Tired of Cutting My Losses Short
- Thread starter enkidu
- Start date
rolextrader gets the big prize this year for his post. it's one of the most valuable things said on this forum in 2008.
you NEED to identify those non-random situations... and thank god, if you look for human emotions on a chart, you'll find those situations too....
big up rolextrader.
you NEED to identify those non-random situations... and thank god, if you look for human emotions on a chart, you'll find those situations too....
big up rolextrader.
"Cutten" said it perfectly in a very brief reply. "reduce the size and widen stops".
Instead of 1000 shares (or 10 contracts) use 300 share size (or 3 contracts). If stop was say 90 cents ( or say 9 Ticks) change it to $1.8 ( 18 Ticks). In futures, if you are not capitalized enough to trade multiple contracts ( at least 2-3) - chances of success are slim because you can't scale in and scale out.
Don't give up, you will find a solution that fits your personality.
Instead of 1000 shares (or 10 contracts) use 300 share size (or 3 contracts). If stop was say 90 cents ( or say 9 Ticks) change it to $1.8 ( 18 Ticks). In futures, if you are not capitalized enough to trade multiple contracts ( at least 2-3) - chances of success are slim because you can't scale in and scale out.
Don't give up, you will find a solution that fits your personality.
First of all, this is my first post.
Anyways, the approach I found best corrected the same problem I had was twofold:
1.)Very small initial position with excellent entry price.
2.)Hard stops where I am assured my trade thesis is wrong.
I wait for excellent entry prices - meaning, I don't catch falling knives nor do I stand in front of rallies. I've found that if a price has been somewhere, it's highly likely it will be there again to give me a chance for an entry before going somewhere else.
I use a small position that I don't mind losing 5, or even 10 ticks on. However, if I'm in at the price I waited for, it's usually no more than 4 ticks. I set my stop right after I'm in my position at the point where my trade thesis is wrong. I don't change it.
After that, it's about adding to your winner, and carefully managing your position with trailing stops.
Lather, rinse, repeat. You'll have a series of small losses on consolidation days, and you'll put yourself in the position to catch the big winner on a trending day.
Anyways, the approach I found best corrected the same problem I had was twofold:
1.)Very small initial position with excellent entry price.
2.)Hard stops where I am assured my trade thesis is wrong.
I wait for excellent entry prices - meaning, I don't catch falling knives nor do I stand in front of rallies. I've found that if a price has been somewhere, it's highly likely it will be there again to give me a chance for an entry before going somewhere else.
I use a small position that I don't mind losing 5, or even 10 ticks on. However, if I'm in at the price I waited for, it's usually no more than 4 ticks. I set my stop right after I'm in my position at the point where my trade thesis is wrong. I don't change it.
After that, it's about adding to your winner, and carefully managing your position with trailing stops.
Lather, rinse, repeat. You'll have a series of small losses on consolidation days, and you'll put yourself in the position to catch the big winner on a trending day.
Good post! If I recall correctly, one trader in the book "Market Wizards" followed a similar strategy in bond futures. Start small, add to position and move stops along the way.
Quote from 99GoNavy99:
First of all, this is my first post.
Anyways, the approach I found best corrected the same problem I had was twofold:
1.)Very small initial position with excellent entry price.
2.)Hard stops where I am assured my trade thesis is wrong.
I wait for excellent entry prices - meaning, I don't catch falling knives nor do I stand in front of rallies. I've found that if a price has been somewhere, it's highly likely it will be there again to give me a chance for an entry before going somewhere else.
I use a small position that I don't mind losing 5, or even 10 ticks on. However, if I'm in at the price I waited for, it's usually no more than 4 ticks. I set my stop right after I'm in my position at the point where my trade thesis is wrong. I don't change it.
After that, it's about adding to your winner, and carefully managing your position with trailing stops.
Lather, rinse, repeat. You'll have a series of small losses on consolidation days, and you'll put yourself in the position to catch the big winner on a trending day.
Best advice here! (Forex is worst advice here FWIW)
Adding to that, add small increments in size to your winners as they prove themselves while then narrowing your stops each time you add, and don't be afraid to get back in a trade - with small starting size - you were stopped out of if it turns again.
Quote from 4DTrader:
Let me tell you a secret of Wall Street, or rather a conspiracy: The big players have created the belief in retail traders that they must set a stoploss and take a loss whenever the stoploss is triggered. This conspiracy is to rob the retail traders.
Think about it: if retail traders never take loss, and choose to wait for the market to come back, the big players on Wall Street will never make money, and the brokers will have little commissions to make.
To take money from retail traders, big players must convince them to terminate their trades at a loss, the more frequent, the better.
Be Smart, don't be deceived by the Wall Street conspirators.
I am sure some Wall Street lap dogs will attack me for exposing their dirty secret.
Finally someone who also shares the same true view of how the stock market actually opeprates, and how you make money consistently, not just lose little bits everyday.