risk to reward, I will risk up to 3 to get 1, but I know my stats well where 1% of each signal can have 2 losses in a row, so when a loss happens, next of same signal trade I will do double or triple contracts so I can wipe out intraday drawdown. I think most traders have no clue of keeping stats on their trades, difference between of dreaming and achieving. My losing/breakeven percentages are very low. I look at trades like grapes, if kept too long on the vine, they go rotten. In other words have a time limit if after you get in and trades becomes stagnant IMHO. Most of my trades regardless of timeframe have 1-3 bars to be going in desired direction or am looking to get out with a tick.
I very seldom read when not to trade a signal, chart patterns, if you really study and test them for stats can negate a few or dozen trades a day. In any day, chart patterns will negate up to 2 dozen signals for me on one system. And most of the negated signals would have been partial or full losses. Study ends of trends for patterns and test them, yes this takes time, takes hardly any time to lose your account.
I very seldom read when not to trade a signal, chart patterns, if you really study and test them for stats can negate a few or dozen trades a day. In any day, chart patterns will negate up to 2 dozen signals for me on one system. And most of the negated signals would have been partial or full losses. Study ends of trends for patterns and test them, yes this takes time, takes hardly any time to lose your account.