This is a good question, and a fair question, and a knowledgeable question, and its something i always battle with my mentor whose a swing trader over, because in his eyes, hes looking at dailies for entries, while im reading 2 minute charts for entries, based on the daily.
The thing is im always looking for a chart first off based on the daily chart,then a setup on the 2 minute.
Then im looking at all the indicators/variables, then im making a decision, is it headed higher or lower?
"Which way is this stock going?"
"Does it make sense for the daily to put in a reversal or a breakout here?"
"Does it make sense based on a catalyst for the stock to move higher here or reverse?"
"Does it make sense based on the only indicators i follow (Volume, Support/resistance, 50 day, 200 day, VWAP, and price action) for this stock to reverse or move higher here.
Obviously Ive shown that more often than not, I am very good at picking spots where its going to go my direction for a little bit, I.E. good at picking S/R levels, and capitulation levels.
But way more often than not, i feel like im good at picking that direction on a short term basis BECAUSE i know where its headed on a little bit longer term of basis, but im obsessesed with nailing stuff with size, thinking im going to hit my homerun where its effortless.
I think also with this journal ive had a tendency to try to size into shit way more aggressively thinking i need to do over a thousand bucks a day in order for it to look impressive, where as really your goal as a trader shouldnt be as much about trying to hit bigger winners as it should be about hitting smaller losers, when compared to your winners. I just see the numbers coming from the guys im close with, and my numbers are a total joke, so i make the assumption "Everyone must be on that level" When in reality more than 90% arent even making money.
The best answer i could give is i have no clue if its going to keep going, i think i said this already once when propositioned with a similar question about why i scale out on winners. The thing is im really good at finding good entries, but really bad at finding good exits, once you get into a stock it becomes much harder to just put emotion aside and read it properly.
So i know there is some way i could do it better, it doesnt necessarily mean hold everything, it just means hold winners a little longer, and try not to get so panicky on shit when it turns into a winner.
It really is a fucked up mindset, but i feel like im more in control when im holding on too a loser, cause i know my exit point, i know my levels, i know my assumption in the tape, so i feel fine when im holding on too a loser cause i feel like im in control and i know my spots to double up and size in, or else stop out for a small loss, but i feel like the second i get a winner im like a GRANDMA at the slots, just desperate to get out and pay myself because i feel like i just popped two nickels in and managed to cheat the system, lol. I dont know why this is the way i feel but it is, it might come from the fact that ive had so much shit blow up on me over so many years, and i just have to many battle scars to make it anymore.
The bottom line is that The people who can read an exit as good as an entry before they have a position are the ones who become legendary traders.
If you can look at a stock, when you already have a massive position, and instead of saying "Here is where it might screw me" and change the mindset too, "Would i go long/short here if i didnt have a position"
And if the answer is go long, you buy/buy out, and if the answer is go short, you sell/short.
That is where the best in the business crush us mere mortals they can look at it like that and take their 70% edge to enter the position, then the 70% edge when they exit the position, instead of just piecing out of it at all the points that look bad.
Good trades tend to work right off the bat, bad trades make you fight, when i look at all my best trades i nail the top add a couple times, then slowly exit, but it seems like any time i get caught in the middle and it turns into a fight i struggle to hold on too the winner after i put up the fight.
Hope that answers the question.
Next week, just as an excercise, im going to cut my size down to a couple hundred shares, and pick spots, and just try using a "Time Stop" I think on most of my positions my ideal hold time is about an hour and a half, based on some numbers i have taken. I.E. in an hour and a half the stock will peak if its going too, otherwise if its a loser just stop out at the original intended point.
Ill see what the profit per share is, i just dont want to do it right before/after the fed.
Out of curiosity, how do you know price is going to continue in order to get more profit from holding longer? This is more of a question rather than a statement.
Your chart for this last post doesn't show, but even if we look at a previous chart you posted in this thread where you got out of your short for a profit, and yet it still dropped further, what was the indication that holding will be beneficial?
https://www.elitetrader.com/et/threads/the-super-terrific-happy-hour.309621/page-33#post-4471029
I have always wondered about when people get into a trade and keep holding it, and win big, is it because they knew it was going lower? Did they perhaps just get lucky? Did they maybe trail their stop above the highs or lows and hence keep riding it?
Likewise, did anyone know on Friday how hard the NQ would fall? Sometimes, although not lately, it has 100 point days, but Friday was over 200 points in that drop, and although there were lots of explanations as to why, there is never anything just before, or even during the event to guess at how low it will go.
Saying all this, I think, its impossible to know. If you're a swing trader, then perhaps you can have a level from an hourly chart to use, some sort of obvious support or resistance that you think will be tested once it gets going in that direction, but the swing trader never knows when it will hit. He simply places his OCO trades and waits for one to hit. A day trader doesn't have the luxury of waiting for this multi day move, so he often has to use targets that through his testing work statistically most of the time.
Now certainly the short could set up again after you exit the first time, but this makes it a whole different trade. If we consider that you shorted NVDA around 153 and it got as low as 146, does it make sense to always wonder holding for a $7 profit? This on most days wont work, and as day traders, don't we have to do what works on most days rather than waiting for rare events? I can tell you that for ES, my chart going into each day is 15 points wide from high to low. Sometimes price shoots higher, and I have to scroll it down a bit, but rarely do I have to expand it so that I can see more than 15 points from the low to high because we simply don't get this range. So if I was hoping for 10+ point moves, I would be waiting a long time because on most days, the trade wouldn't make to a 10 point profit and more than likely either stop me out at BE or for a loss before a generous target is reached.
Now if someone can of course outline what they use to foretell which days will have killer wide moves, then I'm all ears.
