We all know the only real way to make money in the markets utilizing charts would be to follow the trend. My point is that you need a good entry point. Where you want you can not just jump.Originally Posted by ;
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We all know the only real way to make money in the markets utilizing charts would be to follow the trend. My point is that you need a good entry point. Where you want you can not just jump.
Renn, I agree, but what can you call a fantastic entry point? I revealed that I only win about half my trades utilizing the 50 X 200 MA cross in multiple time frames to trigger entrances. That's about a 50/50 win loss ratio, but running about a 10 to 1 reward to risk ratio, even though I am not sure I can keep that up. I would call that an average win/loss ratio. Nevertheless I do in the end due to a very good reward to risk ratio. The reward to risk ratio is determined by staying in the tendency more and cutting losses. Of course the system needs a positive expectancy, but that can be achieved losing the majority of the trades. I suppose I could work hard to improve my entries, but I've found it stay in the trends longer and easier to reduce my losses. My reward is doubled by reducing my losses into 1/3rd ADR to risk ratio. It would be almost impossible for my wins to double. In case it functions I am just saying, it is OK to do the thing. Happy trading. - G
Going by your metrics, you get a good entry point. Now what happens after you have had such a nice ride, to the guy who just enters? What more is left for him?Trend is used up. Is not it the reason?
Thanks Nefser to your input. Stack averaging that is weighted sounds fairly fancy for what I call detailing my rankings. I believe I might start using it in the future. Trend trading can not get positioning or more simple than 1 trading with the fad. In case you've observed my analysis, I always start with the general market trend which most traders view as the'daily fad'. The PA over a span of days of it determined it. Most, well... at least myself, consider the daily tendency to be put using the 200 SMA. It's a consensus however most traders believe the 200 SMA to be the determinant for all time frames. Nevertheless, the process of positioning, if SMA crossovers, that Graviton uses, from the 50 SMA used since the buy/sell line along with the PA, or'weighted stacking' I use.
Your explanation of how I trade is rather convoluted and no, it is not what I am doing. I am simply averaging my position as I mentioned before. Based upon the PA, I'll close some at an early point simply because it is too far in the PA turnaround. Them simply close with minimal reduction and reposition to the surface or underside. I admit, most want to check the top or bottom which is sensible. While I position they're in 10 or 15 pip increments. I do them buy limits so I do not have to be staring at the computer for hours. I walk away and either I get some rankings or even a turnaround is forming.
My trading is generally targeted at the 4 hour chart, but ultimatelyI base the general trend of my trade on the daily chart. I could be in a month or two a week. I win some and a I shed some. I completely concur that handling your profits and losses is the key to success.
In regards my way, I'll take profit on the very first big downswing. But I will attempt to ride. This where the ceases come in for me. I'll add a profit stop and a take profit stop. I'll fix these. You cannot say what I am doing is not trend trading. Trends form stations which I rely on many times. Some are unpredictable and some are not.
Notice my profit quit (stop loss) is set where if it goes against me, all my rankings will be in the green. So, as it stands now, I am in profit. Also observe I use Heiken Ashi candles. The PA simply smooths out and shows the transition swings.
Profit Stop: 1.30
Take Profit Stop: 1.27
I fix these accordingly as I get close an end of a transaction.
I hope I've explained my trend trading. Notice my chart. A downward tendency'm shorting.
Renn, in post 502 I posted a cherry picked example chart of a EU down trend that ran from about May 2014 to March 2015 for about a 3300 pip fall. You will find great entry and exit points throughout that trend. I'd be surprised if anyone was able to extract profit from the entire period. When I entered late mention July and manged to continue to get a 800 pips, there is still over 2000 pips left for the next guy. I find I bond out at the end or rarely get in at the beginning of a trend, even though that is the most profitable way to trade. My entrance trigger is slow to avoid whipsaws and that I simply can't psychologically stand the risk to profits when the retracements get too heavy. In most cases, if I return a week or two after I bail out, I'll observe the retracement has ended and the trend is continuing. I'm still struggling with it, although I have seen this occur repeatedly.
A lot of men and women see this as a zero sum game where I can't win unless a different trader loses or visa versa. In reality, there is plenty of pie for everyone. Large corporations hedgers and central banks exchange countless billions daily with no concern about making a profit. A crumb off this table should be sufficient to meet everyone here several times over. That's my own humble view. Finest success. - G
I concur with your loss prevention. In any game, in which you cant lose if you put yourself in a position , then the only thing left is at worse draw or to win. Making sure you lose as small as possible is the basis for investment success. Nice weekend, down day thou, -10% from summit, but that I live to fight another day.
Losing nicely. (Part 2)
it might be obvious that if price moves against us quickly after entry, odds are tilted in the path this is not a fantastic entry. It is equally obvious that we need to get out of bad entries quickly and keep in great (profitable) entries to let our profits run. The difficult part is deciding how much to let a poor entry run from us. We don't want to use the stop or excuse to let the trade run against us. The end is there for emergencies, like news or a reduction of net. We'll want to cut the disappointment brief ahead of the end is hit. The size of this stop that is used depends upon volatility and the trade length that is expected. For my swing trading using an average length of 3 days to 2 weeks, I use about a 1 ADR cease, so I'll go with this for a good example. Letting the loser run all of the way to the 1 ADR stop will be counter to my own trading strategy of cutting losses short so I'll absolutely need to close the trade until it reaches there. Generally I'd like to cut the reduction as short as possible and not take a chance of hitting on the stop, so I'll look at 0.75 ADR as a difficult mental exit. Just that improvement improves my benefit to risk ratio by 33%. Imagine how hard I would need to work to boost my win/loss ratio by 33%. I could probably never get it done regardless of how hard or how long I labored. This increase to my trading has been, dare I say it, simple.
The obvious question is, if that very first bite was so simple, is there more abandoned? What's the most we could get out of this trick? As soon as we enter a new commerce we are immediately going to be at a loss due to spread or commission, so we can not cut our reduction shorter than this or we'd immediately exit the transaction. That is a limit to cutting entry losses short. Allowing for spread and a tiny bit of noise, we could arbitrarily chose 0.25 ADR as a minimal movement to activate a mental exit. We then arrive at a sensible range to cut losses 0.25 ADR to 0.75 ADR. If we divide the difference, we need to be able to cut losses short at 0.5 ADR on average without too much trouble. Some transactions will really look like they will turn around soon and we might want to hang there all the way to the mental stop of 0.75 ADR reduction. This ought to be the exceptional commerce rather than the standard. Some will stink soon after entry and it's apparent they should be exited as fast as possible. If we work very difficult at this aspect of the trading, reaching the 0.5 ADR average is not that difficult and it increases reward to risk by 100%. That is an improvement in my trading that would not be possible to attain by enhancing my average 50/50 win loss ratio.
Is that the ultimate limitation to cutting entry losses short? What's the limitation? I can not say I really know what the limitation is, however, after years of concentrating effort on this aspect of reducing entry losses I've been able to reduce entry losses to 0.33 ADR on average. That change in my trading has improved my own benefit to risk ratio by 200%. It's a challenge which I shall never be able to say I've perfected although it was well worth the effort.
So all this thought and effort goes into only one small aspect of cutting losses short on entries, and we have hardly entered the transaction. Certainly there must be more progress to be created within the course of a transaction, and really there is, much more.
(to be continued)
Slimming well. (Component 3)
Before I continue, Let me emphasize once again that I am presenting this discussion from my perspective as a trend following swing trader. A 1 ADR stop won't be enough to maintain you if you are a scalper if you position trade holding trades for months and you are not going to trade with a 1 ADR stop. My strategy isn't to buy low and sell high, it's to buy high and sell higher or to sell low and buy lower. If you don't trade as I do, and admittedly most traders don't, then as Renn said, there'll be some food for thought here.
Moving on, above I discussed what happens when we enter a transaction, it either goes down or up. Always assuming a very long entry for simplicity, we discussed what happens when it goes and how to minimize our losses . We is the time for it and now put aside transactions that went up soon after entry. Within this discussion also include transactions that go down a bit but don't hit on our stop, and then go back positive in our leadership. In these favorable entries are our prospective supertrades and the foundation for loss and heartbreak. Conveniently, the market sorts those out . In this phase, the transactions which go up in profit still have potential, and those that turn around and mind against us have a distinctive potential of their own. I said our losers can't be reduced by us to less than less than commission or the spread price of this transaction. Well, I will amend that statement to say that if the trade initially goes into optimistic profit and then turns around and heads , not only can we reduce it is ultimate loss to less than commission or spread price, but we can actually exit a few of those transactions with a few pips profit. Depart a transaction with a couple of pips profit, since that is so small it won't ever influence our account? As exactly even, at this point or other than zero we have an option for every transaction that is remaining. Hold winners and exit losers with a profit or loss, or exit losers with a bigger loss. Of course leaving with a profit or loss rather than a loss agrees with my trading strategy of cutting losses little and letting profits run, so that is what we do. Some of these small profits will cancel some of the little losses and that's an offset we want to thoroughly monitor and seek to maximize.
At this point, our entry is finally finished with the minimum risk of loss that we're capable of producing, and we are prepared to transition to the trade management platform with the surviving trades which are now moving well into positive territory. Any transactions that fail along the way later on (and there'll be a few ) will be exited with a couple of pips or a lot of profit or even fewer pips of loss (No! Fewer.) . It is important to always keep in mind that in this world of randomness and doubt, there'll be winners and losers, but we are like a casino which wins in the roulette table over many trials with it is built in edge. We don't care much if any specific transaction goes down or up. It is only one of the following 1,000 transactions we will take. What we really care about is doing everything humanly possible to keep our edge over trials.
In the trade management platform we're focusing like a laser beam on our central strategy, cut losers short and let winners run. The reply to every decision going forward is contained within that proverb. The losers now are transactions that had once moved well into positive territory and are giving their profits. Certainly we can't exit every trade on it is tick that is down, or we'd never allow winners run. But we do want a objective, deterministic, and repeatable method to lower losers short. Let us dig deeper. What does since every tick does not identify a failure?
(to be continued)
Say your stop is just 1 adr. What number of times is the fact that.
As a quick aside, lets consider uncertainties and probabilities. We will still be unsure what another coin flip will be, if we now have a coin that is weighted so that when flipped it comes up heads 60% of the time. In fact, the more times we flip the coin, the more likely a distinct long string of tails will appear. But we could be sure that if we turn it enough times, 60% of the outcomes will be heads. This is into. It is among distributions that are random and probabilities. There are large areas in this landscape where there is not any certainty and take some little comfort although we will need to not just live with it, but understand it and, if we find that uncomfortable. Once we take this lack of certainty, there is comfort in knowing that it isn't important whether another coin flip is tails or heads, a win or a loss. All that matters is that if we have the position sizing to last long enough to make coin moves that are enough we could be sure that 60% of the outcomes will be heads. That takes the strain off worrying about winning another trade. As it it's not stressful. We are not surprised and we do not feel threatened by the market perhaps if several in a row drop, or if the following trade loses. In fact, we expect that to take place from time to time. We could have a little comfort in watching the probabilities fall into position for us to collect on our edge, as they must, As it does. That is as near a certainty as we could expect here. - G
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