How do we "learn" to take losses and to follow our stop loss?

[wasp]

LOL

 

[SOCRATES]

Well, he does, doesn't he ? He starts off very well and then he muddles it.

 

[Salty Gibbon]

Could be the beer O sage or just me not being as lucid as you, O wise one.

 

[alchemillia]

Hi there everyone
this is my first post. I have traded full time for just over 2 years. I have never demo or paper traded. I feel that live trading is the only way to test strategies and methods.
I make a living from trading. I do not use and technical indicators for my entry trades. I do use them for exits occasionally. I occasionally get out of long trades when some indicators say buy and vice versa. I hold trades between 3mins and 3 days max. I will not divulge my system. I trade DJIA, SPX, Bullion futures and cash indices and FX

This thread was about taking losses and following stops so heres my bit. Each trade I enter is based on a specific statistical probability with a likely outcome over the long term but off course 50% over the short term. I never use market orders for trade entry and only occasionally for exit.
My stops are OCO orders only and in this case my systems are close to set and forgets with some discression. I basically spend my trading day placing, removing and altering stops, limits and OCO orders.
My best performing system has an average win of 50pips for and average loss of 36pips. Many may argue that this is crazy as a ratio but the statistical probability based on hourly charts since 1987 is 78.34%. I have no system where i risk 10 to get 50.
I have no stop that is set at a specific price or lisk limit. The stop is allways changing. I think about stops this way. My limit or stop is hit and I am short, I enter an OCO based on a specific pattern. My stop is 40 away and my target is 50 below. My long term probability is 81.1% for 15pips, 76% for 35 pips, 67% for 50pips and so on. The market moves 36 against me. Have the long term stastics changed? no ! The chance that it will reverse is 50% at best but my risk reward rario is now hugh. I am now risking 4 to make 86. Off couse if I am a gambler trading my account and not a trader trading the market things will look a lot different! I once was this way and blew 5 accounts on the way here and the moment I changed my view of probabilities I was no longer a gambler. I do make mistakes (mostly called market orders, and tech analysis following) these remove me from the bigger picture of long term probabilities. Yes I do sit at the screen most of the day though and sometimes I do fret but I keep repeating to myself that the market is random and the long term probabilities of my system are in my favour over and over again like a mantra. If you are loosing continously (as I was) throw away all you tec indicators , print loads of charts and spend a week just looking at them. This is what i did. I do not feel you can work out concrete probabilities of indicators working ot not. I tried this and fell in the trap of seeing that particular event (eg macd cross) out of context with the rest of the market.
anyway i can go on forever
talk later

 

[peto]

Hi alchemia welcome to T2W.

Glad to hear you've got a profitable system after some major set-backs.
I'm a bit woried that the market moves 36 points against you, and you still feel that you have the same chance of attaining a profit. Surely the probability of the price wiggling 4 more points to your stop is vastly higher than the chance of it retracing back to profit. If you believe otherwise you would begin all your trades with a 4 point stop loss and an 86pt target.

Also I don't follow the apparent contradiction between "I do not feel you can work out concrete probabilities of indicators working ot not" and "Each trade I enter is based on a specific statistical probability"

p

 

[SOCRATES]

Could be the beer O sage or just me not being as lucid as you, O wise one.

Salty have you clocked what I am up to ?

 

[Splitlink]

Salty have you clocked what I am up to ?

Socrates, you had me fooled. I thought you were a serious trader, willing to lend a hand to others. There have just been a couple of posts attempting to get back to trading and you persist in spouting this useless claptrap.

Split

 

[haleh]

An edge is an advantage.
You can obtain an advantage in a number of different ways - including mechanically, although it's debatable whether you'll manage that by purchasing some ready made wonder program. Knowing the instrument you are trading will often give you an edge over those who do not, although sometimes you find the character of that instrument changes and you have to set about becoming familiar with it in its new guise.

An edge, however, is an advantage - it is misleading to claim you can only obtain an advantage via one route.

i have been reading "edge" discussion with some interest & may be THE TRADEER'S EDGE by g. Noble could be of help.resect

 

[alchemillia]

Hi alchemia welcome to T2W.



Also I don't follow the apparent contradiction between "I do not feel you can work out concrete probabilities of indicators working ot not" and "Each trade I enter is based on a specific statistical probability"

p

thanks peto they were major, major setbacks.
What I mean by not being able to work out probabilities based on technical indicators is that I have found for myself that indicator buy/sell signals often form the basis for what I call high volatility fake outs (especially FX and index futures). I feel this to be true from analysis and any trade I entered based on these however probable cast doubt in my mind. These small niggeling doubts are for me the enemy of trading. It was at these times I moved stops, removed stops etc because there was a thought in my mind that any movment toward a technical signal can be a fake out and therefore my trust in the trade is removed. As I said I often get out of long trades based on the opposite technical indicator signal and if I am doing it then others are too.

Don't think I do not use indicators, I do have a screen full but this is to tell me where many other traders are entering exiting. Also technical Indicators provide a subconcious problem as we learn that an indicator predicts an action (car turning indicator) when I tried to tell myself that this was not the case in trading I found myself unable to accept randomness- necessary to follow every necessary trade. In some instances I do reenter my trade if it has moved against me but still inside my stop. I have worked out stats for the occourance of ranging days, open up and never look back days etc so I have a probability withen a probability (over the long term) I should also say that the systems are on the whole extremely simple. I am not a mathametician (I can't enen spel it!) and | discounted them for years.
I have found that the important changes in me and my trading seemed the most proposterous or inocuious at first.

 

[alchemillia]

OK to answer any questions a perfect example has just occured on the GBPUSD. It is now 8:58 GMT and 30 mins ago the market dropped 60 pips in 20 mins. I was short earlier as per a range breakout. It moved up 4 pips from my stop. The ADX was moving up and the DMI+ was above 20. ( 15min chart) IF this is proved incorrect and moves down to knock out others stops it will automatically move lower. If I am wrong and the trend continues up I will loose 4 more. So I shorted again with a target of 20 with a 4 risk. If I am right then the possibility of a ranging day has increased vastly and if the market should then reverse and move above a specific point which seems ridiculous then the possibility for a higher probability trade are in the long run very high. I will not say long or short because I do not know! By the way this type of trade is frequent in all markets.
I do not say thay I am right and others are wrong. I might blow a sixth account at any time but if I move my orders around correctly the odds are in my favour.

I do not consider myself a successful trader,that has yet to be proved. Mayby when I have been profitable for 2 years or so I can say this.
My goal of writing here is to reiterate some of my ideas firsly to drum them into my scull and mayby cause other wouldbe traders that all is not what it seems. For example I spent a lot of time asking myself how I percieved any patterns in my mind. I may be setting myself for critism but I can only say that this was valid for me.

Sorry to get metaphysical here. I have a red rug in the hallway. It has some green and blue motifs on it. Where is the pattern? after asking this countless times I felt that the pattern was where the red was not, where the red stopped and the green/blue began. I get the sense that my brain processed the whole as being red and then found the anomoly and then the other colours.
So I went back to the trading board and looked for things that were anomolies. For example is there support and resistance where common indicators fail? When everything seems over bought how much further has it gone and why..

I began trading DJIA and stuck with it like one egg in my basket for more than a year. I got an idea of being able to predict action but I lost and lost. In 1.5 years I only had 2 consecutive winning months! The difference between my results now and then is way beyond comparrison.

The change was when I suffered so many drawdown, so many defeats that I could no longer ignore the obvious- that I was being played and I was a fool. I need a paradimn shift.

 

[SOCRATES]

Socrates, you had me fooled. I thought you were a serious trader, willing to lend a hand to others. There have just been a couple of posts attempting to get back to trading and you persist in spouting this useless claptrap.

Split

It is not useless claptrap. It is very useful to all of you. It is useful because it shows who's who in the zoo. It shows that when a topic is lifted to a higher level of understanding there are very few who really grab it, or have indeed mastered it, despite there being in our midst individuals who are persistent arguers and who purport to be the fountain of all knowledge but are in fact information beggars in disguise wanting to pick all our brains. This is why I brought up the subject of an edge. It is very annoying for what is truly an edge to be described or dismissed as what in reality is prudent mechanical proficiency. A true edge is something much more. Those who have acquired one are not prepared to share it or discuss it in public, and keep silent about their particular edge. Those out of their depth with it persist in describing it as prudent mechanical proficiency, which it is not. The discussions about it illuminate who knows what. I am not asking for information. I do not need to. I am interested to see annyoying arguers who in truth know very little revealing themselves for what they are for your benefit and my incidental interest. There is too much nonsense bandied about this topic for my liking.

 

[FetteredChinos]

It is not useless claptrap. It is very useful to all of you. It is useful because it shows who's who in the zoo. It shows that when a topic is lifted to a higher level of understanding there are very few who really grab it, or have indeed mastered it, despite there being in our midst individuals who are persistent arguers and who purport to be the fountain of all knowledge but are in fact information beggars in disguise wanting to pick all our brains. This is why I brought up the subject of an edge. It is very annoying for what is truly an edge to be described or dismissed as what in reality is prudent mechanical proficiency. A true edge is something much more. Those who have acquired one are not prepared to share it or discuss it in public, and keep silent about their particular edge. Those out of their depth with it persist in describing it as prudent mechanical proficiency, which it is not. The discussions about it illuminate who knows what. I am not asking for information. I do not need to. I am interested to see annyoying arguers who in truth know very little revealing themselves for what they are for your benefit and my incidental interest. There is too much nonsense bandied about this topic for my liking.

Arrogance is not a virture soc. you may need to re-assess your position on this one.

an edge is probably most easily defined with ones own objectives and realistic targets. for some, an edge is enough to be consistently profitable. for others, the edge is to be consistently profitable every day. the for others still, it is to be profitable whilst trading in previously unaccustomed size. et cetera.

each person's required edge is therefore different.

to talk about higher levels of understanding is utter tosh.

all we are doing is buying and selling a notional item. (unless of course you like to take delivery of your commodities contracts. how big is your warehouse).

making it any more complicated is what keep trading authors in business.

buy low, sell high. simple.

 

[SOCRATES]

Arrogance is not a virture soc. you may need to re-assess your position on this one.

an edge is probably most easily defined with ones own objectives and realistic targets. for some, an edge is enough to be consistently profitable. for others, the edge is to be consistently profitable every day. the for others still, it is to be profitable whilst trading in previously unaccustomed size. et cetera.

each person's required edge is therefore different.

to talk about higher levels of understanding is utter tosh.

all we are doing is buying and selling a notional item. (unless of course you like to take delivery of your commodities contracts. how big is your warehouse).

making it any more complicated is what keep trading authors in business.

buy low, sell high. simple.

It may be utter tosh to you according to your frame of reference and according to your perspective in accordance with your own knowledge bank. As for trading authors, name one single book I have written, go on....or ever bother to write, for everyone and his cat to read. That is why nearly every book written about this only serves to misdirect the reader even more than he is misdirected already.

The fact is, there is too much nonsense bandied about this topic for my liking, and much of it by individuals who ought to keep silent instead of persistently arguing about that which they know very little about. It would not be so bad if they were forthcoming and admitted it, instead of blundering on misdirecting the vulnerable, the uninformed, the hopeful, the weak and the impatient. I did not bring up the subject of the possession of an edge in order to find out anything about one.

I did so to illuminate who understands and who doesn't, and, having exposed that, I am now satisfied, as it is directed for your individual and collective benefit, and not mine.

 

[FetteredChinos]

It may be utter tosh to you according to your frame of reference and according to your perspective in accordance with your own knowledge bank. As for trading authors, name one single book I have written, go on....or ever bother to write, for everyone and his cat to read. That is why nearly every book written about this only serves to misdirect the reader even more than he is misdirected already.

The fact is, there is too much nonsense bandied about this topic for my liking, and much of it by individuals who ought to keep silent instead of persistently arguing about that which they know very little about. It would not be so bad if they were forthcoming and admitted it, instead of blundering on misdirecting the vulnerable, the uninformed, the hopeful, the weak and the impatient. I did not bring up the subject of the possession of an edge in order to find out anything about one.

I did so to illuminate who understands and who doesn't, and, having exposed that, I am now satisfied.

bully for you.

i didnt ever claim that you had written any books.

methinks the lady doth protest too much.

i have never claimed to be an authority on trading, nor, frankly, do i ever wish to be.

frankly, i would prefer to be a well-rounded individual, liked by my peers,friends and colleagues, with an ability to trade profitably.

this is my current situation, and i am quite happy with my lot, thankyou for asking.

 

[SOCRATES]

This is exasperating, because despite two sets of explanations above you still do not get my drift.

I am happy for you being happy however.

Kind Regards.

 

[Splitlink]

I think that we should all have a pretty good idea of what an edge is by now. Those of us who don't, deserve to be in Socrates' zoo.

Split

 

[SOCRATES]

And now this looks as if is going to go plop, so I have to pay attention. see you later.

 

[barjon]

Come on guys, the week-end fun and games should be over now . All this edginess has little, if anything, to do with the thread topic .

Anyone who's still burning to discuss it might like to to open a new thread on the edge so this one can stay on topic.

good trading

jon

 

[dbphoenix]

This is exasperating, because despite two sets of explanations above you still do not get my drift.

I suspect everyone gets your drift by now, Socrates. The more germane issue with regard to the responses you elicit seems to be whether or not you and yours have a monopoly on truth.

As to the issue of definitions, who cares? Try getting people to agree on a definition of "support". Or "trend". Or "swing". All that matters is what fills the account and what depletes it. An edge fills it. Lack of one depletes it. How one defines the edge in practical application is irrelevant as long as it performs its function. A rose is a rose regardless of its color.

 

[SOCRATES]

That's right DB, another attempt to dumb down everybody, the truth is the truth, unpalatable as it may seem and with the gloves taken off.

As to the issue of definitions, definitions are crucial to understanding. Without definitions all is a muddle, you may not care but there are others who do, and who watch all this very closely even if they do not post. But if not all of it is noted, none of it is overlooked, of that you can be certain.

And a good afternoon to you sir.