Help! These breakouts are killing me
- Thread starter Matt Houston
- Start date
In my experience, the trend is up so I should just be holding my long position and looking for opportunities to add.
If I was into interpreting what individual candles mean, then i guess that big doji could mean a correction or a sharp move up is imminent, but I am not.
What do you think?
Triangle breakouts on volume are great setups, IMHO. I think you've laid a good foundation by choosing a setup with positive expectancy.
Here's the root of your problem: Your trading plan is based on technical analysis and price action, yet you were reading market news and took a detour from your plan based on news/opinion.
Your trade management plan is based on TA/PA, so news is irrelevant because news will be reflected in the price action.
MSFT broke out and was consolidating prior to its earnings call. 1/19 after hours earnings call was interpreted positively and it broke out again. If the earnings news was interpreted negatively, it would've gapped down and sold off (notice I use the word "interpreted"; news in and of itself is meaningless, it's the interpretation of the news by market participants that moves price). In that case, you would have been stopped out.
Does your trading plan have a filter for earnings calls? When I put on a swing trade, I make note of the next earnings call and a decision in advance as to whether I plan to hold or close out before the announcement. In a volatile instrument, I'd likely close out or hedge my position; in less volatile instruments (such as MSFT) I may choose to hold.
You have regrets because you violated your trading plan and because the result was negative to your potential profit. If MSFT had gapped down and sold off, would you still be upset that you closed the position based on your opinion? Probably not, but you should be, because it would still have been a violation of your plan UNLESS your plan included a filter for earnings calls.
Your personality may be better suited to a two-tiered profit target on your trades, based on next support/resistance levels in line to be tested (or average breakout moves if a breakout to an all-time new high or low is in play).
Hope that helps a bit!
Plan your trade AND trade your plan.
Life gets alot easier when you resign yourself to the idea that sometimes you will be wrong, your stops will get hit and the market will go back the other way, you won't exit at the perfect spots everytime etc. etc.
Realize that the possibilty of perfection is fleeting. Chalk it up as a learning experience and let your trades run next time until your plan says its time to exit. It seriously is that simple.
Life gets alot easier when you resign yourself to the idea that sometimes you will be wrong, your stops will get hit and the market will go back the other way, you won't exit at the perfect spots everytime etc. etc.
Realize that the possibilty of perfection is fleeting. Chalk it up as a learning experience and let your trades run next time until your plan says its time to exit. It seriously is that simple.
OP:
Once you have a known good setup, it's all about the exits and trade size.
It's hard holding onto a winning trade. It's even harder adding to it.
It's easy take profits to get yourself out of the hot seat.
Many, many price action based traders I've studied have spent great effort on personal psychological work in order to deal with these destabilizing emotions.
Have you ever tried some simple back testing with different profit taking exit strategies to see what worked best? If you see it first, you may have an easier time waiting for it.
Another thing Livermore said was "I never trade on tips"
Listening to the opinions of other traders can be emotionally destabilizing. You must stand apart from the crowd.
Once you have a known good setup, it's all about the exits and trade size.
It's hard holding onto a winning trade. It's even harder adding to it.
It's easy take profits to get yourself out of the hot seat.
Many, many price action based traders I've studied have spent great effort on personal psychological work in order to deal with these destabilizing emotions.
Have you ever tried some simple back testing with different profit taking exit strategies to see what worked best? If you see it first, you may have an easier time waiting for it.
Another thing Livermore said was "I never trade on tips"
Listening to the opinions of other traders can be emotionally destabilizing. You must stand apart from the crowd.
I have spent years learning about the markets, reading books, reading forums, staring at charts for hours every night.
working your way up the newbie bell curve.
So although they were making slow but steady progress I guess it wasn't enough for me.
greed enters the arena. fast money is the goal.
On Thursday I started to read the market news ..........
the talking heads and suits know nothing, the sooner you understand this, the better.
I decided that I have no business being long...........
are they trading your account now......?
Well I closed out my positions in disgust and guess what happened..........
we all know the answer .
If I had stuck to my plan............
exactly.
but maybe after a few trades I will get disillusioned with that too.......
no discipline, no focus, no balls to the wall........
What do you guys think.....
wrong question, its what you think.
navel gazing and soul searching is required while you define your niche and dial it in.
writing down your trading rules is step one.
keeping a trading diary.
you have to start somewhere.
back testing is useless as the market is simple, stupid and irrational, all at the same time.
trading the hard right edge with probability % in your pocket .
fully dialing it along the way.
you have a new girl friend, welcome to the game.
cheers,
shop
working your way up the newbie bell curve.
So although they were making slow but steady progress I guess it wasn't enough for me.
greed enters the arena. fast money is the goal.
On Thursday I started to read the market news ..........
the talking heads and suits know nothing, the sooner you understand this, the better.
I decided that I have no business being long...........
are they trading your account now......?
Well I closed out my positions in disgust and guess what happened..........
we all know the answer .
If I had stuck to my plan............
exactly.
but maybe after a few trades I will get disillusioned with that too.......
no discipline, no focus, no balls to the wall........
What do you guys think.....
wrong question, its what you think.
navel gazing and soul searching is required while you define your niche and dial it in.
writing down your trading rules is step one.
keeping a trading diary.
you have to start somewhere.
back testing is useless as the market is simple, stupid and irrational, all at the same time.
trading the hard right edge with probability % in your pocket .
fully dialing it along the way.
you have a new girl friend, welcome to the game.
cheers,
shop
Thanks for all the replies.
Regarding news...I didn't even know Microsoft was reporting until you mentioned. Maybe I should factor that in and tighten stops in this situation. Then again, and this may be naive, I like to think the people responsible for this pattern may have known somehow the news would be interpreted as positive and the stock was going up no matter what or they wouldn't have wasted their time. Is that too conspiracy theory?
You know what, it wasn't even the news that got me out, it was just me thinking I am wasting my time trading medium term trends that may not even work out, I had a problem sitting on my hands, I was thinking their must be a more efficient use for my money. I guess that comes from not knowing my "edge" well enough.
Re backtesting, is it possible to define a pattern like a triangle in a programming language?
Regarding news...I didn't even know Microsoft was reporting until you mentioned. Maybe I should factor that in and tighten stops in this situation. Then again, and this may be naive, I like to think the people responsible for this pattern may have known somehow the news would be interpreted as positive and the stock was going up no matter what or they wouldn't have wasted their time. Is that too conspiracy theory?
You know what, it wasn't even the news that got me out, it was just me thinking I am wasting my time trading medium term trends that may not even work out, I had a problem sitting on my hands, I was thinking their must be a more efficient use for my money. I guess that comes from not knowing my "edge" well enough.
Re backtesting, is it possible to define a pattern like a triangle in a programming language?
Quote from shopster:
I have spent years learning about the markets, reading books, reading forums, staring at charts for hours every night.
working your way up the newbie bell curve.
So although they were making slow but steady progress I guess it wasn't enough for me.
greed enters the arena. fast money is the goal.
On Thursday I started to read the market news ..........
the talking heads and suits know nothing, the sooner you understand this, the better.
I decided that I have no business being long...........
are they trading your account now......?
Well I closed out my positions in disgust and guess what happened..........
we all know the answer .
If I had stuck to my plan............
exactly.
but maybe after a few trades I will get disillusioned with that too.......
no discipline, no focus, no balls to the wall........
What do you guys think.....
wrong question, its what you think.
navel gazing and soul searching is required while you define your niche and dial it in.
writing down your trading rules is step one.
keeping a trading diary.
you have to start somewhere.
back testing is useless as the market is simple, stupid and irrational all at the same time.
trading the hard right edge with probability % in your pocket .
fully dialing it along the way.
you have new girl friend, welcome to the game.
cheers,
shop
Ha ha, yeah you pretty much hit the nail on the head.
I had a problem sitting on my hands........"
clicking the mouse can be detrimental to your trading capital.
if you want action, join the marines.
we all have been there.
you original post has all the flaws of a newbie.
start correcting them, one by one or you will blow out, like the other 98% strewn along the side of the hiway.
s
clicking the mouse can be detrimental to your trading capital.
if you want action, join the marines.
we all have been there.
you original post has all the flaws of a newbie.
start correcting them, one by one or you will blow out, like the other 98% strewn along the side of the hiway.
s