Managing trades
Some advice from an experienced trader ( tag name FEB25)
Posted by feb2865
Feb 4, 2009 10:32pm
The System II (Yes with irony) - Page 58
Guys.
I am so sorry I am not posting here as I used to do. I am currently working on a longer-term framework (as opposed to my daily scalping routine) to precisely get out of the scalping stress. My health requires a low-paced enviroment. Just that I am not ready to retire yet.
As I mentioned many time, I am a scalper. I've been trading like this since I started, many years ago. But scalping requires not only a strong concentration level, but is harmfully stressful. In my situation, I can't have the luxury of been stressed out the whole trading time.
As for the system II, I mentioned few times this is a high-frequency trading routine. _*T**rading is definitely an art of reading numbers** in order to be first in line at the rigth side of the market. *_
But if the market decides to go the other way, I simply play along.
I will tell you what I use for my scalping. It's applicable on any framework/timeframe.
I use a hard stop, just in case of a connection failure or an unforeseen volatility. I never let my stop to get hit...NEVER.
Your job is to cut that loser short, no matter what. Don't worry about how many times you'll have to cut that loser, at the end you'll get a runner.
Let's assume you are bullish, you go long at your signal, and immediately the market goes against your position(A very common situation). What you should do?? How far is too far?? Does it feel like a cat in the headlights?
This is where you make trading an art. I cannot tell you specifically when to cut it short. None will. But I'll give you some pointers, from my experience ( since 1981)
I use as a reference, how was the market behavior at the past session/timeframe/last bar. Then I have some expectancy/time limit on my trade to work out...or I just simple hit the panic button.
Let's say you'll use the last candle as a reference point. Then , you see the market (assuming you're long) retracing back. If I see more than 50% of the move against me, rest assured I'll be ready to hit the panic button. The point is, you don't know how that candle/bar /time frame is going to end. This is where prediction is useless on the markets.
Trade expectancy is simply put, _*the trade MUST go your way within a resonable time table/rythm/distance...or I just quit.*_
Trade expectancy is the only thing that will keep your head above the water.
_*Trade expectancy is the only tool that will bring consistency to your trading. *_
Money management alone is not sufficient. Having a good entry, is not enough.
You need to go to the basics on what is that you're looking for in trading??
_*MONEY*_
Bottom line is all about how many Benjamin's can you pull off the market. If you're not consistent, trading becomes futile and frustrating.
In my life as a trader, I can count how many times I cut a trade short, only to see the market going back my way. It''s cool. But I saved my ass way more times. I made some statistics about it from my journal.
Actually, as I have my risk in check with my money management, in this specific situation mentioned above, I just go back and re-establish my position, even if I have to go market.
If you get stopped or just simply bail off a position, as I said many times before, look at the other side, maybe there's a change of sentiment.
The science of trading is simple: You're either on the profitable side of the market or you're not. In order to get on the right side, you use technical analysis (and have your ear on the ground, of course). Then you pull the trigger based on your signal.....that's it...and it's easy.
But how do you transform that into $$$ consistently?
_*Cutting that loser short*_. It's more an art than anything else.
The System I and II or any other "system" I put on a thread, is just a framework for you to trade. But if you don't manage the trade, it becomes useless.
I'll be checking this thread more often, as I know for sure questions will arise as a result of this post.
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Enjoy
