Working on Consistent Profitability

[BCE]

tlow,

To reduce the whole thing down to the absolute basics (you probably saw this in the CL thread) just ask the Magic Eight Ball. Period. Why bother with technical indicators, stops, psychology, etc.? Wondering which way the CL is head or what level it will reach? Ask the Magic Eight Ball. And above all DON'T go against the advice of the MEB. http://web.ics.purdue.edu/~ssanty/cgi-bin/eightball.cgi

 

[tlow]

Quote from Redneck:

Tlow

Trading is not hard – we make it hard – or not


Okay so patience was an issue today (took bad / late trades) – have a think on that this weekend please




You are growing your brain - like any other muscle... and like any other muscle that gets a work out - it hurts afterwards

But that will subside in time..

One foot in front of the other - always

eta;

I’m having a rather lengthy discussion about stops on another thread (yee haa)

Bottom line – if you can find a fixed stop setting and use it… it’ll free upthinking about stops… so you can focus more on entries - for now

(and if you want help finding one just pm me)

RN

im not sure how to put this...basically, i like my stops to be above/below a local/minor/major s/r area for any given trade. If that s/r zone lies to far away, say 20 ticks, im not going to take the trade. So I guess my entries and stops go hand in hand. I can't really think about one without thinking about the other. Am I thinking about this wrong?

let me go over today's trade I talked about earlier b/c I think it was a good example.
9:31- Long 97.26 Stop 96.09 Target 97.70 then .78 then .95
9:35- Stop to B/E
9:36- Stopped out at B/E...+1 tick

So from start to end...Entry, wanted to get in off support on that rising channel, a bit slow moving..the previous peak didn't make a H/H so i wanted to be tight on the entry in case it blasted downward thru the channel. I figured the support was at 97.12, so i wanted to make the entry 97.13-.17. normally, I just send a limit order and forget about it and wait and see, but the market has been moving so fast the past couple of days its made me really uncomfortable and that may be where some of the problem lays. Anyway, price came down to .10, then I started overthinking/overanalyzing. Tried to get in at .17 but didn't happen. Then I waited for some more confirmation...got a nice reversal pattern and confirmation all over the place on the 1, 2, 3, 5m charts...probably too much confirmation So I entered at .26.

Price gave a quick wiggle down to .21 then shot up rather quickly to .45 then I moved the stop....and got stopped out like 30 secs later.

So the my entry on the trade was still valid (albeit a bit late) even though it approached my outer limit of what I like to set my stops at but I didn't think about moving the stop to a s/r area...I just moved it to b/e. Also, back to my entries, I think had I been in the .13-.17 level, the need to move the stop wouldn't be as strong since my stop would've been tighter in the first place right below the.10 (or even .05 from the previous valley) level where the latest support was developed...or maybe thats just what Im telling myself ...Either way had the entry been better, I would have kept myself in the trade, whether I moved the stop to B/E or not.

 

[Redneck]

Quote from tlow:

im not sure how to put this...basically, i like my stops to be above/below a local/minor/major s/r area for any given trade. If that s/r zone lies to far away, say 20 ticks, im not going to take the trade. So I guess my entries and stops go hand in hand. I can't really think about one without thinking about the other.


Am I thinking about this wrong?

Yes, no, and maybe

The final say so is yours – obviously


Below is a copy of what I posted in the other thread – see if any of it makes sense (rings a bell)… if not – no worries

=================================================

Another thought to add

As you get more experienced you can always take smaller stops within your "fixed" stop - our Protect capital first mantra


But right now it "may" be beneficial to use a fixed stop to;

Free up your mind (your thoughts focus - as it is a set it and forget it Ron Popiel approach) and allows you to focus on PA

Get use to taking a stop and not missing a step

Acquire the patience it takes to use a fixed stop and still get the appropirate reward to risk your looking for


just something else to ponder - 9 million and counting

RN

Quote from Redneck:

Why fixed stops for the plain jane day trader

1.) Having a random stop, means you think you can control / second guess the market / a given trade’s outcome (if only I give this one more room, it’ll work… ah this one however needs less room)) – you can’t

2.) Traders are risk managers first – using a moving target stop loss; negates – that responsibility…, that tool…, and that ability…

3.) If I have fixed cost, I can manage that… If I have random cost, no one can manage that…

4.) Stops are the only control we have once we’ve entered – you want a sledge hammer…, or a rubber hose - to exert that control

5.) Fixed stops help get your mind off of the money…, and instead focused onto the task of trading (never do I think about how much I may lose for any given trade, I already know... The ONLY question I need ask is; Do I want to risk this much to see if this trade will work – yes…, no)

6.) Using a fixed stop.., also means you need to wait (patience is a VIRTUE when trading) till conditions are right for your entries…

Either that.., or you can read price well enough to get in under the current conditions, knowing your fixed stop will give enough buffer to reasonably allow the trade to work… or fail

7.) If you find you need to use a variable stops based on market conditions – your trading skills suck – period



=============================================================================================
Admittedly there are times I use B/E stops – (this trade will work or it won’t – but I’m not willing to spend any more than commissions to find out) so technically I do adjust my stops… BUT

I never increase/ decrease my default stop…, or move it once I set it, unless my first target is reached… and my targets are solely based on PA…, not some pie in the sky BS I may be thinking about/ assuming will happen… (you are a long way from this)

And my default stop – is a set $ amount – that I know – is just outside of the typical move – in what I trade – within the time frame I trade it…

Now if you thought about that last sentence – a light bulb should be going off regarding the next trade I place – when I’m stopped out for a loss – under typical conditions

=============================================================================================
Random stops are nothing but a band aid, and crutch – for poor trading skills

I know you’re thinking – random hell I pick them based on the current conditions

You are fooling yourself…

Either trade price…, or you opinion – doubtful you can do both - I can't

Feel free to blow holes in my comments – it is your money…, and your choice…

RN

 

[tlow]

hmmmm....more stuff to think about...

I would argue that although my stop is not "fixed" there is a max, normally its 15 ticks, the last couple of days I've pushed it towards the 20 tick range, but that makes me really uncomfortable so i've been trying to wait for set-ups that allow for my 15 tick and under stop, ...so I guess in a sense it is fixed and I do have to wait for set-ups to develop based on that max stop rule. Over the long run the avg stop works out to around 10 ticks.

NoD and couple others have suggested just don't move to B/E and try it for a couple days. It comes down to my emotions a lot of time the time and I've said before the B/E stops just feel like a safety net for a poor trade.

Maybe I will actually follow thru with that and not move to B/E unless a 1st target is hit. Which brings up a whole other arguement, but if I hit a 1st target I should be walking away with something, so at that point I just need to make sure to let PA dictate when I exit if price comes back against me. I haven't really spent any live time actually doing this...so if my emotions can handle it maybe I will try it next week. I believe they can if I keep everything in check... Ahhh more stuff to think about.

 

[Redneck]

Yeah

I never move my 'fixed" stop to B/E... it is set wide enough to allow for normal wiggle in the time frame I trade..., but no more than that..., and yet still small enough that several in a row won't affect me (money, or mentally wise)


When I use a B/E stop - it starts out B/E - the trade's either going to work.., or not... - and I'm only willing to pay commission plus a penny)

==========================================

Technicially it is not B/E (I would be exiting as soon as I entered) it is never no more than 2 cents

(think immediately the other side of where I enter, such as a S or R line)

I just call it B/E - I should have been clearer in my description

RN

 

[bigsnack]

Quote from tlow:

let me go over today's trade I talked about earlier b/c I think it was a good example.
9:31- Long 97.26 Stop 96.09 Target 97.70 then .78 then .95
9:35- Stop to B/E
9:36- Stopped out at B/E...+1 tick

[/B]

Tlow,

I guess it depends on what time frame / tick chart you are using, but you seem to be getting taken out right when everyone who waited for confirmation is just getting in!

I use tick based charts, and right where you got taken out for break even is where I was setting my limit order for a fill to get in. There are a couple of different ways you can interpret the entry, but basically just using price you can either see a micro level of resistance turning to support:

Or you can observe it as a bearish trendline break:

These instances are important because of the context of where they are happening (support).

Again based on my chart, I haven't been bringing my stop to b/e until I see a confirmed R to S / S to R break (i.e. higher high or higher low). In this instance that would be around 9:46 or so when we cleared the 97.50's. Once you have price action on your side, I personally see no reason why you shouldn't be able to bring the stop to b/e

 

[Redneck]

BS,

I wonder if using that small of a time frame going to give him the heebie jeebies (happy fingers)

I remember back before I learned to see smaller time frames as the foundation on which bigger time frames are built – that I traded with smaller TF for the "action” (google juice if you will)


Your thoughts

RN

 

[bigsnack]

Quote from Redneck:

RN

Yeah, I see the concern there. The last thing that I want is for someone to think you can just trade every TL break and be filthy rich. This is exactly why last week I asked about what tlow is using for longer term support and resistance. Once we found support at 97's, I ignored shorts and kept hammering away at longs until we traded to 97.85's. Without that context, I would have taken my own fair share of b/e's

 

[NoDoji]

Quote from tlow:

Hopefully, a bit of rest over the weekend and I can put together a couple of good trading days next week (of course, I may not be around b/c of my real jobby job)

You have no business day trading CL while holding down another job. I am 100% intensely focused with this thing, memorizing S/R levels in 4 time frames - 2 of those time frames being very dynamic - with no room for distractions or hesitation.

I always thought the Holy Grail was a set of instructions and rules for profitable trading that experienced traders had mastered, but I've developed all that and shared it with many people here over the past year, and I realize now that the Holy Grail is one's ability to be passionate about trading and fully focused on it day in and day out.

It's a lonely path and everyone has to find their own way. Everything you need to know technically and risk management-wise is available in books or on line. The ability to translate knowledge into action is 99% perspiration. There is no easy path; no one can do it for you.

You sit with all your friends watching a pro football or basketball game and you're all talking knowledgeably about every play as if you yourselves were professionals. But it's years of practice combined with passion and certain physical gifts that translate into the ability to excel at the highest level in the ultra-competitive and financially lucrative field of sports.

If you can't dedicate your full attention and passion to trading, put it on hold until you can. It takes that 10,000 hours of practice combined with passion and a gift for pattern recognition that translate into the ability to make a living at this.

 

[NoDoji]

Quote from tlow:

let me go over today's trade I talked about earlier b/c I think it was a good example.
9:31- Long 97.26 Stop 96.09 Target 97.70 then .78 then .95
9:35- Stop to B/E
9:36- Stopped out at B/E...+1 tick

So typical of you - a perfect price action entry off a trend line, waiting for confirmation via a break of the bar that touched the trend line, which tells you there are enough buyers who believe in the trend to keep it going there. What reason do you have for moving your stop before price tests previous resistance of 97.70? That's your initial target zone.

There is no emotion involved. When you put on the trade, you decided it was worth paying $170 per lot for a chance to earn at least $400. If you made that decision, the only reason to get out early would be if price set up a reversal signal. I don't see any 5-min price bar that violates the low of a previous bar once the pivot occurred, the pivot where you went long and with good reason.

If you're compelled to move your stop and get stopped out b/e, just get right back in at the same price if price doesn't run more than .05 further from that level. When entering a trending move on a pullback, price will go back retest your confirmed pivot entry 90% of the time. Either leave your stop in place or be ready to re-enter quickly. My seven months of analysis demonstrated that leaving initial stops and targets in place produces greater profits over time than moving stops to b/e.