Trading cliches rubbished!

[xtf]

Here's an example-

"never let a winner turn into a loser".

You got it right , it goes into profit, it goes into loss- do you exit now? No! It's still right, this is the point of the stop loss and profit target- a trailing stop reduces the chance of reaching the profit target.

 

[westernforce]

How does a trader stop a winning trade from becoming a loss, or better yet, when is a trade a winner? As soon as it is one pip positive? According to that old cliche the trader should then bring the stop up to breakeven to prevent it becoming a loss.
As you stated, that's what the stops and limits are there for.

However if a trader was not using rigid stops or limits, just mental ones, then that cliches holds some truth, in that the trader is well in profit, becomes greedy and wants more, only to find a retrace eats away the "profits". The trader then holds on until the retrace has turned into a direction change, , and the once profitable trade ended up on the scrapheap.

 

[xtf]

The trend is your friend-


If markets are ranging more often than trending, following the trend must mean you will more often than not be betting in the wrong direction.

Any more?

 

[shadowninja]

the trader is well in profit, becomes greedy and wants more, only to find a retrace eats away the "profits". The trader then holds on until the retrace has turned into a direction change, , and the once profitable trade ended up on the scrapheap.

That's how I read the cliche as.

 

[xtf]

That's how I read the cliche as.

It can also stop you turning 20 pips into 100 pips because it dips into a loss for a while.

 

[shadowninja]

Yes, but I assumed it was when you had 100 pips and stopped you turning it into -50 pips.

 

[xtf]

Yes, but I assumed it was when you had 100 pips and stopped you turning it into -50 pips.

It's hard to run your winners when you're restricting the amount it can move against you. eg today long usd/cad 1.0105, goes to 1.0134 stopped 1.0082, ends day 1.0162. Annoying.

 

[shadowninja]

Indeed. Experience helps.

 

[nine]

Actually I am going to dispute both of your "cliche rubbishings"

The trend is your friend: in ranging markets its still your friend as long as you are not foolish enough to buy breakouts. You can still improve your edge slightly by being aware of the last trend, the higher timeframe trend, and of course the possibility of it bending.

Never let a winner turn into a loser: again needs to be applied intelligently. Obviously a 1 tick lead is not yet a real winner. And in some markets you NEVER want to snug your stop up. But in other markets it can be very wise to lock in a small profit once a certain level of win is achieved - I do this mainly because it makes the trade free and I actually only do it when I am looking for a large extension because I think a break from the current action is likely (when I am wrong about this the reversal is often fast, big and unforgiving of the slow).

 

[xtf]

Actually I am going to dispute both of your "cliche rubbishings"

The trend is your friend: in ranging markets its still your friend as long as you are not foolish enough to buy breakouts. You can still improve your edge slightly by being aware of the last trend, the higher timeframe trend, and of course the possibility of it bending.

Never let a winner turn into a loser: again needs to be applied intelligently. Obviously a 1 tick lead is not yet a real winner. And in some markets you NEVER want to snug your stop up. But in other markets it can be very wise to lock in a small profit once a certain level of win is achieved - I do this mainly because it makes the trade free and I actually only do it when I am looking for a large extension because I think a break from the current action is likely (when I am wrong about this the reversal is often fast, big and unforgiving of the slow).

I heard recently that eastern traders favour counter trends- ie reversals/ "zigzgs". Whether that's true or not, surely attempt to trade a reversal is as valid a method as trend following.
What about this- "Catching a falling knife"- can be a profitable way to trade news.

 

[timsk]

I heard recently that eastern traders favour counter trends- ie reversals/ "zigzgs". Whether that's true or not, surely attempt to trade a reversal is as valid a method as trend following.

Yeah, it's called 'Swing Trading' - we do it in the west too!
:cheesy:
Tim.

 

[Trader333]

If markets are ranging more often than trending, following the trend must mean you will more often than not be betting in the wrong direction.

This is only the case if you are intent on being in the market all the time. If you are able to determine when a trend is active and only trade during these times then there is no reason to presume that you will have picked the wrong direction most of the time.


Paul

 

[Rossini]

The trend is your friend-


If markets are ranging more often than trending, following the trend must mean you will more often than not be betting in the wrong direction.

Any more?

Thats not right. If a market is not trending, its not trending so you shouldnt trade it using a trending system. Now how to define a trending market- thats the question...

 

[Rossini]

trader333 got there before me....