How do you know if you were right?

[rnicoll]

Part question, part rant...

So, I sell the FTSE100 index future (Dec 08) at 3,950 today, with a stop loss of 3,980, target 3,910. All numbers a bit approximate, but are close enough. The stop loss gets hit, just in time for the market to helpfully turn around and drop down to about 3,920. It's now at 4,063.

I'm left standing here, going "Did I get the stop-loss wrong? The limit wrong? Both? The time scale?". It's hard to pin down exactly why a trade didn't work. Heck, the market may even nose-dive tomorrow, raising the question of "did I just trade too early?".

How do people define success and failure of the criteria they use for a trade?

 

[foredog]

Sh*t happens, it's a % game, sometimes it may stop 1 tick below your stop and reverse, if your plans ok and usually you're not stopped out then thats ok

Jonny Wilkinson doesn't always get his conversions, sometimes he'll hit the upright and it'll bounce in, sometimes back out...it just happens

 

[Lee Shepherd]

Part question, part rant...

So, I sell the FTSE100 index future (Dec 08) at 3,950 today, with a stop loss of 3,980, target 3,910. All numbers a bit approximate, but are close enough. The stop loss gets hit, just in time for the market to helpfully turn around and drop down to about 3,920. It's now at 4,063.

I'm left standing here, going "Did I get the stop-loss wrong? The limit wrong? Both? The time scale?". It's hard to pin down exactly why a trade didn't work. Heck, the market may even nose-dive tomorrow, raising the question of "did I just trade too early?".

How do people define success and failure of the criteria they use for a trade?

Welcome to the world of trading.

There's nothing wrong here apart from you trying to figure out 'what is wrong'.

If your system is working, or more to the point, you are working your system, the time frame will remain the same, the stops are part of your risk/reward so the higher the stop the more reward you want for that risk.

As for timing, well....that is what trading is about, get in, if it doesn't work out, pull the plug, re-enter at better price if need be or take a break and release yourself from being biased in one direction.

Work your plan.

It sounds like you had whats technically known as an 'ar5e trade' you get in, it moves to your stop and hits you by 1pt then moves in your original direction.

Dont worry, this ain't the best trade ever, I've seen many a time of people doing (me included) getting in for a long right at the top, it reverses to the point, stops outs, goes in said direction for another hit that takes you out again, try reversing it then it does the same. 3 losses in a row in the same time frame and perfectly executed for maximum loss.

One of those trades you would struggle to execute if you tried, let alone getting 3 in a row.

This is where the saying comes from:

'The market knows exactly when I trade and goes against me' .

 

[tomorton]

I don't trouble my limited brainpower too much over the losses. I work out whether I abided by my own rules - and usually find I haven't, so go back and try harder to stick with the system. Beyond that, the losses are built-in and MUST occur on a percentage of trades, they are just a business overhead, not a failure.

 

[graemenash]

How do people define success and failure of the criteria they use for a trade?

If you follow your trading plan, there are no such things as failures. There are winning trades and losing trades, but no bad trades.

Bad trades (or failures) come from not following your trading plan, either out of boredom, revenge, or anything else.

If I follow my plan and lose money, no worries, I move on to the next trade. But if I break my own rules and lose money, then I'm an idiot

Of course if I break my own rules and make money, that's even worse...

 

[fibonelli]

Part question, part rant...

So, I sell the FTSE100 index future (Dec 08) at 3,950 today, with a stop loss of 3,980, target 3,910. All numbers a bit approximate, but are close enough. The stop loss gets hit, just in time for the market to helpfully turn around and drop down to about 3,920. It's now at 4,063.

I'm left standing here, going "Did I get the stop-loss wrong? The limit wrong? Both? The time scale?". It's hard to pin down exactly why a trade didn't work. Heck, the market may even nose-dive tomorrow, raising the question of "did I just trade too early?".

How do people define success and failure of the criteria they use for a trade?

You're not correctly trading the open of the US session. Remember, we are in a bear market.:arrowu: :arrowd: :arrowd: :arrowd:

 

[N Rothschild]

How do you know if you were right? when you hear this sound...cha ching!

 

[rnicoll]

If your system is working, or more to the point, you are working your system, the time frame will remain the same, the stops are part of your risk/reward so the higher the stop the more reward you want for that risk.

I suppose what I'm worried about is that:

• My system is over-optimistic, based on my back testing.
• The market is changing in nature, and my system needs refining.
• My system just generally isn't as good as it could be/should be.

It sounds like you had whats technically known as an 'ar5e trade' you get in, it moves to your stop and hits you by 1pt then moves in your original direction.

Yes... I mean, I followed my plan perfectly, and I suppose it could reasonably be argued that it all went perfectly. The stop-loss stopped me from making a massive loss, which I would have made otherwise because the market wouldn't have hit my profitable exit conditions. I just can't shake a feeling I could do better...

 

[rnicoll]

How do you know if you were right? when you hear this sound...cha ching!

From what I've seen so far it is very much possible to simply be lucky, even several times in a row, and make money as a result. I made about 40% in my first year spread-betting, for example, and that was mostly luck (certainly I don't seem able to repeat it). If I wanted to simply make money "most" of the time, I'd sell deep out of the money options, while praying the market didn't trash my account.