Ideas for struggling traders

This next chart offers a nice opportunity to illustrate the importance of good money management.

As I was typing it out, price retraced to my entry. What to do...

Do you stop yourself out? or do you let it run up to your original 2pt stop?

Here is the chart.

Here are the issues to resolve..

1. Where do you take profits?

If you trade 1 contract or only a few contracts, where do you take profits?

and what do you do if price retraces on you like this?
 

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What I chose to do here is get stopped out.

On the original entry at 1285.75 I took profits at 1283.75 for 2pts

Price retaced back up to 1286.75 and then came back down to 1284 creating a higher low. Once a trader saw that higher low confirmed, he could have exited. Thats what I should have done.

Instead I let it wiggle around until it hit my entry again and took the stop out there.

2pts minus commission.

Comments?
 

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The main idea about money management is this

If you are willing to take the time to test scenarios, you can see what the best entry technique will be in advance and use it.

I bring up the subject of multiple entries for those who trade multiple contracts. You have choices.

1. Entry "all in"

2. Entry in stages

3. Entry and add on to your position

Depending on how to manage your exits and profit targets, trading multiple contracts allows you to minimize adverse moves off of your entries. You can for instance, take the initial entry and watch....If price moves against you but not exceeding your stop loss, you can add with a tighter stop and possibly get better (more favorable) trade position. This isn't a strategy for newbies, but combined with strict management and good judgement it works (I have already tested a version of it for my use).

Alternatively one can enter and wait. If price moves against you but does not take you out (exceed your stop) you have additional opportunities where you could add to an already favorable position. This strategy really shows benefit it the trade moves significantly in your favor (again I have tested a version of this for my use).

Finally, I repeat my comment about the importance of getting to the point where you can trade multiple contracts. As you can see from the previous chart, one can take heat and even get stopped out and still make a profit IF you can take a piece off early in the trade...If you have to wait however and exit all at a specific profit target, your system results will be negatively affected..
 
I am going to head out so this is my last trade

As can be seen, price comes back to test the longer MA

and in the process makes a higher low....So this is a nice setup

Entry as shown and it is good for 4 points so far..

As usual, I will let it run or get stopped out.

Bye
 

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Quote from steve46:

I am going to head out so this is my last trade

As can be seen, price comes back to test the longer MA

and in the process makes a higher low....So this is a nice setup

Entry as shown and it is good for 4 points so far..

As usual, I will let it run or get stopped out.

Bye
More...

so did you leave this position open or not?
 
I certainly could do that, however this would be an excellent opportunity for YOU to determine whether it is a viable approach

Setup your charts. I suggest one chart at 2410V, and another at about 800V. You might even experiment with Tick charts. I have used 377T charts with great success.

Then to "prove" the concept to yourself, start with a chart that uses standard 5 minute bars. Scroll back until you find a area of congestion (chop) then check out what is looks like using 2401V. Check it out with 800v, and perhaps using a 377t chart. I think you'll see for yourself, that the slower charts tranform price action from chop to waves, and once you do that, it is a matter of deciding whether that is tradeable for YOU...

Personally I have a lost less problem with choppy action now that I use constant volume charts. But you may not find it suitable for your temperment or style of trading.

Thank you for your comment, I hope that helps.

Steve
 
Quote from lilduckling:

not true...... its important that you have a bias... one that the market is flat or near flat..... let the market prove to you otherwise before you hit the buy or sell button. Use this rule for any time frame and the $$$ will be a little closer to your reach!:cool:
More...

Truer words may have never been written on ET.
 
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