Awesome, I got some replies!
Quote from oraclewizard77:
Your losing trades have a greater dollar loss amount than your winning trades, while your win% is not high enough for a negative risk vs reward.
Try setting a stop and target based on this alone so that your winners and losers are at least even in amounts.
Thanks,
I realize that my win percent isn't high enough. To be honest going into those trades I didn't even take note as to what my risk to reward was. I need to learn more about that.
As far as setting stops. I've been hearing a lot of negative things about them. I even read an article by Don where he talks about the similarities between poker and trading and how having a stop in the market is like showing your hand in poker. I'm not to sure what he meant by that. But it sounded like not having a stop was an edge. I could be wrong in my interpretation. But here's the link.
http://www.stocktrading.com/riskreward2.html
Quote from Mr Super Trader:
What up man.
I like the intro!
The two charts you posted were good entries. Also your hedged to a certain degree by both being long and short in an uncertain market.
Now having a good entry is the simplest aspect to achieve anybody can trade a breakout. I believe it is how you manage your trades that makes the difference. If your greedy you can hold too long until it turns against you. If your in a losing position you may hold too long and wait for it to reverse. So basically what i am saying is you should have an idea of what you want out of the trade. A profit target and what your willing to risk for that target. I would suggest that you start to trade stops again. You can see that your losses are much larger then your winners. This would be fine if you had many more winners. When you start to trade stops again keep them wide. A stop loss should be set outside of the volatility of the time frame you trade. Also utilize support and resistance for stop placement this allows the trade a second chance to bounce of either of the two to allow your trade to work. If you truly want to hedge your risk you should have stops in place. It also keeps the mind free of trading demons. To make things simple try to keep an even risk reward. With an even risk reward you just need a win ratio of more then 50% plus commissions. Smart stop placement utilizing support resistance a reasonable take profit with a good entry is how i trade. I never worry about what i have left on the table i keep my greed in my pocket. I care about taking probable profits with a win ration above 50% with an even risk reward.
Unfortunately though none of the above means anything without proper money management. Money management is way more important then your edge. Just because the chances of a quarter landing on heads or tails is 50 % doesn't mean after ten flips it will be 5 an 5. Your edge may not show due to risk to ruin if you risk 10% per trade and lose 5 trades in a row you would be down slightly less then 50% . Now it will take close to a full 100% gain to get back to where you were. So really managing your draw down is much more important then good entries and taking profits.
I know you have mentioned you are under capitalized. I too have been in this position. I built my account up trading the forex market where you can position your trades at any size you just need to cover the spread as opposed to both paying a commission and covering the spread.
Also the forex market reacts to technical's just as good as the stock market or better.
As far as my advice about how to trade. It really isn't important. Whats important is perseverance. Sticking with the game long enough to conceive your own philosophy of trading. If you keep original you will build from the ground up. So you will know how to rebuild if your strategy starts to fade. You will understand why your stops are being hit and why you are profitable. When you know these things the only thing that can hold you back is risking to much per position and the discipline it takes to do what you know.
Like Wide tailz said losing trades are part of the game get used to it.
Good luck but more importantly good skill!
How's it going Mr. Super Trader? Thanks for replying!
I get what you're saying about being too greedy and holding on too long. My initial mind set was that I wanted to take what the market was going to give me. At one point with the MLHR trade I was up around $60.00, I didn't take profits because I wanted to let my profits run. My mind set now is to take a $30 profit and run with it. I was previously taking trades in stocks with a $0.30 stop and profit target. Most of these trades had a 4.0 risk/reward ratio using S/R and ATR. Again my stops were hit every single time.
I really like what you said about managing drawdowns. That makes a lot of sense. I'll focus on this aspect a little more.
Also the problem with being under capitalized is IMO money management. I've read everywhere that good money management means you never risk more than 2 percent of your capitol on one trade. In my case I would only be risking $40 and $30 after commissions and fees. I can't do much with that.
Also, I don't know about Forex. I hear you can't see volume on Forex, is that true? I also find learning how to trade stocks seems a little more simpler. With FX you have to learn about a slew of things like, pips, pairs, and which markets are open. You have to pay attention to the news. Trading stocks seems more cut and dry. The problem with stocks I find though is you have to scan through a lot and find set-ups.
I do plan on sticking with it. I'm pretty dedicated when I set my mind to something. I have no doubt I will eventually be successful at trading. Again, I appreciate the replies. Please keep them coming as this is helping me learn.
