Don't worry about missing out on moves

arabianights

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Capturing a move is irrelevant.

Well, with some important caveats anyway.

Firstly, let's accept that none of us are Nostradamus. So under most circumstances we cannot predict market moves accurately.

It follows from this that the further a move, the less likely we are to have predicted it (1).

It follows from this that we can predict a smaller move more easily (2)

It follows from this that we can put more size on in a smaller move. In fact, taken to its logical conclusion if we are 100% certain about a two tick move we can risk our entire account in one tick and treble it. (3)

Conclusion: Don't worry about losing the big moves. Assuming you read the caveats.

So next time Trader_Dante messages you moaning about some nob who took one tick who could have taken a thousand, point him to this thread :LOL:

(1): Not always the case, unfortunately: for example I will often 'ignore' a price level when running a position, knowing that if said level is broken I can certainly get out past it.

(2): Almost always true, if only because price has a definite velocity and thus can reverse well before reaching ones chosen level. The exceptions are, as in caveat one, where a certain move practically necessarily is part of another move.

(3): This is the only serious caveat, as 1 & 2 are effectively artefacts of incompetence/less than perfectness. I will split into two parts
(3a): LIQUIDITY: The above assumes a perfectly liquid market. If you need to put ten thousand lots on then assuming it's not a red eurodollar spread or something you're going to have to faff around getting in and out and will have to make allowances for that
(3b): I forgot what I was going to put here


Bonus caveat (4): The above also assumes no transaction costs. If you're paying a spread or paying commission, then you are paying transaction costs, and you will have to adjust accordingly.

Comment on caveats: These are why the traditional maxim is to let your profits run and cut your losses. But if you can get around them, and a competent scalper can in my opinion, then you are perfectly at liberty to ignore said maxim :)
 
This thread is really popular and i think everyone who has replied has found it highly useful.
 
Firstly, let's accept that none of us are Nostradamus. So under most circumstances we cannot predict market moves accurately.
Under most circumstances you absolutely need to be able to assess market moves if you’re trading a directional basis.

It follows from this that the further a move, the less likely we are to have predicted it (1).

It follows from this that we can predict a smaller move more easily (2)
If you can effectively assess the direction, that’s one thing. To asses the extent of the move is another. There’s no logical basis for claiming a relationship between the two.

It follows from this that we can put more size on in a smaller move. In fact, taken to its logical conclusion if we are 100% certain about a two tick move we can risk our entire account in one tick and treble it. (3)
Your size is determined purely by your risk – not the size of the target. But you’re right – if you could ever be 100% certain – you’d bet the ranch.
 
Missing any single move is indeed irrelevant. If its the most amazing trade opportunity ever, that just makes it more irrelevant beacuse its more unlikely to be every repeated. So many new traders think they must win big and soon, and that it is not hard to do this, and this pre-conception causes them to take big risks: hence our community's astronomical drop-out rate.

The most important thing (for beginners, the people who don't know what the most important thing is) is to be consistent in not losing. This will therefore generate a small profit per trade. Consistency in further trades will multiply this small profit many times.

This means of course that it is foolish to chase a price - if you have to over-pay to get into a position late, you are trading by fear, and this can only lead to a bad end.

Profit = Capital x Time x Risk
If anyone wants to double their profit with the same capital in the same time, they must double their risk.
 
I can make more money "working an entry" than on the rest of the trade....indeed, if I make a substantial amount from the off...then I'm more than happy to scrap the initial trade idea that price will go to xxxx ....buggered if I could formulate this approach though.

Being in a trade...any trade = risk...therefore a competent hit and run approach can get the job done quicker.
 
Capturing a move is irrelevant.


So next time Trader_Dante messages you moaning about some nob who took one tick who could have taken a thousand, point him to this thread :LOL:


It's very easy to point to the big move that's been missed after the event and this might lead to holding out for bigger moves next time, but in most cases these moves never come and you end up coming out of the trade with considerably less then what was on the table.

Which ever method you use to get out of a trade, be it trailing stop or profit target you are rarely going to get out at the top and when you do its more luck then skill so don't kid yourself.
 
big moves would relate to the current big ideas? ie macro trends? so to get big moves one has to be big minded?
 
In other words, there are many immediate trends within intermediate trends, and many intermediate trends within major trends. All are based on the same principles. A skilled trader knows what is what and therefore has the choice. No trader should be criticized for the size of their profits. I see it often happens in this forum and I think it is completely inappropriate and reflects badly on the critic. If a trader can consistently make profits based on their OWN figuring, on their OWN understanding, on their OWN skill and sticking to their OWN rules then who is anyone to criticize?
 
Capturing a move is irrelevant.

Well, with some important caveats anyway.

Firstly, let's accept that none of us are Nostradamus. So under most circumstances we cannot predict market moves accurately.

It follows from this that the further a move, the less likely we are to have predicted it (1).

It follows from this that we can predict a smaller move more easily (2)

It follows from this that we can put more size on in a smaller move. In fact, taken to its logical conclusion if we are 100% certain about a two tick move we can risk our entire account in one tick and treble it. (3)

Conclusion: Don't worry about losing the big moves. Assuming you read the caveats.

So next time Trader_Dante messages you moaning about some nob who took one tick who could have taken a thousand, point him to this thread :LOL:

(1): Not always the case, unfortunately: for example I will often 'ignore' a price level when running a position, knowing that if said level is broken I can certainly get out past it.

(2): Almost always true, if only because price has a definite velocity and thus can reverse well before reaching ones chosen level. The exceptions are, as in caveat one, where a certain move practically necessarily is part of another move.

(3): This is the only serious caveat, as 1 & 2 are effectively artefacts of incompetence/less than perfectness. I will split into two parts
(3a): LIQUIDITY: The above assumes a perfectly liquid market. If you need to put ten thousand lots on then assuming it's not a red eurodollar spread or something you're going to have to faff around getting in and out and will have to make allowances for that
(3b): I forgot what I was going to put here


Bonus caveat (4): The above also assumes no transaction costs. If you're paying a spread or paying commission, then you are paying transaction costs, and you will have to adjust accordingly.

Comment on caveats: These are why the traditional maxim is to let your profits run and cut your losses. But if you can get around them, and a competent scalper can in my opinion, then you are perfectly at liberty to ignore said maxim :)

I see where you are going with this - scalping can be highly effective with the right tools but it is a very different style to catching swings that is not as accessible to Joe Public starting out.
 
In other words, there are many immediate trends within intermediate trends, and many intermediate trends within major trends. All are based on the same principles. A skilled trader knows what is what and therefore has the choice. No trader should be criticized for the size of their profits. I see it often happens in this forum and I think it is completely inappropriate and reflects badly on the critic. If a trader can consistently make profits based on their OWN figuring, on their OWN understanding, on their OWN skill and sticking to their OWN rules then who is anyone to criticize?

if someone makes only £20 a week for 5 years they're a sh*t trader
 
if someone makes only £20 a week for 5 years they're a sh*t trader

Maybe they are a great trader with a £100 account who has issues with increasing size?

Also they are still doing better then most who lose their bank several times over in that period.
 
Maybe they are a great trader with a £100 account who has issues with increasing size?

Also they are still doing better then most who lose their bank several times over in that period.

The less a trader tells how much he earns, the more I believe him. Boasting of earnings is only a means towards trying to impress us lesser mortals. :D Quite often , the boast is preceded by " Yup", "Yeah", or some other expression to indicate his casualness towards, what is to us, a can of worms, not be touched with a bargepole.
 
Maybe they are a great trader with a £100 account who has issues with increasing size?

Also they are still doing better then most who lose their bank several times over in that period.

Not as sh*t as the ones who keep killing their accounts but they're still ****.
 
It follows from this that the further a move, the less likely we are to have predicted it (1).

It follows from this that we can predict a smaller move more easily (2)

It follows from this that we can put more size on in a smaller move. In fact, taken to its logical conclusion if we are 100% certain about a two tick move we can risk our entire account in one tick and treble it. (3)

I found this kind of trades highly effective, but of course you must know where the move should (or likely to) end and the distance is still sufficient.
 
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