CL Redux

Quote from NoEmotions:

My reading is CL is behaving little different today jumps up then within no time jumps down vice versa with power.
More...

Typical NYMEX open.
 
Quote from riskaddict:

an intermediate down trend in the making. I'm guessing r1 and that trend line could cause formidable resistance. If we get back down to 87.30 I'll be loading up.
More...
You're just greedy. :D :D Playing. :D And actually this is meant as a compliment. :)
 
Quote from NoEmotions:

My reading is CL is behaving little different today jumps up then within no time jumps down vice versa with power.
More...

your reading is correct, so what will it resolve itself to? I think a large bullish move after some up and down wiggles within the established RTH range
 
Quote from NoEmotions:

I am prefering to stay away till I see more steady action. Typically I like to expolit the weaker side, in this scenario I risk loosing my shirt.
More...

I know what you mean, blindly swinging for the fences is a fast way to the poor house. Only play when you have a low/acceptable risk, entry method and you know your numbers in every scenario.
 
Quote from NoDoji:

I am only beginning this plan of adding to winners, so I don't have the "live" experience yet. I have manual back testing experience. My tactic of initiating on a pullback and adding on a breakout is one of many scaling tactics. If I get into a trend off an early reversal signal, and the reversal breakout confirmation move is strong, I think I'd consider holding through the pullbacks and adding at those points.

Size on breakouts is not a place I can yet provide feedback, because I've only traded 1 lot on breakouts, and have gotten significant slippage when the breakout is strong. BUT if you have a nice profit cushion from the initial position, and the trend is early or midstream (or ridiculous as in "There's no way this can go any higher/lower!"), I'm thinking size is the right thing to do. Some of these breakouts lately have run 50 ticks out of the gate.



I know there are counter-trend traders and faders who average down and make a great living trading. I find it too stressful and too dangerous when I have a small trading account and have to produce consistent significant returns off it.

This post pretty much sums it up for those who average down without a position size/risk management plan set in stone and known in advance.

The biggest problem is that MOST of the time you CAN average your way out of trouble, thereby having a 90% or better win rate which satisfies your ego because you're never wrong. This conditions you to believe that price always does a certain thing if you're patient enough.

Dejavu informed us not long ago that mathematically speaking price reverts to the 20-period moving average 100% of the time. I'm pretty sure it does because on every chart I've seen it does indeed.

But it's a MOVING average, and by the time price finally gets back to it, it may have moved very far from where it was when you first began fading what you calculated to be an "extreme", and by then you may be out of bullets and in deep trouble. I believe Dejavu had a 100% win rate for a few months and stopped posting the day we had a massive trend that ran all the way into the close. The moving average was well over a point from the initial signal to begin fading the first extreme move and the pullbacks were shallow. A trader who can't take a small loss because s/he conditioned to believe the 100% win rate will never fail as long as s/he keeps averaging, will suddenly have that day that wipes out weeks, months or years of profits. Read the story of Long Term Capital Management to find out how it can end for brilliant traders who thought they calculated 100% probability in their favor.
More...
These are great points. Thanks for clarifying what I was meaning to say. You're right, when you average down into a losing position you usually do "get away with it." But this is a bad habit unless like you say you have a position size, risk management plan. But even then you may do this successfully what seems like forever and make lots and lots of money. But it's the one time when the trend continues against you or when there's some extraordinary event that it will kill you.

I used to hang out in the Pitstock http://www.pitstock.com/ live trading room all day with several hundred other traders. And there was a guy in there that was one of the very best traders I ever saw. He just nailed trade after trade after trade. It just left you breathless sometimes wondering how he did it. But one thing was he never used stops, but instead averaged into positions if it moved against him. And this worked time after time. But I came to learn later that I think what happened was during the dot com bubble crash, he used this strategy and wiped out his account. I'm pretty sure that's what happened. And he amassed a huge debt. And being such a great trader, other people gave him their accounts to trade. And even several years later, and with all the great trading he was doing, he was still working his way out of debt. And you mentioned Long-Term Capital Management. http://en.wikipedia.org/wiki/Long-Term_Capital_Management They were really smart, but being so highly leveraged, almost brought down world economies.
http://www.pbs.org/wgbh/pages/frontline/warning/
 
You must log in or register to reply here.
Back
Top