Another newbie

[dbphoenix]

The stop is placed above or below the danger points, and the entry is taken however many ticks or points of which one is willing to tolerate the risk. If one predetermines a stop based on points or percentages, he can go on for years without ever gaining traction.

The stop is determined by the activity of price, whether illustrated by a chart or not. The only question the trader has to answer is whether or not he is willing to assume the risk determined by that activity and that stop. If he isn't, there's no trade.

Db

 

[Fattony81]

The stop is placed above or below the danger points, and the entry is taken however many ticks or points of which one is willing to tolerate the risk. If one predetermines a stop based on points or percentages, he can go on for years without ever gaining traction.

The stop is determined by the activity of price, whether illustrated by a chart or not. The only question the trader has to answer is whether or not he is willing to assume the risk determined by that activity and that stop. If he isn't, there's no trade.

Db

Sorry I missed this post, I've learnt more the past few days than I thought I would and sometimes the answer is staring you in the face.

I haven't back tested this fully but my theory appears to be working, could be a touch of luck as well.

I have found both

1) a reason to enter a trade
2) a reason to place a stop

I find it difficult to not go chasing if I get it wrong which can become dangerous but having found a reason to enter it gives you confidence and I would be happy to set up auto trades and let them run, perhaps that's where I should be ie just let the trades run

 

[tomorton]

I say this answer shows good signs. It is especially good how discussion has evolved from being mostly TA to being mostly trader psychology.

 

[Lúidín]

Sorry I missed this post, I've learnt more the past few days than I thought I would and sometimes the answer is staring you in the face.

I haven't back tested this fully but my theory appears to be working, could be a touch of luck as well.

I have found both

1) a reason to enter a trade
2) a reason to place a stop

I find it difficult to not go chasing if I get it wrong which can become dangerous but having found a reason to enter it gives you confidence and I would be happy to set up auto trades and let them run, perhaps that's where I should be ie just let the trades run

Here is my two cents.

You enter a trade, only when you have identified a highly probable low risk entry, and, if you rely on indicators, or a single chart to identify this entry, then you are wasting your time, and will end up chasing your tail for years.

If you (general) trade without stops, you are a fool, no matter what anyone else says. You never need a reason, it is a requirement. A good approach is have 2 stop levels..the first is your max risk per trade, as in % of how much you have for trading, and even though many will say otherwise, if you go over 1% then you are taking on high risk, which is not the habit you want to get into.

The second stop, is, let's say your "experience" stop, which will get better the more live trading you do, dealing with losers. Do not forget, the better you become at identifying low risk entries, this will automatically make your experience stops better, meaning you can use tighter stops, which is what you want.

Lastly, never worry about profits until you have mastered low risk entries, and always take a % of the AR for the timeframe you are trading, again, the target % becoming better the more experience you get.

Oh yes, unless you trade you will never make money, some seem to forget that, and think they can learn how to make money without trading, as in simulators and course etc. You are always better off to go live with very very small risk, than waste endless hours and money on things that will not really help you gain the experiences you require in order to take money from those who know exactly what they are doing.

Lúidín

 

[dbphoenix]

I say this answer shows good signs. It is especially good how discussion has evolved from being mostly TA to being mostly trader psychology.

Actually TA is trader psychology, i.e., trader behavior. It is only within the last couple of decades with the stampede of small retail traders into the intraday market that TA has become equated with indicators. It has largely been with the disconnect between technical analysis and behavior that so many beginners have taken so many wrong turns down so many dead-end streets, wasted so much time, and lost so much money.

Db

 

[mlawson71]

I place my stop loss below the closest major support or above the closest major resistance.
Also, I try not to go against the trend when I trade. I don't feel comfortable doing it, because every signal in that case can turn out to be false signal.

 

[arigoldman]

I place my stop loss below the closest major support or above the closest major resistance.
Also, I try not to go against the trend when I trade. I don't feel comfortable doing it, because every signal in that case can turn out to be false signal.

Interesting strategy!

 

[Fattony81]

There is probably a simple explanation for this but I'll ask it anyway,

when a trade is going in your favour the gain is slow but when it goes against the loss is extremely quick.

Is that because every one and their dog is selling when I'm buying (hence the quick drop)

Thanks

 

[dbphoenix]

There is probably a simple explanation for this but I'll ask it anyway,

when a trade is going in your favour the gain is slow but when it goes against the loss is extremely quick.

Is that because every one and their dog is selling when I'm buying (hence the quick drop)

Thanks

Apparently you've never participated in a parabolic rise.

Someone is always selling when you're buying. Otherwise you wouldn't be able to buy. Price rises for as long as buyers are willing to pay the ask. When they are no longer willing to do so, the rise stops. Those who are selling must then find buyers at lower prices. If buyers don't appear, prices have to drop, or else the sellers just stand aside and wait for conditions to change.

Nothing mysterious about it. It's just an auction market, like any other that runs on imbalances between supply and demand.

Db

 

[tomorton]

This is all true db. But sellers who decide to sell are a lot nimbler at selling than buyers who want to buy. TA tutors and texts sometimes advise turning a chart upside down as an easier way for newcomers to trading to understand shorting. But upswings and downswings are not mirror images wouldn't you agree?

When it comes to uptrends, they often start slowly but run for surprising time - surprising that is both in length but also rationale. Downtrends start suddenly but tend to peter out sooner relative to uptrends. Which makes me thing buyers rarely get nice surprises from the market but shorters more often will.

 

[dbphoenix]

No, upswings and downswings are not, as you say, mirror images, and those who advocate turning charts upside down most likely view price movement as something divorced from motives and desires and fears and so forth. If sellers are more "nimble" than buyers, I suspect it's because sellers are more professional and not as prone to panic selling (the "panic" more often comes from buyers who feel as though they've been left holding the bag).

Then there is the natural bias of amateur investors and traders to buy. Who after all wants to buy something that they don't believe is going to go up? And once they've bought, they become wedded to that decision (a form of bias) and are reluctant to do what really ought to be done regarding a buy that was a mistake because they don't want to admit that they were wrong. Hence, the common practice of letting one's losses run, averaging down, etc.

But all this goes way beyond a simple post. If, as is common, the beginning trader has difficulty distinguishing between up and down, indicators will not save him, nor will patterns make much sense.

Db

 

[tomorton]

I'm not sure about panic buying of positions - panic selling, yes. I thnk psychologists have established we have a heavier negative emotion when we lose something we had than the positive reaction of gaining something we wanted to have. Its the way we've evolved, I suppose it supports species survival. So it does put a rational basis beneath panic selling that isn't there for panic buying.

You did mention belief and this of course reflects the psychological issues in trading. It is easy to see what has been going up or going down in the last 10 days - but what happens in the next 10 is sometimes sold as a TA prediction - something that must follow a given signal or chart pattern. But really belief about what is going to happen is just another degree of self-delusion. What's really important is what you do about the market, not what the market might possibly / probably do to you.

 

[dbphoenix]

I'm not sure about panic buying of positions - panic selling, yes. I thnk psychologists have established we have a heavier negative emotion when we lose something we had than the positive reaction of gaining something we wanted to have. Its the way we've evolved, I suppose it supports species survival. So it does put a rational basis beneath panic selling that isn't there for panic buying.

I don't know if this is the right thread to discuss it but both arise from fear: the fear of loss and the fear of "missing out", which is a variant of the fear of loss.

You did mention belief and this of course reflects the psychological issues in trading. It is easy to see what has been going up or going down in the last 10 days - but what happens in the next 10 is sometimes sold as a TA prediction - something that must follow a given signal or chart pattern. But really belief about what is going to happen is just another degree of self-delusion. What's really important is what you do about the market, not what the market might possibly / probably do to you.

A lot of things are sold under the cloak of "TA". But it takes very little time and effort to test these things out and discover whether or not they have any value (generally not).

As for your last sentence, yes. Though I would add "for" you to the "to you".

Db

 

[aag100]

There is probably a simple explanation for this but I'll ask it anyway,

when a trade is going in your favour the gain is slow but when it goes against the loss is extremely quick.

Is that because every one and their dog is selling when I'm buying (hence the quick drop)

Thanks

i hear what your saying.wins are small and slow but losses are sharp and severe and keep going if you dont cut but the small win,if you dont take it when it presents itself,can quickly reverse back into a sharp severe loss.its a mindfk i know.
so resign yourself to taking those small wins for now and build up your strategy aswell as your mental game and keep improving

 

[bootsyjam]

Hi

I'm fairly new to trading and hopefully someone could help with my questions below

On 3rd November I stopped watching and started spread betting, roll on to the end of the month and I was £500 in profit, this week I made a couple of rushed decisions and have lost £200 of this but still in profit.

My questions

1) Where should you place your stop loss? Say you open a buy trade at 1900 but the share started dropping, at what point would you close the trade and start shorting, 10 points, 20 points or greater?

2) I made my profit on going against the trend so I waited for a drop and then opened a buy trade, am I better of with betting with the trend so as it rises I open a buy trade?

3) I understand the concept of spread betting but would I be better switching to cfd? I use city index to trade

4) Are there any tips for identifying opening points, I'm open to charting software if it's required.

As I said my gains were made going against the grain, I've made some money and lost some but overall I'm enjoying the trading and it gives me great pleasure to see my prediction was right and the financial gain is always a bonus as well

Appreciate any input and advice

Sincere congratulations on what looks like some early successes. I've come to realise that to be successful you should write down your specific set ups and only trade those set ups. Day in, day out, you trade your set ups and hone them down. It stops you from getting distracted and misusing mental energy. Or in your specific case-'rushed decisions.' If the trades aren't part of your set ups then don't trade. It is important to remember that choosing not to be in the market is as much a trading decision as choosing to enter the market.

If you are trading 8 hours a day, day in, day out, and you don't have any structure then you will get burned eventually.

My advice would be to sit down, write down your set ups and your risk/profit taking/exits and only trade these set ups. I have also found that reading the book "The Trading Athlete" was a big help.

You have to be very organised and methodical to be successful in trading, and if you can do this at the start then you will be in a great position. Hopefully what I have said will go some way to helping you start!