Pinkmans' technical analysis journal

[pinkman]

Quote from Redneck:

PM

How about answering the two questions I asked you a few pages back.., then I'll answer you Sir

RN

I'm struggling to find one question in that post, nevermind two.

The closest I can find is:

Quote from Redneck:
This is your journal… and your journey

Where do you want to go?[/B]

I want to journal my daily trades, with the occasional charts showing my entries and thinking, and I want consistently profitable traders to help me get better with tangible, practical advice and suggestions for technical T/A (or otherwise) improvements

 

[Redneck]

Quote from Redneck:

Where do you want to go?

=====================


If you’re open to that – we can talk – if not – no sense wasting your time…, or mine

Sorry about that, kid called w/ car trouble

You nailed the first one.., as for the second..., here it is (granted its a weakly framed question... but it is a question nonetheless)

I'll give you strait up answers - where appropriate

I'll also give you open ended answers & at times questions - where you'll need to formulate the answer for you


"Are you open to that"



My point to this last one is this;

I can point you in the right direction - but if you're going to question my motives/ question whether I can trade/ question whether I'm bullshitting you or not

Then I don't need the grief

But if you're serious about trading..., and open and willing to do the work - I'll help you the best I can


RN

 

[Redneck]

Quote from pinkman:

Hi RedNeck,

Are you talking about having my stops 1/2 as big as my targets on trades? If so, in my experience, small stops increase the odds of being stopped, so I think it's all 'swings and round-a-bouts'

Or are you talking about the fact that my losing days tend to be bigger than my winning days? I'm not sure how I can control that. Do you mean stop trading for the day when i'm down over $300 or something???

I’m talking about this in no certain order because it all matters


WITH EVERY TRADE

Each / every potential loss / realized loss – must be less than each / every potential win/ realized win

Note;

That math I shared, (and granted I did not factor in fees and commissions) – that math is a fact that cannot be ignored/ gamed if a person is to be successful

Law of gravity - it is a law

Fact for people to survive – they must have air/ water/ food

Fact for traders – each loss must be less than each winner (when you get more experience – then at times they can be equal… but for now each loss must be less than each win by 1/2 to 3/4 (iow 1.5 to 2 - to 1)


That you think smaller stops automatically lead to increased odds of being stopped out – is completely bogus (I prefer the word bullshit but I’ll use bogus so you don’t think I’m being insulting)


With a plan…, patience…, and discipline nearly every trade can have a very low risk (low compared to the potential gain / and to your net capital (net meaning capital without the margin calculated in)

Notice I did say nearly – we can cover the "nearly" later…, for now, all trades need the potential/ realized loss to be less than the potential/ realized win


To get there, you need;

To know how you trade
A plan
Patience
Discipline

======================

Side note

Most at your stage (btw I was there once myself) look for better setups…, look for improved profits (its the if I could only win more I needn't concern myself with these pesky losses)

This is bullshit


Recall – I said a trader’s mindset is different

Job 1 – is to (or learn to) manage losses

More gain can be had by minimizing the amount lost on each losing trade..., than can ever be made by increasing the number winning trades

This is fact… and a law we must live by

=========================

So am I talking about making each trade’s potential/ realized loss - less than each trade’s potential/ realized win


Or am I talking about making each losing day - smaller than each winning day

The answer is YES – to both

Manage each trade – every time – the days will take care of themselves

========================

As for having a per day loss limit that if hit – you stop trading…. your call

Just know - I have one – because some days – I simply suck (and when I do suck I'm not hesitant to go do something else)

RN

 

[Soon2Bgreat]

Quote from Redneck:


Fact for traders – each loss must be less than each winner (when you get more experience – then at times they can be equal… but for now each loss must be less than each win by 1/2 to 3/4 (iow 1.5 to 2 - to 1)

That you think smaller stops automatically lead to increased odds of being stopped out – is completely bogus (I prefer the word bullshit but I’ll use bogus so you don’t think I’m being insulting)

RN

I enjoy Pinkman's journal since I can identify with some of the success/troubles of trading crude in the manner he does. I'm also addressing this point because it's the actionable advice I got from your post and disagree.

Empirically, a tighter stop does lead to increased odds of being stopped out. Not just in crude, but for most products/assets. What you suggest is equivalent to being long volatility, and while it certainly has periods where it performs well, and it's not a bad suggestion, Pinkman's problems aren't simply solved by setting a stop to half his target. In fact, the past couple years has argued for the alternative.

I appreciate you're trying to help - I just don't want to ignore facts...and if I'm looking at them incorrectly, then let me know.

 

[Redneck]

Quote from Soon2Bgreat:

Empirically, a tighter stop does lead to increased odds of being stopped out. Not just in crude, but for most products/assets. What you suggest is equivalent to being long volatility, and while it certainly has periods where it performs well, and it's not a bad suggestion, Pinkman's problems aren't simply solved by setting a stop to half his target. In fact, the past couple years has argued for the alternative.

I appreciate you're trying to help - I just don't want to ignore facts...and if I'm looking at them incorrectly, then let me know.

Simply cutting a stop in half, or whatever - is ludicrous


Ultimately its going to distill down to more selective entries

Because - each trade's stop must be set where that specific trade fails

And each trade's fail point needs to be less than that trade's potential move


To get there, he'll need to be crystal clear about what to look for - what he's doing - why he's doing it - what price is telling him - the ability to wait - the ability to execute (a plan/ the patience/ the discipline)


Way over simplified, but I think it reflects what's lacking

Losing > 2x more than what you're making, on any level, is a big red flag in my experience

RN

 

[Redneck]

One other thought

Increasing one’s stop.., iow relying on the volatility (increased back and forth action) – to save one’s ass – is nothing more than compensating for/ covering up piss poor trading skills

Volatility makes everyone think they’re a trader – as does a seemingly never ending trend

At some point the mkt will show you the error of this thinking in spades

=================================

And don’t confuse increasing one’s stop/ relying on volatility with RTM trading

RTM is a completely different, and valid approach

Increasing stops - then relying on price’s volatility to eventually put you in the black – is simply not sustainable

RN

 

[pinkman]

RN

''"Are you open to that"

Sure. You can give me any answers that you like, in any form that you like. I can't promise to always understand though.

''I can point you in the right direction - but if you're going to question my motives/ question whether I can trade/ question whether I'm bullshitting you or not''

I'm pretty sure that i've not implied that you can't trade or were 'bullshitting'? Some other posters have commented in this journal, but I don't think i've made such comments?!!

Moving onto the stops.
I think I understand what you are saying.
Although, It's not as if i'm just using a gigantic stop on every trade looking to get a really high 'hit-rate'. I've had stopouts most days.
Yesterday for example, I had 1 stop out at (-195) and the biggest winner was (+294)

I would possibly agree with you if I had winning days everyday, made up of lots of $50 profits, and then, 2 weeks later, a losing day made up of 2 stop outs at -$1000 each. But that's not what my stats look like to me.

''That you think smaller stops automatically lead to increased odds of being stopped out – is completely bogus''
I thought it was indisputable fact?!! If I had a 1 tick stop vs a 50 tick stop on any trade (random entry or otherwise), with a 5 tick target, then the odds of being stopped on the trade with the 1 tick stop would be much higher/

I think You are right that in that further work is needed regarding stops, though.
Although, as previously mentioned, the idea of increasing stops came about after that horrid day on the CL, where my small stops were getting chewed up for fun! (making up my biggest losing day thus far I believe)
Hence, i'm playing at the moment with, on certain types of trades, giving the trade more room to wiggle.

However, the way to really remedy this would be more accurate entries, thus eliminating the need for anything bigger than a tiny stop. But, in the uncertain arena of trading, i'm struggling to find better methods to make that possible.

And regarding, potential targets, and having stops half the size etc. I like the concept, but I think it was Dbpheonix who said that targets are nonsense, and we can't include it in our trade management due to the fact that we never know how far price will travel. We just have to watch and manage it.

Do you disagree with him on that point?

 

[pinkman]

closed it too early.
First trade of the day

 

[dbphoenix]

Quote from pinkman:

And regarding, potential targets, and having stops half the size etc. I like the concept, but I think it was Dbpheonix who said that targets are nonsense, and we can't include it in our trade management due to the fact that we never know how far price will travel. We just have to watch and manage it.

Do you disagree with him on that point?

Since I was brought into this, I have not said that price targets are nonsense. They are, however, incompatible with the precept of letting one's profits run. As for stops, I no longer get into them because nearly all beginners use stops as an excuse to avoid taking responsibility for the trade. Instead, I suggest a catastrophe stop in the event of, well, catastrophe, e.g., losing one's internet connection, which happens to me frequently. Otherwise, if the trade is not going as expected, one should simply get out and not sit there like a deer in headlights waiting for the market to do the work instead.

The market doesn't care what your price target is. The market doesn't care what or where your stop is. The market is going to do what it's going to do. Therefore you first have to find an entry that has the least likelihood of being stopped out, then take it, then man up and manage it. If you were wrong, then take the responsibility and get out. If you were right, then stay in until the trade runs its course.

I do believe that the whole risk:reward thing is a waste of time. Traders in general, particularly beginners, focus on the reward and calculate it through means that have only a marginal connection to market realities. As far as risk, they determine that by how much they're "willing to lose", or by placing it somewhere that to them is logical. But, again, the market doesn't care about any of this. These constructs therefore are only in the trader's head.

But all of this amounts to little more than a quibble. In essence, RN's remarks are right on, and you will be making a grave mistake if you do not pay close attention to them and make every effort to implement them. If you're in this as sport, then who cares? But if you're in it to make a living, then you need to knock off the lols and begin to take the planning and implementation phases much more seriously. Whether or not this pisses you off is far less important than your achieving consistent profitability.

 

[Mo06]

Quote from dbphoenix:

Since I was brought into this, I have not said that price targets are nonsense. They are, however, incompatible with the precept of letting one's profits run. As for stops, I no longer get into them because nearly all beginners use stops as an excuse to avoid taking responsibility for the trade. Instead, I suggest a catastrophe stop in the event of, well, catastrophe, e.g., losing one's internet connection, which happens to me frequently. Otherwise, if the trade is not going as expected, one should simply get out and not sit there like a deer in headlights waiting for the market to do the work instead.

The market doesn't care what your price target is. The market doesn't care what or where your stop is. The market is going to do what it's going to do. Therefore you first have to find an entry that has the least likelihood of being stopped out, then take it, then man up and manage it. If you were wrong, then take the responsibility and get out. If you were right, then stay in until the trade runs its course.

I do believe that the whole risk:reward thing is a waste of time. Traders in general, particularly beginners, focus on the reward and calculate it through means that have only a marginal connection to market realities. As far as risk, they determine that by how much they're "willing to lose", or by placing it somewhere that to them is logical. But, again, the market doesn't care about any of this. These constructs therefore are only in the trader's head.

But all of this amounts to little more than a quibble. In essence, RN's remarks are right on, and you will be making a grave mistake if you do not pay close attention to them and make every effort to implement them. If you're in this as sport, then who cares? But if you're in it to make a living, then you need to knock off the lols and begin to take the planning and implementation phases much more seriously. Whether or not this pisses you off is far less important than your achieving consistent profitability.

A lot of wisdom in that post imvho.