How do you cut losses?
- Thread starter hurricane_sh
- Start date
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Good points;
GM, DAL BSCO, LEH went bankrupt.
So even if your plan includes some planned[ not impulsive or revenge] scale ins;
you have to[ if you want to stay alive] factor in stuff like Enron, DAL, GM, BSC[ Bear], LEH.
Hey Hurricane S, i did pretty good one time with stock name ''Hurricane Hydrocarbons'' LOL Single stocks can be real risky.................................................
If long, then the min low of the previous two bars is my stop, vice versa for short. Pick the best entries consistent with that stop condition. Take whatever profit presents itself before it evaporates too much, don't hold out for preset arbitrary targets.
For me there are only two things :
Fractality (Recursions) & Reactions.
Everywhere are Reaction's Reactions.
"How do you cut losses?"
Take them, actually taking them will cut your losses, been times where I extended Protective Stops cause "I just knew it was going to stop right here" BAMM not only did price not stop somewhere else, but slippage to boot. You have some way for your protective stops to end a bad trade or even a good trade as you were trailing it, just get out.
Day trading I don't put in stops, I know area I would get out and I am NOW disciplined. Options I don't use stops, sometimes they all over the place. Longer term or swing trading I will use 2-3% of value of stock price as PS, can also use nickel below lowest low of immediate area which makes for ideal areas for trailing stops, each higher pivot low up, raise stops, but what I do the most in longer term trading is hedge when I first get in, at some point exit long Put keeping short Puts to try to recover from losses of the long Put and at this time, lock in a nickel or dime and that Protective stop stays there for months, years. I revert to using weekly charts and wait for divergence on RSI or MACD on the highs and if fifteen minutes before the end of last day of the week price is below last week's low=exit.
Take them, actually taking them will cut your losses, been times where I extended Protective Stops cause "I just knew it was going to stop right here" BAMM not only did price not stop somewhere else, but slippage to boot. You have some way for your protective stops to end a bad trade or even a good trade as you were trailing it, just get out.
Day trading I don't put in stops, I know area I would get out and I am NOW disciplined. Options I don't use stops, sometimes they all over the place. Longer term or swing trading I will use 2-3% of value of stock price as PS, can also use nickel below lowest low of immediate area which makes for ideal areas for trailing stops, each higher pivot low up, raise stops, but what I do the most in longer term trading is hedge when I first get in, at some point exit long Put keeping short Puts to try to recover from losses of the long Put and at this time, lock in a nickel or dime and that Protective stop stays there for months, years. I revert to using weekly charts and wait for divergence on RSI or MACD on the highs and if fifteen minutes before the end of last day of the week price is below last week's low=exit.
I can work out the direction of current/future trend on FX market nearly perfectly ... but that's still not good enough if I can't find the optimal entry...my loss now comes from the stop loss that I set. Now I am trying hard to find optimal entry/exit ...I don't like bearing too much risk even if that's called discipline...maybe I am still too naive or I might be missing something...although one thing I have found out is that I am not a full time trader, I study and work as well and cannot commit to trading long hours when trading requires a lot of patience for an optimal entry/exit; this is the difference between trading and game; now I work hard to find a good fishing spot to set limited order rather than just initiate market order with stop loss.
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What timeframe are you using for FX and which currencies?
Are you targeting a profit or letting it run?
How much back testing have you done? In other words, what has your back testing have proved to show you a "nearly perfect"?
Most are unaware that the entry is often least of your concerns.
I use daily timeframe to guess the current/future trend.
1 minute, 15 minutes, 30 minutes to monitor how the current trend develops.
1 H/daily moving average to find daily resistance/support level.
I target a profit so I work out the destination and most of the time daily closing price is happen to be my destination.
Maybe I was premature to say 'nearly perfect' although it's not so difficult to work out the current/future direction on FX market now. I sometimes trade EUR pairs but mostly, I trade GBP pairs cos it provides the best volatility for smaller traders.
I use the price action and TA ,but I don't do the backtesting...sometimes I do research and have just downloaded some GBPUSD data from Thomson Reuter to carry out research on optimal entry/exit points with SAS programming.
When I use to lose a great deal, I didn't back test much, I was too bright to back test, what I didn't know that I was Bait and the world were sharks. LOL I use mostly one minute bars for manual trading and generally two minute bars for automation for day trading anything.
What is important to start trading plan is when not to take trades, this alone can save you like one losing trade each day if you trade several a day, so when you see certain S/R patterns that test out you should not trade against them, you want to keep tabs what they are. Also each hour keep idea of what swings are, beginning of that countries currency trading is often more active that when they consider to be Lunch, so you want to adjust your rules. And often times during lunch, protective stops remains the same but targets shrink.