The myth of letting your winners run

[volpri]

Ok last trade gotta hit the garden. Burning daylight outside. Averaged down long on a PB. Do you see why I grab the profits instead of twiddling thumbs? See what happened right after I exited?

 

[Laissez Faire]

Of course I have gotten it wrong and taken hits but losses are generally easy to get back. Double up and reverse. Muy pronto back in the money. My goal is to go with the market. The money will take care of itself. If I am not in groove or in tune with the market I gotta change. Not the market.

When averaging down it is imperative to do it in the right context larger and immediate and to ALWAYS have a spot you will dump it when wrong no questions asked.

In this case today larger context = bullish as gap up opening and it ain't filling much. Immediate context=sideways to up. Ripe for long scalps until that changes.

Sounds good.

Mind me asking what you typically average per day on the ES per contract?

I certainly do not average down at the moment, nor do I know if I ever will, but I do respect that there are traders like yourself and @Handle123 who seems to do it successfully.

The key with this as everything else in trading is knowledge and having a plan.

Reckless averaging down is a recipe for blowing up, but the way you do it seems reasonable.

 

[Tradex]

I have an extensive detailed journal. I am posting trades as they happen. Have been all morning.

You do have a thread about day trading, I am going to take a look:
https://www.elitetrader.com/et/thre...-trading-the-es-nq-ym-mes-mnq-and-mym.336259/

 

[volpri]

Here are the trades from a 30 minute chart and a 15 minute chart. Do you really think I am placing those little buy and sell triangles manually? 4 trades. Four winners. 2 averaging down. two straight scalps. All long trades. Locking in them profits.... cutting short them winners. averaging down them losers.

bye gotta get to the garden.

 

[Tradex]

@volpri Like I said earlier, letting winners run applies to pure trend-followers, not scalpers or range traders.

 

[volpri]

@volpri Like I said earlier, letting winners run applies to pure trend-followers, not scalpers or range traders.

Well it is in a SPBL trend (small pullback bull trend) as I type. Look Eastwood I gotta go. The garden calleth. If Ringo shows up take care of him for me.

 

[Tradex]

The garden calleth.

What? You want to make money scalping the e-minis or plant zucchinis in your garden?
What's the matter with you?
Just kidding.

 

[SimpleMeLike]

I hear you brother!

lol, I am glad you understand and I am not the only one.

 

[SimpleMeLike]

Excellent point, as this is by far the hardest part : when to exit a winning position?

The trader can use a trailing stop, a simple moving average, a Fibonacci level (for example exit on a 50 or 68% pullback), a previous swing low (for long positions), a previous resistance level, a Parabolic Sar indicator, a 3 bar low, an average true range (ATR) indicator or a break of a trendline, to name a few.

But again, only the backtest can reveal the optimal exit strategy to use for maximum profit and minimal risk.

Tradex,

You are 1000% right on this buddy. I have been testing the simple moving average exit method and trailing stop.

You right man. Gotta back test and see what fits you.

 

[Tradex]

I only trade stocks making new highs. Usually new 52 week highs

Be careful, studies show that buying stocks making 52 week highs (or lows) will not give you a very significant trading edge.

Here is a backtest that proves it. The author concludes : "However, at the very least, we can come to the conclusion that there really isn’t an advantage to purchasing a stock based on the 52-week high or low."

https://www.equitieslab.com/buying-high-vs-buying-low/