What do you do to stop overtrading / manage trades? | Psychology and Money Management

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What do you do to stop overtrading / manage trades?

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Bakersfield, CA USA
Trading Experience: Intermediate
Platform: Sierra Chart
Favorite Futures: Bonds, YM
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There are many excellent points in this thread. One of my favorites about stop placement was from JMoniker. There is some value in that statement.

Let me add, however , consider the amount of "randomnous " in your timeframe.

How much can price swing up or down with price flat (not considering a trend)?
Consider 2-3 standard deviations of the last X bars. I use plus 2 sigma of the highs to 2 sigma of the lows of the last 20 bars to get an idea of how much price swing to expect without a trend change. If your stop is within that band you have lost your edge. On a trade moving in my favor I may move my stop to over what I consider to be the random swing.

The same principle could apply to JMoniker's comment regarding buying and selling "the range." Whenever I miss an entry and chase price it always results in buying near the top of the range or selling near the bottom of the range. The shorter your time frame of interest the greater the impact on profits. Learn to wait for your price entry. There will always be another trade.

I intend to examine the random swing range to see if it results in better entries.

Thanks for your question.

JMoniker View Post

Stop Placement: ...Am I willing to go short there at my stop if it gets triggered? If my answer is yes, then my stop is valid because if I am willing to go short there, that means my long bias gets invalidated there. To me, that is a good stop. But if my answer is no, then I am trading my P&L ...

String of Losers: ...... You'll find an infinite amount of ranges within ranges as you go down the time frames. What looks to be an uptrend is only retracing a prior leg up towards the top of yet another range. Knowing this, I tell myself very simply: buy low and sell high. Know the current range. Do not trade the MIDDLE of it. You may buy the bottom of it and sell the top of it.

The problem with trading is one needs to be right twice!
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