Yes, we are not interested when what we bought gets cheaper, we refuse to buy more, we never average down.
We are only interested and buy more when it gets more expensive. We scale in.
Stop Losses are killing me
- Thread starter Sequoia1321
- Start date
We are only interested and buy more when it gets more expensive. We scale in.
Supply and demand sets the price in general. But there are sometimes other factors that can have an influence.
We prospected for clients, but clients also came and made the first contact.
You cannot always sell at profit, not in business and also not in trading.
I don't agree.My system tells me when to get in and when to get out. Always full in and full out.
When I have a signal, according to my system that is the optimal moment to trade. Not before and not after. Scaling in when price is less good has a negative impact on the risk/reward ratio.
Read this thread carefully, depending on your trading experience, it might take you a day or two, and practice. The most important thing is how to revenge your loss if you get stopped out. If most of your revenge get stopped out again, you are setting your stop at places not really show a change of trend, where Volpri calls it a BO from range to new trend.
People can get philosophical on SL in all kinds of ways, but this is the only thread I encountered talking about SL in a practical manner, not only the phenomenon, but also the solution, and if the solution is not working for you, it is your SL price location, Practice on that point and you will find nirvana of your trading.
https://www.elitetrader.com/et/thre...m-mes-mnq-and-mym.336259/page-75#post-5137852
People can get philosophical on SL in all kinds of ways, but this is the only thread I encountered talking about SL in a practical manner, not only the phenomenon, but also the solution, and if the solution is not working for you, it is your SL price location, Practice on that point and you will find nirvana of your trading.
https://www.elitetrader.com/et/thre...m-mes-mnq-and-mym.336259/page-75#post-5137852
To add to my comment above, I have been trading for over 20 years, and full time for over five years, and I have been profitable consistantly on day trading level for years, and it took me over a week on and off to fully read the above thread by Volpri, and it is one of the best thing I found on ET.
On daytrades and swing trades you have to be patient and wait for price to come to the low risk entry point. Random trades are almost always going to get stopped out. I would suggest focusing on larger time frame charts and only attempt opening positions at very key support/resistance levels (on larger time frame charts—- meaning Daily, 240 min and perhaps 60 min) where there is the highest probability of a strong reaction
You know exactly what you are doing but I don't. I do not have a precise system to tell me exactly when to get in and when to get out. It involves a lot of imprecise judgement.
Also, I love bargains, prone to average down.
this is 1 of the better threads. let me show you how to answer the entry vs exit debate.
If entry is everything to you then you dont use a stop loss. why would you? you dont want to exit.
if exit is everything you would use a stop loss because you want to exit.
its depends on your strategy is what im saying. no one size fits all and volpri method of averaging down is insane for a scalper but may do well for a long term swing day trader. however volpri uses position adds at losses as risk management because he exits all of it so quickly. thats not how anyone trades if u want to be consistent. you only add n keep adding when you KNOW the mkt will get above your initial entry other wise if you go by an average price you are locking in losses and gains. u would have been better off realizing those losses initially and doing another trade later. Long term traders use dollar cost averaging on losses. short term traders add to winners then exit all
If entry is everything to you then you dont use a stop loss. why would you? you dont want to exit.
if exit is everything you would use a stop loss because you want to exit.
its depends on your strategy is what im saying. no one size fits all and volpri method of averaging down is insane for a scalper but may do well for a long term swing day trader. however volpri uses position adds at losses as risk management because he exits all of it so quickly. thats not how anyone trades if u want to be consistent. you only add n keep adding when you KNOW the mkt will get above your initial entry other wise if you go by an average price you are locking in losses and gains. u would have been better off realizing those losses initially and doing another trade later. Long term traders use dollar cost averaging on losses. short term traders add to winners then exit all
at the end of the day it is risk vs reward. total risk vs total reward.
my premise is that my risk can only be based on what i am certain of which is if i am not in the mkt i have zero risk. if i have 1 position i have 1 risk 2 positions 2 risks 3 positions 4 risk get it
so i have posed this question before.
which one has more risk. we will be making 1000 in the eminisp500 ok.
1 lot 20 point gain= 1000 profit.
10 lot 2 point gain= 1000 profit.
this is where you need to start to understand your own perception of risk. mkt risk is always unknown no matter what indicator or news hell even insider info has risk.
if you think 1 position has more risk than 10 then you need your head examined.
what if mkt falls 3 points on a huge order.
so its at 2990
1 lot= down 500
10 lot= down 5000!!
we are trying to make 1000 remember !
we now lost 5 x our gain versus losing half our gain amount. risk vs reward.
Volpri must divulge what his max loss is overall for the trade including all positions added or at what point he exits at a loss. he wont say because then you can tell him his system would have had him out not in.
my premise is that my risk can only be based on what i am certain of which is if i am not in the mkt i have zero risk. if i have 1 position i have 1 risk 2 positions 2 risks 3 positions 4 risk get it
so i have posed this question before.
which one has more risk. we will be making 1000 in the eminisp500 ok.
1 lot 20 point gain= 1000 profit.
10 lot 2 point gain= 1000 profit.
this is where you need to start to understand your own perception of risk. mkt risk is always unknown no matter what indicator or news hell even insider info has risk.
if you think 1 position has more risk than 10 then you need your head examined.
what if mkt falls 3 points on a huge order.
so its at 2990
1 lot= down 500
10 lot= down 5000!!
we are trying to make 1000 remember !
we now lost 5 x our gain versus losing half our gain amount. risk vs reward.
Volpri must divulge what his max loss is overall for the trade including all positions added or at what point he exits at a loss. he wont say because then you can tell him his system would have had him out not in.
1 more example
mkt is at 3000 we will buy 4 lots total. 1 every 2 points as the mkt drops. we will then do some exit all scenarios. then we will do the reverse on an add.
3000 buy 1 lot $0
2998 buy 1 2 lots $ - 100
2996 buy 1 3 lots $ - 200
2994 buy 1 4 lots $ - 600
average price is 2997 on 4 lots
we are at 2994 and down 600!
mkt falls to 2900
we are now down 2997-2990 7 pts
7 pts x 4=28×50= $ -1,400 negative
mkt at 2900.
mkt only fell 4 points and we lost 800 dollars!
mkt rallies 8 points to 2998 again.
we are at a profit. 1 pt x4 x50= 200 gain
2999 400 gain
3000 = 600 gain 3pts x4 = 12 x$50= 600 gained on a 10 point reversal. lets remember that ok. 10 points on 4 lots but avg price is 2997
so we made 3 points per lot. or 150 per lot gained but we had a max risk of 1400 on 4 lots which is the mkt at 2900 or 7 points.
if mkt goes to 3010 we made on 4 lots
3010-2997 = 13 ptsx4= $ 2,600 gained.
this is 2600/4= 650 per lot or 13 points per lot
we risked 7 points to gain 13 points per lot
or we risked 1,400 to make 2,600
so 2600/1400= 1.85
13 pts per lot gained. we had a 20 point reversal in the sp500! remember that.
lets do the opposite we buy 1 at 3000 and add 1 every 2 points.
3000 long 1 lot.
2998 long 1 down 100
2996 long 1 down 200
2994 long 1 down 300
mkt drops to 2900
long 1 our max loss here is now 1 lot x50 x 10 points so 500 loss.
mkt starts to reverse as it did before
2998 we are down 100
at 3000 we are even money 0 loss
3002 we buy 1
3000 long
3002 long 2 gain 100
3004 long 3 gain 300
3006 long 4 gain 600
our average price is now long 4 @ 3003
at 3010 we are up 7 points per lot
or 3010-3007=7 ptsx50x4= $ 1,400
wait a second how can this be? lets look at risk to reward now.
max risk was 10 points on 1 lot or 500 dollars.
so in the end of the trade it would look like this.
we risked 500 to make 1400
see you must take the lots out of it and just use total gain and loss!!!
we risked 500 to make 1400
1400/500= 2.8. but we really had little risk of loss of our capital just loss of our current gains.
i would rather lose a paper gain than realize an actual loss wouldnt you!!
mkt is at 3000 we will buy 4 lots total. 1 every 2 points as the mkt drops. we will then do some exit all scenarios. then we will do the reverse on an add.
3000 buy 1 lot $0
2998 buy 1 2 lots $ - 100
2996 buy 1 3 lots $ - 200
2994 buy 1 4 lots $ - 600
average price is 2997 on 4 lots
we are at 2994 and down 600!
mkt falls to 2900
we are now down 2997-2990 7 pts
7 pts x 4=28×50= $ -1,400 negative
mkt at 2900.
mkt only fell 4 points and we lost 800 dollars!
mkt rallies 8 points to 2998 again.
we are at a profit. 1 pt x4 x50= 200 gain
2999 400 gain
3000 = 600 gain 3pts x4 = 12 x$50= 600 gained on a 10 point reversal. lets remember that ok. 10 points on 4 lots but avg price is 2997
so we made 3 points per lot. or 150 per lot gained but we had a max risk of 1400 on 4 lots which is the mkt at 2900 or 7 points.
if mkt goes to 3010 we made on 4 lots
3010-2997 = 13 ptsx4= $ 2,600 gained.
this is 2600/4= 650 per lot or 13 points per lot
we risked 7 points to gain 13 points per lot
or we risked 1,400 to make 2,600
so 2600/1400= 1.85
13 pts per lot gained. we had a 20 point reversal in the sp500! remember that.
lets do the opposite we buy 1 at 3000 and add 1 every 2 points.
3000 long 1 lot.
2998 long 1 down 100
2996 long 1 down 200
2994 long 1 down 300
mkt drops to 2900
long 1 our max loss here is now 1 lot x50 x 10 points so 500 loss.
mkt starts to reverse as it did before
2998 we are down 100
at 3000 we are even money 0 loss
3002 we buy 1
3000 long
3002 long 2 gain 100
3004 long 3 gain 300
3006 long 4 gain 600
our average price is now long 4 @ 3003
at 3010 we are up 7 points per lot
or 3010-3007=7 ptsx50x4= $ 1,400
wait a second how can this be? lets look at risk to reward now.
max risk was 10 points on 1 lot or 500 dollars.
so in the end of the trade it would look like this.
we risked 500 to make 1400
see you must take the lots out of it and just use total gain and loss!!!
we risked 500 to make 1400
1400/500= 2.8. but we really had little risk of loss of our capital just loss of our current gains.
i would rather lose a paper gain than realize an actual loss wouldnt you!!