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Keith M

"what Would You Do" Thread

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We all spend countless hours of backtesting and entering our trades into our UTA. We put together our trade plan, then sim trade it for at least 25 perfectly executed trades.Then we go live, and as soon as we do a situation comes up that we have not encountered in all our testing or trading. Lets air these situations out here for all to comment on.

This is my response to the question put forward in the owners club by TJ.

Today we had a re-entry short trade on the 377 tick cl chart that started during the inventory report but depending how you trade it you could have got in sync with it after the 2 minute waiting period.The entry was at 82.53 but I adjusted down my entry to 82.49 level( it would have triggered at 82.53). 2 candles later a OSOB printed but then it came off on the next candle. We also had a green candle close above the trigger line before the OSOB candle. I kept my entry at 82.49, it triggered and was stopped out for a 17 cent loss. That was the bad news. The good news is we went on and got POQ +65 cents for the day

Now I have question for the FTOD crude oil traders that get in sync with the system at 8:50.. What was your FTOD today Wednesday 10-6-2010 and did anyone get in sync with the trade setup that printed at 8:29.

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...The entry was at 82.53 but I adjusted down my entry to 82.49 level( it would have triggered at 82.53). 2 candles later a OSOB printed but then it came off on the next candle. We also had a green candle close above the trigger line before the OSOB candle. I kept my entry at 82.49, it triggered and was stopped out for a 17 cent loss...

 

Keith, that's a great post. It raises a question similar to what I was trying to ask in OC a couple of days back, but was hard to put across in a chat room. So I will try to ride on the back of your point.

 

In your case - should you have left your Order in as effectively the setup had gone?

 

I trade FOREX only at the moment and a lot of the time there are small ranges where you get sucked in right at the turn (yes I do try to adjust for them) and you are in danger for getting hit at the full stop. So if you see the original set up opportunity disappear should you take an earlier stop than the printed one?

 

It also manifests itself in another opportunistic way. In your example, the original entry you missed because you had adjusted your entry. I don't know what actually happened but say you had taken the printed entry, the price had retraced a bit (quite common) got stopped and then came back in the desired direction would/could the original entry still be valid although not necessarily printed because of the way the system works*. Similar to what you did, if the signal had changed, it might have kept you out.

 

* This is the hard to explain bit:) A normal entry requires a move past the OSOB Zero line for setup BUT that entry is maintained as long as it stays there. However if a STOP occurs and then turns AND the situation returns to how it was (but obviously not printed) could/should you take the entry. I appreciate that there is a lot of subjectivity for each individual but was interested in a technical view as this happens quite a lot.

 

Thanks for listening to my :2c:

 

I thinks this forum can be a great place to help each other.

 

Cheers

 

Alan

 

PS Apologies if I have confused the issue but I confuse myself at times:confused:

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Alan P, thanks for responding to my post. After reading your comments you bring up some great points. In my last situation I could have canceled that re-entry trade because it was adjusted down and did not trigger. 2 candles later we had a close above the trigger line and a reversal printed but did not trigger. The next candle a re-entry setup should have printed but the system thought it was still in the short re-entry trade. I could have manually calculated the setup which would have been at 82.54 ( a better entry? maybe),

 

Moving on,

 

Keith M

 

P.S. In real time I would still keep that entry at 82.49

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You guys are making me smile with this excellent 'trader talk' regarding peculiar and vexing real time live market action issues, that come up all the time. The market will always throw infinite challenges at us, session after session.

 

Keith, your 10/6 question regarding the open is a good one. My way of doing it is this: If the setup was only a few bars (a few minutes, in other words) prior to our 8:50 start time, AND the trade really hadn't moved much, that is, it was still vacilating around the entry, I'd consider that a good trade. In your example, the setup bar was at 8:25, which for me is way more than just a few minutes. 8:50 is my start time, with a tiny bit of room to fudge as I just indicated. A good argument could be made that at 8:50, the price was moving lower and breaking a swing level, but for me, it is just cleaner and easier (also eliminates a 'deer caught in the headlights' potential scenario) by just waiting for a new setup. My FTOD would have been the long at 9 am. Don't underestimate the value of a clean, easy rule to follow. It will never be perfect. But if you allow for too much 'fudging,' then you will find yourself doubting your decisions, second guessing, etc., and I believe that can not be a good thing for one's trading in general. So make the rule easy and clean. That's my 2 cents.

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The original question I posed in the OC, was about whether an entry that has been adjusted should be cancelled if the bar goes back and closes on the other side of the trigger line.

 

The short Keith references was a bit peculiar because the system entry did trigger in, but our adjustment entry did not. So the trade was live, as far as the unadjusted system trade goes. It was a short. Then the price went up and closed above the trigger line. It did not stop out though. The question was, would you cancel your adjusted short entry at that point, or would you still consider it valid, if the trade came back down and broke to your adjusted entry? Would you take the trade? Would you cancel it and wait for a new setup? If so, you'd have to calculate it by hand since the system was in its unadjusted trade. Honestly, I really don't know if there's a right or wrong answer. What I wanted to point out was how we have to make real life decisions at the right edge of the chart. We should try to anticipate but if something like this comes up, and we don't know what to do, it is smart to come up with a rule so that next time, you have a way of dealing with it. I doubt either cancelling or not is right or wrong. But doing it the same way every time will solve a bunch of problems from a tradeplan point of view. I had thought that since it was breaking to a new swing level, and breaking support, that it made sense to keep the trade on. Now we can see that was wrong! But if you change your mind and do it different next time, then it would have been right the 2nd time around, but since you changed your rule, you were wrong again. lol.. The market gets the last laugh if we can't be consistent with our approach. KISS should be the thing that tips the scales, when you have 6 over here and half a dozen over there.

 

Alan, I'm not sure I understand your question still. I don't know if you're referring to a similar thing or something different. Perhaps you can try to explain it to me in the OC or with some screen shots, pointing out the steps of your scenario.

Edited by tjnoon

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