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jswanson

Better To Buy Strength Or Weakness?

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Better To Buy Strength Or Weakness?

 

Always BUY into Strength, but buy into it by fading into the price.

This keeps you close to your protective stop and gives you Sellers to buy from.

 

Remember that buying the breakout can leave you unfilled when you read the move correctly, but you will always be filled and a long way from your stop, when you read the price move incorrectly.

 

Trading is just a game .. however the winning methods may seem unfamiliar.

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I am saying that I don't have a hard stop in the market. This means that the theoretical size of my loss, if the market moves hard against me, is the entire value of the contract for longs, and infinite for shorts. I am willing to bet that though this is the case in theory, it won't be the case in practice.

 

With regard to how deep a trader's (or fund's) pockets are, please see my response to MightyMouse above - you don't need deep pockets to do this, you just need to trade within your means.

 

Do you have a disaster stop you place before you go to bed? If not, how would you have handled the May 2010 "flash crash" which was not in theory. If the market went against your position and you had a small account - yes, your loss will be infinite.

 

My means are assessed on the premise of what I am willing to lose before entering the market. Entering without stop (not even disaster stop) is declaring that you have infinite deep pockets.

 

I know I can only control my initial risk when in the market. I need to at least expect what I am ready to give up! But again, my time and means are not infinite so maybe I am ignorant to what you are saying!

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When the market is ranged

 

You can short higher highs

 

You can buy lower lows

 

When the market is uptrending

 

You want to buy red in pullbacks

 

When the market is downtrending

 

You want to short green in rallies

 

How you do that its up to you, but that's my rule of thumb

 

Dont wait for false illusions and end up using bigger stops and getting worse fills.

 

Best wishes

 

Nem

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Do you have a disaster stop you place before you go to bed? If not, how would you have handled the May 2010 "flash crash" which was not in theory. If the market went against your position and you had a small account - yes, your loss will be infinite.

 

My means are assessed on the premise of what I am willing to lose before entering the market. Entering without stop (not even disaster stop) is declaring that you have infinite deep pockets.

 

I know I can only control my initial risk when in the market. I need to at least expect what I am ready to give up! But again, my time and means are not infinite so maybe I am ignorant to what you are saying!

 

Hello,

 

My current strategy would have handled the 2010 flash crash without any difficulties at all. Unfortunately I had only been trading for about two weeks at that time, and was busy losing money trying to daytrade using hopeless tactics from the John Carter book. What's more, because the day of the flash crash coincided with the day of the general election here in the UK, it got absolutely no news coverage whatsoever!

 

However, I do understand the point that you're getting at, so fast forward fourteen months or so and you have the huge sell-off off last August. My strategy (which I was trading in real time) handled this very poorly indeed. So if you go and look at JSwanson's original equity curve for buying pullbacks, and see the massive drawdown that occurred, this is roughly what happened in my real trading account at this time. Subsequent winning trades have since virtually erased this loss, but a similar event may well occur tomorrow.

 

I have spent a hell of a lot of time since last August looking at possible strategy revisions, including all manner of stop losses, but have not found anything that is satisfactory or robust. My conclusion: because I trade only with money that I can afford to lose, I am happy to risk trading without a stop in order to swing for the bigger gains.

 

I hope that's a helpful answer.

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Do you have a disaster stop you place before you go to bed? If not, how would you have handled the May 2010 "flash crash" which was not in theory. If the market went against your position and you had a small account - yes, your loss will be infinite.

 

My means are assessed on the premise of what I am willing to lose before entering the market. Entering without stop (not even disaster stop) is declaring that you have infinite deep pockets.

 

I know I can only control my initial risk when in the market. I need to at least expect what I am ready to give up! But again, my time and means are not infinite so maybe I am ignorant to what you are saying!

 

Keep in mind there are times you can trade without stops. If you have a strategy based upon a short-term move in the index ETFs, don't buy the security. Buy options. Options have a catastrophic stop built in. You know your risk when you open your position. Again, not having a stop does not mean you don't control risk. It depends on what or how you are trading.

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Your post made ​​me think, and this is what I'm here to find interesting posts that make work my neurons.

 

Thanks for posting.

 

No..no,actually,as it turns out you are here to build up a post count while you prepare your sad,lonely,miserable blog.Then some time later (today in fact) spam the forum in the most secretive and devious way you could devise.

Good idea,keep working those neurons....

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