In my beginner's opinion, I believe setting daily or weekly goals serves the purpose of controlling emotions and discipline whole lot more than money management itself. If you're on a roll, I'm pretty sure that your emotions will (sooner than later) take over your rationale. If you're behind, same thing: chances than you dig yourself into a deeper hole increase. Because after all, even if you stack the odds in your favor (positive or negative) with your knowledge of the market, trading ultimately remains a probabilities game.
Additionally, since we can't predict the future, you wouldn't be able to know that a big move happened later in the day until it would have happened. The next part of the day after you were ahead by 40 ticks could have easily been a crappy consolidation period where you give back all your gains. You know you missed out on a big winner once it has happened. Same thing with a big loser where after seeing it you could say: " Man, I'm glad I didn't get into that one".
Maybe a good way to deal with all this would be to lower your size once you've achieve your daily/weekly goals. Any extras is bonus and additional losses hurt much less. The ultimate "STOP TRADING" rules would then apply after your reduced size bonus trades.
Or you could just raise your size (just like you did going from 1 contract to now 5) instead of looking at it like "missing out on winners or losers".
My beginner's 2 cents...
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I have been really getting good results lately from locating those areas where there is a huge probability that there are a tremendous amounts of stops underneath. Usually in a trending move, you get a lot of entries of traders after a pullback. Of course there will be a lot of stops placed above/or below the failed countertrend swing area. What I see happen often is that price will be heading for a support or resistance area...and therefore many traders are staying in their positions untill their s/r levels are hit. But then, unexpectedly, price fails to go up to the level everyone thinks it will ..and it starts reversing. Then when it takes out that previous swing area where there's a ton of stops...and order flow is showing all those trapped traders getting stopped out..there becomes a great opportunity to catch a strong quick reversal.
The more you can figure out areas and situations that create trapped traders, the better you can exploit these moves. I would imagine there are algorithms designed specifically to locate trapped traders. It's easy to just look at charts and lose sight of the fact that there are "herd mentality" traders all following some chart pattern together...and when they are squeezed out on the wrong side, you can really capitalize on it.
This is obviously not a new concept, but simply one I have been paying more attention to lately.
Failure is not an option
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Two things that never leave my mind since I learned them. I'm sure everyone has a version of these:
“The History of every major Galactic Civilization tends to pass through three distinct and recognizable phases, those of Survival, Inquiry and Sophistication, otherwise known as the How, Why, and Where phases. For instance, the first phase is characterized by the question 'How can we eat?' the second by the question 'Why do we eat?' and the third by the question 'Where shall we have lunch?”
― Douglas Adams, The Restaurant at the End of the Universe
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For some (likely motivated by the money alone, the 'poor savers' of society?) conscious competence might lead to complacency instead further exploration but that is the basic idea.
Daily/weekly goals or trade till you start to tire, when you know what you don't know and have some proficiency I don't see it as a debate. With some history of success you know whats working for you and your other commitments and might even mix things up.
The 3rd best trader I know trades two hours (not to a monetary target) then goes to do voluntary work in his kids' school or community voluntary work / fishing. Its keeps him sane and happy.
Off for lunch at a picnic place
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Funny drawing how many of those have you on your computer, I am amazed by the number of them you post everyday?
I find this one especially interesting for me. In everything I have done in my life the stage 3 has always been my ultimate goal. I can work incredibly hard to reach it but once it reached I "waste" (it is not a waste for me) my time and money in some interesting (when I am lucky) place/activity in the world It may sound crazy but even if I had a magic wand that could provide me with one wish about trading I will never choose something like: make me the new Soros. Strange?
R.I.P. Olivier Terrier (aka "Okina"), 1969-2016.
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Google images as quite a few pictures haha. I was a trainer for some years, I got into the habit "picture says 1000 words" and it both amuses me and trains my memory finding a remembered image. I don't doubt there is a connection between a good visual memory and my eclectic but increasingly successful style of trading.
I understand what your saying, I have a similar migratory stage 3 pattern. I have climbed the (2nd) highest mountains, spoken to the wise men across the Earth and the honest ones always had the same answer about their life's work.. Not a clue what its all about really but it pays the bills.
"Dave Spritz: I remember once imagining what my life would be like, what I'd be like. I pictured having all these qualities, strong positive qualities that people could pick up on from across the room. But as time passed, few ever became any qualities that I actually had. And all the possibilities I faced and the sorts of people I could be, all of them got reduced every year to fewer and fewer. Until finally they got reduced to one, to who I am. And that's who I am, the weather man."
My mother used to say (kindly) "Rory, bored people are usually boring people" (even unto themselves) and it still motivates me to not be that guy.
Last edited by Rory; April 17th, 2016 at 02:26 PM.
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It seems the answer would vary depending on the stage of a trader's development. In general, the more skilled a trader becomes, the further into the day/week they can continue to expect to trade profitably. It all comes down to a trader's ability to discern opportunity vs danger, or to change tactics with changing conditions. Novice traders are less skilled at recognizing these conditions and therefore tend to give back gains on days when they trade well early, while digging ever deeper holes on days when things aren't going well. Therefore for a novice trader it is probably best to guard gains and limit losses.
For someone like yourself, who is more adept at recognizing the difference between opportunity and danger, I would think you could trade deeper into the day/week, perhaps even changing tactics with the changing conditions.
Last edited by Tap In; April 17th, 2016 at 08:31 PM.
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