CL Redux

[zxd]

Well, oil just went south of 85.51, selling half now.

Schizo, I think the 140 to 40 was an extreme case considering it was while we were in a severe recession.

 

[zxd]

Quote from NoDoji:

Where are you long from? Technically it looks way oversold, but then again the long term trend line broke out today and so anything can happen. I think you should follow whatever your plan was in the first place, even if it's painful.

87.50 is where I'm long from, ouch. I just closed half out at 85.50, I'll buy the half back in if it declines some more. I mean how much lower can it go?

 

[schizo]

Quote from zxd:

How much lower can it go?

Consider including this 3-year weekly chart into your plan.

 

[McBet]

Quote from schizo:

Consider including this 3-year weekly chart into your plan.

Could you also chart Brent crude oil for us please?

 

[BCE]

Quote from NoDoji:

I think you should follow whatever your plan was in the first place, even if it's painful.

FWIW I couldn't disagree with this statement more. And your statement below points out why. Sometimes you're just wrong and your "plan" is not a good one. And the sooner you admit it, the less pain and destruction you'll suffer. This is true if your "plan" doesn't include a viable exit strategy if you are wrong. To not admit you are wrong is called "denial". And as was previously mentioned, "denial" is not a river in Egypt. Denial will eventually get you killed.

Quote from NoDoji:
I had a very losing short position once in a stock and I used a disaster stop at a price that it would absolutely never get to, and it got there, and I was stopped out, and it sucked because it erased a huge chunk of my year-to-date profits, but it saved me from a bigger loss.

 

[BCE]

I was meaning to add some thoughts the other day on "conviction". Obviously we all have times when we feel strongly about where the market or an individual stock or contract is headed, up or down. The thing is, the market will tell us whether we are right or wrong. Period. The market of course doesn't give a flying f**k what we think. The market is going to do what it is going to do for a million different reasons.

Here are some quotes from the George Soros on Trading thread I started a few weeks ago. http://www.elitetrader.com/vb/showt...9&perpage=6&highlight=conviction&pagenumber=1

Quote from BCE:


Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage. As far as Soros is concerned, when you're right on something, you can't own enough.

The key words here are "when you're right".

Quote from the1:

Regardless of the fact that I'm not a Bazzillionaire I don't agree with this statement. Even when I've had "tremendous conviction" on a trade I've been flat out wrong. Going for the jugular could wipe you out when you are using leverage. That being said, position sizing in trading is critical to success but I'd rather go for the Portal Vein. If I'm wrong at least I got a chance of getting to the hospital before I bleed out.

Quote from Landis82:

You're not understanding the context of Soro's statement and trading methodology correctly.

He goes for the jugular and dramatically increases his position size WHEN THE MARKET TELLS HIM THAT HE IS RIGHT.

He doesn't just go in and take a huge position because he has "tremendous conviction".

He takes a position in tons of markets around the globe, and when the market takes his position into a profitable trend, he then ADDS to it.

The reason that I know this is because a very good friend of mine used to be his head financial futures / currency trader for nearly 15 years, and reported to Stanley Druckenmiller.

Quote from BCE:

I was going to point this out too. It's only when he's right that he that he steps it up. Not just because he has a strong hunch or feeling about market direction or position direction.

 

[NoDoji]

Quote from zxd:

I mean how much lower can it go?

The current contract started trading actively on 1/18. Everybody who shorted it between then and right this minute is profitable. Everybody. So shorts have no reason to buy right now.

Nobody who went long between then and right this minute is profitable.

There's really no incentive for anyone to buy right now, because the fundamentals are weak and technically we are in no man's land between here and 84.50 (11/30 support and 11/19 resistance).

 

[NoDoji]

Quote from BCE:



FWIW I couldn't disagree with this statement more. And your statement below points out why. Sometimes you're just wrong and your "plan" is not a good one. And the sooner you admit it, the less pain and destruction you'll suffer. This is true if your "plan" doesn't include a viable exit strategy if you are wrong. To not admit you are wrong is called "denial". And as was previously mentioned, "denial" is not a river in Egypt.

My plan for that particular trade (a swing trade) was to hold until the disaster stop or my profit target was reached. I believed that price would never get to that stop (which was quite dumb as I was still quite the noob at the time), but it was my pre-trade plan nonetheless.

 

[BCE]

Quote from zxd:

87.50 is where I'm long from, ouch. I just closed half out at 85.50, I'll buy the half back in if it declines some more. I mean how much lower can it go?

This is all of the stuff we've been talking about. I feel bad your trade is going so poorly. But the strategy of closing out half to buy back in lower and create a lower break even level can work but it's really dangerous to trade that way as we've pointed out. What if some other really bad fundamental news comes out that drives this considerably lower? Where will you exit? That's the problem with averaging into a losing position. A lot of times you "get away with it". But there are those times when it really goes against you and you run out of bullets. Or the pain is so great you just give it up and then feel really miserable at what you've done.

And the other thing is the other half you're still holding is fighting the current trend. This is "babysitting" a losing position and it ties up your money that could be used for a better entry and winning position. It's better to cut the losses short originally and reassess the market.

I'm not ragging on you at all. So please don't take it that way. Most all of us have done just this very thing. I speak from experience. Believe me. My post here is just as much a reminder to myself of what works well and what doesn't.

 

[BCE]

Quote from NoDoji:

My plan for that particular trade (a swing trade) was to hold until the disaster stop or my profit target was reached. I believed that price would never get to that stop (which was quite dumb as I was still quite the noob at the time), but it was my pre-trade plan nonetheless.

So are you saying basically that you need to make sure you have good plans but you should stick to your plan no matter what? Just curious what your take is.