To what extent do you use indicators?
- Thread starter IronFist
- Start date
Indicators are only as good as their interpretation. Through years of looking at the same charts time after *bleeping* time my mind is trained for pattern recognition and I'll know in a split second whether I want to be in the stock (swing trade) or not just like a hitter decides in a few hundreths of a second whether it's a good pitch to swing at or not. All it takes is a few decent trades and your confidence builds and then you're on a roll. It's all about training your mind for pattern recognition, in essence an automated system in your head. JMO.
Rule 1: Manage risk
Rule 2: Sometimes you're the pigeon, sometimes you're the statue!
Good trading,
MOB
Rule 1: Manage risk
Rule 2: Sometimes you're the pigeon, sometimes you're the statue!
Good trading,
MOB
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Agree Buy1Sell2;
except could word#1.price action[price being first]]with indicators
Indicator like ma does show trend well;
buti like ma to underline/overline price, not replace it.
And #3 is probably better on short side;
but in strong ,early uptrend/bull market scale out can be a practical way of letting some profits/ winners run.
Friday was a good place to sell all[not scale out]ES longs;
cause no matter how long this bull market lasts, its rather mature
Quote from Buy1Sell2:
If a trader feels that the trade they are in warrants having part of it taken off, then it really warrants taking off the whole trade. Winners are where the money is. They must be allowed to ride. Thanks for the question.
B1S2,
The markets are not that accomodating where one can simply state that scaling out decreases performance....And these are the numbers talking..
I would agree that one should let winners ride,but you must define ride..For an EOD trader with a longer perspective,does ride mean 1 ATR?? /10ATR..20%?? 70%??
Run thousands of backtests and of course there will always be some "hypothetical" scale out point that maximises return. Is there a flat plateau in the optimisation graph which would indicate with some level of confidence that scaling out may be the correct path. And if that level is 50% or greater,would you consider that "letting it ride"??
Also,when you backtest,do you run long and short positions at the same time to validate scaling out/NOT scaling out?Obviously if one doesnt,depending upon what type of market one is testing on will skew results dramatically...
Last but not least,are we speaking strictly in terms of Net Profit when deciding upon scaling out or not?Are we ignoring volatility of returns or the smoothness of ones equity curve?
B1,I have seen no statistical validity to scale or not..The markets are too efficient to have one style be more profitable than the other...In the end,all it comes down to the other points you brought up as well as the method that one can emotionally live with
1) Take some off if you have too large of a position, or take some off if you are up 100% to lock in some of the gains.
2) Take some off if you have a margin call.
3) Put more in if your stop loss has not been reached and you still believe that you were right in the 1st place.
4) Put more in to lower your average price on the trade.
5) Be careful not to end up holding losers and selling winners. Some actually will add to positions that go in their favor. You may have a lower win% but you will have a higher amt of profit for your winners.
2) Take some off if you have a margin call.
3) Put more in if your stop loss has not been reached and you still believe that you were right in the 1st place.
4) Put more in to lower your average price on the trade.
5) Be careful not to end up holding losers and selling winners. Some actually will add to positions that go in their favor. You may have a lower win% but you will have a higher amt of profit for your winners.
OOH. You were doing so well. I was right there with you.
* never exit a trade with a profit, continue moving stop in direction of the trade until the market takes you out. Livermore said, "being right and sitting tight, that's where the money is".
* Taking a profit at a target (or scaling out) is speculating on the future when it is not necessary to do so. If you believe it is not worth keeping your whole position on, then why wouldn't you just exit all of it?
* The amount gained by staying in the market that trends beyond expectations far exceeds the times when you are taken out with less profit than a target would of produced.
Instead of giving advice, I'd like to put it in the form of a question.
Do you think indicators are better when used for exits?...
cm69
Do you think indicators are better when used for exits?...
cm69