Berzerk

"Each indicator that you add to your trading system tries to preclude you from your feelings about loss and uncertainty"

Hi eralinks, I see you short cut many words in your post, so it's possible you might be looking for some shortcuts in trading...? You might be disappointed because I don't know about any method to see which breakout might work and which won't before they happened because there's no way to predict the market action. It's mainly a function of how much you lose when a breakout fails vs how much you win when it doesn't fail. One way to be selective about breakouts is to take breakouts in the strongest markets and breakdowns in the weakest. See "the original turtle trading rules" for some description of that. Check which instruments in each market group (metals, energy, stock indices, currencies, grains etc) breakout first and use your trend-following method to trade these only. No more than 1-2 per group. As an example - Dow Jones futures have exceeded the all times high and other indices are still below. This would mean this index is the strongest at the moment. Trading the best instruments in non-correlated markets...

Hi Ingot54, I really liked your down-to-earth posts about psychological issues in trading and the way you bashed some gurus and vendors with sincere comments I've decided to write this post because I'm really sad to hear that you plan to give up live trading despite all your efforts for the last 9 years. I don't post a lot because people don't care about stuff they read, always looking for easy answers. I write this because apparently you decided your methods don't work (???) and are looking for some hints. If you're in a mode to absorb something that might be different from what you've been trying to do for the last 9 years, I'd like to leave here some comments for you to digest. 1. In this thread I read 2 of your sentences which kind of tell me the way you trade, these were "Trend is not your friend" and "Master the counter-trend entry points, and you will succeed as a trader." - I think you're wrong in both of these. 2. You seem to try to pin point a low risk entry points in a trend but it seems to me that all your trading is counter-trend, buying dips or reactions in an uptrend is counter-trend because you're buying weakness. 3. By trying to define the low risk entry points you say you know when a reaction will end, hence try to predict the future. You can't predict in the markets when a reaction would end, you're basically trying to catch bottoms in an uptrend which is close to impossible. 4. I understand the need to find low risk entry point. You want to enter a big enough position (distance between entry and SL) so that when the move reverses to uptrend again and continues your risk/reward ratio skyrockets. You can do the same by buying strenght. 5. Buying strenght is buying breakouts, the same goes for selling weakness (selling breakdowns) - people are usually afraid to do that because they're afraid of false breakouts and whipsaws. 6. By accepting the fact that wipsaws are part of the trading game and you can't avoid them and by actually embracing and experiencing the feelings you connect to whipsaws (my SL is hit, I'm a failure, oh no, not another loss!!!) you free yourself from the fear of whipsaws. This takes lots of time and soul searching. 7. When you're free of fear of whipsaws, you're free of fear of buying breakouts. You realize anything can happen in the markets, by that I mean ANYTHING. It may happen that when you buy a breakout, the market suddenly reverses and hits you SL NO MATTER WHERE YOU PLACE IT or it may happen that the market can move up and never look back 8. It may take 2, 3 or more trials for the markets to breakout and not look back so you have to be prepared for such whipsaws. 9. It's important to find a good breakout point - e.g. all time new high in stocks, weekly or monthly high in forex or futures. As an example you can google "why can't most people buy the all time high" and read this study. 10. Now to low risk entry point - you don't have to put your SL after a breakout at a far away place indicated by chart. you can put your SL anyplace you want below the breakout (scary, eeh?). If you're free from the fear of whipsaw AND you know that ANYTHING can happen in the markets then you can put your stop very close to your entry even on weekly charts. your SL can be taken out even if you put it far away from the entry point, because ANYTHING can happen in the markets. Certainly you need to put it some distance from the spread, but it can be as close as 0.5 daily or weekly ATR. The closer you put it the more you're prone to whipsaws BUT you're not afraid of whipsaws anymore,right? 11. This way you can always risk a small percentage of your capital initially (say 1% or even 0.5%) but your position is quite big because of close stop. 12. When the markets breakout and never look back, you need to trail your stop allowing for the trend to continue. It's a good idea to trail your stop on weekly or e.g. for stocks it might be even monthly TF. 13. With this you can be stopped out 2 or 3 times loosing 2 or 3 % but when the market moves, imagine the kind of risk/reward ratios, they can be HUGE 14. You'd need to test your risk parameters, entry, exit and trailing stop parameters to find the ones most suitable to you, the ones to which you'd stick no matter what. This is not to find the best parameters but to check what you can handle psychologically. 15. The most difficult parts are: sitting tight when the trend gets going, especially through corrections; allowing for the trend to fail even when you're in the profit; doing the soul searching to find the parameters for the above mentioned that you can stick to. 16. The good part is that once you figure out the way you want to trend breakouts, you have lots of time to spend with your family and doing other stuff. 17. The huge moves DO HAPPEN more often than you think. I don't want to start any discussion with that because these points are kind of general and doing the soul searching and testing on past data can give different results for different people. My opinion is that most traders fail because they trade counter-trend even though they think they trade with the trend and because people believe they can predict what can happen in the markets. If you accept you can't predict, but just set your risk, put the position in place and set your stop, you free yourself from a lot of burden.

Enigmatics, I have only this short advice for you, which in fact helps me tremendously in my trading. When you're anxious to take the quick profits, leave the position on and go for a walk. When you feel good about your position, close it. Give this a try and see what happens.

it's a great idea, I mean fasting every x days or every other day. I did the same with not eating sweets for more than a month and it made a huge difference. Perhaps with trading the idea might be NOT to take profits too early...

Does this include the pages you read more than once? :rofl: he writes some interesting and thought provoking stuff, then you read the footnote and it's difficult to take him seriously

"One strategy to capitalize on winning trades is to scale out of your winners. A loss should always be exited in full at your predetermined stop point, however when a trade is going in your favor, having multiple targets allows for the trade continue working in your favor. Exiting half the position at your first target, half of your remaining position at a second target, and the last portion (1/4 of the original) at a third and final target can be an effective way to capitalize on your winning trades" All nice but isn't it cutting profits short? I mean scaling out can be part of the trading plan that works for somebody, but still when your stop is hit, you have the whole position on and you take a hit on the entire position. When the trade is going your way, you're earning money on part of your position only. I've seen this advice on scaling many times and still have the impression that it's against profitable trading.