MiniBagTrading
Newbie
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Hey guys,
I’ve been trading for about a year now. Year one didn’t go so hot. Pretty sure I lost money in every undisciplined (and sure, sometimes unlucky) way imaginable. For the most part, my own fault for making less-than-ideal entries and then aggressively averaging up/down, switching back & forth from long to short, etc. I then tried setting hard and mental stops, and would often get frustrated by those getting taken out only to see the price recover, whether it be a couple minutes, days, or weeks later.
Towards the end of the year, I decided to implore a strategy of reasonably safe scalps. My initial PT would be about 2% or so, at which point I would have a limit sell set up for 25-50% of my position, with more shares left over to take any additional profits in the chance that it ran further (or dropped lower if shorting). I haven’t set a stop or max loss here. If I’m short, I have a relatively tight level where I switch to long on a resistance break. If I’m initially long and it goes against me, I just hold the bag.
I know we’re taught to cut losses quickly, that holding a bag exposes you to a much greater potential loss, lack of liquidity, etc etc. I know this is the opposite of what everyone has told me to do. But my success rate on hitting my initial PT in this time been roughly 90%. Yes, there have been some bags accumulated (never short bags. I’ve been switching to long as mentioned and holding the bag with an adjusted breakeven price from there). I’m realizing consistent profits, and since I haven’t averaged down, the bags I do have aren’t considerable losses. They all have potential upcoming catalysts/reasons for a spike at some point to get me out at my even price (down an average of 10%-25% on the few bags I have). There’s been a rotation of “get rid of a bag or two at even, gain a new one” going on, but all the while I’ve been making consistent realized profits.
Surely some of these or future bags may never come back to where I need them to be, and I may need to take a loss on them. But again, as long as I don’t throw in more to average down and potentially compound the loss, it shouldn’t be devastating. Maybe wipe out a week or two’s worth of profits at worst case (keep in mind 100% of realized p&l has been green).
So I guess my question is, if I’ve avoiding getting stopped out and guaranteeing a quickly realized profit 9 times out of 10, and I’m remaining liquid long enough to continue imploring this strategy while waiting for inevitable pops & spikes to get me out of most of these bags I do accumulate (not like I’m playing HOD breaks on something up 200% and getting stuck holding from the top on a P&D that is now 75% down from my entry), what is my major downside, as long as i’m careful with my entries?
Talk me out of this. Feel free to unleash. On the surface this may be a flawed, unsustainable strategy. But it has certainly worked for me thus far and it seems promising for the future. Coming here to hear the Devil’s Advocate.
I’ve been trading for about a year now. Year one didn’t go so hot. Pretty sure I lost money in every undisciplined (and sure, sometimes unlucky) way imaginable. For the most part, my own fault for making less-than-ideal entries and then aggressively averaging up/down, switching back & forth from long to short, etc. I then tried setting hard and mental stops, and would often get frustrated by those getting taken out only to see the price recover, whether it be a couple minutes, days, or weeks later.
Towards the end of the year, I decided to implore a strategy of reasonably safe scalps. My initial PT would be about 2% or so, at which point I would have a limit sell set up for 25-50% of my position, with more shares left over to take any additional profits in the chance that it ran further (or dropped lower if shorting). I haven’t set a stop or max loss here. If I’m short, I have a relatively tight level where I switch to long on a resistance break. If I’m initially long and it goes against me, I just hold the bag.
I know we’re taught to cut losses quickly, that holding a bag exposes you to a much greater potential loss, lack of liquidity, etc etc. I know this is the opposite of what everyone has told me to do. But my success rate on hitting my initial PT in this time been roughly 90%. Yes, there have been some bags accumulated (never short bags. I’ve been switching to long as mentioned and holding the bag with an adjusted breakeven price from there). I’m realizing consistent profits, and since I haven’t averaged down, the bags I do have aren’t considerable losses. They all have potential upcoming catalysts/reasons for a spike at some point to get me out at my even price (down an average of 10%-25% on the few bags I have). There’s been a rotation of “get rid of a bag or two at even, gain a new one” going on, but all the while I’ve been making consistent realized profits.
Surely some of these or future bags may never come back to where I need them to be, and I may need to take a loss on them. But again, as long as I don’t throw in more to average down and potentially compound the loss, it shouldn’t be devastating. Maybe wipe out a week or two’s worth of profits at worst case (keep in mind 100% of realized p&l has been green).
So I guess my question is, if I’ve avoiding getting stopped out and guaranteeing a quickly realized profit 9 times out of 10, and I’m remaining liquid long enough to continue imploring this strategy while waiting for inevitable pops & spikes to get me out of most of these bags I do accumulate (not like I’m playing HOD breaks on something up 200% and getting stuck holding from the top on a P&D that is now 75% down from my entry), what is my major downside, as long as i’m careful with my entries?
Talk me out of this. Feel free to unleash. On the surface this may be a flawed, unsustainable strategy. But it has certainly worked for me thus far and it seems promising for the future. Coming here to hear the Devil’s Advocate.
