Trade Size, Stops and Volatility....

[*JDR*]

Started trading for cash this past few weeks and am not doing so great, my account is down about 4%
Although I am getting my trades about 50% correct, due to the volatility I've been struggling with the "let the winners run".... cutting my losses I'm ok with, although there are some emotions involved in seeing my stops hit, I don't move them and accept the loss... on a couple of occassions I have added to a losing position.... but I have learnt from that mistake and wont be making it again.

One thing I haven't worked out and am not doing properly is getting my stops in the right place. With the current volatility I am getting stopped out and then if I still had the share I would move back into profitability. I must admit my stops are not calculated, they are just set at my acceptable loss level per trade and it seems that in the current market to prevent my stops being hit to easily I need to reduce my trade size and increase my stop size.

Does anyone have some insights as to how they set their stops. At present I am not using any volatility calculations, I am simply using a set percentage for every trade.

Thanks.

 

[laptop1]

Not sure what time frame you are looking at. You could base your stops on a ATR over the last 4 to 8 bars you could add 30% to the ATR for a little more room if you wish....

 

[TheBramble]

Started trading for cash this past few weeks and am not doing so great, my account is down about 4%
Although I am getting my trades about 50% correct,

About 50% sounds pretty borderline. Were you getting similar results before you started trading with real cash?

due to the volatility I've been struggling with the "let the winners run".... cutting my losses I'm ok with, although there are some emotions involved in seeing my stops hit, I don't move them and accept the loss... on a couple of occassions I have added to a losing position.... but I have learnt from that mistake and wont be making it again.

The markets have been relatively volatile and not particularly good for cutting your teeth on. If you're sticking to your stops why are you adding to losing positions? Or are you saying you're moving your stops as well?

One thing I haven't worked out and am not doing properly is getting my stops in the right place. With the current volatility I am getting stopped out and then if I still had the share I would move back into profitability. I must admit my stops are not calculated, they are just set at my acceptable loss level per trade and it seems that in the current market to prevent my stops being hit to easily I need to reduce my trade size and increase my stop size.

Nobody ever puts their stops in the right place..... Volatility is an issue, but the first thing you may want to consider doing is establishing a basis for assessing your stop. Recent Support/Resistance work pretty well and are incredibly low-tech. Even that wont necessarily help too much in a whipsaw market. So perhaps the best favour you can do yourself is establish what constitutes a whipsaw market and don't trade it. If you factor in volatility from recent market conditions, your stops will be large compared to potential target levels.

I'd suggest if you're not actively trading volatility, and by that I mean having to treat it as risk variable rather than a tradable entity in its own right, then allow the market to calm down a while and take a breather - especially if you're using indicators, they'll take a while to iron out the recent excitement.

 

[*JDR*]

Thanks for your comments and help....

As for when I added to losing positions, I moved my stops as well. Very silly of me and as I said something that I have learnt from.

Thanks.

 

[new_trader]

Volotile?

Worth bearing in mind the fact that these are simply quite volatile times in most markets. Money management is very important for a prop trader whether retail, institutional or whoever, but take some heart from the fact that plenty of traders more experienced, more highly capitalised and better resourced than you are still finding it hard going.
GJ

HUH!? I've only had 1 losing trade out of 9 in these "Volatile" times. I suppose it makes a big difference if you know what you are doing.

 

[*JDR*]

HUH!? I've only had 1 losing trade out of 9 in these "Volatile" times. I suppose it makes a big difference if you know what you are doing.

I agree it does, having said that, over condfidence might also be an issue....

I've changed my strategy for the time being and am day trading and scalping with real time charts. Not holding anything over night. Since I changed to that I have one losing trade a day.... I've also reduced my trade size. And although not making large amounts of money I am in profit for $1000 - $2000 a day. If I maintain my discipline I should be able to keep that up.
My only problem now is that I am taking profit a little bit too early.

 

[ForceBeWithYou]

Should start out trading stocks on day or week charts really. I tend to use percentage rules. Eg my stop will always represent a fixed monetary risk. I will look for a typical stop of 5% of current SP. If there is enough (imo), to potentially repel price from getting there, then it's a go. Rarely target mote than 10-20% though. Markets don't like to give more than that, easily. Instead of cap tied up for more, go find 10-20% elsewhere.

 

[EnlightenedJoe]

One thing I haven't worked out and am not doing properly is getting my stops in the right place.

Well, what exactly is a stop then. Imagine you bought at 10 and stop at 5, what exactly are you doing ? It looks to me like you guarantee to buy at 10 and then guarantee to sell at 5, in other words you have an iron clad guarantee to buy high and then sell low. What you have to ask yourself is why wouldn't someone take-you-on on your guarantee ? They have no way to lose.

So it doesn't matter where you place the stop, your deal is too good for people to refuse. From your actual experience so far, this is the case anyway. Maybe things will only change when other people can no longer get such a good deal from you ?

 

[ForceBeWithYou]

2 decades in markets, but I still can't figure out what your saying lol.

Guarenteed to buy at a high eg 10? What if price dropped from say, 90p to 10p, is 10 not buying at the low? Eith your stop lower?

Sorry dude. I didn't know this was a beginners forum. Il bail out of this trade lol.

 

[EnlightenedJoe]

Well a bankrupt stock is worth 0. So 10 is too much, even if it dropped from 1000.

Warren buffet trades stock. Have you ever heard him say I buy at 10 and stop at 5 ? I doubt it. He buys at 10, holds for life or until it's worth more. Nobody gets a good deal out of old buffet. If you want a deal from him, you will have to pay 20 or go home.

 

[ForceBeWithYou]

Buy at ten and stop at 5 is 50% for a start. Not five. Secondly. I dint trade junk. Just stocks that are liquid. Buffet is a dinosaur. Lost a stack in Tesco. What a deal.Lol. He is the fodder of the new breed. I can see your only in this game 2 days max. So. I wish u well.

 

[ForceBeWithYou]

Also, hold forever until make money? No bail out price? Lethal. Ot may never come back. And if it does, probably a loss anyway.
Eg, you hold a share. It drops. But then it recovers, and in three years, you have realised a gain of 5-10%. That's a loss my friend. Not a gain. Real term inflation. Present value to future value of cash (purchase power). A loss in real terms.

Now let's assume I took the hit, three years ago. Five percent of sp. Well thst cap has been churning out 10-20% many times over in the three years. Real gain.

The day of doing a buffet re buy the share and bury head in sand, long gone. Unless you have buffets money. And can bang a billion into tesco etc lol.

 

[EnlightenedJoe]

Buy at ten and stop at 5 is 50% for a start. Not five. Secondly. I dint trade junk. Just stocks that are liquid. Buffet is a dinosaur. Lost a stack in Tesco. What a deal.Lol. He is the fodder of the new breed. I can see your only in this game 2 days max. So. I wish u well.

Well, obviously you are better than buffet. Yes I was only in this thread for 2 days.

Buffet held forever. He obviously knew something you didn't. Buffet has his money precisely because he did what he did. It's silly then to assert he could only do what he does because he has money.

 

[ForceBeWithYou]

What I meant was, Buffet was once God. If he bought, all hail Buffet - the rest followed. But now, his money is simply targeted by the market and traders. How he made money in the old days, worked in the old days. But not a method I'd use today. He is no longer God. He is as much a victim of manipulation today, as the manipulator of past. Every dog (buffet) has its day. New world order now. A sensible trade today? A few weeks max. Well timed on the buy, gaining what bulk of the year surge or short the drop. It's going to yield. And on to the next.

 

[ForceBeWithYou]

I'm probably fifty times better than Buffet. My percentage returns (not monetary), thrash his weekly, monthly and yearly.

 

[EnlightenedJoe]

What I meant was, Buffet was once God. If he bought, all hail Buffet - the rest followed. But now, his money is simply targeted by the market and traders. How he made money in the old days, worked in the old days. But not a method I'd use today. He is no longer God. He is as much a victim of manipulation today, as the manipulator of past. Every dog (buffet) has its day. New world order now. A sensible trade today? A few weeks max. Well timed on the buy, gaining what bulk of the year surge or short the drop. It's going to yield. And on to the next.

Who told you it's new world order now ?

So in this NWO of yours we must guarantee to buy high sell low to make money ?

 

[ForceBeWithYou]

I do not know how mentioning a 5% sp stop, has brought your thinking to be that I suggest buy high, sell low.

I dont say, Buy low or buy high. I dont say sell high or sell low.

I say, buy or short at the right time. that can be anywhere. Depending on how you analyse and see market at that time.
And

 

[EnlightenedJoe]

I dont say sell high or sell low.

You do say sell low. If you paid at 10 and then you place a stop at 5, then you are effectively screaming to the market: I SELL LOW, COME GET GOOD DEAL.

As the OP has already explained, people in the market are queuing up for the exceptional deal he has on offer. If I knew where he's running this no-lose deal, I too would want a peace of the action.

 

[ForceBeWithYou]

No. I am saying.....I'm wrong. Time to bail. This baby on way to hell, and no reroute possible haha.

But its the markets greatest con. You'll rarely hear an investor say 'i got that wrong'. And get out 5% down or whatever.

What u will usually hear investors say is:

Great value. Il buy more. Bring my aggregate price lower. Investors when holding paper losses, mostly prefer to hold massive paper losses, instead of exiting minor real loss. For some strange reason. That math makes sense that them.

Most shares, when dropping, and be arsed market sees them as junk. Hence, your buying rubbish, until such a time, u identify the change in sentiment on it. That's the art.

 

[ForceBeWithYou]

Example. Barclays
Been seeing people for the last 8 year's, say as you do now. And u still see investors still holding since 2007, averaging in, trying to buy hopeless value. (barc be 70p within 18 months).