There are two common ways to do risk management - hedge (using stop loss) and diversification (by forming a portfolio)
Your thought process going into a trade
- Thread starter shotstakovich
- Start date
There are two common ways to do risk management - hedge (using stop loss) and diversification (by forming a portfolio)
Yep, any trader who are affected by psychological bias will lead to negative positions because they tend to rely more on luck.
I understand that it's part of growing stage for beginners but once you become matured then that will no longer be the case. Triple H always finishes with pedigree, Shawn Michael finishes with sweet chin, and the market trend reverses with double bottom/top. Anyway, if the volatility is not increasing and becoming flat then there is no reason to hold that becoming vulnerable trade anyway - just simply exit that trade
victorycountry
In the heat of the moment, market volatility does not matter at all. You enter the trade and wait to take action. A trader is successful rather the trade makes money or not on the trade. A trader is unsuccessful if enter or exit the trade unplanned or with emotional reasoning. Unless unplanned or emotional trading is part of the trader plan.
Yep, a lot of traders don't really know what the market volatility is. Only one ET member has mentioned it - Freak of Nature (he must be proud
).Most traders only focus on market liquidity (e.g. volume) but whether you believe or not, market is driven by both market liquidity and volatility.
That's simply the reality.
If you have a hard stop limit order (stop-loss) then volatility is already accounted for.
Personally speaking, from my experience any measurement of volatility is a lagging indicator, and markets undergoing extreme volatility swings are no place for real-time observations to then react and do something about a trade. I've seen too many guys freeze up, and I've seen too many markets dry up.
For me and my clients, we can have on several positions simultaneously, and so I insist upon stop loss stop limit orders being placed GTC at the time of trade entry. For the varied backgrounds and temperaments of my clients - this has proven the best approach.
As a side note, I teach my clients to set both profit targets and stop-loss levels based upon modeled trading range. If the entry skews the risk /reward for that modeled range, we take a pass on that particular entry. Since we model thousands of Spread combinations in virtually every electronic market, I want my clients to be selective with their trade entries. We get excellent results with that approach.
Personally speaking, from my experience any measurement of volatility is a lagging indicator, and markets undergoing extreme volatility swings are no place for real-time observations to then react and do something about a trade. I've seen too many guys freeze up, and I've seen too many markets dry up.
For me and my clients, we can have on several positions simultaneously, and so I insist upon stop loss stop limit orders being placed GTC at the time of trade entry. For the varied backgrounds and temperaments of my clients - this has proven the best approach.
As a side note, I teach my clients to set both profit targets and stop-loss levels based upon modeled trading range. If the entry skews the risk /reward for that modeled range, we take a pass on that particular entry. Since we model thousands of Spread combinations in virtually every electronic market, I want my clients to be selective with their trade entries. We get excellent results with that approach.
Doesn't matter if it's an election or forex or stocks, the underlying process is the same.
Institutions know the money flow and can pick off more or less any point they want.
Relatively simple with an institutional indicator, which I have, picking off pulls from irrational.
All discretionary, algorithms, HFTs work on this basis, success is picking exact flow points.
I always wonder this part.. which institutions? There was another quote you made where I asked, and you didn't reply, which was the question about how the big guys have already left the market and that it was obvious in the chart you posted.
But what you say here again makes me really wonder for 2 reasons. First, from the info that I have scanned in the headlines and such, most hedge funds aren't killing it, and many banks don't have the trading revenues they used to. So which of these magical institutions are the ones raking in all the money and hence responsible for the money flow?
Second, we know the retail trader is a small fish... correct? So if the big boys have left, who is buying up all of these contracts or stocks? If the price doesn't crash, which it hasn't, and yet all the big players are gone, how can the price be help up? It can only be one big buyer selling to another big buyer.
But if you can provide more explanation, I'm all ears.