How do you stay patient in situations where maybe you are repeatedly scalping out too soon or holding winners too long? Like for example, I will maybe scalp out too fast on a few trades that end up running to my "best case scenario" targets, and then I convince myself to hold the next winner for those bigger targets, and then I get a string of trades where I should have taken profits faster. This tends to lead to me overtrading and taking trades that make no sense because I eventually start wanting to "take action" to make up for those inefficient exits especially once a few losses enter the mix as well.
Risk/Reward Ratio
- Thread starter Goldlover
- Start date
How do you stay patient in situations where maybe you are repeatedly scalping out too soon or holding winners too long? Like for example, I will maybe scalp out too fast on a few trades that end up running to my "best case scenario" targets, and then I convince myself to hold the next winner for those bigger targets, and then I get a string of trades where I should have taken profits faster. This tends to lead to me overtrading and taking trades that make no sense because I eventually start wanting to "take action" to make up for those inefficient exits especially once a few losses enter the mix as well.
it is binary, so 50/50, other factors aside.
I don't scalp, or should say almost never do so don't know what to tell you.
I do use Tom DeMark indicators ( so
to the no-indicators crowd) for most of my entries which also give me my stop loss spots. Of course I can't say I never get impatient but I've done it enough times, enough years, to just let things do what they will do.
The number is simply the notional value of the ES
lol, no one thinks notional in CME products. i only calculated once, about 600 million in 8 months, I am not even a hyper active trader on this forum.
Best way to see R/R is:
1) start with assuming the average price through a period represents the midpoint of an outcome
2) through time, see if visibility has improved (should shrink the tails as moving forward in time narrows probability density)
3) fade moves that diverge from the midpoint (post your due diligence that confirms no new accretive info)
E.g.:
SPX at 4400 represents a view that fed hikes to ~5.5% and earnings remain resilient at ~220 NTM... that would give SPX a p/e of ~20x.
If no new data comes out tomorrow and SPX moves down to 4350, then you could "fade" the move back to 4400. If you think the move down is due to passive flows, portfolio rebalancing, and such, then your assessment of risk/reward is favorable.
You can quantify by considering other scenarios.
E.g. scenario of Fed not hiking to 5.5%, scenario of economy entering into a recession over NTM (which would be a -ive to EPS), etc. You can assign a probability (your view) of each occurring. This would also allow you to consider your risk of a poor outcome vs. expected reward. Generally, most hedge funds will have some minimum expected reward target (~40% annualized) as a filter...
1) start with assuming the average price through a period represents the midpoint of an outcome
2) through time, see if visibility has improved (should shrink the tails as moving forward in time narrows probability density)
3) fade moves that diverge from the midpoint (post your due diligence that confirms no new accretive info)
E.g.:
SPX at 4400 represents a view that fed hikes to ~5.5% and earnings remain resilient at ~220 NTM... that would give SPX a p/e of ~20x.
If no new data comes out tomorrow and SPX moves down to 4350, then you could "fade" the move back to 4400. If you think the move down is due to passive flows, portfolio rebalancing, and such, then your assessment of risk/reward is favorable.
You can quantify by considering other scenarios.
E.g. scenario of Fed not hiking to 5.5%, scenario of economy entering into a recession over NTM (which would be a -ive to EPS), etc. You can assign a probability (your view) of each occurring. This would also allow you to consider your risk of a poor outcome vs. expected reward. Generally, most hedge funds will have some minimum expected reward target (~40% annualized) as a filter...
That's what ET is for silly. Find an idiot to argue something stupid with or go down to politics and state a strong political opinion, all the while keeping your chart open on one side of your main screen and wait for the golden goose to set itself up or to let a trade you are confident of run.
“No one” when I provided you with the contrary evidence. Buddy … If you don’t use stop and don’t know the notional value of your underlying … I feel sorry for you.