trading paradoxes:newb to newbs

S

slowcpa

there are a few things i have come to learn over my extended 3 month career as a trader and i thought i would share these seemingly impossible yet true items with those behind me on the learning curve.

1. take a stock that start at T0 (time zero) and look at it in relation to where it finishes at T+1. seemingly its going either up or down to end at T+1. nothing else. just up or down. from the T+1 perspective there was a 50/50 chance of getting the right answer. you would think you have a break even chance when placing a trade. wrong. i have a long string of trades that result in a less than 40% win rate.

2. take a stock that start T0 at $100 and finishes at T+3 at $110. seems that would be an easy 10% gain. wrong again. i can show you that i bought at $100, it went down, i got scared and so i sold it at a low at T+1 and then it started to rally so i bough it again at the high at T+2 only to have it come back down to$110 for not just one loss but two

3 an 80% win rate does not mean you make money. if 80% of your trades are winners for 3 ticks and 20% of your trades are losers for 20 ticks then you still lose. ask me how i know

i write this now on a euphoric high as a result of hopefully taking a step in the right direction. my YM trades today were: 11 of 13 winners with an average run of 6.5 ticks, 1 break even, and one 19 tick loss. i know there is room for improvement and i hope i can keep this up over time. one day does not a trader make.

im just wondering as i a progress if the markets hold more twisted paradoxes for me to discover.
 
why are you letting your losers go? Your winners should be at least 1.5 times the size of your biggest losers. If your average winners are 6 ticks, then your biggest loser cannot be more than 3 ticks. It is not rocket science.
 
Yes, sounds like your doing it exactly the wrong way.

You need to let your winners run and cut losses quick.

One key thing, is getting the best possible entry - - that usually requires discipline and patience - but you must combine that with a lot of other important things .........might take another 30 months to get the hang of it - probably much longer to master.

I always recommend subscribing to this guy - http://youtube.com/user/SnP500Trader - the stuff he teaches works for ES, NQ, stocks, funds etc.

Best of luck!
 
If you want set 3 tick stop on YM you never traded it. Impossible /by manual trading/.

If you want high winning percentage you need have larger stop. It is obvious.
19 tick stop looks acceptable to me.
End result is what counts, not rigid rules.


Quote from STOCKKBROKER:

why are you letting your losers go? Your winners should be at least 1.5 times the size of your biggest losers. If your average winners are 6 ticks, then your biggest loser cannot be more than 3 ticks. It is not rocket science.
More...
 
Quote from slowcpa:

11 of 13 winners with an average run of 6.5 ticks, 1 break even, and one 19 tick loss.
More...

This way of trading has no future at all. It's like throwing darts at a wall of balloons but hoping that the dart will fly through the tiny loopholes.

It is infinitely easier to understand the underlying forces and flow with them instead of taking a beating up and down. What was the reason you took those 13 trades? Was the market changing direction that often on April 16? Come on, it was exploding up! It never changed direction on that particular day. What was so hard to understand about that? Buy it and don't touch this position.
 
Again bold statement without knowledge of trading system. If you will anticipate that OP has 20 point stop and assume by risk and reward 1:1 if you will analyse that trading day you will see as minumum 20 trades /both long and short side. If you will use such stop just to go long during rally up to 12900 you will be stopped out as minimum 5x. By 10 point target during trading day were much more opportunities than 13 and we all know that post factum is counting easy, during real trading we need more attempts.

OP did well job during that day. If he can repeat it, fine. If not you can try corrrect mistakes when he will be not sucessful and not when he is sucessfull

Quote from Palatine:

This way of trading has no future at all. It's like throwing darts at a wall of balloons but hoping that the dart will fly through the tiny loopholes.

It is infinitely easier to understand the underlying forces and flow with them instead of taking a beating up and down. What was the reason you took those 13 trades? Was the market changing direction that often on April 16? Come on, it was exploding up! It never changed direction on that particular day. What was so hard to understand about that? Buy it and don't touch this position.
More...
 
Pholeuon, you are right. I have no knowledge about systems because I refuse to follow orders from a box that is designed to interpret market activity in a scientific manner. The way I trade is purely based on my analysis about the battle between bulls and bears and I trade in the direction with the dominant participant. It is easy, it is consistent and in my opinion an everlasting way to trade because the battle will never end as long as the market exists. It has served me very well through many years of different market conditions.

Someone who understands this battle won't have to rely upon a system.

The poster "NoProblem" recommended a good page that is very similar to what I am emphasizing. Experienced traders tend to do what is more advantageous and I'm just here trying to help the newbies adapt to it.
 
very philosophical view of the markets....kind of like the battle between good and evil will never end as long as life exists.
 
Quote from Palatine:

Pholeuon, you are right. I have no knowledge about systems because I refuse to follow orders from a box that is designed to interpret market activity in a scientific manner. The way I trade is purely based on my analysis about the battle between bulls and bears and I trade in the direction with the dominant participant. It is easy, it is consistent and in my opinion an everlasting way to trade because the battle will never end as long as the market exists. It has served me very well through many years of different market conditions.

Someone who understands this battle won't have to rely upon a system.

The poster "NoProblem" recommended a good page that is very similar to what I am emphasizing. Experienced traders tend to do what is more advantageous and I'm just here trying to help the newbies adapt to it.
More...

Now what's wrong with a system? Some of the richest traders in the world trade based on the systems they created. Just read the trend following book by Michael Covel. The way the system traders trade, there is no struggle between Bulls and Bears, only the struggle to have enough conviction to take all of your signals. From what I've read, John Henry, the owner of the Boston Red Sox trades off of a system. He obviously made some nice cash using the system.

And your user name, is that in IL? I went to P.H.S. Go Pirates!
 
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