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Tradewinds

Elliminate a Handful of Bad Trades

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I look at my trading stats, and they don't look to bad. Win rates over 70% percent, etc, etc. But I know that I held on to loosers way to long. If I had cut those losses, my stats would be much better. This is a situation where seeing that win rate makes me understand the potential, and helps me to see where the problems are.

 

 

I'm a person who wants:

 

  • Certainty
  • Prediction

 

This is a "set up" for disappointment, and develops unrealistic expectations. Thinking in terms of anticipation verses prediction, changes the mental outlook.

 

I got this info from a video of Andrew Menaker.

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to become a good trader, you really have to keep an eye on a few statistics...

 

MFE -- Maximum favorable excursion -- ie the largest paper profit in the trade

MAE -- Maximum adverse excursion -- ie the largest paper loss in the trade

 

if your MAE are consistently larger than your average win... you are heading for a wipe out.

if your MFE are significantly larger than your average win... you are holding too long (ie hope for more that's not there. you need to work on your exit strategy)

 

if your MAE = MFE... you need to work on your entry.

 

more later...

 

 

 

info on MAE/MFE

http://www.traderslaboratory.com/forums/f208/looking-beyong-pnl-mae-mfe-6049.html

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I look at my trading stats, and they don't look to bad. Win rates over 70% percent, etc, etc. But I know that I held on to loosers way to long. If I had cut those losses, my stats would be much better. This is a situation where seeing that win rate makes me understand the potential, and helps me to see where the problems are.

 

 

I'm a person who wants:

 

  • Certainty
  • Prediction

 

This is a "set up" for disappointment, and develops unrealistic expectations. Thinking in terms of anticipation verses prediction, changes the mental outlook.

 

I got this info from a video of Andrew Menaker.

 

Every so often you will get a rush of adrenaline when you call the market to the tick. It tends to happen most when you are not in the market which makes you wish you were in the market and makes you wish that you could do that all the time. Its sort of like when people hear the Lottery Daily number result and wished they played because they were thinking of that number.

 

What you are not realizing is how many times you do not call the market to the tick.Your mind does applaud those bad calls, in fact, it ignores them. That is your ego at work. Thinking you can call the turn in a market consistently is a true sign of an amateur or a charlatan. If you try to put the effort into practice, your mind will not be able to ignore the poor call, because your account will reflect it.

 

If you make it a practice to buy the low in an attempt to buy low and sell high, other traders are also seeing that it is a low and it is not too hard to get you to buy low and make you sell back lower. If you try to sell the high in an attempt to sell high and buy back lower, other traders are also seeing that it is a high and will attempt to make you sell high and buy back higher.

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I've decided on some new profit taking rules.

 

Exit orders on these three conditions:

 

  • At Peak or Bottom signal
  • On unusually large price moves
  • Stop Loss - Price fails to move in my favor

 

I've been trying to scalp the ES on every price level. I've decided this strategy does not work well. When the trend is strong, it's rarely possible to exit, then re-enter at a better price. So, it's better to ride out the trend to it's end. The problem is, the price can turn against you with absolutely no warning. That is shown in the attached chart at 10:32 am. But, there was a good way, to deal with that situation. Price had an unusually big move up prior to the downturn at 10:32 am. That's where the rule for taking profit on an unusually large price move comes in.

5aa7106cb70a7_ESUnusualMove.thumb.JPG.76372bba396a93a344f7a9cffea26253.JPG

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as a suggestion if you are scalping - ask yourself - are you are trying to eliminate a handful of bad trades, or trying to improve your profit taking.

The handful of bad trades are usually the ones which either your entry was so poor that you were trying to pick tops or bottoms, and never gave yourself a chance, OR you did not cut them when clearly you were wrong.

It seems you are still worried about taking profits, when thats not the problem.

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The handful of bad trades are usually the ones which either your entry was so poor that you were trying to pick tops or bottoms,

 

What is wrong with trying to pick tops and bottoms? What is the other option? An order can be entered after the top or bottom is apparent. I'm not trying to encourage anyone to think or act the way I do with a trading strategy. I respect a person's choice of whatever they want to use for a strategy. I don't criticize anyone else's strategy. I'm just encouraging that a procedure of problem solving be employed. Provide something to work with. Present a theory. Give an opinion on how price action works. Suggest what affects price moves. Give pros and cons about methods of entry and exit.

 

This is what I'm looking for. You bring up the issue of picking tops and bottoms, but then give absolutely nothing as background information, examples, logic or even an opinion about WHY it's a good or bad idea.

 

Price often moves very quickly in the reversal direction after the turn around. Not always, but quite often. So here is what can happen. If price moves very quickly in the reverse direction at BOTH the bottom AND the top, and you wait for confirmation of of reversal on both ends, then by the time you enter and exit the order, you are at a very small profit, or break even. This is why I don't like Moving Average lines. If you look at the CENTER of an MA line, between the bottom and top, then compare the up center to the down center, those levels are very often almost at the same price level. And if you wait for confirmation of the price reversing to enter and exit, then the above mentioned situation is what you find yourself in much of the time. You will end up entering long at the center going up and exiting at the center going down, for little or no profit.

 

Alternately, you can take a little profit out of the center of the trend, or the center to the top or the center to the bottom, and then wait for the next entry set up. But if you are judging the center to the top in a long trade, then you are guessing at where the top is. So if you are guessing at where the top is, then why not just reverse down at that point?

 

I don't want a strategy that automatically eliminates a range of good possibilities. It's not bad to narrow down your focus, filter out situations, and concentrate on certain circumstances. That can all be good. But I personally don't want to limit good potential.

 

I try to pick tops and bottoms. I will probably always do that. It's my opinion that it's the best strategy. To me, that's the whole point. That's the optimum and ultimate goal. I've started a trading log here on the site. And hope to post the statistics of my trades. I'm not promising anything or making any claims, but I like the idea of providing something tangible. And if I do become wildly profitable, I may have a lot better things to do than make posts.

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Tradewinds - please take this in the right manner.

you seem to be wanting easy or very precise answers to everything...... the only person who will work out what works for you is you, and with the number of posts all around the place you are jumping around everywhere.

If you you dont know whats wrong with trying to pick tops and bottoms, and what the other option is then you are not thinking about it.

No-one is critising your strategy/ideas and most people realise that there are plenty of ways to skin a cat, and what works for you may not work for others.....but there are certain truisms I think that over many many years and many different types of traders ....and one of those is bottom pickers get smelly fingers.(similarly for tops), and the trend is your friend.

I and others who (may or may not actually be able to trade, or may or may not make money) offer ideas and possible solutions to make you think.......they are not designed necessarily to give you an answer to questions that are subjective and open to different interpretations by different people......you have to tailor it to yourself.

If you are wanting to have evidence of someones prowess in trading then I thinking you will be whistling dixie as what you will find is a whole rabbit hole of fraud. statements can be made up and often those who will provide these will often provide select statements, and will then often offer a payment service of some sort after this. All the traders I know who have been profitable give their services of mentorship or advice for free - if thats what they choose to do. You even mention that once if you become profitable you may have better things to do......and if you dont become profitable then what?

Personally I have periods of success and failure and often this can involve long periods of frustration of going to BE, lots of losses and a few big wins. This can often take months. By the sounds of what you are looking for these types of returns are not for you. Seeing someone elses returns are no tangible proof of what they are thinking.

 

you write - Give pros and cons about methods of entry and exit. This is what I am looking for.

This information is already available in plenty of places.....but what you see as a pro or con is not what others do. are you are scalper, are you swing trading, trend following, a fader etc; etc;?? It seems you dont have a strategy yet, you are only sim trading and flicking from idea to idea.....your statement of I dont want to limit good potential implies this to me. there is nothing wrong with searching for ideas and opinions, but unless you form your own and are able to take advice when offered then ....:(

I may be a complete idiot, I may be a hopeless communicator, I may be lots of things, but I do have a lot of trading experience and offer this advice for nix on a free and open internet - this is either priceless or worthless. I have only worked for a company and not for myself a total of 7 of the first years out of twenty - all of it trading and the markets....Get what you want out of it. This also applies to everyone who posts on the net - thats what makes it so good..

 

take this the right way - it may seem harsh or critical....but if you cant take this then good luck to you.

it is meant to help. ....

 

you started the thread saying you wanted to eliminate a few bad trades, by cutting your losses, and then quickly jumped to new taking profit rules, I offered a simple question to you that seemed to get a response that has prompted this from me in reply......do you know what you want?

(I may regret sending this but life is full of them)

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Tradewinds - please take this in the right manner.

you seem to be wanting easy or very precise answers to everything......

 

Yes, I want precise answers. You are right. I am looking for a good understanding of the market I'm interested in. Do I want it to be easy? Of course I do. Why wouldn't I want that? I know it isn't easy, and I don't expect it to be easy.

 

the only person who will work out what works for you is you, and with the number of posts all around the place you are jumping around everywhere.

 

I don't understand what you are trying to say. I'm making to many posts? I only post to threads that interest me. I probably should be spending my time doing other things. Do you want me to make fewer posts? I agree that the only person who will work this out is me. So we agree on that.

 

If you you dont know whats wrong with trying to pick tops and bottoms, and what the other option is then you are not thinking about it.

No-one is critising your strategy/ideas and most people realise that there are plenty of ways to skin a cat, and what works for you may not work for others.....but there are certain truisms I think that over many many years and many different types of traders ....and one of those is bottom pickers get smelly fingers.(similarly for tops), and the trend is your friend.

 

I think I know what you are saying. A problem that I have, is that I'm constantly trying to fight the trend. So if that is what you sensed, then you are right.

 

I and others who (may or may not actually be able to trade, or may or may not make money) offer ideas and possible solutions to make you think.......they are not designed necessarily to give you an answer to questions that are subjective and open to different interpretations by different people......you have to tailor it to yourself.

 

I'm offering my thoughts and opinions to make you and others think. What's your point? That's what happens in a forum. It's a free internet. I post what I want where I want, and as long as I'm within the rules, then I can do and write whatever I want. I do take information from different sources and tailor it to myself. I already know that.

 

 

If you are wanting to have evidence of someones prowess in trading then I thinking you will be whistling dixie

 

Your right again. We find ourselves in agreement yet again. We agree on a lot of things.

 

You even mention that once if you become profitable you may have better things to do......and if you dont become profitable then what?

 

Then I evaluate my situation and try to figure out what I'm doing wrong. Then make a decision about how to trade, or not to trade, or go get a real job.

 

you write - Give pros and cons about methods of entry and exit. This is what I am looking for.

This information is already available in plenty of places.....but what you see as a pro or con is not what others do.

 

If it's available in plenty of places, and it is a resource that backs up your statement, then just provide a reference.

 

are you are scalper, are you swing trading, trend following, a fader etc; etc;?? It seems you dont have a strategy yet, you are only sim trading and flicking from idea to idea.....

 

I do have a strategy, but what does that have to do with the subject of picking tops and bottoms? I'm not flicking from idea to idea. How did you come up with that thought? I have refined my strategy to very specific inputs and rules over the last couple of years.

 

your statement of I dont want to limit good potential implies this to me. there is nothing wrong with searching for ideas and opinions, but unless you form your own and are able to take advice when offered then ....:(

 

So it seems like you are saying that I'm not able to take advice? Do you think I'm not able to take advice because I reply to your posts? What makes you think I'm not able to take advice? I reply to your posts, and I give you my opinion and try to back it up with some rational thought. Do you want me to stop replying to your posts?

 

I do have a lot of trading experience and offer this advice for nix on a free and open internet - this is either priceless or worthless. I have only worked for a company and not for myself a total of 7 of the first years out of twenty - all of it trading and the markets....Get what you want out of it. This also applies to everyone who posts on the net - thats what makes it so good..

 

I appreciate what you are saying, and again I agree with what you are saying. Keep on offering your advice. All I ask, is that you don't mind if I reply with my thoughts and opinions.

 

take this the right way - it may seem harsh or critical....but if you cant take this then good luck to you.

it is meant to help. ....

 

That's fine. I agree with what you are saying. All I ask is that you live by the same standard. If it's okay for you to write, "if you can't take this then good luck to you", . . . is it okay for me to write in the same manner to you? Can you take it? Do you mind if I wish you a "Good Luck?", and state that I'm just trying to help you.

 

you started the thread saying you wanted to eliminate a few bad trades, by cutting your losses, and then quickly jumped to new taking profit rules, I offered a simple question to you that seemed to get a response that has prompted this from me in reply......do you know what you want?

 

What if i don't know what I want? What's your point? Do you know what your point is? Is it not okay, if I don't know what I want? How often do people know exactly what they want? What do you want out of this interaction? Are you saying that it's bad if I don't know what I want? What is the point of asking me if I know what I want?

 

(I may regret sending this but life is full of them)

 

:rofl: Don't worry about it SIUYA. Keep giving me all the advice you want. It's a free internet. I can choose to reply or not reply, or how I reply. It's my choice. You do whatever you want, and I'll do whatever I want. Deal?

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