Market Wizard Tom Baldwin way of taking loss

Quote from Dynomitedoll:

hello,
http://stockmarekt.blogspot.com/
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D doll;
Hi,
Mark Weinstein [nickname hi% trader] said the best traders are humble. Agree

Probably may study that word, ''humble'' more ,thanks for definition. Also humble includes idea of not arrogant, not pride, not bragging.

Opposite of humble is not being decisive, like link implied;
its arrogance ,pride, like a bananna peel usually a fast fall.

Course if you are arrogant & short selling , fast long squeeze will humble:cool: If long & arrogant,market will humble your longs.
Pride includes carelessness , over focus on one self.

Helpful point about T Baldwins size, Johnny T;
probably his style would be the worst for any but highly experienced:cool:

murray TT
 
Quote from frank grimes:

Me speaking as volente " loss? whats a loss. I buy the bottom and sell the top" For us real people, I usually call a spade a spade and punch out, forget it and go to the next.
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i thought his "trading desk" did the buying and selling......
 
Quote from Johnnie T-Bond:

When you trade the huge numbers of contracts that Tom Baldwin did in the pit it can be very hard in fast markets to just dump several hundred or even several thousand contracts immediately without getting killed. Everybody would know your'e in trouble and stick it to you. Also, he has the intestinal fortitude to sweat out several more ticks and wait for some sort of correction to bail more gracefully and end up not losing as much. The vast majority of us can't stomach the pain and therefore blow out the trade quickly. It depends on how much fear and pain you can tolerate as to how you exit a loser when trading size. Each trader has a different psychological makeup and needs to tailor his exit strategies to what he can handle emotionally. So in that sense, I think both answers are right.
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I guess the key factor here is having enough experience to trade several thousand contracts... I wouldn´t recomend this approach to anyone trading on small positions...
 
Judging market environment when considering taking a stop loss rather than a predetermined stop loss ..were you right on direction but as it turns out just a bit early ? There are so many things to consider and to be prepared for. All the way from how you've been feeling prior to the trade and during - overall wellbeing plays a significant role. Its a tough thing to take a costly stop out and see the market reverse soon afterwards .
Being able to assess the current market's health is very important- But to answer the question.. i think that both reactions can be appropriate under different circumstances
 
"Taking a loss" is a bit of a misleading term, since positions are marked to market. You "take a loss" the moment the market ticks against you, not when you exit the position.

The real question is, when you have made a poor entry, which has resulted in you losing money, what should be your exposure in the market? It should be obvious that the fact you previously made a bad entry has nothing whatsoever to do with what the best position is now. Your prior trading decisions have nothing to do with what your current position should be. The optimal current position is dependent purely on the market environment and the likely future distribution of prices.

Therefore neither Baldwin nor Tudor Jones are following the right way to "take a loss". One things can be said though - the cost of Tudor Jones' potential mistakes is going to be, at worst, lots of moderate losses. The cost of Baldwin's mistakes will be an eventualy gigantic loss, which he indeed suffered. Jones has a much lower risk method, and a much more robust one that should survive even very bad decisions and market environments.
 
Quote from Cutten:

The real question is, when you have made a poor entry, which has resulted in you losing money, what should be your exposure in the market? It should be obvious that the fact you previously made a bad entry has nothing whatsoever to do with what the best position is now. Your prior trading decisions have nothing to do with what your current position should be. The optimal current position is dependent purely on the market environment and the likely future distribution of prices.
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The problem is that it´s extremly hard to be 100% objective once you´re already in a position... emotions start playing with you and you start ignoring information that you consider painfull... unless of course you really know what you´re doing.
 
I think in his MW interview Baldwin mentioned he was long bonds a full 5 handles before the bottom in 87. It seems it would all come down to relative position sizing in such an extreme scenario.
 
Any rule I ever (heard, read about, or created on my own) there came a time when I felt it should be broken, except for one, which is RISK management. Trading is a creative and freewheeling endeavor and anything goes, but not taking your loss will end you. Baldwin seems to be able to finesse his exits on losing trades but my guess is the majority should stick to some prearranged target and honor it, otherwise emotions are apt to get the best of you.
 
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