discussion: 'breakouts offer risk beyond what makes sense, corrections offer too many retail losses'

E

easymon1

Handle123 posts the following:
Someone wrote all system entries are either breakouts or on corrections, mine are not. Some of mine are based on what retail does and wait for them to be stopped out, hey retail are consistent at losing, breakouts offer risk that are beyond what makes sense and corrections within a normal trend offers too many retail losses.

Entries are 1% of a Trading Plan, so 99% is risk management.

I took Swagger's book:
A Complete Guide to the Futures Market: Technical Analysis, Trading Systems, Fundamental Analysis, Options, Spreads, and Trading Principles (Wiley Trading)
Find out what retail trade the most and where the stops are, then figure out
 
Arnie said:
breakouts offer risk that are beyond what makes sense

What is the one thing a stonk MUST do in order to make new highs or new lows?
More...

I wrote about risk, not about new highs or lows, i.e. large triangle - many would entry on breakout and risk beyond other side of triangle, testing has taught me this is a negative approach but retail loves momentum type entries. Much better to wait for the failed trades and thereby possible waiting for tighter formation which offers much less risk then enter. To me less risk allows for more shares to be traded and still be within limits of total risk of less than 1%.

Every hear what was once resistance is now support? This pattern is often produced for others to lose on original trade.
 
Handle123 said:
I wrote about risk, not about new highs or lows, i.e. large triangle - many would entry on breakout and risk beyond other side of triangle, testing has taught me this is a negative approach but retail loves momentum type entries. Much better to wait for the failed trades and thereby possible waiting for tighter formation which offers much less risk then enter. To me less risk allows for more shares to be traded and still be within limits of total risk of less than 1%.

Every hear what was once resistance is now support? This pattern is often produced for others to lose on original trade.
More...
%%
I see your points, including but not limited to ''new highs '' ; some do both.
Having said that i would prefer an uptrend hitting new highs as much as possible .And sometimes a very good trend will not pullback much. Un-fllled limit orders can be evidence of that. But tha't's life.
QQQ has had some deep drawdowns ; but i have charts of QQQ @$30 area, also\bear market of 2002 . 1.0% stop in qqq could easy be counter productive. Thanks H123........................
 
murray t turtle said:
%%
I see your points, including but not limited to ''new highs '' ; some do both.
Having said that i would prefer an uptrend hitting new highs as much as possible .And sometimes a very good trend will not pullback much. Un-fllled limit orders can be evidence of that. But tha't's life.
QQQ has had some deep drawdowns ; but i have charts of QQQ @$30 area, also\bear market of 2002 . 1.0% stop in qqq could easy be counter productive. Thanks H123........................
More...

My drawdowns are very low due to hedging on time-frames 30 minutes and larger. Actually risk at time of entry is almost nil, I don't keep hedges on forever like most might think, entries have greatest risk of being a loser, that not to say I don't have losers as systems do, but so long as price moves one way or other, systems do much better than not hedging. Automation doesn't find all the ends of trend or corrections but when it does, hedges placed to insure open profits. Ebb and flow.

Early in my trading I did breakouts and buying new highs but drawdowns were horrible, just easier to wait for better patterns and hedge.
 
Handle123 said:
My drawdowns are very low due to hedging on time-frames 30 minutes and larger. Actually risk at time of entry is almost nil, I don't keep hedges on forever like most might think, entries have greatest risk of being a loser, that not to say I don't have losers as systems do, but so long as price moves one way or other, systems do much better than not hedging. Automation doesn't find all the ends of trend or corrections but when it does, hedges placed to insure open profits. Ebb and flow.

Early in my trading I did breakouts and buying new highs but drawdowns were horrible, just easier to wait for better patterns and hedge.
More...
Handle123 posts the following:

"A Complete Guide to the Futures Market: Technical Analysis, Trading Systems, Fundamental Analysis, Options, Spreads, and Trading Principles (Wiley Trading)
Find out what retail trade the most and where the stops are, then figure out"
Complete Guide to the Futures Market.png
Complete Guide to the Futures Market8.png
 
easymon1 said:
Handle123 posts the following: Entries are 1% of a Trading Plan, so 99% is risk management.
I took Swagger's book: A Complete Guide to the Futures Market: Technical Analysis, Trading Systems, Fundamental Analysis, Options, Spreads, and Trading Principles (Wiley Trading)
Find out what retail trade the most and where the stops are, then figure out
More...
If you get some time, - What does Schwager say about Market Patterns in chapter 37 single page p 572? I don't have a copy, looks like quite a read.
 
Handle123 said:
My drawdowns are very low due to hedging on time-frames 30 minutes and larger. Actually risk at time of entry is almost nil, I don't keep hedges on forever like most might think, entries have greatest risk of being a loser, that not to say I don't have losers as systems do, but so long as price moves one way or other, systems do much better than not hedging. Automation doesn't find all the ends of trend or corrections but when it does, hedges placed to insure open profits. Ebb and flow.

Early in my trading I did breakouts and buying new highs but drawdowns were horrible, just easier to wait for better patterns and hedge.
More...
%%
SOME of my ETFs drawdown big/typical big trends;
some don't drawdown much partly because of inverse ETFs , but price ladder works well/very well .
Some use a hedge like insurance +some insurance companies have more money than banks.

State FARM [#1 in auto insurance] had a huge number of stocks + bonds plus premium but i like to insure my ETFs myself sometimes.................................................................................................
 
http://thepatternsite.com/at.html

Has chart patterns.

murray t turtle said:
%%

SOME of my ETFs drawdown big/typical big trends;

some don't drawdown much partly because of inverse ETFs , but price ladder works well/very well .

Some use a hedge like insurance +some insurance companies have more money than banks.


State FARM [#1 in auto insurance] had a huge number of stocks + bonds plus premium but i like to insure my ETFs myself sometimes.................................................................................................
More...

Had to learn hedging hard way, tough to backtest, what started out as simple way for insurance eventually became complicated. Some commodities don't have options or enough volume, have to think outside the box. Hedging stock positions, just made more sense to hedge with Future Indexes then hedge those and even use futures to hedge short options.
 
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