Swing Trading Risk Management

T

tradermike99

Hi guys,

How do you manage risk on your swing positions?

Especially at the beginning of the potential swing.

For Example: If the price wents against you but didnt hit your Stop Loss, would you close the Position or consider what the market is going to do?

Thanks a lot for your answers. :D

Mike
 
You have to stick to your plan so if you plan says put the trade on, put the stop in, then wait for either a profit or Loss (via the stop), that's what you have to do. It's also the HARD thing to do.

The easy thing to do would be to buy, put your stop in, have the market sell-off a touch (stop not activated), panic that it's going lower and will fill your stop, so exit early to nullify the pain.

Markets are PERVERSE. And many times that perversity will rear its head when you first iniate the trade, ie you buy and the market will go lower and try to shake you out. So you have to do the hard thing, hold on. If it stops you out so be it. But many many times, it won't and holding strong, following your plan, will the right thing to do.
 
Doesn't matter which time-frame the EXECUTION of the game-plan is the same.

Anyway, there's little different, or actually zero difference, between all the different timeframes (assuming there's action on the chart). So the 1m is the same as the weekly. For example, I could put up 10 1m charts and 10 weenly charts (with no X/Y axis) and nobody would be able to ssay which is which. Fractals basically...
 
This is why smaller traders (under $1m cap) have a massive advantage over the bigger boys because the smaller traders can trade that 1m chart all day every day.

And if you learn to do it right (takes 2-5 years) the 1m chart prints money almost as well as the Fed :)
 
AbbotAle said:
Doesn't matter which time-frame the EXECUTION of the game-plan is the same.

Anyway, there's little different, or actually zero difference, between all the different timeframes (assuming there's action on the chart). So the 1m is the same as the weekly. For example, I could put up 10 1m charts and 10 weenly charts (with no X/Y axis) and nobody would be able to ssay which is which. Fractals basically...
More...
#1. Can you trade 1 min candles without stops ?
#2. Can you trade 1 week candles without stops ?
 
Nobert said:
#1. Can you trade 1 min candles without stops ?
#2. Can you trade 1 week candles without stops ?
More...

You can do whatever you want in the market, so yes.

However, I would strongly advise you use stops. Stops mean you've taken into consideration that you might be wrong and in turn what that loss will be (slippage excluded). Stops also mean you're thinking the long game and one trade, profit or loss, is basically irrelevant.

I once new a very big trader on one of the floors and his famous quote was 'more money has been lost in the market by people not using stops than by all the other reasons combined'. And guess what, he always used a firm stop.

Anything can happen so you better have a plan (for that) and using a stop is a nice simple plan.

Another point to mention is that when in a position you're in what I call the 'Twilight Zone'. That's a dark place where it's not always easy to make the right decisions aat the right time because of the open-trade.For example, we panic out of a winning trade (don't want to give back) and panic out of a good trade (that ultmatly would have worked) because we 'knew' that out stop was going to be hit. We can also freeze like that deer in the headlights and not know what to do.

A good real-time example of this would be some of the Tesla shorts right now. Yes, Tesla may well be a fraud, who knows, but right now their minds are shot, they're not thinking correctly, all they're thinking is they're 'right' and Tesla/the market is wrong. They're in deep in that Twilight Zone and they're 100% trapped. The only way out for them is if Tesla dumps this week (unlikely) or when they're taken out of the game by their broker because of lack of funds. If/when that happens how they'd wish they used a stop. Losing money shorting Tesla is not a crime as long as the amount lost is small.

Stops protect you from yourself...
 
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