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Enigmatics

If I'm Good at One Strategy, Why Change It?

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Mulling over what it is I do well and what it is I don't. I've long maintained that one of my weaknesses as a trader is not maximizing trades when they go in my favor. I tend to take profits quickly. The previous 2-3 weeks were chalk full of trades that I took profit early on only to have the stocks go up quite a bit more. So this week, I tried adapting .... tried scaling out of stocks or riding thru dips. The end result was a red week working through some of the "chop" we saw.

 

Obviously as a trader I'd like to be able to stomach dips better. I'd certainly like to utilize scaling. But if I'm hitting my modest profit goals on a daily basis just playing the first pop on the setup I trade ..... well then why get away from that? I would assume in time that as I continue to build my portfolio, I might be able to take more advantage of scaling and riding thru dips. The largest net can absorb the most risk right?

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Mulling over what it is I do well and what it is I don't. I've long maintained that one of my weaknesses as a trader is not maximizing trades when they go in my favor. I tend to take profits quickly. The previous 2-3 weeks were chalk full of trades that I took profit early on only to have the stocks go up quite a bit more. So this week, I tried adapting .... tried scaling out of stocks or riding thru dips. The end result was a red week working through some of the "chop" we saw.

 

Obviously as a trader I'd like to be able to stomach dips better. I'd certainly like to utilize scaling. But if I'm hitting my modest profit goals on a daily basis just playing the first pop on the setup I trade ..... well then why get away from that? I would assume in time that as I continue to build my portfolio, I might be able to take more advantage of scaling and riding thru dips. The largest net can absorb the most risk right?

 

If you got out before you were supposed to you did something wrong. If you got out after you should have, you did something wrong.

 

If you get in before you should have, then you did something wrong. If you didn't get in when you should have, then you also did something wrong.

 

It seems to me like you might need to better define when you are supposed to get in and when you are supposed to get out so that you stop second guessing yourself. You can see how fruitful your second guessing yourself was. A really simple remedy, if you are committed, is to take your indicators and consider what your expectation of price is with each combination of your indicators. The formula for figuring out your combinations is (categories)^(indicators). Categories could be something like bullish, neutral, bearish...

 

So 4 indicators with 3 categories would give you 81 combinations to consider. 6 indicators with 3 categories will give you 729 combinations.

 

Its a really good exercise and it clearly defines your reasons for staying in and getting out based on the indicators you are watching.

 

MM

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If you got out before you were supposed to you did something wrong. If you got out after you should have, you did something wrong.

 

If you get in before you should have, then you did something wrong. If you didn't get in when you should have, then you also did something wrong.

 

It seems to me like you might need to better define when you are supposed to get in and when you are supposed to get out so that you stop second guessing yourself. You can see how fruitful your second guessing yourself was. A really simple remedy, if you are committed, is to take your indicators and consider what your expectation of price is with each combination of your indicators. The formula for figuring out your combinations is (categories)^(indicators). Categories could be something like bullish, neutral, bearish...

 

So 4 indicators with 3 categories would give you 81 combinations to consider. 6 indicators with 3 categories will give you 729 combinations.

 

Its a really good exercise and it clearly defines your reasons for staying in and getting out based on the indicators you are watching.

 

MM

 

Entry is not the issue. It's the sell. I commonly sell too early, even though technically I am hitting my profit goal for the trade. Should it matter that I'm missing the larger moves? I'm wrestling over it because it seems like I could've traded "longer" in that uptrend we had all during October but I didn't. I got a little frustrated with that kind of missed opportunity. Now that I'm trying it the first week here in November when we've been choppy, I actually took a step back. So is it better to just play the pop at all times until I better learn market trending .... or better yet until I've sufficiently built my account up even more?

 

I'm not so much an indicators guy. My whole strategy is based on a combination of Volume Spread Analysis, Market Profile, VWAP, and Point of Control.

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One solution is to leave a small position in place (with a GTC order) in case it runs. If you place a stop, your worst case is that you pay commission and take a little off your profit. Your best case is you make additional profit.

 

The benefit to you if you use that rule with discipline is that after any time period (say a month) you look at your results, you may be motivated to always keep an extra unit in place.

 

Good luck

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Entry is not the issue. It's the sell. I commonly sell too early, even though technically I am hitting my profit goal for the trade. Should it matter that I'm missing the larger moves? I'm wrestling over it because it seems like I could've traded "longer" in that uptrend we had all during October but I didn't. I got a little frustrated with that kind of missed opportunity. Now that I'm trying it the first week here in November when we've been choppy, I actually took a step back. So is it better to just play the pop at all times until I better learn market trending .... or better yet until I've sufficiently built my account up even more?

 

I'm not so much an indicators guy. My whole strategy is based on a combination of Volume Spread Analysis, Market Profile, VWAP, and Point of Control.

 

VSA, MP, VWAP, POC, price, volume, time, candles, ohlc bars, and etc are all indicators. Each assembles historic data on a chart. If you are a discretionary trader, then you need to understand what your indicators need to look like in order to stay in the trade. As an example, perhaps, you want to stay in if volume is increasing, price is moving away from value, and price bars are making a series of higher highs and higher lows. ( Just a guess). the point of my previous post was that you need to define what you need to see in order to stay in a trade longer, what you need to see to add contracts to a trade, and what you need to see when you need to exit a trade

 

You are getting out at the wrong time because you do not understand what your indicators are telling you and you are engaging in a very common defeatist pattern of accepting a small profit because of a fear of the unknown or some other fear.

 

Leaving a small position as steve46 suggests is a good idea as well.

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VSA, MP, VWAP, POC, price, volume, time, candles, ohlc bars, and etc are all indicators. Each assembles historic data on a chart. If you are a discretionary trader, then you need to understand what your indicators need to look like in order to stay in the trade. As an example, perhaps, you want to stay in if volume is increasing, price is moving away from value, and price bars are making a series of higher highs and higher lows. ( Just a guess). the point of my previous post was that you need to define what you need to see in order to stay in a trade longer, what you need to see to add contracts to a trade, and what you need to see when you need to exit a trade

 

Perhaps my ability to translate the candles needs revising ..... maybe using price bars instead or possibly Heikin-Ashi candles. The HA candles seemed like they'd be right up my alley since they smooth out the price data using averages.

 

You are getting out at the wrong time because you do not understand what your indicators are telling you and you are engaging in a very common defeatist pattern of accepting a small profit because of a fear of the unknown or some other fear.

 

Leaving a small position as steve46 suggests is a good idea as well.

 

Sobering comment ..... no seriously though .... there's a truth to what you're saying, especially the fear of the unknown part. I mean we're currently trading in a very volatile market place where most of the equities do not act on their own behalf.

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One solution is to leave a small position in place (with a GTC order) in case it runs. If you place a stop, your worst case is that you pay commission and take a little off your profit. Your best case is you make additional profit.

 

The benefit to you if you use that rule with discipline is that after any time period (say a month) you look at your results, you may be motivated to always keep an extra unit in place.

 

Good luck

 

Along that note .... if you're going to leave some out there, what kind of position size should I be entering in with in the first place? I currently pay $4.99/trade and ECN fees (which vary by position size). Is there a "make sense" sizing for scaling and leaving some out there? I'm commonly trading with 400 shares right now. I know it's not a lot but it's what I'm presently most comfortable with. I used to use anywhere between 500-800, but scaled back after I had hit a trading rut a couple months ago.

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all the extra analysis in the world wont matter if you cannot deal with the trade off running positions has.

This involves giving up profits sometimes....often with the occasional big win.

If you dont like, that, cant deal with it, or dont want to tolerate it then stick to what you are doing.

If you can do some backtesting on it where you can have an idea about the reality of what numbers will occur do that.

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all the extra analysis in the world wont matter if you cannot deal with the trade off running positions has.

This involves giving up profits sometimes....often with the occasional big win.

If you dont like, that, cant deal with it, or dont want to tolerate it then stick to what you are doing.

If you can do some backtesting on it where you can have an idea about the reality of what numbers will occur do that.

 

See that's what my thinking was. Part of that lies in the fact that I'm still growing my portfolio. Even though I want the "bigger" profits, I'm not at a point portfolio-wise where I feel I can pass up the chance to lock automatic ones. I can imagine that people who've really groomed theirs can more comfortably let the "trade off" take it's course.

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Along that note .... if you're going to leave some out there, what kind of position size should I be entering in with in the first place? I currently pay $4.99/trade and ECN fees (which vary by position size). Is there a "make sense" sizing for scaling and leaving some out there? I'm commonly trading with 400 shares right now. I know it's not a lot but it's what I'm presently most comfortable with. I used to use anywhere between 500-800, but scaled back after I had hit a trading rut a couple months ago.

 

With small size, you want to split your split your position into thirds...(if you could trade 600 shares this will be easier to work out) So you look at your chart and find approximate profit targets based on your expectation (I have specific time-based profit targets for my portfolio). You could liquidate either one third (if you are optimistic about the future for that issue) or two-thirds if you are less "happy" with the perfomance.

 

Good luck

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Entry is not the issue. It's the sell. I commonly sell too early, even though technically I am hitting my profit goal for the trade. Should it matter that I'm missing the larger moves? I'm wrestling over it because it seems like I could've traded "longer" in that uptrend we had all during October but I didn't. I got a little frustrated with that kind of missed opportunity...

 

You're a profitable trader, you're reaching your profit targets but you're using "hindsight analysis" to say you're exiting trades too early only because they continue moving further after you've exited.

 

I call that being greedy.

 

My point is you're worrying too much. Thus, you should only be concerned if you're consistently exiting trades before they reach their profit targets. That's the only time you should be worried that you're missing larger moves if/when those larger moves had reached your profit target involves your profit targets.

 

Yet, if you're not profitable or the dollar amount of your winners are at a ratio too close to the dollar amount of your losers...yeah...that's when you should re-design your exit strategy.

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You're a profitable trader, you're reaching your profit targets but you're using "hindsight analysis" to say you're exiting trades too early only because they continue moving further after you've exited.

 

I call that being greedy.

 

My point is you're worrying too much. Thus, you should only be concerned if you're consistently exiting trades before they reach their profit targets. That's the only time you should be worried that you're missing larger moves if/when those larger moves had reached your profit target involves your profit targets.

 

Yet, if you're not profitable or the dollar amount of your winners are at a ratio too close to the dollar amount of your losers...yeah...that's when you should re-design your exit strategy.

 

Really gave a tremendous amount of thought to all of this over the weekend .... all of what you say is very true. Look, we're talking about a market that can swing 100 points on the Dow in 30mins (which it just did today). Sitting thru those kinds of dips and trying to ride them out takes a lot more gumption than normal.

 

If I'm getting my initial pops, then the next step for me is to continue stacking gains and raise my positions sizes incrementally to increase future profits. Untiil then I cannot get hard on myself for not trading "all" of the move or most of the move.

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Along that note .... if you're going to leave some out there, what kind of position size should I be entering in with in the first place? I currently pay $4.99/trade and ECN fees (which vary by position size). Is there a "make sense" sizing for scaling and leaving some out there? I'm commonly trading with 400 shares right now. I know it's not a lot but it's what I'm presently most comfortable with. I used to use anywhere between 500-800, but scaled back after I had hit a trading rut a couple months ago.

 

A little off topic, but your commissions seem a little high. IB charges 50 cents per 100 shares, which includes ECN fees. Who are you using?

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In my opinion you need to change your mantra from "I could have gotten more" to "I got mine". After you got yours it shouldn't matter if the market goes up 10 or 10000 points. You enter a trade with a protective stop and a profit target. When you hit either you are out. Don't be greedy and stick to your plan which is working.

 

If you are moving targets once you enter a trade that is a different problem - namely fear - fear of the trade turning against you etc.

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I've long maintained that one of my weaknesses as a trader is not maximizing trades when they go in my favor. I tend to take profits quickly.

 

Enigmatics,

i'm a position trader (intermediate term swing). i stay in primary trend as long as it's favorable. i look for divergence between momentum and price. divergence is easy to spot when you look at chart 'history'. the past is not helpful in trading. it's a bit more challenging looking at the hard right edge.

 

here are two charts: the first chart shows actual divergence as it occured july. momentum indicator is CCI. it's important for momentum to come from overbought (above +200 for CCI). black trendlines shows divergence between price and CCI. the key point is the low between the momentum peaks. this is the trigger point. when momentum again peaks and then drops below this trigger, exit is suggested. this methodology gets me out when the current trend is ending.

 

nuances: CCI above +200 is colored red. blue arrowhead shows a potential top. red dot shows actual exit. black dot shows red candle closing below the 50 vwma.

 

the second chart shows this same scenario wnen view from the hard right edge. i built all nuances into the chart. they give me an excellent heads up on what will soon be history and thus become useless for trading.

good trading to you,

peter.

AXP-divergence.thumb.png.4ccc9955c72192b1615d4dd6845d484c.png

AXP-divergence1.thumb.png.527664c13a969534faea4a2c3385398d.png

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Engimatics,

 

Mulling over what it is I do well and what it is I don't. I've long maintained that one of my weaknesses as a trader is not maximizing trades when they go in my favor. I tend to take profits quickly. The previous 2-3 weeks were chalk full of trades that I took profit early on only to have the stocks go up quite a bit more. So this week, I tried adapting .... tried scaling out of stocks or riding thru dips. The end result was a red week working through some of the "chop" we saw.

 

Obviously as a trader I'd like to be able to stomach dips better. I'd certainly like to utilize scaling. But if I'm hitting my modest profit goals on a daily basis just playing the first pop on the setup I trade ..... well then why get away from that? I would assume in time that as I continue to build my portfolio, I might be able to take more advantage of scaling and riding thru dips. The largest net can absorb the most risk right?

 

Entry is not the issue. It's the sell. I commonly sell too early, even though technically I am hitting my profit goal for the trade. Should it matter that I'm missing the larger moves? I'm wrestling over it because it seems like I could've traded "longer" in that uptrend we had all during October but I didn't. I got a little frustrated with that kind of missed opportunity. Now that I'm trying it the first week here in November when we've been choppy, I actually took a step back. So is it better to just play the pop at all times until I better learn market trending .... or better yet until I've sufficiently built my account up even more?

 

See that's what my thinking was. Part of that lies in the fact that I'm still growing my portfolio. Even though I want the "bigger" profits, I'm not at a point portfolio-wise where I feel I can pass up the chance to lock automatic ones. I can imagine that people who've really groomed theirs can more comfortably let the "trade off" take it's course.

 

re “I'm not at a point portfolio-wise where I feel I can pass up the chance to lock automatic ones” etc...

 

Two thoughts (purchased for myself with much pain and costs and time)–

1) it’s system specific

are you ready to really to embrace “it’s system specific” for real?…

really replacing “where I can feel…” and “like to be able to stomach dips better”, etc.,

to really test and find your odds and near optimal sizing and trade close to them regardless of how it ‘feels’,

to use ‘feels’ in a different way - to develop/find new systems that fit instead of trying to get the current system to fit to your ‘feels’

 

ie “take profits quickly” and “hitting modest profit goals on a daily basis just playing the first pop on the setup I trade”

is just the only way some systems ‘work’.

Your system may or may not be that way.

Find out!

Then, if you know the odds and still have conflicts executing then it’s time to move to a different system AND do some trading syschology work.

 

2) ...any change to any parameter of a system, entry, exits, sizing, scaling, etc. is NOT a tweak or adjustment!

It is a whole new system!

This is another of those thoughts that is easy to ‘get it’ cognitively; but practically, can take forever for it really sink in deeply and really be implemented…

... keeping your current great entry methods and tweaking the exits and thinking you are still trading the same system would be an example of this... WHOLE NEW system ...different resultant risk levels, different optimal scaling, different optimal sizing... WHOLE new system I tell you :)

 

gotta go… hth… all the best… zdo

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$1 compounded at 20% four times over a span of time doubles it's value.

 

So, keep on doing what you can do well! Shoot for 20% on your quick trades and compound the results over a period of time, and after four 20% gainers, you'll have twice as much.

 

Double $1,000 ten times, and you have $1M!

 

It seems to me that you want to capitalize on your strengths - that's doing what you can do best - then simply learn to manage position sizing and set some goals for doubling.

 

I agree that it would do you some good to analyze what gets you into a trade and what gets you out, and if you think you're exiting early, adjust the exit but don't change the system.

 

Part of the analysis is to discover what you do well and find a way to keep on doing it.

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Trying to Simply trade with GTC orders. For an example when you are in trade Just Put a stop loss and Limit profit set on your software with the help of OCO (One Cancel Other) order type. And Always place your limit @ double of your Stop.its mean if you place a stop @20 Pips away and place a limit @ 40 pips away of current market Price and after a day or Week you make 10 decisions in which with the ratio of least 50%/50% you Lose 200$ in your Stops and earn 400$ in your limits. Result will be in your favor.

The only key is Plan your trade and trade your Plan.

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