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Liquicci, it's unfortunate that once in a while you will get some personalities who will behave like that, but the good news is, that some of them come to realize the error of their ways, and learn from the experience. Remember a few weeks ago on one of your other threads, you had another poster displaying this same behavior? Well, you and I and a few others had an ongoing discussion with him on the thread about that. Well, a few days back I got a personal message from him, and he apologized for his behavior, and he says he took my advice on various other posts to concentrate on trading only one setup, and that advice now is making him more profitable then he has been before. I would share the email here, but I don't want to infringe on his privacy. So, know that our thoughts, advice and behavior here do affect other people whether we come to know it or not.
I'd also like to remind everyone, that if the OP (original poster, thread starter) of a thread ignores someone, that person will not be able to make a post any longer in the thread. This is a feature of the forum and is designed to help keep discussions civil and on track, but is not to be used to exact punishment on a poster for disagreeing with the OP.
Thanks for keeping everything civil. A good, civil, polite discussion is what the forum is all about.
monpere yes I remember that. Nice to know some come around listen. Thanks for letting me know.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
Trading: Emini ES, Emini RTY (TF), Crude CL, Eurex DAX, Euronext CAC40, EuroFX 6E, and Hang Seng HSI
Posts: 47 since Mar 2011
Thanks Given: 125
Thanks Received: 61
Initial stop/loss protection...tight stops, large stops or normal stops has a different meaning from one trader to the next...different from one trading instrument to the next...different from one price action to the next price action.
Thus, a tight stop to someone may be a normal stop to someone else or a large stop to another.
Regardless to the labeling of initial stop/loss protections, we need to be very careful about the trade management after entry if it's designed for psychological reasons (e.g. comfort) versus being designed based upon the current price action of the trade. My point is that sometimes I place a stop at a particular price I'm not comfortable with but is required for the price action of that particular trade. In contrast, there are times when I place a stop at a particular price that's very comfortable but not appropriate for the price action regardless if its small, large or normal stop in comparison to prior trades I've done. Therefore, ignore the labeling (small stop, large stop or normal stop) and concentrate on the price action itself and then label your stops whatever you want upon completion of the trade.
That's why when someone ask me why did I use a small stop ? I reply...I didn't know it was small and the stop was placed at that price because the price action required such. I give the same answer to someone labeling my stop as large or normal. In fact, the few times I label my own stops...that implies I've allowed too much psychology into my trade management.
As for risk:reward ratios...I don't use them. Thus, my initial stop/loss protection is always different from one trade to the next trade because the price action is never the same. Simply, it's counter-productive for my trade method (maybe not for your trade method) to use the same risk:reward scenarios as if every trading day is the same or as if every trade is the same. We all know every trading day or each trade is not the same especially due to the fact of the constant changing in volatility.
To successfully manage stops (initial stop/loss or trailing stops) also requires the ability to adapt and that often correlates to your trading experience level...knowing when not to be absolute.
I do agree with adapting...going with the flow. However, in regards to your comment on r:r, don't you only want to take the most favorable setups? I guess it depends on the system you've developed. The market I'm trading may be advantageous for my system but because of how the price action is setup, my stop placement and first level target might only be 1:1, which is usually a trade that I will pass up. I'm always learning and tweaking so let me know know what you think.
Trading: Emini ES, Emini RTY (TF), Crude CL, Eurex DAX, Euronext CAC40, EuroFX 6E, and Hang Seng HSI
Posts: 47 since Mar 2011
Thanks Given: 125
Thanks Received: 61
Yes, we all want to take the most favorable trade setups. The issue is that the price action is constantly changing and it will change for worst or better as soon as we enter a trade. Thus, risk:reward scenarios is typically a fixed (same for every trade) trade management rule within changing price action. Therefore, fixed r:r are not adaptable unless the trader changes the trade management (e.g. increase reward, decrease reward, decrease risk or increase risk) while the trade is still open and based upon current price action.
Regardless, if your trade management after entry via fixed r:r is working for you...keep doing it because there is not a one way only to profits.
I don't have a fixed r:r. I'm big into market auction theory so the r:r for my setups (one for developing and one for distributing markets) changes depending on supply and demand at certain prices.
I am on the same wave length as you. The market is constantly changing as price and volume unfold.
A tight to medium stop for me is 10 to 20 ticks (/TF, /6E, /ZN) I'm definitely wrong on the trade if price moves more than that. I look for setups that have the potential to move 20-40 ticks based on the volume profile. As I grow as a trader, I hope to catch larger moves, in which case my strategy will change and my stop placement will change. Right now, I'm definitely incorporating my thoughts for those larger moves into my strategy, but I'm happy to take these short to medium sized moves for now.
As a longtime TF scalper I use the old-timey method: I put on my trade at the first reversal of the day and immediately set the stop just above or below the bar I entered on. Let enough contracts go for a point or two (some days I'll catch a flier) and it's a decent living. If I give a bar enough time to form before I enter and it goes against me then I was wrong to begin with but I still don't get killed. But you swing traders and long-term holders beware....this method ain't for you.
You can trade with a fixed reward risk/reward ratio, and still have variable size stops dictated by price action. This is only possible if you multiple contracts. You can use the Van Tharp R-Multiple position sizing. You vary the number of contracts on each trade based on how large your stop has to be, and therefore keep a constant risk per trade, yet still be able to have your stop placed appropriately on market fundamentals. The formula is ContractSize = RiskAmount / StopSize. Since your risk amount stays constant, if your StopSize increases, then ContractSize decreases, and as StopSize decreases ContractSize increases. You trade many contracts when your stop is small, and fewer contracts when your stop is large, from trade to trade, while the amount of money you risk on every trade remains the same.
Gentlemen, might this be a webinar topic? If Big Mike would permit it, have the more experienced members of this thread participate in presenting their ideas, views.
I for one would love to hear the ideas discussed live.
