Just want to vent about a trade

[heavenskrow]

Just want to vent. I thought I was trading it well(until I scratched), but maybe some of you might have a better opinion on how a pro or "elite trader" would have managed this trade better.

My initial entry is the peak for intraday near US market open noted by white line.
I enter and market takes off in my direction, I'm happy about my entry.
Now I focus on "managing the trade"

From initial entry, market came back so I decided to add and sure enough it went in my direction again, so I was deciding to sell my first position at target white line and let the other ride longer depending on market action post target.

Unfortunately, it bounces again before reaching target and it retested the same exact prior peak, even a little past my add area. I thus got out of all my positions as that is a rule that I have that if the market ever comes back to where I add(I like to scale in), I get out of all positions. I listened to my rules, and after scratching on the trade, I see a reversal candle but I hesitate to get back short as psychologically, this market kept chopping back and forth and never reaching my target all session. After I throw in the towel at the short side, FINALLY the market decides to move and hit my original target during Asia session.

To all you professional traders(who do this for a living), what would you have done to better manage this trade?

 

[Seaweed]

Its of course very easy to say in hindsight, but the stop should really be above the highest high, so the yellow line I drew.

I can't tell you how often I see this myself, where if the stop is at least above the most recent swing point for a short, or below the swing point for a long, then the trade would have worked. Of course a poke below this level also needs to be accounted for. For the ES, price will often stop just 1 tick shy of some swing level before reversing, or do the 1 tick poke. (although I know your trade isn't in the ES)

rule that I have that if the market ever comes back to where I add(I like to scale in), I get out of all positions.

This seems like a problematic rule. The market doesn't care about where you get in. I understand about having a fixed stop based on ticks or money, but a proper price action based stop is much better.

 

[traider]

There is so much noise in ES due to different types of players, tight stops will just get raped and yield random results.
After comms you will be a net loser.
Unless you have hft signals from very expensive data sources...

 

[Real Money]

The obvious answer is to use ultra bond contracts as a cross hedge to control your risk. This can also be done to protect a position, and improve your entry price (cost basis).

This is also known as "working an average price" or even "jobbing" a position.

So you have a stop price rule, OK.

This would go something like this.

Sell 3 ZB at ~6:45 (your original entry).

You keep playing the range. At the lows in the action you long 2 lots UB. When the market gets back near your entry you close them.

With this technique you're gonna short bonds outright, leg the BoB spread during the action, and then leg out into outright risk as the trade keeps working for you.

This way you established a good short position, and then improved it. Using this technique, your risk is high, then low (cross-hedged via BoB spread), then high again, etc.

This is a great way to trade rates. It allows you to be very bearish, slightly bearish, neutral, slightly bullish, or very bullish for each part of the trade. If you can read markets and price action, the advantage is obvious.

As an aside, this technique can be careful and slow (outright to hedged, to outright, etc.) or it can be a way to trade with extreme aggression.

This is because, a trader can put on a huge position further out in the curve, and then trade against it for stupid size all day long using ZB.

Rates traders love spreads, especially for daytrading.

 

[formikatrading]

For what it's worth, I think bonds are harder to trade on shorter time frames and often have moves that will shake you out of a position right before it goes in the direction that you believed it would go all along. In this case, you were right about the momentum which can even be seen on a daily chart but maybe you were too focused on the micro view.

 

[danielc1]

OP did nothing wrong. This is a classic example of even if you follow your trading rules, you will have losses due to what ever it causes. The trap you now enter is that you want to adjust your system to have this trade work. But next time it will be something else that cause the loss. If you try to avoid losses by adapting your rules to every trade that loses, you are going to fall in the trap of holy grail searching. Like I see it, is that you have a good system to make money. And sometimes the trade will hit your stop and reverse to your target. If you have a re entry rule and just did not take it because you are worried that it will hit your stop again, then lower your positions until you do not care about the loss. Most of the time you do not Follow your rules because of the heat you take every single time you trade.

 

[heavenskrow]

The obvious answer is to use ultra bond contracts as a cross hedge to control your risk. This can also be done to protect a position, and improve your entry price (cost basis).

This is also known as "working an average price" or even "jobbing" a position.

So you have a stop price rule, OK.

This would go something like this.

Sell 3 ZB at ~6:45 (your original entry).

You keep playing the range. At the lows in the action you long 2 lots UB. When the market gets back near your entry you close them.

With this technique you're gonna short bonds outright, leg the BoB spread during the action, and then leg out into outright risk as the trade keeps working for you.

This way you established a good short position, and then improved it. Using this technique, your risk is high, then low (cross-hedged via BoB spread), then high again, etc.

This is a great way to trade rates. It allows you to be very bearish, slightly bearish, neutral, slightly bullish, or very bullish for each part of the trade. If you can read markets and price action, the advantage is obvious.

As an aside, this technique can be careful and slow (outright to hedged, to outright, etc.) or it can be a way to trade with extreme aggression.

This is because, a trader can put on a huge position further out in the curve, and then trade against it for stupid size all day long using ZB.

Rates traders love spreads, especially for daytrading.

THat's really interesting. I've played the idea of also trading ZB on a different expiry month from the one I'm initially trading to hedge. I figure it would be the exact same as UB, no?

I really like your idea though of a cross hedge. Obviously depends on skill level like you said to gauge market and price action, but could be an amazing tool if used and timed correctly.
THank you Real Money!

 

[heavenskrow]

OP did nothing wrong. This is a classic example of even if you follow your trading rules, you will have losses due to what ever it causes. The trap you now enter is that you want to adjust your system to have this trade work. But next time it will be something else that cause the loss. If you try to avoid losses by adapting your rules to every trade that loses, you are going to fall in the trap of holy grail searching. Like I see it, is that you have a good system to make money. And sometimes the trade will hit your stop and reverse to your target. If you have a re entry rule and just did not take it because you are worried that it will hit your stop again, then lower your positions until you do not care about the loss. Most of the time you do not Follow your rules because of the heat you take every single time you trade.

I do have re-entry rules based on price action, but I also have "don't be emotional and don't trade in chop" rules in my trading plan. I realized at the final real turning point that, I'm being very emotional and feel like revenge trading and that zb has been chopping back and forth all session, so i should not get chopped in a million pieces like my mistakes in the past. Psychologically, I was defeated even though the direction was ultimately correct.

Thank you all for your inputs! I will try to manage trades like this better in the future.

 

[wrbtrader]

Just want to vent. I thought I was trading it well(until I scratched), but maybe some of you might have a better opinion on how a pro or "elite trader" would have managed this trade better.

My initial entry is the peak for intraday near US market open noted by white line.
I enter and market takes off in my direction, I'm happy about my entry.
Now I focus on "managing the trade"

From initial entry, market came back so I decided to add and sure enough it went in my direction again, so I was deciding to sell my first position at target white line and let the other ride longer depending on market action post target.

Unfortunately, it bounces again before reaching target and it retested the same exact prior peak, even a little past my add area. I thus got out of all my positions as that is a rule that I have that if the market ever comes back to where I add(I like to scale in), I get out of all positions. I listened to my rules, and after scratching on the trade, I see a reversal candle but I hesitate to get back short as psychologically, this market kept chopping back and forth and never reaching my target all session. After I throw in the towel at the short side, FINALLY the market decides to move and hit my original target during Asia session.

To all you professional traders(who do this for a living), what would you have done to better manage this trade?

View attachment 219137

Ignore the trade result and move on to prepare for the next trade unless its a frequent problem you're having.

If its a frequent problem, develop a re-entry signal that's different from the original trade signal but similar to get you back into the trade if it begins moving back down again.

Something interesting...pretend you did have a re-entry signal and got Short again...would you have realistically continue monitoring that position in the after hours - late into the evening ?

By the way, hedging is an excellent tool but is tough to do for most because most can not manage multiple positions at the same time...too mentally exhausting for them.

wrbtrader

 

[tommcginnis]

I do have re-entry rules based on price action, but I also have "don't be emotional and don't trade in chop" rules in my trading plan. I realized at the final real turning point that, I'm being very emotional and feel like revenge trading and that zb has been chopping back and forth all session, so i should not get chopped in a million pieces like my mistakes in the past. Psychologically, I was defeated even though the direction was ultimately correct.

Thank you all for your inputs! I will try to manage trades like this better in the future.

An ATR will show you when the market is undergoing more chop than your general trading anticipates (or, *requires*). Before I learned this, a too-quiet market (or a too-choppy) market would *kill* me, because learning to S.O.H. (sit on hands) was too hard.

Put up an ATR, evaluate the look-back to where it coincides with your best P(success), and then establish levels outside of which you won't trade. Then, .