Help Needed

[ukdaytrader]

Guys I need some help here as I've been recking a good stream of profits with some stupid risks (as The Bramble has pointed out) , which always seem to go against me and wipe off like a large% of the profits I make from all the hard work during the month. And this seems to happen at the end of the month in the main or after a good run of consecutive profitable days.

Just want to understand how the rest the rest of the people work, given my limited experience

1) Do you always place a limit and stop on positions or sometimes not ?

2) Do you then move your limit / stop or do you just let it close out naturally ? i.e. does anyone use trailing stops ?

3) Do you diversify your positions and hold say like 10 / 20 positions open at any time or do you only ever trade a single position get out then open another ?

4) Whats the best way of keeping the emotion out of the trading ?

5) Do you stick rigidly to your limits that you set or on occasions are tempted to move away from them ?

 

[RedGreenBen]

I know I am going to sound 'preachy' but you need to answer these questions for yourself as part of a strategy/approach that works for *you*.

Perhaps the only universal (which some will disagree with, but it kind of proves my point above!) is to always have a stop at the price that proves your assumption for entering the trade was wrong.

Ben

 

[Technically Fundamental]

Told you you've been lucky lol

 

[ffsear]

1) Do you always place a limit and stop on positions or sometimes not ?

Never use Limits, always place a stop after I open.

2) Do you then move your limit / stop or do you just let it close out naturally ? i.e. does anyone use trailing stops ?

Yes, I move my stop to break even once the trade is up enough. I never increase my stop for its initial position.

3) Do you diversify your positions and hold say like 10 / 20 positions open at any time or do you only ever trade a single position get out then open another ?

I trade whats in front of me, if there we 10 setups within my rules, i'd trade them all. But this have never happened, 4 is the most I have ever had open.

4) Whats the best way of keeping the emotion out of the trading ?

Have confidence in your system/rules. Losses never bother me, I know i'll make it back.

5) Do you stick rigidly to your limits that you set or on occasions are tempted to move away from them ?

ALways tempted, but have never broken my 2% any one trade rule. Most important part of trading IMO!

 

[Dinos]

Guys I need some help here as I've been recking a good stream of profits with some stupid risks (as The Bramble has pointed out) , which always seem to go against me and wipe off like a large% of the profits I make from all the hard work during the month. And this seems to happen at the end of the month in the main or after a good run of consecutive profitable days.

Just want to understand how the rest the rest of the people work, given my limited experience

1) Do you always place a limit and stop on positions or sometimes not ?

2) Do you then move your limit / stop or do you just let it close out naturally ? i.e. does anyone use trailing stops ?

3) Do you diversify your positions and hold say like 10 / 20 positions open at any time or do you only ever trade a single position get out then open another ?


Each to their own, for me, I trade 4 markets only, as part of my trading plan, I know before I place a trade what my profit or loss will be, I trade to a certain number of pips profit/loss of each trade, these levels I got from hard work, studying and analyising each market, and backtesting/forward testing. I then set my stops and limits for each "market" I trade, and when my set up conforms a trade, without hesitation or human emotion I place the trade, safe in the knowledge, that my stats, and i stat every set up that happens so I'm fully aware of the current conditions of the market I'm trading, and can set my stop accordingly, to ensure its not taken out in the natural price movement, but that its there as a disaster stop for the wrong trades and protect my capital position. I don't worry about losses, as my win/loss ratio is in my favour and my stats back up my position for taking/losing pips. I've traded this way full time (my only source of income) for the last 10 years. Trading doesn't have to be difficut, its the trader that makes it difficult which imho, withover elaborate charts when simplicity dedlivers the results.

I always take my pips at at set point and don't run a trailing stop (personal preference), I never look back after taking my set points and see that it went on to geain substancially more... why... I traded my plan, it delivered the results and then I wait for the next set up... simplicity is the key (well for me anyway), no stress, no human emotion etc etc etc just my thoughts

 

[elitejets]

1) Do you always place a limit and stop on positions or sometimes not ?

Yes, always. Otherwise how do you know what your risk / position size is?

2) Do you then move your limit / stop or do you just let it close out naturally ? i.e. does anyone use trailing stops ?

I always have a first target where I take some profit off. That pays for my stop. The stop is the place where I know my trade is wrong, I don't like being shaken out of good long term trades.

3) Do you diversify your positions and hold say like 10 / 20 positions open at any time or do you only ever trade a single position get out then open another ?

I scale in and out of positions, taking some profit off and adding on dips/rallies.

4) Whats the best way of keeping the emotion out of the trading ?

Don't use too much risk. I trade like an idiot when I use too much risk.

5) Do you stick rigidly to your limits that you set or on occasions are tempted to move away from them ?

I stick to them, there is always another entry or another trade. I hate losing a lot to find out I am wrong.

 

[ukdaytrader]

thanks very much for the information everyone it has been really useful.

 

[montmorencyt2w]

5) Do you stick rigidly to your limits that you set or on occasions are tempted to move away from them ?

I stick to them, there is always another entry or another trade. I hate losing a lot to find out I am wrong.

Nicola,

As a matter of interest, for you does this only apply to stops, or also to take-profits?
What I had in mind was: say the price goes almost right up to your first TP, and then reverses.

If you think it's not going to stop reversing, do you take profit anyway, for fewer pips than you intended, or do you let it run its course?

Do you consider it a failed trade if it fails to go right up to the TP, even if it got near?

Thanks,
Mike

 

[trader_dante]

I agree with RedGreenBen, you need to answer these questions yourself: it matters not the slightest what other people do...firstly, you don't know who is profitable and who is not and even if you did, you know nothing about their strategy, their individual tolerance for risk, their style of trading etc etc

But for what it's worth...

1) Do you always place a limit and stop on positions or sometimes not ?

Always use a stop. Never use a limit (i.e. a target).

I'm not in the habit of trying to limit profits.

2) Do you then move your limit / stop or do you just let it close out naturally ? i.e. does anyone use trailing stops ?

I trail stops.

3) Do you diversify your positions and hold say like 10 / 20 positions open at any time or do you only ever trade a single position get out then open another ?

Almost always only have one position open. From time to time I have two. Very, very rarely more.

4) Whats the best way of keeping the emotion out of the trading ?

Walk away from the computer screen.

5) Do you stick rigidly to your limits that you set or on occasions are tempted to move away from them ?

I always keep to my stop but sometimes I am tempted to change my target depending on the way the market is doing what its doing, what is happening on higher TFs and my own expectations going forward.

 

[elitejets]

Nicola,
As a matter of interest, for you does this only apply to stops, or also to take-profits?
What I had in mind was: say the price goes almost right up to your first TP, and then reverses.
If you think it's not going to stop reversing, do you take profit anyway, for fewer pips than you intended, or do you let it run its course?
Do you consider it a failed trade if it fails to go right up to the TP, even if it got near?

I'm strict with stops, I'm more flexible with targets.
I try ride it for as long as it goes and not get shaken out by the retraces. I just find it easier to ride the retraces if I have banked a part first.
I'm trying not to get shaken out with thinking that it is not going to stop reversing and stick to my plan, which is ... my trade is not wrong until my stop is taken out or I have hit my target.
I don't necessarily think it is a failed trade if it gets almost to my TP but not quite, but I go and look at how I drew that SR level.

The others are right tho, this is all very personal and down to you as an individual trader. I think where to leave or move your stop in a winning trade is one of the hardest things to decide.

 

[nine]

Trading is a wonderfully diverse game with lots of different ways of making and losing money.

One of the keys is finding the ones that suit you as Nicola suggests. Often ones background drives the choices one makes - after all, most people follow the religions of their parents so why would trading be so different.

Dante says "I'm not in the habit of trying to limit profits" and chooses to trail stops. Such a strategy isn't always best. Although, on a single contract basis, for trendy contracts it may appear best it might be that the reduced statistical variation of a target based system gives fewer losing runs and thus permits a higher per trade bet with the same risk of ruin.

Horses for courses ... and for Jockeys. Find the one you like to ride; others can only give you ideas about what they have found to suit them and might work for you if you can find the same thinking, feeling, and preferences. I am 100% target based but it suits what I currently trade and my own personality. I'm about to add forex and will use an initial target on half chosen for a good expectancy and then a trailer on the other half - that way I get the pleasure of both quick positive payback and following the trends when they appear.

But my chosen entries suit such strategies - Dante's may suit trends better than mine.

 

[ukdaytrader]

I agree that I need to adapt to my style but there are a few common themes arising from everyone on this.

I think one common element is the use of stops to limit losses, something that I was not really doing for fear of volatility, but I suppose there is volatility and basically a wrong trade, in current environment difficult to tell sometimes.

It is useful to understand what others do to limit the losses, and looking at earlier comments made on the board it would seem that it will be an unacceptable loss that seems to wipe out someones account, not the absence of profits. This is probably why a lot of day traders collapse quite quickly.

 

[Technically Fundamental]

I agree that I need to adapt to my style but there are a few common themes arising from everyone on this.

I think one common element is the use of stops to limit losses, something that I was not really doing for fear of volatility, but I suppose there is volatility and basically a wrong trade, in current environment difficult to tell sometimes.

It is useful to understand what others do to limit the losses, and looking at earlier comments made on the board it would seem that it will be an unacceptable loss that seems to wipe out someones account, not the absence of profits. This is probably why a lot of day traders collapse quite quickly.

You seem to be in a place where I was on a demo account a few months ago. Started swinging it about a bit because I was making decent big returns then the next thing you know you're waiting for the market to come back to you -which is an irrational and emotional action imo- so you can get out of your position that is 10k offside and wiping out all your work.

I never used to understand who people on here didnt mind taking losses but if you think about trading as a career and not a get rich quick scheme it boils down to nothing more that a numbers game. Carter says a traders job isnt to win big its to know how minimise losses when you're wrong. You have a 50-50 chance when you click in and your analysis should give you a bit more of an edge on that figure. If you make 10,000 trades over 10 years get 50% wrong @ 2-5% risk but you run your winners and carry on making the profits you have said you were making in the past what the hell will your account look like? It'll balloon. I know I'm no proper trader mate but seems to me you're getting drunk on returns and looking past logic.

 

[Bloodhound]

I agree that I need to adapt to my style but there are a few common themes arising from everyone on this.

I think one common element is the use of stops to limit losses, something that I was not really doing for fear of volatility, but I suppose there is volatility and basically a wrong trade, in current environment difficult to tell sometimes.

It is useful to understand what others do to limit the losses, and looking at earlier comments made on the board it would seem that it will be an unacceptable loss that seems to wipe out someones account, not the absence of profits. This is probably why a lot of day traders collapse quite quickly.

I stand corrected by those more experienced than myself but you should be looking to place stops at levels which, should they be hit, invalidate your reason for being in a trade. With this in mind, volatility should not really come into it as stops should generally be sitting behind levels where, even with volatility, the market is unlikely to take price again unless there is a change of direction, thus invalidating your set-up. In my experience, and from reading others on this forum, most people are wiped out by committing too much of their capital to individual trades.

 

[Bloodhound]

It's already been said by everyone already but the key is to devise a strategy that works for you. I've been trading since last Nov and it is only in the last month that I have finally started to feel happy and (dare I say it) confident in what I am doing because I am trading my own strat, not someone else's.....

 

[trader_dante]

As Kitejedi said:

"It's already been said by everyone already but the key is to devise a strategy that works for you"

But the amateur trader comes along and thinks to themselves: "Why does everyone keep saying this bullsh*t?! Why do I have to find something that works for me?? If it works for KiteJedi or TraderDante and they make money, why can't I just do what they do..."

Well, as some will quite rightly say, there are lots of reasons:

- some have more time than others to trade
- some have more patience than others etc etc

But another very important reason that I realised the other day was this:

Personally, I have got to the stage, where I only need 1 trade per week to make a comfortable living. That is to say, the size I am betting at (and please don't start asking me what it is) is such that, an average winner of 100 pips is enough to give me an excellent salary by most peoples standards.

So that means, I can spend the whole week looking for one high probability trade. It doesn't mean I will only do one trade per week but knowing I only HAVE to do 1 trade means that I am under almost no pressure to find things.

Now, if you were to follow what I did, betting at £1 per point you would become incredibly frustrated at how little money you were making. Because for people that are just starting out they want to increase their accounts fairly quickly and cannot bear the thought of one trade per day let alone one per week...so its scalp, scalp, scalp...because as the conventional amateur wisdom goes - the more you are in the market - the more chance you have of making money.

I've taught quite a few people one to one and some of them have asked me to call live trades and almost all of them have got incredibly frustrated at how little I trade.

But that's the way it goes.

Last month (May) I made my monthly salary in 2 trades. I traded on the 12th May and I traded on the 29th May and that was it.

And eventually, one day, God willing, I aim to get to the stage of the greats that make Millions on just one or two trades per year.

 

[montmorencyt2w]

I'm strict with stops, I'm more flexible with targets.
I try ride it for as long as it goes and not get shaken out by the retraces. I just find it easier to ride the retraces if I have banked a part first.

Makes a lot of sense.

I'm trying not to get shaken out with thinking that it is not going to stop reversing and stick to my plan, which is ... my trade is not wrong until my stop is taken out or I have hit my target.

I don't necessarily think it is a failed trade if it gets almost to my TP but not quite, but I go and look at how I drew that SR level.

Right, I see.

The others are right tho, this is all very personal and down to you as an individual trader. I think where to leave or move your stop in a winning trade is one of the hardest things to decide.

Indeed.

I also like your idea that the first partial take profit pays for the stop. I had never thought of it quite like that before.

Thanks Nicola.
Regards,
Mike

 

[montmorencyt2w]

And eventually, one day, God willing, I aim to get to the stage of the greats that make Millions on just one or two trades per year.

Can see the headlines now:

"Mysterious British Soros-like figure makes 100M on collapse of the Pound [or the dollar, or maybe it'll be the Amero by then...]...".

And some of us will be able to say "Hey, I used to follow his posts on T2W......hey mate, can you spare some change for a cup of tea...?"