Take every setup ? Or quit when you're up

Quote from wiesman02:

Just curious as to what you guys think.

I trade the ES. Lately, I've been enforcing a rule for myself where when I'm up 1.75 points or more, I stop trading for the day, and just watch the market..... trying to get better at reading it while keeping my profits.

This works out fairly well except for the occasional blow-up.....I'll start trading off the 1 min charts instead of higher time frame charts and get chopped up real bad. My +$100 days on 1 contract turn into -$450.....I mean hardcore tilt.

Lately, these blowups happen less and less. And many times they stem from the fact that I don't take my good setups....I leave them be....then see them profit, and get pissed and get into trades that I shouldn't.

So now, when I'm up 1.75 points +, I quit. I know I'm limiting myself when I only take 2 points per day. I see other opportunities that I could be trading, but I leave them alone.

*Oh and FYI, if I'm long, and have a target that will net me 3 points, i will not exit early for 2 points *

Is this a stupid idea ? Or how many days in a row do u think it should take for me to graduate to taking every setup ? Or should I be taking every setup ?
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Each time you trade your "setup" you build skills and intuition trading that "setup".

Each time you fade or ignore your "setup" you start erasing/negating all the skills and intuition you built up trading the "setup".

So over time too much fading and ignoring your system erases all the skills, intuition, and confidence you built up trading the system. And this is how traders can go years without building up any skills at all. They stay stuck at the amateur level.

Calling it a day early is a good way to limit attachment to the action which can lead to trading way too frequently (impulsively). Its also a good way to limit greed by taking the profits that you have and being grateful for them because a single reversion to the mean can wipe out profits if trend trading and a single deviation away from the mean can wipe out all profits if counter trend trading. In the long run, the money you "leave on the table" ends up equaling the money you lose by not taking the profit.

Eventually you do have to trade more aggressively on your winning days but that is an expert skill that slowly develops later on in your career. Right now its just important to stick to the system and build the consistent discipline that will later on enable you be more aggressive on the winning trades/days.
 
Quote from NoDoji:

Rashid, it took Bighog about a year and a half to pound this into my head. He never quit telling me to follow the trend, until it ends, period! And I never quit doubting the validity of it! Until this year. The psychology behind the trend-following price action is that it takes a LOT to change crowd sentiment. It doesn't just change because price is "too high" or "too low". After 2008/2009 I think we all realize "too low" is still a long way off from the current state of affairs.

I made more money so far this year shorting lows, buying highs and trading with the trend than I made in all of all of 2009.
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NoD you mention trend following. Taking all the long and short 3-min hammer entries you listed earlier ... fading each trend that came before - I'm curious how you see this as trend following. :)

Also, when you say shorting lows and buying highs, I assume you're referring to L's/H's of individual reversal bars, not of ranges. Most of your posted trades, from what I've seen, seem to be at some sort of reversal area or at least near a key turning point (DT's, DB's, 1st LH, HL, etc.)

Playing H/L breakouts directionally on ES is normally brutal business, except on days like today when the range is coiled early on.
 
Quote from Arjun1:

Each time you trade your "setup" you build skills and intuition trading that "setup".

Each time you fade or ignore your "setup" you start erasing/negating all the skills and intuition you built up trading the "setup".

So over time too much fading and ignoring your system erases all the skills, intuition, and confidence you built up trading the system. And this is how traders can go years without building up any skills at all. They stay stuck at the amateur level.

Calling it a day early is a good way to limit attachment to the action which can lead to trading way too frequently (impulsively). Its also a good way to limit greed by taking the profits that you have and being grateful for them because a single reversion to the mean can wipe out profits if trend trading and a single deviation away from the mean can wipe out all profits if counter trend trading. In the long run, the money you "leave on the table" ends up equaling the money you lose by not taking the profit.

Eventually you do have to trade more aggressively on your winning days but that is an expert skill that slowly develops later on in your career. Right now its just important to stick to the system and build the consistent discipline that will later on enable you be more aggressive on the winning trades/days.
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Great post... It really hit home with me!
 
Quote from tomahawk:

NoD you mention trend following. Taking all the long and short 3-min hammer entries you listed earlier ... fading each trend that came before - I'm curious how you see this as trend following. :)
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Regarding, "One of the best setups I see on ES off the 3-min chart is a hammer/inverted hammer at a pivot point off a strong move in one direction."

This is a counter-trend play and the hammer/inv hammer following a strong move is a high probability reversal signal, a good play for aggressive traders looking to catch the possible start of a new trend. The conservative trader will wait for confirmation by way of the higher low or lower high.

Today, for example, ES 3-min chart, you have a major move down from overnight into pre-market trading. Inverted hammer on the 5-min chart signals an opening range breakout during the 10:10am bar, and that's a with-trend hammer signal and offers a 12-pt move. OK, back to the 3-min chart, that 12 pt final push (after a looong overnight downtrend) leaves a hammer at the close of the 10:24am bar. This is a strong trend reversal signal after a strong move. That's why I called it high probability, but it's not with-trend.

You get 4 pushes up in the counter micro-trend and then the close of 11:39am bar leaves an inv hammer at a lower high. Short signal with a stop above the hammer high gives you 16 pts of downside to extract something from. (I personally doubt I'd have the patience to sit through all those retraces for the entire move unless I dragged myself away from the trading platform, but I may have taken profits and re-entered following the 12:45pm inv hammer.)

The 1:00pm bar on the 3-min offers up another hammer at the bottom of the strong move down.Ling as soon as that bar closes, 2-3 pt stop, and a whole bunch of pts for the taking to the upside.

Quote from tomahawk:

Also, when you say shorting lows and buying highs, I assume you're referring to L's/H's of individual reversal bars, not of ranges. Most of your posted trades, from what I've seen, seem to be at some sort of reversal area or at least near a key turning point (DT's, DB's, 1st LH, HL, etc.)

Playing H/L breakouts directionally on ES is normally brutal business, except on days like today when the range is coiled early on.
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Yes, I play reversal off pivot points mostly, but in a strong trend I will often buy at the high or sell at the low for the breakout. I did that a lot with AAPL when I was trading it and recently had a nice CL trade that way.

Range breakouts are also decent in the direction of the previous trend, such as the early ES break mentioned above.

OK, I'm outta here, and only a tiny bit of trading time for me tomorrow too. Clean up, everyone!
 
Quote from NoDoji:

Regarding, "One of the best setups I see on ES off the 3-min chart is a hammer/inverted hammer at a pivot point off a strong move in one direction."

This is a counter-trend play and the hammer/inv hammer following a strong move is a high probability reversal signal, a good play for aggressive traders looking to catch the possible start of a new trend. The conservative trader will wait for confirmation by way of the higher low or lower high.

Today, for example, ES 3-min chart, you have a major move down from overnight into pre-market trading. Inverted hammer on the 5-min chart signals an opening range breakout during the 10:10am bar, and that's a with-trend hammer signal and offers a 12-pt move. OK, back to the 3-min chart, that 12 pt final push (after a looong overnight downtrend) leaves a hammer at the close of the 10:24am bar. This is a strong trend reversal signal after a strong move. That's why I called it high probability, but it's not with-trend.

You get 4 pushes up in the counter micro-trend and then the close of 11:39am bar leaves an inv hammer at a lower high. Short signal with a stop above the hammer high gives you 16 pts of downside to extract something from. (I personally doubt I'd have the patience to sit through all those retraces for the entire move unless I dragged myself away from the trading platform, but I may have taken profits and re-entered following the 12:45pm inv hammer.)

The 1:00pm bar on the 3-min offers up another hammer at the bottom of the strong move down.Ling as soon as that bar closes, 2-3 pt stop, and a whole bunch of pts for the taking to the upside.



Yes, I play reversal off pivot points mostly, but in a strong trend I will often buy at the high or sell at the low for the breakout. I did that a lot with AAPL when I was trading it and recently had a nice CL trade that way.

Range breakouts are also decent in the direction of the previous trend, such as the early ES break mentioned above.

OK, I'm outta here, and only a tiny bit of trading time for me tomorrow too. Clean up, everyone!
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All good ... excellent recap. - thnx.
 
appreciate it guys. Didn't get to trade today, but tomorrow I am going to take every setup. Might be messy tomorrow with options ex, but I'll do the best I can.
 
Important post. Arjun has reminded us that discretionary does not equate to doing what you feel like. Discipline is the result of consistently working your edge. And if you find out you don't have one ... finding that out has enormous value.

Quote from Arjun1:

Each time you trade your "setup" you build skills and intuition trading that "setup".

Each time you fade or ignore your "setup" you start erasing/negating all the skills and intuition you built up trading the "setup".
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