Journal XburbX - My Plan

Quote from xburbx:

You have a way of identifying stops (where the trade fails) -
A: Yes - Self debate but I believe my conclusion is acceptable. So far

Are your stops measured in pennies… or possibly a nickel, plus/minus a few pennies
A: Not sure I understand this. Pennies if I understand the question
More...



Well then lemme esplain a bit


Some context

I’ve id that price is ranging; say 45.10 to 45.50

Hence I’ll trade it as such


If I were to go long, I would consider it a fail trade once price hit 45.09

If I were to short, I would consider it a failed trade once price hit 45.51


My stop is .04 cents


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Soooo


Before I can enter a long; price must come within .04 cents of 45.09

Likewise before I can short; price must come within .04 cents of 45.51

Any more than .04 is more risk then I am willing to assume

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Never do I identify a stop by a % of my account… my stop is always .04 cents (or whatever “specific” amount I choose)

Granted I can certainly do a little math and come up with what % of my account is at risk…. But I’ve yet to see a % of an account reflected on a chart…

Otoh; I know exactly where .04 cents from where any given trade would fail – is…, immediately

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This example is based on horizontal price movement... it works diagonally as well….

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I view this stop methodology (thinking in terms of cents) as a fundamental building block…

imho

It instills identifying/ focusing on where a trade fails

It makes one read/ think in terms of PA

It instills patience – must wait till price gets within my designated loss amount, otherwise if it doesn’t, I’ll simply sit this one out….

It helps in focusing on trading... instead of one’s account

Losing .04 cents (or whatever one decides) is a lot easier to accept and move on from, than say losing 40.00/ 400.00/ 4000.00, or what ever


Think through this please, maybe you’ll agree… and maybe you won’t


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And yes they’re many ways it can be applied/ and many variations depending on current PA – but that is a separate discussion

For example;

Some trades are B/E’s – iow they either work immediately…, or fail

Others are on a time stop (and I am pretty damn impatient as a general rule)

Others use the H, L, or Middle of a previous candle/ channel/ swing

on and on....

Things they all have in common

Low risk
Takes PA into account
Set where the trade fails (well in actuality where I think it fails – which may, or may not always reflect what actually happens next)

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And don’t think for one moment it is always as straight forward as I’m making it sound… sometimes trading gets downright messy… PA bounces more than a super ball on steroids

But trading during those messy times should be exceptions, rather than the rule – for that is when we should be sitting on our hands

Hard for price to head fake us when volume is present…. Hard for it not too when volume ain’t

Unfortunately when volume is present, it’s easy for a trader to transform into a dear in the head lights

I digressed a bit with this last section – apologies

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Based on your answers I believe I'm orientated now - Thanks


Good job being patient today XB

RN
 
Quote from xburbx:

Pending large gaps trades should be in play tomorrow.
More...


Ever contemplate gaps are engineered for a reason... and not simply a happenstance occurrence

Price does tend to gravitate back to them (whether it be near term or eventually)


Things that make you go; Hmmmmm

RN
 
I have noticed that for sure. I guess I should have explained a bit more about the gap comment. Most of the time the gap puts price way outside the boundary of price that I have on my screen. If it is inside that boundary and a trade sets up, I have noticed that it tends to be a nice trade. I haven't put weight on it one way or the other but now that you mention it, I will take a harder look at it.
 
So RN you touched on some points that I have been batting around in my head. A nice self vs self convo.

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I’ve id that price is ranging; say 45.10 to 45.50

Hence I’ll trade it as such


If I were to go long, I would consider it a fail trade once price hit 45.09

If I were to short, I would consider it a failed trade once price hit 45.51


My stop is .04 cents
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Response ::-- I do have this context in place as per the way you mentioned above. The part where I have been really going back and forth in my head (not in my trade plan) is where price fails in the trade. There IS a reason to take the trade with a price action reason to place the stop where I do now. My stop varies from 4 cents to 8 cents depending on the candle I enter on. This would be something I would prefer to talk with you via PM on. It's been something I was actually going to use in back study after X amount of trades to see if results would have been different. For now, I am continuing to trade with the way my plan reads.

As far as the mental end of small stops, yes it helps for sure. I understand why you mention 4 cents as your stop size. A 15 or 20 cent stop would be (has been) a heavy loss to keep my mind straight on the next trade. In my trading now, those trades would not be taken.
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Hard for price to head fake us when volume is present…. Hard for it not too when volume ain’t

Unfortunately when volume is present, it’s easy for a trader to transform into a dear in the head lights
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Response -- This I have not incorporated into my plan. I do watch the TS around certain levels on my screen but more for curiosity rather than to trade on right now. I have tried to make my rules as simple and clear as possible.
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