How do you handle winners?

S

stocon

Let's say,
I got my entree.
I got my stop.
I enter and the trade starts moving in my favor now what?
Do I use a target, a trailing stop, bring my stop to breakeven, when, trade turns back to BE do I keep original stop for wiggle room or get out? If I'm suppose to have a 2 : 1 profit/risk ratio then I can't expect 50% winners because I must allow winners to turn into losers inorder to get my 2 : 1 winners.

How do you guys do it? How do manage your trades? Do you let a small winner become a small or normal loser inorder give it a chance to move up and become a substantial winner? What's your key or advice?
Thx Steve
 
Quote from stocon:

Let's say,

I got my entree.
I got my stop.

I enter and the trade starts moving in my favor now what?

Do I use a target, a trailing stop, bring my stop to breakeven, when, trade turns back to BE do I keep original stop for wiggle room or get out?

If I'm suppose to have a 2 : 1 profit/risk ratio then I can't expect 50% winners because I must allow winners to turn into losers inorder to get my 2 : 1 winners.

How do you guys do it?

How do manage your trades?

Do you let a small winner become a small or normal loser inorder give it a chance to move up and become a substantial winner?

What's your key or advice?

Thx Steve
More...

Depends on what your trading.

Would'uv been nice if you provided a chart of some particular pattern your using on what ever your trading.

More importantly...depends on the particular trade setup your using.

Why?

Trade setups are different from each other.

Thus, each requires different trade management rules that's best suited for that particular pattern.

Now...to answer your question directily...

NOBODY can teach you how to trade.

What your asking is for the reader of your message post to provide answers without knowing anything about your trade methodology.

Those questions your asking...

in my opinion...

is asking for someone to teach you how to trade via some sort'uv in-depth paragraph or two.

IMPOSSIBLE and only results in you asking more questions.

(I recommend you tell traders what city your located in and try to hook up with someone in person to learn from and ask those same questions in realtime trading conditions)

Further...you seem to already have trade setups...

Congrats because too many traders are trading via the seat of their pants with no trade setups...

start using your trade setups...with a small size to reduce the pain and stress as you learn how to trade on your own and take some losses.

Traders learn more from losses than they do from winners.

Simply...spend a little more time in learning the strengths and weakness of your trade setups...

more time about yourself as a trader...

and you won't have to ask those types of questions.

Any trader that does reply with answers...

should at least provide you with their trade methodology so that you can determine if the info they provided that answers your questions is compatible with your trading style.

If the above seems a little abrasive.

It's intended that way because you really need to start trading so that you can answer those questions yourself.

If your struggling after making a good effort and still don't know the answers...

come back here...

post some charts with your favorite trade setups (where you enter, where you exit and a brief commentary of why you enter and exit) and ask for help again.

P.S. Here's your other thread on a similar topic (back in December 2002)...

http://www.elitetrader.com/vb/showthread.php?s=&threadid=12285

It's now 5 months later and you still have almost the same questions.

Reason why I believe your not getting much from the replies because your asking the same questions again...

Therefore...spend more time trading or get a mentor in your city.

Use ET Hook Up thread to find a mentor or traders to help guide you in person.

http://www.elitetrader.com/vb/forumdisplay.php?s=&forumid=28

NihabaAshi
 
Stocon:

A lot has to do with the style you end up being comfortable using. For me, I look for my high probability price pattern setup and signal within a trend, calculate its risk and possible target, enter the trade if my entry signal is tripped, and place my protective stop. When the market moves in my favor, I start to trail my stop. As price approaches the target, I tighten my stop further until I am eventually stopped out with a profit. In a nutshell, that’s how I handle my winners; very simple. The key then is to apply it consistently each time to every single high probability trade that comes along.

Beyond that, I will always try to re-enter a trade if I am initially stopped out at a loss shortly after entry and to increase my position if the market really starts to move favorably. Hope that gives you some idea on just one approach to handling winners.

Kermit
 
At any point in time there is risk in the trade. I really doesn't matter how much you are making or losing in a trade, the stock/index is going where it wants to go.

That said, folks 'take' profits and losses as a money management scheme, as much as a reflection of their opinion of the trade potential. They are actually 2 separate things.

there IS no easy answer. I almost always take profits too soon, as a personal style. Probably costs me money in the long run, but keep that batting avg way up there where I like it.

Trade must be evaluated on a tick by tick basis. Mechanical rules are fine for most but only a necessary substitute for actual decision making, which is 10x harder.
 
In my opinion, learning how to handle winners takes realtime market research. I trade one setup intraday and enter every trade into an database ( spread sheet would do). The main trade characteristics I am interested in are:

A. How far does the trade go against me before turning into a winner.

B. How much profit potential does the winning trade offer me.

I am beginning to find that most of my winners go against me very little. I am also finding that my targets are a tad bit to big. Armed with this info, I am able to tweak my money management.

Trade one setup and keep good records and you will answer your own question.
 
Fan,

I agree with you, ad I think you are on the right track.

MAE= Maximium adverse excursion
MFE= Maximum favorable excursion

I do the same and I am testing several setups.

Michael B.
 
NihabaAshi,
I've been trading for awhile and my greatest frustrations always evolve around getting out too early or seeing a profit disappear. I've read tons of books and articles and I'm just trolling for new ideas. I think the options are pretty limited, unless you are super intuitive and trade diff every single time, but I still like to hear other traders' thoughts and ideas. I've kinda thought that the entree may be a little overrated and that trade management may be more important. So I'm sorry about the redundant thread but for me I find it useful and got some new ideas from the most recent fishing experiment. Thx for your help.

Fan27,
I find your statement about the good trades almost always seemed to work out right away with little adversity to be characteristic of successful trades that might run a little further, and make me wonder if I should take off the trade prior to the initial stop because the inverse is a trade that usually fails. In other words If it don't work right away scratch it for min loss regardless off stop. Thx for the help.

ElectricSavant,
If you were trading the emini on the 5min bar what kind of stops and targets would you be talking about?
MAE= maximum adverse excursion
MFE= Maximum favorable excursion
What kind of a look back and how do you address contractions and expansions in volatility? Only share what you are comfortable with. Thx fot your help

stock777,
"Trade must be evaluated on a tick by tick basis. Mechanical rules are fine for most but only a necessary substitute for actual decision making, which is 10x harder." Prior to entree, I can sit , focus and fire, but while in the trade the ability to decide without rules or should I say the ability to screw the rules increases 10x.
With time I'm cooler and have coping skills but I am seriously considering leaving the premises and going to autopilot with say BT or AT. But even with a simulator when the mind is really cool,
ans focused and not hampered by emotion i find the mind plays tricks and the decisions based on TA , market structure are wrong.
Any thoughts would be appreciated and thax for your help.
 
stocon > I enter and the trade starts moving in my favor now what? <
More...
Average Up! When it starts moving in your favor, add more.

If you really want to know how you questions effect your own trading, I suggest you read Tharp! !
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post some charts with your favorite trade setups (where you enter, where you exit and a brief commentary of why you enter and exit) and ask for help again.
More...
Sure, after Tharp! , give us a chart.
Kermit >Beyond that, I will always try to re-enter a trade if I am initially stopped out at a loss shortly after entry and to increase my position if the market really starts to move favorably.
More...
Sounds like your stop may be a little close.
 
Well,

I would first measure the previous days range ohlc exactly 24 hours previous to my entry time. This would require a charting program such as Investor R/T or a simiar charting package. Then I would statistically measure the historical range on a spreadsheet to develop what to multiply it wth to give me a target.

I would also note the statistical MAE at that time of day to set my stop. You would need to build this information as you enter as it is always at a different time of day. You would also quickly need to calculate the previous periods range. The previous periods range should give you retracement levels to play with.

Your database would grow and give you better sampling as you go. If you enter at the same time everyday this would change things.

I personally am in the process of building a database going back to 1999 of 24 hour custom daily bars with OHLC opening and closing at different times of day. This is an exhaustive study and might take several more months. The combinations of openings and closings to build the database to backtest is time consuming. For example build a daily bar from 9:30cst to 9:30cst the following day. Then 10:30cst to 10:30cst and so on....record the OHLC in a spreadsheet. You are doig this to discover the overlap or retracement of the next bar. If you entry from your system happens to match the open of one of your studies then you statictically might know its target and stop.

You see being that ES is a 24 hour instrument and most of us trade during RTH. But I have noticed volume picking up in the 24 hour market. The europeoans usually start trading about 3:00 CST.

This is very difficult to explainbut I am comfortable to discuss this.

Michael B.
 
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