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"POP" Quiz
- Thread starter VisionTrader
- Start date
Quote from VisionTrader:
Now I think a 2 point stop on the ES is very tight and small to begin with.
If you find it too small, why do you then use it? I don't understand that. If it is too small, use a bigger one that you think is good enough or improve your timing. With a really good timing, even a 1.5 stop on ES is enough. Otherwise, I would choose 2.5-3 to be on the safe side.
you're talking about phantom of the pits, and yes, you're violating the rule.Quote from VisionTrader:
If I have a planned stop in my strategy and it is a very tight stop, say 1 or 2 points and I let the market take me out if I am wrong....................
Am I in violation of Rule #1 because I let the market take me out?
I am having trouble with this.
Wong!
Quote from electron:
If you find it too small, why do you then use it? I don't understand that. If it is too small, use a bigger one that you think is good enough or improve your timing. With a really good timing, even a 1.5 stop on ES is enough. Otherwise, I would choose 2.5-3 to be on the safe side.
Some traders use a 1 pt stop, it all depends on the method and the timeframe. Trading of a 1 min chart and the 15 min chart is not the same and requires different strategy.
TM Trader
I think he is talking about a different situation. You enter a position trade with a big stop, it doesn't go up but it doesn't really do anything dramatically bad either. It has not proven itself right. After a reasonable period, get out. For a position trader that might be measured in days. A trade with no profits seldom gets better with age. Why not? Because if you know what you're doing, you had some catalyst to trigger your entry. Since nothing has happened, that catalyst has failed, even if price is muddling along. The exit door might get crowded.
In your case, the trade has proven itself bad, at least by your definition. Should you have exited sooner, in the period when it had not proven itself right? Maybe, but 2 points is not a lot of room to begin with. If you are a good tape reader, perhaps you can see something that tips you off and exit early.
Overdo it though and you will be throwing in some good trades.
In your case, the trade has proven itself bad, at least by your definition. Should you have exited sooner, in the period when it had not proven itself right? Maybe, but 2 points is not a lot of room to begin with. If you are a good tape reader, perhaps you can see something that tips you off and exit early.
Overdo it though and you will be throwing in some good trades.
Quote from inandlong:
C'mon VT, too much of that psycho-babble will really mess you up.
HeHe...when Trader Vic makes a trade, he goes to court!
Quote:"The market is like a courtroom where
you are the accused--innocent until proven guilty. That is, when you initiate a trade, you have to assume that you are right until the market proves you wrong. It proves you wrong when the
price hits your stop or your mentally chosen exit point, which is as
absolute as a Supreme Court ruling---no appeal is possible, your
freedom to act is gone, you must close out the position." Trader Vic-Methods of a Wall Street Master...pg.180
Is that where that comes from? I read that a number of years ago.this is incorrect in regards to phantom of the pits' rule #1.
One thing you have to remember is his advice is coming from someone who has traded in the pits. You probably haven't. I have. The things he is talking about, the advice he is giving, is not transferable to off-the floor trading, especially Rule #1. You might think that it is, because you think you understand what he is saying. However pit trading is nothing like off-the-floor.
Off the floor, you don't see what the other players are doing. You don't see what paper is coming in, who is buying and who is selling. You don't have the slightest clue about the information that is passed around that never reaches you off the floor. A nod, a wink, a fake. Is it a local bidding it up on 2 cars, or is Cargill buying? Say what?
No matter how well someone describes an experience, until you have done the same thing, you don't really understand. Don't try to employ pit tactics out of the pit. The only one that works well is "the numbers."
VT
From reading a lot of your posts I am wondering if you always set your stops by a predetermined point number or do you have an area of a chart that would determine the trade no longer valid ?
Double tops/bottoms, which I believe you trade quite frequently, would be violated if the top or bottom is blatently violated, would it not ?
Depending on the volatility at the time of the trade, the size of the double top/bottom and your entry, it seems that the stop size would vary and not always be 2 points.
From reading a lot of your posts I am wondering if you always set your stops by a predetermined point number or do you have an area of a chart that would determine the trade no longer valid ?
Double tops/bottoms, which I believe you trade quite frequently, would be violated if the top or bottom is blatently violated, would it not ?
Depending on the volatility at the time of the trade, the size of the double top/bottom and your entry, it seems that the stop size would vary and not always be 2 points.