Trade Trends or trade Ranges?

[ryan1978]

-What do u succeed at more ,trading Ranges or trading Trends?
-Do u double up on a bad trade, at what price distance do u get out when ur wrong?
-If you trade trends do u like to get in after a trend stops and is reversing,
or before a trend starts.?

I am new.To my newbie knowledge,there is only three ways to trade.
1-trade ranges (in and out)
2-trade trends-get in during first trend move
3-trade trends-get in after a trend and its reversing direction(less risk?)

I have a hard time with Trends.Have always done ranges.In and out quick .20,
not long before I have a $1.00 and at 1,000 shares.thats decent money in one day
just clicking a mouse.If Im doing more poorly lower my shares to 300.
My dillema is when im just in for that tini a huge trend emerges against my trade.
I was in for a small .20 and now it quickly shot against me .60.
I then double up and get in again against the trend thinking it will come back.
And it sometimes does.But when it doesnt it hurts bad with large losses.
I have often doubled up on a bad trade up to 6 times .Stock doesnt come
back in for a few days and i cant trade ,holding these positions and finaly
getting out when stock does come back in.

 

[shadowninja]

Averaging down is a bad strategy for newbies. You need to just accept that you are wrong when it approaches your stop loss.

 

[ryan1978]

Thanks for replying,
So doubling up on bad trade is no good.
I know everyone trades differently but at what price do u personally set ur stop loss
at.Because as we all know a stock often comes back in to where it was.and now you
took this loss with a stop loss,if you would of held ur trade would still be good

 

[cpngtw]

Ryan, stop hoping or you will blow up your account. Amid you are wrong on a bad trade and accept the small loss rather than praying hoping and then finally get out with a bigger loss... Even after you get out at the stop loss & the stock goes back to your original direction, just forget it and go find a new opportunity.

 

[Charlton]

Thanks for replying,
So doubling up on bad trade is no good.
I know everyone trades differently but at what price do u personally set ur stop loss
at.Because as we all know a stock often comes back in to where it was.and now you
took this loss with a stop loss,if you would of held ur trade would still be good

I must agree with the other posters so far. Recognise when the trade is wrong based on predefined criteria you have set. If it goes wrong then get out with minimal loss.

This way you not only minimse your loss, but you also release your cash for a new better opportunity and trade.

This has added psychological benefits because when you remain in a losing trade or try to average down it will do your head in - you won't think straight and unemotionally because you are out to get your revenge on the stock.

It will also perpetuate any mistakes you are making in your entries, because you are not facing up to the reality of the market. This is because you are replacing unemotional technically based analysis with the emotion of hope, which has no basis in fact.

Whilst in the short run you might be lucky and get away with it, ultimately it is bad for you development as a consistently successful trader

Charlton

 

[ryan1978]

Man,thats exactly what I do ,I want revenge on the stock with alot of emotion as well.

Thanks again i have alot of learning to do.To help give me a small glimpse of how successful traders trade, can i ask how often do u guys get in a trade per day.
And how much do u make per trade.Not how much money but how much do you get from the stock like 1.00 per trade or less.
Charlton thanks again u made many good points.

 

[Calinor]

You're going to get a lot of different answers to that, because there are a lot of different styles of trading. But I think you should focus on making sure that the point at which you take profits is larger than your stop-loss point. Some people might take profits at twice their stop-loss distance, or three times etc.

Remember, if your profit taking point is twice the distance of your stop-loss, then you only have to be correct 40% of the time and you'll make a profit.

 

[shadowninja]

Thanks for replying,
So doubling up on bad trade is no good.
I know everyone trades differently but at what price do u personally set ur stop loss
at.Because as we all know a stock often comes back in to where it was.and now you
took this loss with a stop loss,if you would of held ur trade would still be good

You need to test for your own setup how many pips you need for your trade to be wrong.

 

[sebby2468]

If my stop gets hit it gets hit,let it go,you will not win all of your trades.But I am comfortable with my strat,the secret is,and you are probably sick of hearing this, is let your winners run,look for obvious s&r,pay major attention to a 50 fib,on a daily or weekly chart,and if you are new to trading just stick with the major trend,and try not to get emotional,and revenge trade,trading is as much about phycology as being able to read charts but like anything in life the more practice you get the better you will become, good luck

 

[Trendy Trader]

Before you get into a trade, have a predefined idea of where you want to take profit and where you want to take a loss. Try to get the risk:reward above 1:1, 1:2 and beyond is good. Like others have said, when you make the right call, let it run, when you realize it's wrong, get out immediately. Never add to a losing trade, you think it might come back, but it may only retrace slightly and continue going the wrong way. When it's the wrong call, realize it and get out.

 

[mrsoul]

-What do u succeed at more ,trading Ranges or trading Trends?
-Do u double up on a bad trade, at what price distance do u get out when ur wrong?
-If you trade trends do u like to get in after a trend stops and is reversing,
or before a trend starts.?

I am new.To my newbie knowledge,there is only three ways to trade.
1-trade ranges (in and out)
2-trade trends-get in during first trend move
3-trade trends-get in after a trend and its reversing direction(less risk?)

I have a hard time with Trends.Have always done ranges.In and out quick .20,
not long before I have a $1.00 and at 1,000 shares.thats decent money in one day
just clicking a mouse.If Im doing more poorly lower my shares to 300.
My dillema is when im just in for that tini a huge trend emerges against my trade.
I was in for a small .20 and now it quickly shot against me .60.
I then double up and get in again against the trend thinking it will come back.
And it sometimes does.But when it doesnt it hurts bad with large losses.
I have often doubled up on a bad trade up to 6 times .Stock doesnt come
back in for a few days and i cant trade ,holding these positions and finaly
getting out when stock does come back in.

Those who average down ain't around!
Never catch falling daggers!

-When in doubt stay out-

 

[ryan1978]

Thanks guys,I understand not using stop losses can be very profitable in the short run.
So can be very attractive at first thought.
But at some point one day the markets gunna get u and ur gunna blow ur acnt,just a matter of time.
Thanks for all the advise it might save me an acnt or two.And from yrs of hard labor at a factory job hopefully.I work for coke in a production plant,have been trading since
nov 08.Still a bit lost but managed to hold on to 10k profit with risky no stop loss trading i def will change up and use stop loss for now on.Ive been trading stocks only Walmart ,3m,Xom.Dont
know y i chose them just grabbed any from the DOW.I figured stocks from the
Dow would be more stable and not go crazy on me.Itrade from home baught a 42inch screen and three 22 inch screens.can fit alot of charts on them.but still so much to learn.Any other advice of where to go from here would be highly appreciated.To point me in the right direction.Should i be learning from experience more or from books more.

 

[ryan1978]

Before you get into a trade, have a predefined idea of where you want to take profit and where you want to take a loss. Try to get the risk:reward above 1:1, 1:2 and beyond is good. Like others have said, when you make the right call, let it run, when you realize it's wrong, get out immediately. Never add to a losing trade, you think it might come back, but it may only retrace slightly and continue going the wrong way. When it's the wrong call, realize it and get out.

Im thinking u can either
1-make alot of little profit trades,to match one or two big losses.
or
2-U can make one or two large trades that are profit,to match alot of little losses.

But it seems that almost all that post on here (except a few who everyone calls
risk takers)always try to do the second option.Making alot of little profit trades
is not really advised here.Is that right?Because my trading style was always
getting in and out real quick with .20 gain or less.Do u think i should change
this to riding trends for what a buck $1.00?Im gunna have to find dif stocks
then to trade.Wmt only trends like .60 usually

 

[HaloTrader]

People say don't average down. But i personally do, because in the end i'm always right about the trade direction... Except that one time i lost all my money (£100) and my xbox360! (3 red lights).

P.s. I cannot be held liable for any advice you may take from me that causes massive losses and eventual suicide.

 

[rawrschach]

If WMT 'only trends' 60c that's fine, now figure out how much drawdown in a trade usually means that you're wrong and use that as your stop.

 

[ryan1978]

If WMT 'only trends' 60c that's fine, now figure out how much drawdown in a trade usually means that you're wrong and use that as your stop.

how do u figure out the drawdown figure.how do u tell when a stock is at a point of no return and going to
trend.

 

[amnonco]

Im thinking u can either
1-make alot of little profit trades,to match one or two big losses.
or
2-U can make one or two large trades that are profit,to match alot of little losses.

But it seems that almost all that post on here (except a few who everyone calls
risk takers)always try to do the second option.Making alot of little profit trades
is not really advised here.Is that right?Because my trading style was always
getting in and out real quick with .20 gain or less.Do u think i should change
this to riding trends for what a buck $1.00?Im gunna have to find dif stocks
then to trade.Wmt only trends like .60 usually

you are absolutely correct.
the thing is to have positive expectancy.
if you win (that is profit) in 80 out of 100 trades, and each time profit only a third than what you lose on the other 20 - you still make money.

the important thing is to be consistent, using the same method again and again, so that you'd really have an expectancy, otherwise you're just playing around blindfolded.

than, your measured expectancy times the amount of opportunities, along with your position sizing scheme, should give you the returns you can expect over the long run.

e.g if you have the above 100 trades each month, and you risk 1% of your account each trade - you'd make 20% a month. (considering you change your equity for risk management once per month to be precise). annually that means 890% more than less...

I actually know a guy who trades like that and he's very profitable...(but because he's a chicken****, he does not fully reinvest his earnings)