Trading Naked - Part 2

Bloodhound

Bloodhound

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As promised I thought I'd start a thread to follow on from the previous one to look at trading without all the frills - i.e. Keeping it Simple.......

Everyone is welcome as are any timeframes, markets etc.

All I'd ask is that we try and avoid getting into non-nudist stuff such as:

fundamentals
fibs
Japenese candlesticks
chart patterns
trend lines
MA's
oscillators
etc., etc., etc.

that would be great as it will keep the thread 'on message' so to speak!!

Also, as Tenbob called it in Part 1, 'paper-tiger' trading is more than welcome. Some of us from the previous thread are already doing this sort of thing for real, but others may still be seeing if it fits with them so hopefully this can be a place to experiment and discuss, as well as just post countless charts of our successes or (in my longer timeframe adventures) failures!!

I'd also like to see if we can look a little more at money and trade management as this seems to be rarely discussed. In my own trading to date, the thing I have found is that I tend to always look at my first entry as a shot across the bows - it's what happens next that seems to dictate if I end up making money or not. In other words, loading up on the winning trades and cutting the losing ones quickly. It would be great to hear / see others' views on this.

To anyone reading this who hasn't read the previous thread, I have found that this style of trading (to those it suits) can be incredibly relaxing in some ways and, to this end, it would be great if this thread could reflect that. In other words, arguments, attitude, egos, flamers etc. aren't welcome here IMVHO. For me, trading this way is about horizontal levels of price and the more horizontal I get, the more laid back I get :)

All the best

Rob
 
And to start things off

I've had a quick scan of some charts to see if anything leapt out at me and came up with this one.....

audusd - 091025 weekly a.gif
audusd - 091025 daily a.gif
audusd - 091025 h4 a.gif
 
Cool, Part 2!

Hi Rob

Haven't been on T2W for a while, just read your last thread, good to see I'm not the only one who likes my charts (mostly) naked!

Looking forward to Part 2...

All the best

Julie
 
I see your wondering off to the higer timeframes again kite, and who can blame you I often find myself staring at the set up on the 4h chart and thinking omg that would have netted me 800 pips:-0
 
Kite - would you set a one cancels other order above/below the channel contained within 4 hour chart?
 
jel31 said:
Hi Rob

Haven't been on T2W for a while, just read your last thread, good to see I'm not the only one who likes my charts (mostly) naked!

Looking forward to Part 2...

All the best

Julie
Click to expand...

Hi Julie,

Look forward to hearing more from you!!

All the best

Rob
 
neil said:
Kite - would you set a one cancels other order above/below the channel contained within 4 hour chart?
Click to expand...

Hello Neil,

That's a really good question IMO. If this were an M5 intraday chart I would definitely be looking to both sides but, and this is where I am falling back on some excellent advice I was given courtesy of the previous thread, what I do on M5 and what might apply further up the food chain are possibly quite different. To that end I am looking at this chart and the meteoric rise from a year ago and thinking that I would like to see a lot more confirmation before shorting - hence the comment on my chart about wanting to see a break and retest of 9180 before committing to a short position. My alternative plan involves watching how things develop later tonight and into tomorrow with a view to an OCO BUT moving my stop very swiftly to b/e. I guess, at present I'm just not seeing a convincing enough picture to start selling but there's every chance I'll get it wrong!!

All the best

Rob
 
Elefteros said:
I see your wondering off to the higer timeframes again kite, and who can blame you I often find myself staring at the set up on the 4h chart and thinking omg that would have netted me 800 pips:-0
Click to expand...

I may be wandering but, as I was advised to do, I am treating this higher tf stuff as a hobby. M5 is still very much where it's at for me :)
 
kitejedi said:
In other words, loading up on the winning trades and cutting the losing ones quickly. It would be great to hear / see others' views on this.
Click to expand...


Hi Rob


Noticed this but you've also been saying that you've been cutting trades too quickly......

I haven't got the answer but, i'd hazard a guess that what you mean is that you get short, it goes 10points onside before creeping back to entry, so you get out at BE, it then goes 5 points offside before turning and shooting off 50points to the good. Is this what you mean?

Well i'd guess it's a toss up between taking a few more hits of -15 to but then capturing a few +50's, or missing a few +50's but then also missing the -15's. You can't win 'em all.

I think you need to find which one suits you better as when you switch it's XXX law that the one's you cut will be the runners.

Hope thats what you meant...if not sorry for sending the thread the wrong way.
 
Hi Foredog,

Re what I posted originally TBH I was thinking more in terms of a little further down the road, once a trend looks like it may be 'established', and how one deals with loading up etc. as I am always aiming to score big on the winners and interested to see how others play it, or foresee playing it. That said, you've raised a really interesting point and one that has been vexing me of late.

When I first started trading M5 I went in using what I call logical stops - in other words if I were going long then I would place my stop where price was telling me I should perhaps go short (see below).

gbpusd 091013 m5 - stops.gif

As I started to trade cable M5 more I realised I could generally get away with fixed 20 pip hard stops. This wasn't an arbitrary number, but one calculated using 50-60% pullbacks from cable's average swings of around 30-40 pips. This was great as it meant for higher returns etc. BUT, whilst being good for my P&L it has actually been causing me some problems:

1) I am getting very stressed out in the early stages of a trade (first second to 5 minutes), which is not good and can only lead to emotions coming into play. No matter how cool, calm and collected I may think I am, I'm just not!!! You may recall that M1 chart of cable I posted a couple of weeks ago - all looked so damn simple in hindsight but it was not an easy few minutes for me as that breakout developed!!
2) Because I am getting so stressed about cutting losers quick it is clouding my view of price, and I have been missing some blindingly obvious 'footprints' along the way.
3) Whilst using a 20 pip hard stop has been great for P&L / returns to date, I fear that, due to points 1 & 2, it may become an issue for me further down the road if this perceived 'stress' develops further.
4) I should add that this stress is not panic or anything like that - more that I have an annoyingly logical brain and a 20 pip hard stop is not logical enough for me!!

Anyway - it is an interesting dilemma but I am actually erring towards having wider stops again to allow myself (not the trade) more room to breathe. As you can imagine, this sort of decision could have a major impact on my trade and money management once the trade is rocking along as the winners have to pay for the losers.

Hope that all makes sense and thanks for raising what I think is an extremely pertinent point, regardless of market tf etc. I had always aimed for as tight a stop as possible but am starting to learn that this may not be the best stance for me personally to take.

All the best

Rob
 
Last edited:
kitejedi said:
Hi Foredog,

Re what I posted originally TBH I was thinking more in terms of a little further down the road, once a trend looks like it may be 'established', and how one deals with loading up etc. as I am always aiming to score big on the winners and interested to see how others play it, or foresee playing it. That said, you've raised a really interesting point and one that has been vexing me of late.
Click to expand...

"Loading up" or adding to a position is the weakest aspect of my trading.
My win rate on additions is lower than for my other trades. Even when I think I am being objective I have come to realise that just having a position in the first place must skew my judgement a bit, so I am much more cautious lately if I want to add.
 
elitejets said:
"Loading up" or adding to a position is the weakest aspect of my trading.
My win rate on additions is lower than for my other trades. Even when I think I am being objective I have come to realise that just having a position in the first place must skew my judgement a bit, so I am much more cautious lately if I want to add.
Click to expand...

Hi Nic,

As you know my way around this is to psychologically treat each new set up (entry) as a new trade. One thing I have found, and this follows on from what I was just saying about stops, is that when I use 'logical' stops for my additional positions everything is fine but when I try and use tighter stops I invariably get caught / stopped out. The downside for me might be lower returns, although I have been looking back over the last couple of months' trades today and it is amazing how many times my T2 additions get stopped out when they needn't have been, because I was trying to add with too tight a stop. No matter how I look at it I always come back to HrH's, HrL's, etc. Maybe I'm not quite the 'rat' I thought I was!!

All the best

Rob
 
I think the best way for you to solve this may be to either take every trade as you do at the moment but make a note of how trade would play out in real time with other strategy, eg if you're stopped out for =20 but a logical stop would've kept you in make note, but remember to compare size etc becasue the logical stop may mea half size of 20pt.

Or

Open two trades , one following the favoured strat and one of min size of the other and then that will be a live test and then compare the results, although again the size thing would come in as you wouldn't always be tranding 50p per point.

After a month I'm sure there would be a logical conclusion with the results.

Or maybe not.......
 
foredog said:
Or maybe not.......
Click to expand...

Thanks for the pointers but the above quote is about where I think I may end up!! In truth both methods work and both stack up. I think at the moment I'm favouring logic over 20 pip hard stops but that may have a lot to do with the fact that I'm moving house in 10 days time and am looking for a stress free environment at the moment lol!!!

I think this is one of those issues which is more about me than cable....
 
kitejedi said:
.....

Anyway - it is an interesting dilemma but I am actually erring towards having wider stops again to allow myself (not the trade) more room to breathe. As you can imagine, this sort of decision could have a major impact on my trade and money management once the trade is rocking along as the winners have to pay for the losers.
.....
Click to expand...

re: having wider stops to allow "myself" to breathe, not the trade.

That is so insightful.
The real tension is when the stop-loss is about to be hit, and you're wondering "will it hit the SL and reverse? shall I push the SL a bit further out?" etc

having a wider stop, allows you to see the action with less tension as its further away from the stop. and gives you time to assess.

With tight stops, you put yourself into tense mode immediately because the slightest nudge could threaten the trade.

I can relate to that post of yours. Thats why most of my trades have about 30 pips SL. I find it gives me about 30 minutes to monitor whats happening. If a trade is poorly executed, you have more information/bars to assess its worth.

thanks for continuing this and have a great week.
 
trendie said:
re: having wider stops to allow "myself" to breathe, not the trade.

That is so insightful.
The real tension is when the stop-loss is about to be hit, and you're wondering "will it hit the SL and reverse? shall I push the SL a bit further out?" etc

having a wider stop, allows you to see the action with less tension as its further away from the stop. and gives you time to assess.

With tight stops, you put yourself into tense mode immediately because the slightest nudge could threaten the trade.

I can relate to that post of yours. Thats why most of my trades have about 30 pips SL. I find it gives me about 30 minutes to monitor whats happening. If a trade is poorly executed, you have more information/bars to assess its worth.

thanks for continuing this and have a great week.
Click to expand...

Interesting Trendie, hadn't ever thought of it like that.

To me i am selling a break of X so if it goes back up i'm wrong, sitting there watching it go against me 30pts before i'm out feels..... "evil(?)"...... when I could've been out at -10 and also if it runs you think "bugger i could've been long twice as much"

But, as you said there would be more time to think..maybe a time to think now. Although i'm sure either method would probaly bring roughly the same results over time, just my way you may have had a heart attack before you can prove it!!!!!!!!!
 
Just a way to add to the stop issue... Although I am debating between logical stops and 20 pip stops I should add that these are 'hard stops'. In other words they are my safety margin and I hardly ever let price get near them.

One little trick I did learn was to trail 1 pip at a time. In other words for every pip price goes in my favour I narrow my hard stop by 1 pip.
 
kitejedi said:
Hi Foredog,

Re what I posted originally TBH I was thinking more in terms of a little further down the road, once a trend looks like it may be 'established', and how one deals with loading up etc. as I am always aiming to score big on the winners and interested to see how others play it, or foresee playing it. That said, you've raised a really interesting point and one that has been vexing me of late.

When I first started trading M5 I went in using what I call logical stops - in other words if I were going long then I would place my stop where price was telling me I should perhaps go short (see below).

View attachment 66688

As I started to trade cable M5 more I realised I could generally get away with fixed 20 pip hard stops. This wasn't an arbitrary number, but one calculated using 50-60% pullbacks from cable's average swings of around 30-40 pips. This was great as it meant for higher returns etc. BUT, whilst being good for my P&L it has actually been causing me some problems:

1) I am getting very stressed out in the early stages of a trade (first second to 5 minutes), which is not good and can only lead to emotions coming into play. No matter how cool, calm and collected I may think I am, I'm just not!!! You may recall that M1 chart of cable I posted a couple of weeks ago - all looked so damn simple in hindsight but it was not an easy few minutes for me as that breakout developed!!
2) Because I am getting so stressed about cutting losers quick it is clouding my view of price, and I have been missing some blindingly obvious 'footprints' along the way.
3) Whilst using a 20 pip hard stop has been great for P&L / returns to date, I fear that, due to points 1 & 2, it may become an issue for me further down the road if this perceived 'stress' develops further.
4) I should add that this stress is not panic or anything like that - more that I have an annoyingly logical brain and a 20 pip hard stop is not logical enough for me!!

Anyway - it is an interesting dilemma but I am actually erring towards having wider stops again to allow myself (not the trade) more room to breathe. As you can imagine, this sort of decision could have a major impact on my trade and money management once the trade is rocking along as the winners have to pay for the losers.

Hope that all makes sense and thanks for raising what I think is an extremely pertinent point, regardless of market tf etc. I had always aimed for as tight a stop as possible but am starting to learn that this may not be the best stance for me personally to take.

All the best

Rob
Click to expand...

Rob

You could try thinking of the area between your logical stop level and your hard stop 20 point level as a "stop zone" where you are committing yourself to exit but to be guided as to when by the price price action in a lower time frame. You'd need to set some lower time frame exit rules, of course.

good trading

jon
 
stops

Interesting discussion about stops, it really is a personal thing isn't it? I see the benefits of using both "logical" stops and rigid stops, both work in their own way.

Personally, I reallly like break-outs with tight rigid stops, TP (part) very early and move stop to BE, then move stop along with trade. Granted, a lot of trades end up being small profits, small losses or BE, but when they go, they go...

Not the most efficient MM when break-outs re-test S/R before going in your favour, but here is EURJPY from last week, an example of a good 'un!

J
 

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  • eurjpy19-23oct09.gif
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barjon said:
Rob

You could try thinking of the area between your logical stop level and your hard stop 20 point level as a "stop zone" where you are committing yourself to exit but to be guided as to when by the price price action in a lower time frame. You'd need to set some lower time frame exit rules, of course.

good trading

jon
Click to expand...

Hello Jon,

Thank you. That's very interesting as I have played about with dropping from M5 to M1 to trail / 'see' price in more detail and it has always helped me psychologically. I think the thing which will always guide me is that, no matter how hard I try to view things differently, I feel my hard stop should be in a logical place. As I mentioned above though, that is purely a hard / emergency stop. In practice I will always be looking to kill trades sooner. The major impact of differing hard stops is my position size and also where I take profit from half my position which I guess is more mathematical than anything else.

Thinking about what you have said, I guess I am currently using the difference between my hard stop level and where I actually cut a trade as my 'stop zone' as you suggest.

All the best

Rob
 
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