Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

jperl

What is your strategy when a trade goes against you

Recommended Posts

You enter an intraday trade long, and the trade immediately goes against you.

What do you do? Here are several possibilities:

 

1)You exit the trade at your preset stop and wait for a new entry

2)When the price action hits a support point, scale in

3)When the price action drops below a support point, reverse the trade and increase size.

4)exit on the close of the day and take a loss whatever that is.

5)exit when my risk tolerance is hit.

 

There may be other options.

Let's here from you and tell us what you would do.

Share this post


Link to post
Share on other sites

Option 1, but without the "...and wait for a new entry".

 

If you're wrong, you're wrong. Get on with frying other fish.

 

By the same token, just because you called it wrong last time, doesn't mean you stay shy of that stock. It has no memory of you.

Share this post


Link to post
Share on other sites

I am option #1 as well. There's no point of placing a protective stop if you have no plans to honor it. When you are wrong, get out. You can get back in when the time is right.

 

Now, with that being said, I think stop placement is key here as well. If you have a stop that is routinely being taken out and then the trade moves in your favor, you might need to adjust your stop placement methodology.

Share this post


Link to post
Share on other sites
Guest cooter
I am option #1 as well. There's no point of placing a protective stop if you have no plans to honor it. When you are wrong, get out. You can get back in when the time is right.

 

Now, with that being said, I think stop placement is key here as well. If you have a stop that is routinely being taken out and then the trade moves in your favor, you might need to adjust your stop placement methodology.

 

Which also means that your entry might be suspect too. And thus your trade setup might not be truly valid.

 

Risking 4 points on a stop to earn 1 point won't make you much $$$ in the long run, will it?

Share this post


Link to post
Share on other sites
Which also means that your entry might be suspect too. And thus your trade setup might not be truly valid.

 

I disagree. If your method says to enter based on XYZ, then you enter based on XYZ. We can't say the a setup is not 'valid' if you enter your trade based on the conditions you set. If your conditions are met, then that's a valid trade regardless if it's the greatest entry point possible. The point I was making was that the protective stop placement is very important, esp at the start of the trade. Reason being that many traders are too eager to place an initial stop too snug (since that provides comfort knowing you are not risking that much) or moving your initial stop too quickly (for sake of protecting that little profit). I constantly have to monitor my stop movement b/c I am eager to get that stop moved so that I can't 'lose'. Well, if you get ticked out of a trade that is a winner, you just 'lost'.

Share this post


Link to post
Share on other sites
Guest cooter
I constantly have to monitor my stop movement b/c I am eager to get that stop moved so that I can't 'lose'. Well, if you get ticked out of a trade that is a winner, you just 'lost'.

 

So when do you move up that "wide" spread then? Sounds like a touchy-feely sort of "rule", rather than a hard-and-fast trade parameter, no?

Share this post


Link to post
Share on other sites
Guest cooter
I disagree. If your method says to enter based on XYZ, then you enter based on XYZ. We can't say the a setup is not 'valid' if you enter your trade based on the conditions you set.

 

Sure, we can. Your ENTRY may be valid, but based on the faulty premise of your trade setup which may not be valid.

 

If your conditions are met, then that's a valid trade regardless if it's the greatest entry point possible. The point I was making was that the protective stop placement is very important, esp at the start of the trade.

 

 

And the point I was making is that your trade setup might not be valid to begin with, especially if you are always getting stopped out.

 

Of course, your definition of valid and validity might vary....

Share this post


Link to post
Share on other sites
You enter an intraday trade long, and the trade immediately goes against you.

What do you do? Here are several possibilities:

 

1)You exit the trade at your preset stop and wait for a new entry

2)When the price action hits a support point, scale in

3)When the price action drops below a support point, reverse the trade and increase size.

4)exit on the close of the day and take a loss whatever that is.

5)exit when my risk tolerance is hit.

 

There may be other options.

Let's here from you and tell us what you would do.

 

I'm a strong believer to map out the trader prior to entry.

 

Anyways, my contingency plan involves #1, #2 and #3 depending upon the price action at the time of the trade.

 

Mark

(a.k.a. NihabaAshi) Japanese Candlestick term

 

"Volatility analysis is a doorway to consistent profits."

Share this post


Link to post
Share on other sites
Sure, we can. Your ENTRY may be valid, but based on the faulty premise of your trade setup which may not be valid.

 

 

 

 

And the point I was making is that your trade setup might not be valid to begin with, especially if you are always getting stopped out.

 

Of course, your definition of valid and validity might vary....

 

Coot - how do we define 'valid' then? I guess that's why I'm not understanding here...:confused:

Share this post


Link to post
Share on other sites
Guest cooter
Coot - how do we define 'valid' then? I guess that's why I'm not understanding here...:confused:

 

 

Simple. Validity refers to (in this context) a strategy that yields a statistically significant positive expectation of return (assuming that was the result you intended to achieve).

 

Remember, you can design, test and implement a strategy that does not yield a positive/winning result.

 

And you can enter and exit correctly per this setup.

 

Just because you execute this setup correctly, does not make it a winning strategy if the premise upon which your strategy was designed was flawed to begin with.

 

And that's my point. :D

Share this post


Link to post
Share on other sites

So you are saying that if the strategy itself is flawed, your doomed no matter what, right?

 

If so, doesn't that go w/o saying? I mean, a losing strategy will lose over time no matter what. Hopefully everyone here understands that basic premise.

 

My point was that you can in fact have a winning strategy that is easily turned into a losing one b/c of stop placement and stop movement. Therefore, if you find yourself often watching trades go in the direction you wanted but only after being ticked out of the trade, examining the stop placement is needed. And that minor change can make a big difference. And back to the topic on hand - if you are 100% comfortable in your stop placement, then you simply allow the stop to be hit (to prove you are wrong) or let the trade go.

Share this post


Link to post
Share on other sites

"If you have a stop that is routinely being taken out and then the trade moves in your favor,"

 

if that is ROUTINELY happening, then i agree - the trade setup IS faulty.

 

clearly, you should set your ENTRY where this "setup" places the stop

 

cause if the stop is hit there constantly, then it moves in your favor, then THAT is where you should be entering.

 

that's kind of self-evident

 

a big part of my trading is knowing how retail trades - where they place their stops and entries because then i know how to trade - NOT like retail. after all, most retail traders lose money

 

if u enter at price X, and price routinely takes out your stop at X-10, why not set your ENTRY at X-10?

Share this post


Link to post
Share on other sites
Guest cooter

Unfortunately, this is the kind of "self-evident" stuff that supposedly "goes without saying" which trips up many a trader, newbie and seasoned alike.

 

Just because one may "think" his or her trade setup is "valid" does not make it so. Analyzing and breaking down your flawed and winning trades can help pinpoint the errors in recognition or execution, and determine whether the strategy was really worthwhile after all.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date: 22nd November 2024.   BTC flirts with $100K, Stocks higher, Eurozone PMI signals recession risk.   Asia & European Sessions:   Geopolitical risks are back in the spotlight on fears of escalation in the Ukraine-Russia after Russia reportedly used a new ICBM to retaliate against Ukraine’s use of US and UK made missiles to attack inside Russia. The markets continue to assess the election results as President-elect Trump fills in his cabinet choices, with the key Treasury Secretary spot still open. The Fed’s rate path continues to be debated with a -25 bp December cut seen as 50-50. Earnings season is coming to an end after mixed reports, though AI remains a major driver. Profit taking and rebalancing into year-end are adding to gyrations too. Wall Street rallied, led by the Dow’s 1.06% broadbased pop. The S&P500 advanced 0.53% and the NASDAQ inched up 0.03%. Asian stocks rose after  Nvidia’s rally. Nikkei added 1% to 38,415.32 after the Tokyo inflation data slowed to 2.3% in October from 2.5% in the prior month, reaching its lowest level since January. The rally was also supported by chip-related stocks tracked Nvidia. Overnight-indexed swaps indicate that it’s certain the Reserve Bank of New Zealand will cut its policy rate by 50 basis points on Nov. 27, with a 22% chance of a 75 basis points reduction. European stocks futures climbed even though German Q3 GDP growth revised down to 0.1% q/q from the 0.2% q/q reported initially. Cryptocurrency market has gained approximately $1 trillion since Trump’s victory in the Nov. 5 election. Recent announcement for the SEC boosted cryptos. Chair Gary Gensler will step down on January 20, the day Trump is set to be inaugurated. Gensler has pushed for more protections for crypto investors. MicroStrategy Inc.’s plans to accelerate purchases of the token, and the debut of options on US Bitcoin ETFs also support this rally. Trump’s transition team has begun discussions on the possibility of creating a new White House position focused on digital asset policy.     Financial Markets Performance: The US Dollar recovered overnight and closed at 107.00. Bitcoin currently at 99,300,  flirting with a run toward the 100,000 level. The EURUSD drifts below 1.05, the GBPUSD dips to June’s bottom at 1.2570, while USDJPY rebounded to 154.94. The AUDNZD spiked to 2-year highs amid speculation the RBNZ will cut the official cash rate by more than 50 bps next week. Oil surged 2.12% to $70.46. Gold spiked to 2,697 after escalation alerts between Russia and Ukraine. Heightened geopolitical tensions drove investors toward safe-haven assets. Gold has surged by 30% this year. Haven demand balanced out the pressure from a strong USD following mixed US labor data. Silver rose 0.9% to 31.38, while palladium increased by 0.9% to 1,040.85 per ounce. Platinum remained unchanged. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news. Andria Pichidi HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • A few trending stocks at support BAM MNKD RBBN at https://stockconsultant.com/?MNKD
    • BMBL Bumble stock watch, pull back to 7.94 support area with high trade quality at https://stockconsultant.com/?BMBL
    • LUMN Lumen Technologies stock watch, pull back to 7.43 support area with bullish indicators at https://stockconsultant.com/?LUMN
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.