Constantly shaken out

Z

ziyan

Hi all,
I'm still a novice trader. The market has been very good to me for the most part, but I keep getting shaken out of highly profitable trades prematurely (2nd straight time this month). I use discretionary stops based on daily profit loss percentages to around 2.5% (?which is substantial?)
Here's my most recent trade:
SZYM BOT on 3/7 @ 11.88 (knife-catching? crap, I know. sorry guys! Thought I saw good support from previous periods)
3/12: Gap up @14.18, breaks 14,
breaks 13.90,
breaks 13.80, I type in my order,
breaks 13.75, I brace myself,
breaks 13.70, I vomit. and hit the sell.
SOLD @ 13.65
4:00 pm closes over 13.90. I curse the world.
Today. Closes over 14.43. I am too chickenshit to get back in saddle. (trading on cash acct w/3-day settling) and I curse the world some more.

Now part of me pats myself on the back for making a profitable (albeit riskily initiated) trade. The other part kicks me for being a slight wuss in a bull market and not using wider stops. And of course, I always kick myself for trying to catch the falling knife so often.
Can I please get some feedback on this trade?
Any & all constructive criticism appreciated.
Thanks so much!
 
Quote from ziyan:

Hi all,
I'm still a novice trader. The market has been very good to me for the most part, but I keep getting shaken out of highly profitable trades prematurely (2nd straight time this month). I use discretionary stops based on daily profit loss percentages to around 2.5% (?which is substantial?)
Here's my most recent trade:
SZYM BOT on 3/7 @ 11.88 (knife-catching? crap, I know. sorry guys! Thought I saw good support from previous periods)
3/12: Gap up @14.18, breaks 14,
breaks 13.90,
breaks 13.80, I type in my order,
breaks 13.75, I brace myself,
breaks 13.70, I vomit. and hit the sell.
SOLD @ 13.65
4:00 pm closes over 13.90. I curse the world.
Today. Closes over 14.43. I am too chickenshit to get back in saddle. (trading on cash acct w/3-day settling) and I curse the world some more.

Now part of me pats myself on the back for making a profitable (albeit riskily initiated) trade. The other part kicks me for being a slight wuss in a bull market and not using wider stops. And of course, I always kick myself for trying to catch the falling knife so often.
Can I please get some feedback on this trade?
Any & all constructive criticism appreciated.
Thanks so much!
More...

I'm far from an expert, but my solution to avoid picking tops/bottoms was to start entering the majority of my trades on stops instead of limits. I mainly trade 6E and sometimes NQ in the evenings (6E mostly for liquidity purposes) and I had quite a bit of success initially trying to squeeze as many ticks as possible out of every trade. Then, things went south for awhile when the volatility really deteriorated and I found - same as you - that I was getting shaken out of good opportunities and getting shredded in the chop.

Now I'm ok giving up those few ticks to try and confirm I'm in the right direction (whether entering on a pullback or grabbing a reversal). If price doesn't move the way I anticipated, I generally don't get filled and I look for another setup. Figured since my stops get run all the time anyway, why not just enter on them and profit when everyone else's get run instead of the other way around :p

Just my 0.02 and good luck out there!
 
Quote from ziyan:

Hi all,
I'm still a novice trader. The market has been very good to me for the most part, but I keep getting shaken out of highly profitable trades prematurely (2nd straight time this month). I use discretionary stops based on daily profit loss percentages to around 2.5% (?which is substantial?)
Here's my most recent trade:
SZYM BOT on 3/7 @ 11.88 (knife-catching? crap, I know. sorry guys! Thought I saw good support from previous periods)
3/12: Gap up @14.18, breaks 14,
breaks 13.90,
breaks 13.80, I type in my order,
breaks 13.75, I brace myself,
breaks 13.70, I vomit. and hit the sell.
SOLD @ 13.65
4:00 pm closes over 13.90. I curse the world.
Today. Closes over 14.43. I am too chickenshit to get back in saddle. (trading on cash acct w/3-day settling) and I curse the world some more.

Now part of me pats myself on the back for making a profitable (albeit riskily initiated) trade. The other part kicks me for being a slight wuss in a bull market and not using wider stops. And of course, I always kick myself for trying to catch the falling knife so often.
Can I please get some feedback on this trade?
Any & all constructive criticism appreciated.
Thanks so much!
More...

Now I think you need to be clear about your holding period on this trade. If you are holding this for a position trade to take out 15 you shouldn't be shaken out of a small correction like that. However if you are looking for short swing trade you need to be scaling out into that move lol. That thing moved up more than 25% from you entry and had gapped up close to 10% that day.

Regardless you need to more specific with what the objective of this trade was? What type of move were you looking for? What was your target? You can't just throw on a trade and hope for the best, your emotions will get the best of you and you'll make mistakes.
 
Quote from ziyan:

Hi all,
I'm still a novice trader. The market has been very good to me for the most part, but I keep getting shaken out of highly profitable trades prematurely (2nd straight time this month). I use discretionary stops based on daily profit loss percentages to around 2.5% (?which is substantial?)
Here's my most recent trade:
SZYM BOT on 3/7 @ 11.88 (knife-catching? crap, I know. sorry guys! Thought I saw good support from previous periods)
3/12: Gap up @14.18, breaks 14,
breaks 13.90,
breaks 13.80, I type in my order,
breaks 13.75, I brace myself,
breaks 13.70, I vomit. and hit the sell.
SOLD @ 13.65
4:00 pm closes over 13.90. I curse the world.
Today. Closes over 14.43. I am too chickenshit to get back in saddle. (trading on cash acct w/3-day settling) and I curse the world some more.

Now part of me pats myself on the back for making a profitable (albeit riskily initiated) trade. The other part kicks me for being a slight wuss in a bull market and not using wider stops. And of course, I always kick myself for trying to catch the falling knife so often.
Can I please get some feedback on this trade?
Any & all constructive criticism appreciated.
Thanks so much!
More...
this is going to happen to you for the rest of your life until you incorporate a sound money management program which is not based on market price.

A good system will usually give back 30% of any move. So,when you look at your highwater mark, don't forget to minus out the 30% you should give back.

nothing wrong with catching falling knifes, nothing wrong with closing out early, and really, nothing wrong with closing out late.

put it all in context of your money management system, then, what you are now devoting 100% of your mental energy to will only require 10% of your brainpower.

you already have a good starting point. You know your money management system needs to avoid PDT.

If possible, take some time off and do some testing using random entries. Once you get a random system that will break even minus the spread and commissions you are ready to go live.

good luck
 
Thanks everybody for the insightful replies.
I'm gonna look into the buy-stop orders, maximum adverse excursion, and for sure the trade targets, money management, and being real about my trade objectives.

For runaway trades like this, does anyone have an opinion on whether it's better to have wide stops from the onset or simply to jump back in after a shakeout if conditions are favorable?
Simply put, this year has been ridiculous so far in terms of bullish sentiment & chances are, in another environment, that drawdown could have been steeper.

Oh, and what are the mechanics behind entering long trades with a stop? Did not know that was possible?..

Again, I'm very grateful for the replies I've gotten. Thanks so much!
 
Quote from ziyan:

Thanks everybody for the insightful replies.
I'm gonna look into the buy-stop orders, maximum adverse excursion, and for sure the trade targets, money management, and being real about my trade objectives.

For runaway trades like this, does anyone have an opinion on whether it's better to have wide stops from the onset or simply to jump back in after a shakeout if conditions are favorable?
Simply put, this year has been ridiculous so far in terms of bullish sentiment & chances are, in another environment, that drawdown could have been steeper.

Oh, and what are the mechanics behind entering long trades with a stop? Did not know that was possible?..

Again, I'm very grateful for the replies I've gotten. Thanks so much!
More...

Glad to see you getting some really good info here!

As far as entering long/short on a stop - think about how your stop works if you are already in the trade. For example, if you are long @ 5.00 and are risking 0.25 on the trade - you simply put a sell stop in at $4.75. Now assume the market is trading around your entry point, the whole point of the stop is to rest your offer below the market without being automatically filled. The order is only triggered if the market moves against you.

Now assume you're watching the same instrument @ $5.00 but you have no position. However, your setup is telling you that it looks poised for a reversal and you want to get short but you also want to confirm that the market is moving downward as you anticipated. Here, you could enter a stop sell at $4.75 (using that as your signal confirmation price) and if the market moves down like you thought, your stop is triggered and you are now short. If your setup doesn't develop like you envisioned and the market continues upwards - voila! you didn't get filled on your stop. Now you can cancel your order and look for another setup. If you had tried to squeeze every tick out of this trade, you would have shorted using a limit or market entry at the point where you believed the high of the market to be (say $5.05 in this example).

So fantastic if your setup was correct and you picked the top but if you were wrong, you're now trapped in a bad short position. Had you sacrificed a few ticks to possibly confirm the direction, you could have avoided a bad trade.

This is just one simplistic example but it has helped me be patient, confirm my setups, and let my good trades run further. I've found that this technique has worked to enter with trend, to scalp pullbacks within a trend, or to enter countertrend.

Happy trading!
 
I got long at a bad place today on my 1st trade, after going in my favor it reversed and I got stopped out. I now wish I had a tighter stop on this trade so I would have been stopped out sooner.

I then watched the market, saw a better setup long at a lower price, and went in again, and made back most of my loss.

So what I am suggesting, is its fine to get stopped out, you can then go back to watching for a good setup, and get back long again if you get a new setup.

There is no holy grail system where you never get stopped out. However, you can keep a journal of your trades and see if a trend is developing.

For example, if you notice you are getting stopped out, and the market is not going much lower before reversing higher, then maybe you need a wider stop. If your stop did prevent a much greater loss, then it worked fine. It does not matter if the next day or 4 hours from the time you were stopped out, price was higher. What matters is if the stop functioned correctly, and if it did, then you just need to identify the next trade setup in time to catch price moving back up.

I noticed, that my long on my trade I did not wait for a second confirmation signal that if I waited for it would have gotten me in at a better price and I would not have had the loss in the 1st place. While, no one can be perfect, my goal is to wait next time for more confirmation so I hopefully will not make a similar mistake.
 
I'm guessing that a gigantic weakness I have is that I try to squeeze every last penny out of a trade... and then balk to hit the sell when it goes against me... hot damn I'm such an amateur :(

I suppose the intra-trade jitters and greed are like a novice set of problems that lead to a massive amount of micro-managing the trade instead of shooting for the fences?

The buy stop technique looks like a great part of the disciplined speculator's repertoire and I'm honestly gonna give that a try on my next trade. I say 'disciplined' b/c if I understand the mechanics of the order correctly, jo, the price action would have to be moving up or down INTO the trade as opposed to the knife-catching limit orders, which are set to catch the lowest possible tick against your trade so you get the lowest support-hugging price...? ...Not sure how much sense that makes to the reader XT

So I guess the lesson here is that at the end of the day, one might not catch every last penny of a move every time, but they shouldn't need to so long as they get a good confirmation and trade momentum

... would it be correct to say that exits can at times be more important than entries?
 
Quote from ziyan:

I'm guessing that a gigantic weakness I have is that I try to squeeze every last penny out of a trade... and then balk to hit the sell when it goes against me... hot damn I'm such an amateur :(

I suppose the intra-trade jitters and greed are like a novice set of problems that lead to a massive amount of micro-managing the trade instead of shooting for the fences?

The buy stop technique looks like a great part of the disciplined speculator's repertoire and I'm honestly gonna give that a try on my next trade. I say 'disciplined' b/c if I understand the mechanics of the order correctly, jo, the price action would have to be moving up or down INTO the trade as opposed to the knife-catching limit orders, which are set to catch the lowest possible tick against your trade so you get the lowest support-hugging price...? ...Not sure how much sense that makes to the reader XT

So I guess the lesson here is that at the end of the day, one might not catch every last penny of a move every time, but they shouldn't need to so long as they get a good confirmation and trade momentum

... would it be correct to say that exits can at times be more important than entries?
More...

You nailed it! Watching PA and moving INTO the trade is exactly what helped me avoid catching those falling knives (and I caught a lot of 'em, lol). Good advice above as well - just document your stops and how they are impacting your trades. If they are preventing catastrophic losses, they're a gift (god knows I've been caught scalping a range after RTH and figure no need for stops, we're flatlining... then all of a sudden I'm down 3 or 4 points when I was looking for a few ticks!). Just Loosen them up if you find they're shaking you out because you're taking a little heat.

I also agree, exits are the hardest... Finding myself still cutting too many winners short but the worst part is that they are always before my profit targets which is something I need to STOP! My worst habit is trailing my stop way too tight and way too early. A funny thing that I've found helped has been to change my pnl to points or % instead of $$... purely psychological, gotta love the human mind :cool:

Best of luck
 
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