S/R Emini Journal

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I am sorry I shocked some of you saying that 4re was leaving some money on the table. This is in no way a criticism of his strategy but a suggestion on possibly nimproving it. My experience trading stocks and options has been that it does not make much sense to set arbitrary profit or loss targets, like 2 points for example. Why exit a position that is going your way? This has nothing to do with greed, but with proper exit strategy and money management. Fear is as bad as greed when trading. I agree that losses should be kept as small as possible but there is nothing wrong with letting profits run.
In fact, most traders fail because they take profits too fast. If the reason why you entered the trade has not been negated, why would you exit? What is wrong with setting a trailing stop once you are profitable? You still protect your profits but don't limit them to the upside. What is the logical reason behind picking an arbitrary profit of 2 points?
4re, I don't mean to be critical here. I think you have a great entry strategy, probably the result of years of experience. I don't know if your win/loss ratio can be sustained over the long term but I hope it will. I just think your exit strategy could be greatly improved.
 
Also, letting your profits run does not mean that you will be waiting and hoping etc...You can easily have very strict rules with trailing stops, which allow no guessing . This is really not different than setting a hard stop of 2 points, in terms of discipline. If you are so afraid to give back some of your profits (which you should not), take 1/2 of the position out when you reach your 2 points and let the rest run until a trailing stop (that protects your 2 points) is hit. I really don't see how anyone could argue with this.
Again, I am not criticizing your whole system, but I think you said yourself that the goal of this board was to be educational and that you were hoping for some constructive feedback.
 
Quote from candeo:

I am sorry I shocked some of you saying that 4re was leaving some money on the table. This is in no way a criticism of his strategy but a suggestion on possibly nimproving it. My experience trading stocks and options has been that it does not make much sense to set arbitrary profit or loss targets, like 2 points for example. Why exit a position that is going your way? This has nothing to do with greed, but with proper exit strategy and money management. Fear is as bad as greed when trading. I agree that losses should be kept as small as possible but there is nothing wrong with letting profits run.
In fact, most traders fail because they take profits too fast. If the reason why you entered the trade has not been negated, why would you exit? What is wrong with setting a trailing stop once you are profitable? You still protect your profits but don't limit them to the upside. What is the logical reason behind picking an arbitrary profit of 2 points?
4re, I don't mean to be critical here. I think you have a great entry strategy, probably the result of years of experience. I don't know if your win/loss ratio can be sustained over the long term but I hope it will. I just think your exit strategy could be greatly improved.
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Don't get me wrong, last nights message was not directed at you directly. You just happened to be the last one that suggested it. I have heard it before. I always encourage everyone to form an exit strategy that fits them best since everybody has different circumstances. If someone feels comfortable just taking 1 point and can do that daily, that is fine as well.

I did not take your suggestion yesterday as hostile in any way. I just wanted to take the time to explain why I exit as I do.

Sometimes I do take more than 2 points. But I don't need to in order to be profitable. If you will look ack through this thread you will probably see several times that I did take more.

As always I do expect positive and negative feedback and everybody is free to express their opinions. I was just clearing the air on my circumstances.


Thank You,
4re
 
Quote from candeo:

Also, letting your profits run does not mean that you will be waiting and hoping etc...You can easily have very strict rules with trailing stops, which allow no guessing . This is really not different than setting a hard stop of 2 points, in terms of discipline. If you are so afraid to give back some of your profits (which you should not), take 1/2 of the position out when you reach your 2 points and let the rest run until a trailing stop (that protects your 2 points) is hit. I really don't see how anyone could argue with this.
Again, I am not criticizing your whole system, but I think you said yourself that the goal of this board was to be educational and that you were hoping for some constructive feedback.
More...

I personally don't think you did anything wrong and I want your opinions as well as everybody elses. Trailing stops are a great thing. I probably would use them except that I am not a full time trader. I don't have the time to sit in front of my monitor all day. I do however have the luxury of owning my own company so that I can allow myself a certain amount of freedom to do what I love, and that is trading. My goals are just different than most. I do this in hopes of building up a nice fat account to retire on. If and when that comes I will sell my company and retire to a life of trading and traveling.

One reason that most people tend to shoot for 2 points these days on the ES is beacause everybody else is doing it, it makes things difficult to hop on a trend and ride it all day. Some people do it however just with smaller positions. I choose to use a large posiiton and go for 2. I do have and use faithfully a modified exit strategy to keep my losses smaller. If you haven't looked back through the journal to see it I wish you would. It is a modified trailing stop. I hoe that my explaination gives you an idea of why I do things the way I do. And I don't think anybody was shocked by your comments yesterday as I have heard the same comment before. Hope I didn't shock you by mine response as it was not guided towards you but to all that have questioned it. And I don't mind the question.

4re
 
Nice...you do bring up a good point. If we have a set long range but the chart starts indicating a little resistance on the intraday then might it be a good idea to tweak our entry? EG. Like K-Rock said, he bought after it broke above the previous high and easily got his two points.

One of my minor concerns about 4RE's strategy is that the stake might tear up to the long point (say 1275) but then stall just above there (despite no resistance on the chart due to buyer exhaustion. Or am I off base?


Quote from K-Rock:

I got in at 1274.25, after it broke the higher-high. Done for today.:D
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I got my 2 for the day. Will keep watching just to see if it comes back again. I might take it for a quik scalp maybe 1 or 1.5 points. We'll see.

Good job everybody,
4re
 
Quote from pkts:

Nice...you do bring up a good point. If we have a set long range but the chart starts indicating a little resistance on the intraday then might it be a good idea to tweak our entry? EG. Like K-Rock said, he bought after it broke above the previous high and easily got his two points.

One of my minor concerns about 4RE's strategy is that the stake might tear up to the long point (say 1275) but then stall just above there (despite no resistance on the chart due to buyer exhaustion. Or am I off base?
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Anything can happen. That has happened before. The same could have happened with K-Rock also. You just have to develop a feel for it.

S/R breakouts happen for a reason, they are high probability. Not saying 100% though. The longer you do it the more you develop a feel for it. One thing is, if you feel fear in a trade exit. You can always regroup and re-enter on your terms.

4re
 
Where did you exit the trade 4RE? I'm just trying to understand how you modified your trade since I thought it was buy @1275, sell @1277. I had a sell limit at 1277 that never filled. Did you enter a little earlier?

Quote from 4re:

I got my 2 for the day. Will keep watching just to see if it comes back again. I might take it for a quik scalp maybe 1 or 1.5 points. We'll see.

Good job everybody,
4re
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