Fading Yen - It has gone parabolic

[benwm]

Quote from gmst:


Curious - why you think usdjpy is going to even touch 105 or 110? Is it because of US employment situation getting better or S&P strength or is it more because Japanese FinMin wants U/J at 100?

Trend is very strong now and once above 100 you will always want to buy the dips for a while. Nothing to say it can't get to 120 in time, certainly if that is what the FinMin wants...

Can never be sure of anything but if you take a small position in the direction of this very strong trend and it works in your favour you will start to have small profits to trade with around the main trend and add into any temporary weakness.

Honestly I am not trading yen so it is easy for me to give advice from the sidelines. Yen will strengthen if stocks take a dump and you will be annoyed at closing. But I still think it is better for you to exit, take the full loss and then reevaluate. Maybe you'll decide to re-enter the short in USDJPY but that is surely better than holding on to a losing position and hoping it will turn around.
When you are flat you will be able to make a better decision, either way.

 

[hftvol]

, this move has gone parabolic and will surely end soon..." -> Famous last words. And then...

-> "oh shit no, hail Mary, what is this damn pair doing at 108....".

Quote from benwm:

You're not being an asshole. We still don't know why gmst didn't stop out at 96.00 on the full position. That is the worst sin of all - not following the original trade plan. How do you explain that to your boss when USDJPY moves to 100?

He says, "It's good we stopped out at 96, well done for the excellent stop placement above those key levels. That's why we decide on the stop loss before the trade because we will convince ourselves of anything in the middle of the trade."

Then you start to explain, "Ummm..actually I didn't stop out...well, I did on most of the position...half actually...(cough, splutter).."

Your boss replies, "Shit! Oh f*** it, I hired you, it's my neck on the line too. Whats our credit limit? The only option now is to add to the position and try and get out for a smaller loss..."

"Yeah I suppose you're right boss, I mean 100 will be a massive level to take out, this move has gone parabolic and will surely end soon..."

 

[hftvol]

I was a prop trader for many years. I still am but I am calling the final shots now and take full fiduciary duty to the entrusted funds by my valued and respected clients. So, please believe me I can see crap, when it smells like crap, looks like crap. It was a crap trade wrapped into "prop gift paper". You know what? If there is any place where you can bs bosses then its at a market making desk. I have never had better but stricter and smarter mentors than within all the prop teams I have worked at. So your comments only display that you were at max a green behind the ears junior if at all.

P.S.: With all due respect but please spare me with "new style of trading", for heaven's sake, by your own admission you guys lost a truckload on delta and I stand by what I said, the whole desk should have gotten fired for such dumb trade alone.

Quote from gmst:

a) I am sorry to say but you did not learn anything new because you have a closed mindset and too large of an ego. I already clearly mentioned this trade was a trade done typically in a prop desk, not your typical vol trader desk.

b) I agree you must have made tons more money than I have but consider for a moment that maybe in your career - you have made less money than my erstwhile boss who approved this trade. He was not head of trading without a reason!! If I tell you his career and his best year PL, you will be astonished but giving that information will be revealing too much on this anonymous board.

So, my humble suggestion is if you have not seen a particular type of trading style before, be open to new kinds of information that comes your way, instead of out-rightly rejecting it.

 

[hftvol]

At this stage....you try to get out? NO YOU DONT. CUT THE FUCKING POSITION THEN YOU CAN SAY YOU GOT OUT. JUST FUCKING DO IT!!!
Goodness!!!!

Quote from gmst:

Well, I have already admitted that this trade has not worked as planned, and I have said that countless times. So, I am not sure you are giving me any new information.

At this stage, I am just trying to get out of this losing position in the best possible way.

 

[hftvol]

sorry but I am out of here. You still dont get the point which is it does not matter how small your position. If you cannot cut a losing position when its small how you wanna cut a larger position in the future? You dont learn the small trades you will utterly fail on the big ones. And out. Good luck!!!

Quote from gmst:

Well, I am not sure you are giving a fair assessment here.

I added 2.5% risk at 96.5 and booked profits on it at 95.5. This was not in the original plan! Couple other times also, I added some risk and booked profits on them along the way. My point is - I have deviated slightly from the original plan when market presented good opportunities. I have already cut more than half the risk at original 96 stop level.

Its just that at this point, it makes sense for me to keep this reduced position on for more time. After having reduced my size, a decent amount of my capital tied-up in this position has been freed.

Problem is everyone is making comment on this single trade while having no idea about my total portfolio. You should look over my trades in ES Journal. That will give you a better perspective of my portfolio standard deviation and % returns. Losing 9% over 3 months is losing 3% per month, which is a perfectly manageable kind of loss.

 

[murrica]

Quote from hftvol:

At this stage....you try to get out? NO YOU DONT. CUT THE FUCKING POSITION THEN YOU CAN SAY YOU GOT OUT. JUST FUCKING DO IT!!!
Goodness!!!!

Just playing devil's advocate here. I have been watching this thread regularly because this is a situation that I have found myself in before.. Martinscaling is almost always a bad idea because of that one monster, ostensibly irrational trend that never looks back.....

If you were in the situation of the OP at this time, wouldn't it make sense to just place the stop somewhere above the recent highs (below recent lows in case of J6), instead of just blindly closing the trade now? At this point, you might as well risk a bit more, no? At least you would have a fighting chance, even if the probabilities are not exactly stacked in your favor due to momentum. Furthermore, since the risk profile has already been previously established and is admittedly somewhat low, it seems there is minimal consideration of systemic risk to the OP's account (insolvency) by giving the trade a little more breathing room.

I can empathize with all of the posters trying to provide assistance. You were all right in identifying that this was a bad vehicle and timing to attempt to martinscale, but it is not like the OP has some ginormous percentage of his account at risk (as pointed out).

 

[oldtime]

Quote from murrica:

Just playing devil's advocate here. I have been watching this thread regularly because this is a situation that I have found myself in before.. Martinscaling is almost always a bad idea because of that one monster, ostensibly irrational trend that never looks back.....

If you were in the situation of the OP at this time, wouldn't it make sense to just place the stop somewhere above the recent highs (below recent lows in case of J6), instead of just blindly closing the trade now? At this point, you might as well risk a bit more, no? At least you would have a fighting chance, even if the probabilities are not exactly stacked in your favor due to momentum. Furthermore, since the risk profile has already been previously established and is admittedly somewhat low, it seems there is minimal consideration of systemic risk to the OP's account (insolvency) by giving the trade a little more breathing room.

I can empathize with all of the posters trying to provide assistance. You were all right in identifying that this was a bad vehicle and timing to attempt to martinscale, but it is not like the OP has some ginormous percentage of his account at risk (as pointed out).

you know going in that one of these days martinscaling is going to get you, it's a known risk, just like writing home owners insurance in New Orleans. Not much difference between the martinscaler and the option writer, you keep your risk spread, but it's no gurantee of sure profit. It's just a risk I am willing to take.

I just got my ass handed to me on some long gbp/usd

it will probably take me all of 2013 just to get back to the 2012 high

that's the risk we take, this is the business we have chosen

the concept is very simple, good for people like me, buy all the way down, and sell all the way up

no edge to worry about

no positive expectancy

no support/no resistance

don't even need charts

it's more like running a grocery store than it is trading

but you know going in that one of them is going to get you, so it shouldn't be a surprise when it happens

 

[HopelessTrader]

Quote from murrica:

Just playing devil's advocate here. I have been watching this thread regularly because this is a situation that I have found myself in before.. Martinscaling is almost always a bad idea because of that one monster, ostensibly irrational trend that never looks back.....

If you were in the situation of the OP at this time, wouldn't it make sense to just place the stop somewhere above the recent highs (below recent lows in case of J6), instead of just blindly closing the trade now? At this point, you might as well risk a bit more, no? At least you would have a fighting chance, even if the probabilities are not exactly stacked in your favor due to momentum. Furthermore, since the risk profile has already been previously established and is admittedly somewhat low, it seems there is minimal consideration of systemic risk to the OP's account (insolvency) by giving the trade a little more breathing room.

I can empathize with all of the posters trying to provide assistance. You were all right in identifying that this was a bad vehicle and timing to attempt to martinscale, but it is not like the OP has some ginormous percentage of his account at risk (as pointed out).

In my opinion: It's better to cut it now regardless if "it can finally turn around". The concept here is that if you stay in a trade that is outside of your plan, it will only reinforce the belief that it's ok to trade outside the plan. He said he only lost 75% last time instead of 100% of his worst case scenario. So, he is trying it again. In other words, just because he got away with it last time he now believes that he might be able to pull it off again. Surely, anything is possible. He has 3 choices. One of them he failed to see. The one is to cut it now. The 2nd is to try to minimize the loss by letting it run. The third, that he failed to see is that the market could force him out at a much greater loss.

I'm with you in empathizing with him. I think it's fair to say that we've all been there.

I like reading gmst's comments. He seems very honest, which is rare on this site. At this point I find it entertaining to watch someone be so attached to a trade. It's a good lesson for readers.

 

[Maverick74]

Quote from murrica:

Just playing devil's advocate here. I have been watching this thread regularly because this is a situation that I have found myself in before.. Martinscaling is almost always a bad idea because of that one monster, ostensibly irrational trend that never looks back.....

If you were in the situation of the OP at this time, wouldn't it make sense to just place the stop somewhere above the recent highs (below recent lows in case of J6), instead of just blindly closing the trade now? At this point, you might as well risk a bit more, no? At least you would have a fighting chance, even if the probabilities are not exactly stacked in your favor due to momentum. Furthermore, since the risk profile has already been previously established and is admittedly somewhat low, it seems there is minimal consideration of systemic risk to the OP's account (insolvency) by giving the trade a little more breathing room.

I can empathize with all of the posters trying to provide assistance. You were all right in identifying that this was a bad vehicle and timing to attempt to martinscale, but it is not like the OP has some ginormous percentage of his account at risk (as pointed out).

This might give you some colorful background on the OP. He has a few journals where he blew out 100% of his account or close to it. He over leveraged, he went for broke, with no trading plan. You can read it all here.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=239446

It seems like this trade is just like the others. We've all been there. So I'm not deriding him. But this particular individual is NOT learning from previous mistakes. Something that is imperative to one's solvency in this profession.

 

[Datradr]

one of the toughest things to do is to take small losses...and this obviously becomes increasingly apparent as you increase your size...taking 5-10% loss is fine...but once you start trading bigger size and u dont want to cut your losses because it will be a big nominal loss....you are dead....make that mistake a few times and good night Irene--there goes ur bank roll...NEXT!!!

Mav is right dude...write down your mistakes and everytime you are in a trade --review them and make sure you arent violating any of the same mistakes.. then the profits will roll in----or atleast massive losses will stop lol