Where am I going wrong?

[new_trader]

Can anyone explain what happened? (See Attached Image Below) I have made a number of trades where the market retraces enough to take out my STOP and then REVERSES to profitable levels. Are my stops too tight?

 

[hornblower]

you are trading in a very short time frame ,
try 5 min, 15 min ,and 60 min charts

 

[Mornington Crescent]

trading on such a short time frame - never let a profit become a loss.

once in profit move your stop loss to breakeven at least

 

[hungvir]

You're doing nothing wrong, you're just learning

You may want to look at risk:reward ratio though.

Good trading!

Hung

 

[new_trader]

you are trading in a very short time frame ,
try 5 min, 15 min ,and 60 min charts

Can you expand on the significance of different time frames please? I don't want to make any assumptions.

Thanks

 

[new_trader]

trading on such a short time frame - never let a profit become a loss.

once in profit move your stop loss to breakeven at least

I have had so many trades which have retraced just enough to take out my break even STOP and retrace into profit again that I decided to increment my stop at a less aggressive pace. But, I suppose everyone offering advice has gone through this and knows exactly what works. But I am aiming to understand what is going on rather than just doing what is advised. ie/ Am I a weak hand being slaughtered by the strong hands?

Are there Market Manipulators taking out my stops?


Am I just paranoid

 

[fildi101]

nothing wrong. Stop was tight, you didn't lose much (I presume) so it was a good trade.

In hindsight, maybe you could have been better prepared to re-enter the trade, possibly catching the next bottom, rather than dwelling on the loss you just took. Sometimes the best entry is very soon after you got stopped out

 

[new_trader]

nothing wrong. Stop was tight, you didn't lose much (I presume) so it was a good trade.

In hindsight, maybe you could have been better prepared to re-enter the trade, possibly catching the next bottom, rather than dwelling on the loss you just took. Sometimes the best entry is very soon after you got stopped out

At the moment I am trading the min US$50/point. I lost 0.75points (inc slippage) so trade was (US$43.3) after commission. But it isn't the actual loss that bothers me, it's seeing the index currently at 1389 which does. I could have been around 18 points up This is the same story with about 50% of my trades so far I'd be in profit if I managed my stops better

You are right, I shouldn't have dwelled on the loss and I was tempted to re-enter because I was confident the 1st trade was in the right direction.

 

[dbphoenix]

Fildi is correct as far as being prepared to re-enter.

Trying to "catch the bottom" is wise only if you stack the deck in your favor. Otherwise you stand to make a series of counter-trend trades and do unnecessary damage to your account.

Here I'm sure you had your reasons for going long where you did. And price did seem to move in the direction you hoped it would. But when it failed at 2 to make a higher high than 1, you should have moved your stop to 3. This puts you in the clear.

Then, when the new low (4) is tested at 5, note that not only is a lower low not made but that trading activity is lighter. This gives you the confidence to enter long somewhere around 6. Note, however, that you aren't going long just because it seems like a good idea; you have at least two good reasons for doing so.

Forget about what you want. Stay open to what the market is telling you in real time. If, for example, price fails to advance, why? Is it in trouble? Is it just resting? Do you want to be there in either case? Watch how trading activity and price vary together and you'll know what to do.

Db

 

[laptop1]

At the moment I am trading the min US$50/point. I lost 0.75points (inc slippage) so trade was (US$43.3) after commission. But it isn't the actual loss that bothers me, it's seeing the index currently at 1389 which does. I could have been around 18 points up This is the same story with about 50% of my trades so far I'd be in profit if I managed my stops better

You are right, I shouldn't have dwelled on the loss and I was tempted to re-enter because I was confident the 1st trade was in the right direction.

volatility is high on the s&p at the moment, Go back through the charts and see if your past trades would have worked out with a 2.5 stop? ... that be your first step, come back to me with an answer once we know this. We can look at something else then...

 

[new_trader]

volatility is high on the s&p at the moment, Go back through the charts and see if your past trades would have worked out with a 2.5 stop? ... that be your first step, come back to me with an answer once we know this. We can look at something else then...

Here are my trades for the 5th March 2007

Side Symbol Avg.Price

Sell ESH7 1391.75
Buy ESH7 1393.25

Buy ESH7 1390.5
Sell ESH7 1390

Sell ESH7 1388.25
Buy ESH7 1387.5

Buy ESH7 1371.75
Sell ESH7 1371

1st Trade I got stopped out even though it was in the right direction, should have had a wider stop.

2nd trade..."What was I thinking"?????

3rd trade.. Closed because I wanted some profit for the day, I was afraid the
trade would hit my stop again

4th Trade, we have discussed.

 

[new_trader]

Here are my trades for the 5th March 2007

Side Symbol Avg.Price

Sell ESH7 1391.75
Buy ESH7 1393.25

Buy ESH7 1390.5
Sell ESH7 1390

Sell ESH7 1388.25
Buy ESH7 1387.5

Buy ESH7 1371.75
Sell ESH7 1371

1st Trade I got stopped out even though it was in the right direction, should have had a wider stop.

2nd trade..."What was I thinking"?????

3rd trade.. Closed because I wanted some profit for the day, I was afraid the
trade would hit my stop again

4th Trade, we have discussed.

Wanted to add that around 15:30 I was going to place a BUY limit order at 1384.75, naturally I didn't and look at the result

 

[new_trader]

Fildi is correct as far as being prepared to re-enter.

Trying to "catch the bottom" is wise only if you stack the deck in your favor. Otherwise you stand to make a series of counter-trend trades and do unnecessary damage to your account.

Here I'm sure you had your reasons for going long where you did. And price did seem to move in the direction you hoped it would. But when it failed at 2 to make a higher high than 1, you should have moved your stop to 3. This puts you in the clear.

Then, when the new low (4) is tested at 5, note that not only is a lower low not made but that trading activity is lighter. This gives you the confidence to enter long somewhere around 6. Note, however, that you aren't going long just because it seems like a good idea; you have at least two good reasons for doing so.

Forget about what you want. Stay open to what the market is telling you in real time. If, for example, price fails to advance, why? Is it in trouble? Is it just resting? Do you want to be there in either case? Watch how trading activity and price vary together and you'll know what to do.

Db

What you said makes so much sense now in hindsight. Is my philosophy on the right track. ie/ Can you see my intentions?

 

[dbphoenix]

What you said makes so much sense now in hindsight. Is my philosophy on the right track. ie/ Can you see my intentions?

I don't know what your philosophy is though I assume from your post that you're trying to buy a reversal. Problem is you're trying to buy it too soon, and you don't know what to look for to tell you that you're buying it too soon.

And a wider stop may "work" for you. But if you don't know why you're entering where you are and when you are, a wider stop may mean nothing more than a wider loss.

As to "hindsight", the principles apply in real time as well. But trying to learn them, apply them, and trade all at the same time is a near-impossible task for beginners and usually serves to retard rather than accelerate their progress.

Db

 

[laptop1]

Have you gone through all your trades, with regards to your stops, to see if the 2,5 works better.

 

[new_trader]

I don't know what your philosophy is though I assume from your post that you're trying to buy a reversal. Problem is you're trying to buy it too soon, and you don't know what to look for to tell you that you're buying it too soon.

And a wider stop may "work" for you. But if you don't know why you're entering where you are and when you are, a wider stop may mean nothing more than a wider loss.

As to "hindsight", the principles apply in real time as well. But trying to learn them, apply them, and trade all at the same time is a near-impossible task for beginners and usually serves to retard rather than accelerate their progress.

Db

Yes, I want to trade a reversal and I don't want to widen my stops, I want to improve on my entries. My reasons for entering trades are based on Price & Volume and my interpretation of whether Accumulation or Distribution is taking place taking into account key pivot/FIB levels.

 

[dbphoenix]

Yes, I want to trade a reversal and I don't want to widen my stops, I want to improve on my entries. My reasons for entering trades are based on Price & Volume and my interpretation of whether Accumulation or Distribution is taking place taking into account key pivot/FIB levels.

I don't use indicators and can't speak to anything but price and trading activity regarding the above. And I don't know why you made the first long entry, but it's not necessary that I know. Once you're in the trade, however, you can see, in real time, that there is insufficient buying interest to advance the price past the first swing point (1). Why you entered the trade is no longer important. All that matters is that your long is not supported by sufficient buying interest to make it good, or any better than it is. Why, then, would you want to remain in the trade until your stop is taken out, particularly if by doing so you're denying yourself the opportunity to short?

 

[new_trader]

I don't use indicators and can't speak to anything but price and trading activity regarding the above. And I don't know why you made the first long entry, but it's not necessary that I know. Once you're in the trade, however, you can see, in real time, that there is insufficient buying interest to advance the price past the first swing point (1). Why you entered the trade is no longer important. All that matters is that your long is not supported by sufficient buying interest to make it good, or any better than it is. Why, then, would you want to remain in the trade until your stop is taken out, particularly if by doing so you're denying yourself the opportunity to short?

When you say Price & Trading activity, what do you mean specifically? Are you talking about Tape Reading? This is the direction I want to head. I waiting for my copy of Wyckoff's 'Studies in Tape Reading' to arrive.

My trade decisions are based on Price, Volume and what I think is happening in Depth of Market.

 

[dbphoenix]

When you say Price & Trading activity, what do you mean specifically? Are you talking about Tape Reading? This is the direction I want to head. I waiting for my copy of Wyckoff's 'Studies in Tape Reading' to arrive.

My trade decisions are based on Price, Volume and what I think is happening in Depth of Market.

I've explained twice as specifically as I can.

You go long.

Price halts at (1) and pulls back.

The advance resumes and fails to make a higher high (2).

You raise your stop or exit outright.

That's it.

As I said, if buying interest has dried up, why do you want to continue to be long?

It's very simple. If you stop looking at so much, perhaps you'll see it.

Db

 

[new_trader]

I've explained twice as specifically as I can.

You go long.

Price halts at (1) and pulls back.

The advance resumes and fails to make a higher high (2).

You raise your stop or exit outright.

That's it.

As I said, if buying interest has dried up, why do you want to continue to be long?

It's very simple. If you stop looking at so much, perhaps you'll see it.

Db

Sorry, I understood you the 1st time, perfectly clear. I was asking how YOU determine YOUR trade entries? You said you don't use indicators meaning not even Volume?

Everything that you explained after the trade makes perfect sense to me. My question/problem is that if you were looking at the chart in real time, how can you be confident that 6 will make a new high where 2 failed?Why wouldn't you wait until it broke above the peak after 4? Do you follow what I mean?