It's not enough to be right: Managing the trade

Getting the direction right is only half the story - how you go from there is what really puts pounds in the piggy bank.

Take these four traders who all saw MKS in downtrend and looked to short after a retracement. They all entered at around 617 after the low of the swing high went (white line).

Both Cavalier Clarence and Nervous Norman entered on the first day with stoploss @ 634. CC then switched off and went golfing, but NN screenwatched and didn't like it when the day closed with him underwater. The next day looked better and he moved his stoploss to break-even - goodbye NN for zilch.

Tightstops Tim entered on that second day with his stoploss @ 625 - goodbye TT for - 8.

Swinging Sid entered on the fourth day with a stoploss @ 630 and a target of 581 - he was able to cover for +36.

Meanwhile Cavalier Clarence got back from his golfing trip today and turned on to find it standing at 575 ( + 42) having been as low as 561. "Oh, that's nice.", he said, "What shall I do now............?"

Each to his own style I suppose

good trading

jon

ps: it's a ProRealTime chart i'm playing with

What comes to mind. ?

When should a trade be stopped ?

ah, the $64,000 question CB when indeed - who of us hasn't cursed when the price takes off after we've exited, or watched a profit dwindle away to nought?

good trading

jon

Crap Buddist said:

When should a trade be stopped ?

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Eventually.

Crap Buddist said:

When should a trade be stopped ?

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When it is the furthest distance from your entry in a profitable situation or when it is as close as possible to your entry point in a non-profitable situation.

Both of these situations apply only if there is sufficient evidence that there will be no further movement in your favour within the timeframe of the trade’s originally estimated duration, or if there is no evidence that your original expectations will be met within the he timeframe of the trade’s originally estimated duration, and if other market factors indicate you are taking the appropriate course of action.

That’s the ‘when’ answered.

TheBramble said:

..........................That’s the ‘when’ answered..................

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TheBramble said:

When it is the furthest distance from your entry in a profitable situation or when it is as close as possible to your entry point in a non-profitable situation.

Both of these situations apply only if there is sufficient evidence that there will be no further movement in your favour within the timeframe of the trade’s originally estimated duration, or if there is no evidence that your original expectations will be met within the he timeframe of the trade’s originally estimated duration, and if other market factors indicate you are taking the appropriate course of action.

That’s the ‘when’ answered.

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I remembered this....

theBramble; said:

There are only four things you need to know to trade the markets profitably. Where it is heading? When is it going to start? How far will it go? How long will it take? If you are placing trades without knowing these in advance then you are not trading.

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I'm inclined to agree and use Bracket Orders almost exclusively.

Originally Posted by theBramble;
There are only four things you need to know to trade the markets profitably. Where it is heading? When is it going to start? How far will it go? How long will it take? If you are placing trades without knowing these in advance then you are not trading.

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I think I would amend this list to:
What is overall direction of the market for the timeframe
What are my buying criteria
What is my bet size
What are my selling criteria

I do not know how far it will go or how long it will take. I have an overall view and then a set of rules for entry and exit and more importantly for bet size. After that it is all just probabilities. For a single trade I have no idea and do not really care if it is a profit or a loss. What is important is that each trade is approached in the same manner until the overall view is changed and that my bet size is changed according to a well established methodology.

barjon said:

Getting the direction right is only half the story - how you go from there is what really puts pounds in the piggy bank.

Take these four traders who all saw MKS in downtrend and looked to short after a retracement. They all entered at around 617 after the low of the swing high went (white line).

Both Cavalier Clarence and Nervous Norman entered on the first day with stoploss @ 634. CC then switched off and went golfing, but NN screenwatched and didn't like it when the day closed with him underwater. The next day looked better and he moved his stoploss to break-even - goodbye NN for zilch.

Tightstops Tim entered on that second day with his stoploss @ 625 - goodbye TT for - 8.

Swinging Sid entered on the fourth day with a stoploss @ 630 and a target of 581 - he was able to cover for +36.

Meanwhile Cavalier Clarence got back from his golfing trip today and turned on to find it standing at 575 ( + 42) having been as low as 561. "Oh, that's nice.", he said, "What shall I do now............?"

Each to his own style I suppose

good trading

jon

ps: it's a ProRealTime chart i'm playing with

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What about Repeating Pete? He's a follower of Tightstops Tim but not so Timorous. Whereas Tim stopped at -8, Pete had another go on the next bar and ended up 8 less than Cavalier Clarence without carrying CC's risk.

The snag is that he had to wait at home, instead of getting that round of golf in!

Split

This case is interesting because it shows that all of the traders had no problem in deciding on the entry point. Where the stops were was the problem.

Split

Splitlink said:

What about Repeating Pete?

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Wouldn't work. It has to be alliterative. It would have to be something like Persistent Pete or Pedantic Pete or Pushy Pete.

TheBramble said:

Wouldn't work. It has to be alliterative. It would have to be something like Persistent Pete or Pedantic Pete or Pushy Pete.

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You have some interesting friends!

Split

Splitlink said:

You have some interesting friends!

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Just the one actually. He/she has MPD.

It might well be me thinking about it...

Getting back to Jon's topic, Jon, what was the topic? You've not gone all ancient Greek on us have you?

Which one were you?

Were you recommending one over another? Point being, while Malcolm Maxpips would likely get the vote for Trader of the Year on this example, there would be an equal (at best) number of situation where he would become Malcolm Maxdrawdown.

This thread is getting like on-line Cluedo....just going out to play Golf with Norman Nostops.

tony

I started this thread to highlight something that came up in the "edge" thread where I suggested that the key edge was about the ability to manage a trade to best advantage.

Most literature/discussion seems to be about "direction" and set-ups designed to get that right more often than not. I was trying to show that this is only half the story and unless one pays at least equal attention to how one is going to manage the trade (starting with your 3rd and 4th questions from a quote of yours that rols remembered) profit and profit maximisation is not guaranteed.

It is true, of course, that if one gets the direction right one should not lose (some do!!), but taking 10 points from 100 point move is unlikely to be the road to real success.

One of my key performance measures is the is the %age of the move gained ("move" needs to be defined in terms of your style, of course) which I constantly try to edge up. For example, I exited that MKS trade @ 569 which is some 85% of the down leg from entry IF the price has three rising days from here. Alternatively, if it plummets without such a retracement then I will have exited prematurely and that healthy looking 85% will drop like a stone.

good trading

jon

Splitlink said:

This case is interesting because it shows that all of the traders had no problem in deciding on the entry point. Where the stops were was the problem.

Split

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spilt

yes, that's pretty much the point

good trading

jon

Jon,

You are illustrating one approach (and potentially one pathology) to trading.

Getting a good proportion of a move is good (if that's your objective) but it could be pathological if its your obsession in a market or market situation where you're better doing something else.

My goals are about consistency rather than gaining some percentage of what's possible so for me taking the next logical target and being relaxed if one time its 95% of the move and the next time its 12% is very important. Of course, consistently taking too little, perhaps because of fear of giving what you have back can also be pathological.

I don't know if it will help others but for my markets I find that taking the move to support or resistance (and/or tightening stops when close to these points) is the highest reward strategy when the market has not broken out of a range or a slowly rising range. But when the market breaks out, removing my targets and just trailing stops is the best strategy.

nine said:

Jon,

You are illustrating one approach (and potentially one pathology) to trading.

Getting a good proportion of a move is good (if that's your objective) but it could be pathological if its your obsession in a market or market situation where you're better doing something else.

My goals are about consistency rather than gaining some percentage of what's possible so for me taking the next logical target and being relaxed if one time its 95% of the move and the next time its 12% is very important. Of course, consistently taking too little, perhaps because of fear of giving what you have back can also be pathological.

I don't know if it will help others but for my markets I find that taking the move to support or resistance (and/or tightening stops when close to these points) is the highest reward strategy when the market has not broken out of a range or a slowly rising range. But when the market breaks out, removing my targets and just trailing stops is the best strategy.

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That entry was quite logical. There seems to be a downtrend and the entry was made near where the top channel band would be. I think that a lot of traders would have thought that that was a good point to short. The problem was where to put the stop.

I mentioned in "Day Trading the Footsie" that last Friday (the 14th) I entered a trade, put the stop above the high and went out for the morning. If I had used a trailing stop or lowered the stop during the morning, I would not have made the profit that I did, because there was quite a sharp upwards bounce about halfway down which would have caught me, for sure. This is sheer luck. I have tried the same thing before going to work at lunchtime on several occasions by putting the stop at B/E and, when I got home found that I had been stopped out without having made a cent. Do you often do that, Jon? I know you like golf so have a pretty good idea who Cavalier Clarence might be. I'd be interested to know what your track record is when you go on those jaunts.

Split

split



One thing going out does is MAKE me trade the daily (which is what I'm supposed to do). Intraday is supposed to be for fine tuning entry and exit once the decision has been made via the daily. Screenwatching tends to remove that discipline and I find myself making the decisions via the intraday rather than relying on the daily.

good trading

jon

You are not getting it!

barjon said:

Getting the direction right is only half the story - how you go from there is what really puts pounds in the piggy bank.

Take these four traders who all saw MKS in downtrend and looked to short after a retracement. They all entered at around 617 after the low of the swing high went (white line).

Both Cavalier Clarence and Nervous Norman entered on the first day with stoploss @ 634. CC then switched off and went golfing, but NN screenwatched and didn't like it when the day closed with him underwater. The next day looked better and he moved his stoploss to break-even - goodbye NN for zilch.

Tightstops Tim entered on that second day with his stoploss @ 625 - goodbye TT for - 8.

Swinging Sid entered on the fourth day with a stoploss @ 630 and a target of 581 - he was able to cover for +36.

Meanwhile Cavalier Clarence got back from his golfing trip today and turned on to find it standing at 575 ( + 42) having been as low as 561. "Oh, that's nice.", he said, "What shall I do now............?"

Each to his own style I suppose

good trading

jon

ps: it's a ProRealTime chart i'm playing with

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Trading is not about money, it is a measure of a persons wit and mental skills. good luck.

Exits and taking profit and not being shaken out

TWI said:

I think I would amend this list to:
What is overall direction of the market for the timeframe
What are my buying criteria
What is my bet size
What are my selling criteria

I do not know how far it will go or how long it will take. I have an overall view and then a set of rules for entry and exit and more importantly for bet size. After that it is all just probabilities. For a single trade I have no idea and do not really care if it is a profit or a loss. What is important is that each trade is approached in the same manner until
the overall view is changed and that my bet size is changed according to a well established methodology.

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barjon said:

split



One thing going out does is MAKE me trade the daily (which is what I'm supposed to do). Intraday is supposed to be for fine tuning entry and exit once the decision has been made via the daily. Screenwatching tends to remove that discipline and I find myself making the decisions via the intraday rather than relying on the daily.

good trading

jon

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Splitlink said:

That entry was quite logical. There seems to be a downtrend and the entry was made near where the top channel band would be. I think that a lot of traders would have thought that that was a good point to short. The problem was where to put the stop.

I mentioned in "Day Trading the Footsie" that last Friday (the 14th) I entered a trade, put the stop above the high and went out for the morning. If I had used a trailing stop or lowered the stop during the morning, I would not have made the profit that I did, because there was quite a sharp upwards bounce about halfway down which would have caught me, for sure. This is sheer luck. I have tried the same thing before going to work at lunchtime on several occasions by putting the stop at B/E and, when I got home found that I had been stopped out without having made a cent. Do you often do that, Jon? I know you like golf so have a pretty good idea who Cavalier Clarence might be. I'd be interested to know what your track record is when you go on those jaunts.

Split

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Hi TW1, Barjon and Split,

TW1

"I do not know how far it will go or how long it will take. I have an overall view and then a set of rules for entry and exit and more importantly for bet size."

Old thread, but very interesting because I was involved in the Split no brainer trade sorry mate. It was an eye opener for me that day and a few days later to.

I like Barjon use or am supposed to use intra day trading to fine tune trade entry, sub-prime market mess put intra day trading back on menu again for me.

Did ok little ok you notice, method tested in pretty volatile market conditions for someone of my ability and only mistake was in fact IMO not being aware or not making the written order to myself to search for the entry that should be held.

Result - traded well intra day and got carried away with intra day trading but missed large moves in higher time frames that I was certainly in on multiple occasions while intra day trading.

Might be a limitation on my part but find it hard to concentrate on multiple trading ideas only able to concentrate on ONE

The pull back that Split mentions was pretty fast and would have IMO shaken most shorts, well not the real good traders trading trend, but anyone aware of intra day S&R points would have been glued to screen I traded near perfect that day, every turn, game plan, method HEAD all at one . I pulled Split for what I thought at time was careless and possibly dangerous post to any newbys reading.

Anyway the point and I expect all members to award Split plenty of green"y points for this and elevate is status to the highest level

a few days later, I am trading and posting trades on the day trade ftse thread, I was enjoying trading at time and thought it a worthwhile exercise, I wanted to see if well I could do it , see if method was as ingrained in me as I thought, given my recent results while the

Strong TURKEY wind was blowing

worked out ok, 2 great trades both short, and was about to call it a day, just exited as index spiked support. Greedy me thought ah"aaaa

4 hour 12 noon bar guards change, Low risk trade off support, close valid stop and who no"s where, if it bounces I can move stop to BE, and off for game of Golf (Bike ride in my case) Posted it

Then the Man who goes by the name of SPLIT post this in a nanoooo second

Thank you again, simple but effective and timing was well Perrrrrrrrrfect

IMO I think a lot of traders should be able to work a reasonable exit out from this and avoid calling an end to the trend or move prematurely. Hope it helps someone else as much as it helped me that day.

So here it is the Post you have all been waiting for ~

Trendlines, to me, are drawn arbitrarily. I just use them as a sort of "comfort line". If I am on the right side of it I feel fine and have no worries. The rule that they must be drawn across the tops or bottom is, more or less, telling the market what to do. How can you expect that of a price? When the price cuts the trend I look to see if a pattern is forming. If the pattern is continuous, I revert to a trendline, again, almost certainly, the momentum will have changed but if I keep to the right of it in a bear and to the left of it in a bull then I am OK- Whenever it crosses, it is a warning to pay attention to the trade, nothing more.

There is nothing to be learned from trendlines, IMO anyway, except to help keep the ship on course. Go inside it and you are entering into shallow water.

By Split

Not rocket science, but good solid basic advice is sometimes all that is required. If I had a trend line on chart that day and previous days for that matter, I would certainly have been aware of and stayed with an earlier trade and given it a chance to make some real profit:!:

Exit I think, maybe not the absolute best exit but competent enough, depending on a traders greed would have revealed itself to the trader dependant on their original goals.

Instead I just gave myself eye ache for a couple of weeks intra day trading

Rols your on, take the floor. previous mention to signals taken on no less a time frame than one hour with bracketed order, shine or forever hold your piece. Simple explanation only, nothing to complicated on Einstein