I have a completely mechanical strategy that I use and my scanner probably throws 1-3 trades a day that have good risk/reward. There are very few differences between patterns that work and patterns that don't but over the past week I've probably only taken 5/16 of the trades and often times ones that I'm skeptical about end up working and going much further than i would have expected. Some days 2/3 may fail and other days all of them will work. my current hit rate is 4/5 and out of all of the trades somewhere around 12/16 would have worked and hit the target. Obviously none of you know my strategy but my question is, if you took all of the trades and traded perfectly (Let it either kick you out or let it hit your target which is hit most of the time). Would this be much better than taking profits based on feelings? What would you do if you bought a stock and you're up 30 cents but your target is 50 and it begins to collapse? and then ends up kicking you out and tanking. Rather than having a mathematical projection would it just be better to use a 25 period moving average on the 1 minute chart or something? or even both
Taking all of the trades vs taking trades/selling based on feelings.
- Thread starter pk3r1234
- Start date
I am hearing several questions which would suggest you are still finding your way. While your instincts will improve with time, it's been my experience that given a viable trade plane, to take the signals and let the trade do what it will. Many trades, both successful or not will be uncomfortable at some point.
As to your example of being up and then getting stopped out, some trades will work and some won't. If it happens a lot, then a target or trailing adjustment may be in order. There is no way to avoid losses, only ways to make a plan better.
As to your example of being up and then getting stopped out, some trades will work and some won't. If it happens a lot, then a target or trailing adjustment may be in order. There is no way to avoid losses, only ways to make a plan better.
If you have a system that works, follow it.
I can honestly say that in 14 years of trading, the trades in which I inserted my feelings or opinions have been the cause of my vast majority of losses.
No matter what the cause of my actions - whether to capture early profits, avoid losses, feel in personal control - I've hurt my own bottom line time and again.
Let your system go to work, and so long as it works get yourself out of the way.
short answer - no
so what to do with the feelings?
record them and then use them, when analyzing you trades after the close
based on the feelings new ideas eventually should come-up which should find their way into the method. that is how you will continue to develop the method.
if the feelings are overwhelming , but there are no new ideas stop trading real money
I have 0 problems following my plan on the loss side because if I'm wrong the stock usually collapses. My biggest problem is being up and taking too small of gains just to see the stock blow past my expectations. Maybe just because I don't want to see it pull back and go negative on me. All I can say is I'd be up 10 times more than I am right now if I would have followed the strategy like a robot. I believe nobody is perfect enough to realize 100% and even the best probably only realize 60% of what their strategy calls for
Clearly it would, if your system has an edge. And you wouldn't be trading it at all, without having proven that first, presumably?
I would have decided that, and have a policy to cover it, before buying in the first place. Such aspects of trade-management are typically more important, overall, than the entry itself. You wouldn't be confusing an "entry system" with a "trading system", would you?
Thus, your problem is cutting your gains short and letting your losses run. Which is, of course, precisely the opposite of what you need to be doing.
Your excuse is that you're not a robot and that most traders have the same problem.
Doesn't sound to me like you're ready to be successful.
Clearly it would, if your system has an edge. And you wouldn't be trading it at all, without having proven that first, presumably?
I would have decided that, and have a policy to cover it, before buying in the first place. Such aspects of trade-management are typically more important, overall, than the entry itself. You wouldn't be confusing an "entry system" with a "trading system", would you?
Well my entry system is very good. I'm 100% sure it's a big edge and I've done backtesting using math, typically it plays out double my expectations and even more. I think it would be a lot easier trading with more shares because then i could take some off the table as I go which I've always done paper trading. Trading with 100 shares is terrible, But I think the only way to really grow the account using 100 shares is to follow the trade as planned. I'm a big believer in trading with market money and the amount I've made so far would only cover 3-4 loses. Once I'm up a few hundred it will be much easier.
I definitely don't let loses run. My average loss is probably 5 cents or less because like I said before, if I'm wrong the stock collapses. The profits I'm taking are already double what my loses would be, I just don't hold on long enough to really grow the account in anyway
Greetings Pk,
Simple answer: If what you have described is an example of how you trade your method and how you are conducting your trading operations, then you will indeed have a very difficult time of making a "Consistent Living" from your trading.
If you trade based on your "feeling and emotions" then the fact of the matter is that you are; "Random Trading", based on your oftimes random feelings and emotions. If you are random trading, then you will never be able to understand your losses, nor will you be able to replicate your gains.
You need to take every single trade that your method signals in order to determine if you truly have a efficacious method, and a viable "edge" in the market. You must know that you are going to win this game, after a statistically significant series of trades, so that you can trade with "Confidence and Trust", vice "Feelings and Emotions".
For example; if you were watching a videotape of last years Super Bowl, and you saw the Seahawks leading the Patriots at any time....would you ever worry? Of course not, because you already know the Patriots are going to win in the end. The same is essentially true for trading a time tested statistically proven method, and experiencing a few back to back losses.
Don't ever sit at the "market table" until you know for a fact that the odds favor your method, and you should profit in the long run.
"The battle is won before the battle has begun". - Sun Tzu
Hope this helps.
KDASFTG
Simple answer: If what you have described is an example of how you trade your method and how you are conducting your trading operations, then you will indeed have a very difficult time of making a "Consistent Living" from your trading.
If you trade based on your "feeling and emotions" then the fact of the matter is that you are; "Random Trading", based on your oftimes random feelings and emotions. If you are random trading, then you will never be able to understand your losses, nor will you be able to replicate your gains.
You need to take every single trade that your method signals in order to determine if you truly have a efficacious method, and a viable "edge" in the market. You must know that you are going to win this game, after a statistically significant series of trades, so that you can trade with "Confidence and Trust", vice "Feelings and Emotions".
For example; if you were watching a videotape of last years Super Bowl, and you saw the Seahawks leading the Patriots at any time....would you ever worry? Of course not, because you already know the Patriots are going to win in the end. The same is essentially true for trading a time tested statistically proven method, and experiencing a few back to back losses.
Don't ever sit at the "market table" until you know for a fact that the odds favor your method, and you should profit in the long run.
"The battle is won before the battle has begun". - Sun Tzu
Hope this helps.
KDASFTG
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There isn't a way of defining (let alone of measuring) its edge, if it doesn't have defined exit parameters that would cover the answer to your original question. What you're saying is therefore a contradiction in terms.
I'm not attacking you or trying to criticise you - simply trying to explain that you don't at the moment have a clear understanding of how to go about answering the type of questions you (very understandably) have, because your category-framework for thinking about it is a deficient one.
I'm saying the same thing as Lindq, above - just in slightly different words.