Over-trading versus Fear of Loss

[speedo]

I take no offense. Remember that there are many different trading styles. I trade the 6E futures contract short term based primarily on the depth of market and time & sales. That's the way I see the market best. It may or may not work for others and by no means am I suggesting it is "the only way to trade".

My "safety stop" is set at 10 ticks. I should have said my INITIAL stop rarely gets hit. I move the stop down as the trade matures and often it will get hit on my "runner" contract.

There is no reason for me to stay in a trade if the reason I entered is no longer present. I enter based on the Depth of market and tape primarily. There are other things I look at but the final trigger is what I am seeing in the orders.

Stalling right after entry - If I enter and it just ticks around the entry point for too long why stay in it? This is indicating to me that there isn't a clear direction and I misread the order flow. I would rather take a scratch than give up 4 or five ticks. If the trade stalls after it has moved in my favor I will stay in but tighten up the stop.

Not taking my full stop - I enter a trade and it starts ticking against me. I misread the order flow. Say I enter and it ticks against me and back towards my trade. It keeps ticking against me but each time it does it ticks back less towards my entry and then goes a little further away. This will be clear on the depth of market and tape. Instead of seeing orders pulling in my favor I see orders stacking. Should I wait until it goes all the way to my stop? Each tick I lose is 6.25 and my trading costs are 4.28 for a round trip. I can always get back in later.

I use Jigsaw trading tools. They had an interesting presentation recently called "kill it or keep it" that explains the concept better than I can.

I used to use "hope" as a money management strategy until I realized it doesn't work. I am looking at every trade while I am in a position.

I am not questioning your methodology as I have no idea whether it works or not but I do know that if I bailed a position every time it ticked against me or stalled, I would leave a whole boatload of winners on the table.

 

[wartrace]

I am not questioning your methodology as I have no idea whether it works or not but I do know that if I bailed a position every time it ticked against me or stalled, I would leave a whole boatload of winners on the table.

I am not bailing "every time it ticks against me". I bail out when it ticks against me to the point I know I am wrong. It is hard to explain but all my trades are based on momentum in the orderflow. If I enter a short trade and I start seeing market buyers come in, the bid firming up and the offers pulling why should I wait for my full stop to be hit?

Same thing with stalling. If the orderflow looked good to enter a trade and then conditions no longer are clear it becomes a 50/50 proposition. I don't enter a trade based on a 50/50 chance so there is no reason to stay in when I had just entered a trade. I DO stay in mature trades that have moved in my favor when they stall; I just tighten the stop.

This is my take on it. Each tick is worth 6.25 in the 6E contract. I pay a little over 4 dollars for a round trip. If I save two ticks by bailing early I am ahead. I can always get back in if conditions change back to a favorable trade.

 

[SimpleMeLike]

but u do no believe that its good enough for you... you want to improve it, and knowing that after the series of wins will probably follow the series of loses u refuse to trade further

effectively u do not believe in your method...

happens

what to do? stop trading, continue to improve you method until u want to trade it again,..... trade it again, until u find again that u do not want to take all the trades... stop again... and like that: iteraton after iteration

u have to understand once and for all: if trader does n0t take his methods trades (all of them) that is clear indication that he does not believe in the method at hand

Thank you for response

I belive in the system. But I belive I have been accustomed to taking $300 to $400 and calling it a day just to satisfy my fear of taking a loss and being happy with a win.

After market when I calculate the system trades, i see I missed about another $400 to $700 worth of trades. losses too sometimes.

I am confused of should I be happy with the win and end trading for the day or continue taking trades.

Am I being to greedy? am I overtrading?

Every where I read it says don't over trade and don't be greesy4.

So that's where I am confused.

 

[SimpleMeLike]

If your system has a positive expectancy, you should take all defined signals. No one knows whether the next series of signals will result in wins, losses or any combination.

Thank you Speedo,

If I take all the trades, is this consider overtrading? I believe I need to remove the "just make some money for the day and no losses" from my mental thinking.

Thanks

 

[SimpleMeLike]

You don't believe in your system. There's only one thing to do - go back to the drawing board and start live trading again only when you feel you can take trades without overwhelming caution/fear.

Thanks d08,

I do believe in the system, but here is the thoughts in my head after taking a winning trade for the day of lets say $300 to $400

"ok, thats enough, we end the day making money, turn computer off"

"ok, but what if tomorrow gives you a loss, then thats two days of really making no money, you should keep on trading"

"Just keep on trading, so what if you take a loss, the system says you will win more then lose, just trade what you see and forget about taking a loss after having a win"

After the reading the posts and advice here. It is best, I trade the system when a setup occurs during the daily timeframe I want to trade and remove my thoughts of losing money, feeling bad about a winning day turning into a losing day, and greed. And realize, I am in the business to make money, and in order to make money I have to trade my system.

Thanks,

 

[SimpleMeLike]

Your "system" doesn't work. You have to accept the fact that it isn't working. You say "I have a system that I have been trading with decent (slightly over break-even) profits. "Slightly over break even" isn't worth it.

Your system doesn't seem to have a contingency plan for when trades go against you. When you give back 3 to 400 dollars it tells me part of your system is based on "hope".

I always trade with a stop in the 6E market. I can't remember the last time I let my stop get hit. If a trade starts going against me I am out. If a trade stalls near my entry I am ready to close.

Do you look at the tape and order book while trading? Given enough experience it is easy to see when it's a good idea to get out.

Thanks wartrace,

Well, if I don't take alll the trades in real time, then how do I know the system works. This is my question or asking for advice. Should I take all the trades in real time or end the day when that first trade is a profit? Yes, I can calculate the trades after market for data collection of wins and losses, but again, its not real time live real money trading.

When I give back 3-400 dollars on a day of trading, I am simply following the rules of my system. My system does not state "when you feel or think the trade is going to against you when up 3-400 dollars on the day, exit the trade entirely"

However, yes there are times when I am in trade and just from experience I see price action dance around my entry price and go against me. Every part of me wants to exit that trade for a minor loss cause I "feel" the trade is going against me. More then likely it does. But am I being discipline trader. I feel if I exit the trade, then I am not following the system.

Yes, I see the tape and order book, but I don't pay attention to it. I am more of systematic trader and not discretionary trader. I don't like thinking alot while in a trade.

 

[speedo]

Thank you Speedo,

If I take all the trades, is this consider overtrading? I believe I need to remove the "just make some money for the day and no losses" from my mental thinking.

Thanks

The only reason I will stop trading for the day is if I get tired or want to go do something else. If your system works...trade it. Over trading is taking entries with no defined signal or getting out of a trade which has not met your stop or target parameters and then you decide to re-enter. If your system provides an uncomfortable large number of signals in a day, look to move to higher time frames. Some days, I'll get two or three signals, some days 12-15, it is what it is, I just take them.

 

[SimpleMeLike]

If your system has a positive expectancy, you should take all defined signals. No one knows whether the next series of signals will result in wins, losses or any combination.

Thanks. I just calculated a positive expectancy (>$80) for my system for 160 amount of trades. These are sim trades of course.

Is positive expectancy beneficial if taken all (partial setups or all setups) trades or does that not matter?

Thanks

 

[SimpleMeLike]

The only reason I will stop trading for the day is if I get tired or want to go do something else. If your system works...trade it. Over trading is taking entries with no defined signal or getting out of a trade which has not met your stop or target parameters and then you decide to re-enter. If your system provides an uncomfortable large number of signals in a day, look to move to higher time frames. Some days, I'll get two or three signals, some days 12-15, it is what it is, I just take them.

Thank you speedo,

You and I think alike. I like your comment as it matches my thinking and takes the over-thinking out of the equation. If I see a setup, I should take it.

 

[Handle123]

....

When I give back 3-400 dollars on a day of trading, I am simply following the rules of my system. My system does not state "when you feel or think the trade is going to against you when up 3-400 dollars on the day, exit the trade entirely"

I learn more on data after I have had a losses, but the loss is not important so long as it is a good loss. So in your testing, on losing days in morning, does it show you can recover by end of the day? Do you stop at getting net profitable during the session or are you swinging for fences till end of the day?

I prefer to get positive net zero on the day if possible and tomorrow another day. But still comes down to what the method averages each day and where profits usually come in by the hour so you can better understand if the losses can be made up.