Bad Trade.

[SONICSCOOTER 10]

Hi to everyone, my first post.

 

Just wondered what the opinion was, say you are in a trade, you short and the trade goes up and you get stopped out, do people generally look to get back in or think that for the moment the stock or pair is not doing what i feel it should, therefore walk away from it for a while. maybe you were trading range bound and it starts to trend.

 

Thanks in advance for any replies.

 

Shane.

[jpennybags 11]

Hello Shane... welcome to TL.

 

I wouldn't let a trade that went against me take me out of the day, but it's always prudent to reassess the situation. It really depends a lot on what just occurred as to whether or not I'll take another trade in the same direction or sit on my hands for a while. If price is showing some follow through after taking out a stop I would think differently about getting back on than if it just got touched and is moving my direction again. Sometimes its best to forget about it and get on the other way...

 

There are some days that my trading system just isn't in sync with the market (sometimes it's just me that is out of sync... developed a wrong headed bias). I've learned to recognize those days early on... before digging a hole that I'll spend a day filling back in.

[MadMarketScientist 11]

Welcome to TL.

 

When that happens to me I don't give up on it right away. I might just be a little early and the opportunity could still go my way later in the day. But while I am waiting I definitely try my damn hardest not to have trigger-finger - this is probably the hardest part.

 

MMS

[MightyMouse 12]

Hi to everyone, my first post.

 

Just wondered what the opinion was, say you are in a trade, you short and the trade goes up and you get stopped out, do people generally look to get back in or think that for the moment the stock or pair is not doing what i feel it should, therefore walk away from it for a while. maybe you were trading range bound and it starts to trend.

 

Thanks in advance for any replies.

 

Shane.

 

You have to look at the market before each trade and determine which direction is it trying to go and how good a job it is doing getting there.

 

You really only should have entered short if the market looked like it was trying to go down. It could be that your entry was a mistake. If it was a mistake, then certainly do not try to take a short again. If it wasn't a mistake and it still looks like it is still trying to go down, you should enter short at the next opportunity. If it did look like it was trying to go down and you got stopped out and it is now unclear to you if it is trying to go down or up, then stay out. If it was trying to go down and you got stopped out and it now looks like it is trying to go up, then get long at the next opportunity. Whatever you do, the thing you don't want to do is sit there and cry about the loss and wondering if life would have been better if dad would have played catch with you more often. In other words don't feel sorry for yourself. Losses happen and they happen a lot. It has nothing to do with you. If you make it all about you, then, figuratively, you are doing exactly what the market wants you to do. The market needs you to be weak and stupid so it can take your money. The market is the collective pool of other traders.

 

Direction: There are a zillion tools that will help you determine direction. Find a set of them and get comfortable with them until you trust them. Then, never, ever take a trade which opposes them.

 

The way you trade the direction or if you trade the direction will be determined by how well it is doing, going in that direction. The conditions could be too volatile for the strategy you use or not volatile enough for the strategy you are using. You want multiple strategies to trade different conditions, but always being cognizant of the direction.

 

Your loss sucks but it is a fact of life trading the markets electronically. You are not always going to get the direction right and the strategy you use will not always be the right one. That is why you have a stop. Accept the loss, understand that the loss could be bigger and be prepared for the next trade either in the same direction or the opposite direction.. On the other hand, nothing is better than when you do get the direction right, and your strategy is working and the green is pouring out of the market. When you get the hang of it, it is actually easy. So easy that even a European can do it.

 

MM

[wrbtrader 10]

Hi to everyone, my first post.

 

Just wondered what the opinion was, say you are in a trade, you short and the trade goes up and you get stopped out, do people generally look to get back in or think that for the moment the stock or pair is not doing what i feel it should, therefore walk away from it for a while. maybe you were trading range bound and it starts to trend.

 

Thanks in advance for any replies.

 

Shane.

 

It's very simple, if you get another trade signal...re-enter the trade again. Yet, if you don't get another trade signal and it then trends. There's nothing you can do but remain discipline and stay on the sidelines.

 

Yet, if you consistently were in a losing trade that takes off and trends in your desired direction after it stopped you out for a loss...you need to update your trade method via any of the following:

 

• 
  Design a re-entry signal
   
  
• Improve your initial stop/loss protection method so that it gives your trades more room to breath
   
  
• Improve your entry signal so that it doesn't get you in so early
  

 

The above recommendations are via the assumption you have some sort'uv statistical proof after analyzing your trades that these losing trades would have been profitable had you done one of the above solutions.

 

However, if you have no statistical proof or you're only talking about a "few trades" that you're getting emotional about after witnessing how far they trended without you on board the train...learn to let it go and start preparing for your next trade opportunity.

Edited June 30, 2012 by wrbtrader

[SONICSCOOTER 10]

Hi, thankyou for the replies, its interesting to get you views,, its a strange world trading, its a lonely job, good to find this forum.

 

MightyMouse in English, no way European........

 

Thanks again.....Shane.

[fast 10]

Hi to everyone, my first post.

 

Just wondered what the opinion was, say you are in a trade, you short and the trade goes up and you get stopped out, do people generally look to get back in or think that for the moment the stock or pair is not doing what i feel it should, therefore walk away from it for a while. maybe you were trading range bound and it starts to trend.

 

Thanks in advance for any replies.

 

Shane.

 

With my trading methodology, whether it’s short or long makes no difference. Getting stopped out rarely makes any difference. What matters, or at least what matters to me, is that I take my next setup that triggers, and it matters that I do it without hesitation. I can’t let any anxiety inhibit me in any way. In fact, when I get stopped out and subsequently get another setup that triggers, I have a better chance of the next one working. Not only that, I sometimes skip my initial setup and patiently wait for those times when a subsequent setup comes along in-between cycle extremes.

 

I’ll tell you why. If I’m taking a trend trade, and let’s say I’m going long, I’m trying to buy after what I believe to be the cycle low moves in my direction. If I’m stopped out, that means I missed my mark, but if I have another setup come along soon after, that usually means I’ve found myself caught up in a complex retrace, and I love trading those when all other elements of my trading methodology comes together, and the reason is because they are more often successful than simple retraces.

 

As to your comment about trading range bound, that doesn’t happen to me when I have a setup for a trend trade, for my rules are such that stocks that are not trending do not even fit my setup parameters, let alone have a chance of triggering me into a trade.

 

You asked about what people generally do. Keep in mind that people generally aren’t successful, and it’s most often a result of what they’re doing, so at best, knowing what most people do could help serve as a contrarian indicator.

[MightyMouse 12]

With my trading methodology, whether it’s short or long makes no difference. Getting stopped out rarely makes any difference. What matters, or at least what matters to me, is that I take my next setup that triggers, and it matters that I do it without hesitation. I can’t let any anxiety inhibit me in any way. In fact, when I get stopped out and subsequently get another setup that triggers, I have a better chance of the next one working. Not only that, I sometimes skip my initial setup and patiently wait for those times when a subsequent setup comes along in-between cycle extremes.

 

I’ll tell you why. If I’m taking a trend trade, and let’s say I’m going long, I’m trying to buy after what I believe to be the cycle low moves in my direction. If I’m stopped out, that means I missed my mark, but if I have another setup come along soon after, that usually means I’ve found myself caught up in a complex retrace, and I love trading those when all other elements of my trading methodology comes together, and the reason is because they are more often successful than simple retraces.

 

As to your comment about trading range bound, that doesn’t happen to me when I have a setup for a trend trade, for my rules are such that stocks that are not trending do not even fit my setup parameters, let alone have a chance of triggering me into a trade.

 

You asked about what people generally do. Keep in mind that people generally aren’t successful, and it’s most often a result of what they’re doing, so at best, knowing what most people do could help serve as a contrarian indicator.

 

You're making a strong assumption. Your suggestion that most people aren't successful because of "what they are doing". I would suggest that most people do not succeed because they are undercapitalized and have unrealistic expectations, and they over- trade. The archives of TL are full of decent ideas from traders who are now extinct or have at least moved on. I will bet that we can find the "thing you are doing" somewhere in the archives.

[wrbtrader 10]

Hi, thankyou for the replies, its interesting to get you views,, its a strange world trading, its a lonely job, good to find this forum.

 

MightyMouse in English, no way European........

 

Thanks again.....Shane.

 

Shane,

 

Trading is only a lonely job if you want/allow such. Yet, if you want "in person" interactions with other traders, there are many ways to easily find/locate other traders near your home location. For example, use social networks to locate them (e.g. forums, facebook, twitter, stocktwits, software groups, nearby universities, local library and so on).

 

It starts via you letting everybody you know on those social networks what city you live in and you then initiate meetings if someone hasn't already done such.

[fast 10]

You're making a strong assumption. Your suggestion that most people aren't successful because of "what they are doing". I would suggest that most people do not succeed because they are undercapitalized and have unrealistic expectations, and they over- trade. The archives of TL are full of decent ideas from traders who are now extinct or have at least moved on. I will bet that we can find the "thing you are doing" somewhere in the archives.

 

Hey, what do you expect at one in the morning? (smile)

 

Looking back at what I said, I didn't take the time to break down the various reasons that create a barrier to success, but it was my intention to use the phrase, "what they are doing" in a broad and encompassing way. For instance, trading while undercapitalized is something some traders do. Overtrading is something else traders do. Having unrealistic expectations isn't an action, but yes, they often lead to action, but it's still the underlying trade commitments that go to the heart of my point. Regardless of what a person thinks, says, or does prior to pulling the trigger and placing an order, ultimately, success or failure can be tracked back to their buy, hold, sell decisions--what a trader does (or even doesn't do). Certain trading methodologies necessitate a bank roll that’s more than mediocre, yet what do many traders do? They trade anyway, and that's not a good idea, even if their plan is.

 

So, your point that traders have had great ideas is not (to me) in question, but there's a thorny counterpoint that mustn't go unnoticed. Little Johnny might have had a decent idea on where to take his family on vacation, and he may have even decided to act on that wonderful idea, but dragging your family all the way to Disney World with $200 dollars in your pocket isn't all that bright of an idea, even if it's still true that taking your family to Disney World happens to be a great vacation idea.

 

It's still morning, and I'm a PM kind of person, so be wary about this post too. (smile)

[MightyMouse 12]

Hey, what do you expect at one in the morning? (smile)

 

Looking back at what I said, I didn't take the time to break down the various reasons that create a barrier to success, but it was my intention to use the phrase, "what they are doing" in a broad and encompassing way. For instance, trading while undercapitalized is something some traders do. Overtrading is something else traders do. Having unrealistic expectations isn't an action, but yes, they often lead to action, but it's still the underlying trade commitments that go to the heart of my point. Regardless of what a person thinks, says, or does prior to pulling the trigger and placing an order, ultimately, success or failure can be tracked back to their buy, hold, sell decisions--what a trader does (or even doesn't do). Certain trading methodologies necessitate a bank roll that’s more than mediocre, yet what do many traders do? They trade anyway, and that's not a good idea, even if their plan is.

 

So, your point that traders have had great ideas is not (to me) in question, but there's a thorny counterpoint that mustn't go unnoticed. Little Johnny might have had a decent idea on where to take his family on vacation, and he may have even decided to act on that wonderful idea, but dragging your family all the way to Disney World with $200 dollars in your pocket isn't all that bright of an idea, even if it's still true that taking your family to Disney World happens to be a great vacation idea.

 

It's still morning, and I'm a PM kind of person, so be wary about this post too. (smile)

 

I took your post to mean that the entry and exit decisions of traders are what caused their failure.I think that most traders are bright enough to learn that what they are doing isn't working and are bright enough to figure that out pretty quickly. What happens next in the progression of their extinction is a variable. But, I think it can be summed up to their realization that they are not traders.

 

Don't take my post to mean that I am right and you are wrong. You, in fact, may be completely right and I could be completely wrong for all I know. What I do know is that I am bored as shit when the markets are closed.

[fast 10]

I took your post to mean that the entry and exit decisions of traders are what caused their failure.

Yes, but in the broadest sense. When a decision to enter the market is carried out without consideration of (oh say) their account size, then what may have been a good decision had their account size been adequate would therefore have not been a good entry decision. Still, in retrospect, I shouldn't have been so vague, and I think you were right to say what you did.

[Obsidian 10]

Hi to everyone, my first post.

 

Just wondered what the opinion was, say you are in a trade, you short and the trade goes up and you get stopped out, do people generally look to get back in or think that for the moment the stock or pair is not doing what i feel it should, therefore walk away from it for a while. maybe you were trading range bound and it starts to trend.

 

Thanks in advance for any replies.

 

Shane.

 

Guess things depend on the situation. I can say that studying the charts make such decisions easy. During the weekends I go over the charts again and mark important levels. I calculate possible entry levels (also sl, tp, sar levels). If you have a plan each time you open a position, it would be easy for you

[Tradewinds 12]

. . you short and the trade goes up and you get stopped out, do people generally look to get back in or think that for the moment the stock or pair is not doing what i feel it should, therefore walk away from it for a while.

 

• Price Wave Length - Price cycles back and forth, up and down. Sometimes the price has bigger waves, sometimes it has smaller waves. Volatility effects how big the prices moves are going back and forth, up and down.
  

 

Hard stops may not take volatility into account. If your stop price is for a strategy that assumes the price is cycling up and down X units, then you use that stop target in a more volatile market where price is cycling up and down 3X units, the stop will be too tight.

 

Make a common sense decision about what the volatility may be. Is there scheduled news coming out? Was the scheduled news much better or worse than forecast? Is there a big political or economic decision being made that day? Is it options expiration day? Are contracts expiring this week? You need to know all these things, and anticipate what the volatility may be.

 

Don't confuse how much the price has moved with what the trend might be. For example, price can go up on weak up volume. That is a divergence. If price is going up, and there's no good reason for it to be going up, it doesn't matter that it's going up. Eventually, it coming down if there is no reason for it to be going up.

 

So if you shorted something, the news was bad, the up volume was low, but the price shot up, it might be valid to get back into a short.

 

What happened on your last trade should be totally immaterial to your decision on the next trade. If you shorted something, lost money, then think to yourself, "Well, the short didn't work, so I should go long now." If that is your state of mind, then stop. Don't enter another trade. You need to be aware of what you are basing your decision on.

 

If you lost X amount on the trade, then enter another trade thinking, "Now I need to make twice as much money on this trade to make up for that loss. I'll use a profit target that's a lot bigger." If that's what you are thinking, then stop. Don't make another trade.

 

If you lost money on a trade, it doesn't bother you, you look at the situation, go through all your checks, and you get another 'Set Up'. Then enter another trade.

 

If you shorted something, got stopped out, and it bothers you, and you stubbornly think that by entering another short you are going to make the market comply with your will, then stop. Don't enter another trade.

 

So, before entering a trade you need to ask yourself, "Do I feel lucky?" If the answer is 'Yes' I'm feeling lucky. then you are going to get killed.

 

My point is, determine your state of mind, then analyze your strategy. If you have the wrong state of mind, STOP! If your strategy is giving you no signals, STOP!

 

Good state of mind; strategy gives signal; analysis is Complete with regard to every detail, CONTINUE.

[Predictor 11]

I will continue to monitor the situation because I find that most of my ideas will often end up working out if I had used a larger stop. One trader has described the effect of stops as causing strategies to "lose memory". I often that there are good opportunities to take both long and short after being stopped out -- based on keeping awareness of the total game.

 

So, I always try to retain that memory. If I were trading perfectly, I would probably continue to monitor the situation. There is a possibility my analysis was just flat out wrong and that's something I'm always concerned about. I also take into consideration my mental state. Sometimes it is better for me to clear my mind and take a break even if the "optimal" thing to do would be to stay on the trade.