If your trading seems "death by a thousand cuts", I suggest your bias is wrong.
Why is hard to make money? Find trend, stops above previous/high low, TP @ next highs/lows
- Thread starter iamnewuser911
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If your trading seems "death by a thousand cuts", I suggest your bias is wrong.
Or stops too close
Not the most likely. If you're consistent about "fading rallies or buying the dip".. and you're getting lots of stop-outs, it's most likely because your market direction bias analysis is wrong.
I've never been able to structure a viable trading model around perceived overbought/oversold indications regardless of the tool. Same goes for chart patterns. I work strictly with price and momentum within specific time series, using volatility studies to handicap entry/risk/reward, actively managed by automated software. Different strokes for different folks I guess, so long as you manage the trade properly.
Good summary. I think its OK to set a sell criteria such as momentum fading, price falls out of channel etc but just assigning a sell price alone is rather crazy since you don't know if or when it will be hit. It would also be ignoring all the extra market and economic data from point of trade to when the sell price is reached.
People screw up and look for a better oscillator, another set of time frames, maybe Elliot Wave, Fib's, Gann...whatever. The solution is often in the mirror but it's a lot easier to work on the chart than the human. One has to fight through the fears, repression, ego, denial etc to get to the real deal and most will not go through that. Which is a shame as striving to operate at a higher level may well be the most valuable exercise you ever go through...trading or no trading. But without consistent discipline, focus, courage and patience, trading is largely impossible.
As much as I agree with most of what you say here at ET @Scataphagos , I do believe that targets is a strategy that is just as viable as letting the market tell you, especially with either small stops and targets, or when trading an instrument like the NQ which tends to have lots of spikes.
I have seen in my own stats that if I look at trades that make it +5 points before hitting my stop, if I look to see how many make it +10, the number of wins drops. Clearly, not every trade that goes +5 will go +10. If I set my target to +20, clearly even less will win.
The question of course is will those that hit +20 make up for those that did get to +5 or +10 but then had to be closed at BE or even at a loss. The answer to this lies very heavily on the type of day it is. There have been many days where you can try and get into a trade over and over again and eventually you're in and it goes +50. (for the NQ) But psychologically, knowing that you could have had 2 or 3 trades hit +5 and gotten that profit, but you didn't since you're holding out for more, is tough.
Plus, talking about win rates really only makes sense if you formulate the equation in a way that is like "chance of hitting +5 before it hits -3" or chance of hitting "+10 before it hits -5". If there is no target, then the win% is a function of all your closed trades at all sorts of different wins, which is fine, but its not a function of the win rate of what that trade could have done under different R:R profiles. In the end you have a stat that says I have a 50% chance of winning if I manage my trade properly and move my stop up properly and the market doesn't make an unexpected move before some swing point, etc., as opposed to a simple stat that says I have a 50% chance of this trade hitting +5 before it hits -3.
Of course in the end, both work just fine. The guy waiting for the market to take him out I believe has a smaller win rate, but bigger overall wins, whereas the guy going for small targets has a bigger win rate, but misses major moves sometimes. He has the added stress of re-entry, but he also has the benefit of banking profits along the way.
I do think it comes down to psychology, and which fits your profile.
Disagree.
It all comes down to "your position being in tune with the market" as best you can manage.
The market couldn't care less about "your profile" or "your psychology".
When your trades are very much in tune with the market, you make a lot of money with low risk.
But if "your psychology" hinders your ability to get in tune with the market, that's not "your profile"... that's "your problem" and needs to be addressed.
Sure, but what you describe is Utopian. Who actually trades without a single shred of feeling or emotion? Everyone knows they have a crutch and so its important to work within that framework. You can't be mad at a person with only one leg for not being able to run as fast as a person with 2.