Tight Stops can give false comfort - Psychology and Money Management | futures io social day trading
futures io futures trading


Tight Stops can give false comfort
Updated: Views / Replies:13,307 / 114
Created: by liquidcci Attachments:3

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 3  
 
Thread Tools Search this Thread
 

Tight Stops can give false comfort

  #91 (permalink)
Elite Member
Bala, PA, USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Mirus, IB
Favorite Futures: SPY, Oil, Euro
 
monpere's Avatar
 
Posts: 1,858 since Jul 2010
Thanks: 300 given, 3,276 received


liquidcci View Post
Sorry to those who follow this thread for the drama in the last few set of posts this weekend. I did not like poster ReaM taking my statements out of context then trying to argue against them with absolutes. I do not mind opposing opinions but twisting games I do not like. I let it get to me and began to make it personal. I actually came to big Mikes from other boards because while enjoying debate do not enjoy childish endless loop arguments. I appreciate that most posters on this board are respectful and do not play such games. The quality of posters and posts is why I am at Big Mikes as opposed to other boards.

In order to end the drama I did what I should have done early on and ignored ReaM. I also deleted a few of my own posts where I was borderline making it personal. While the things I said were true I do not like stooping down into childishness.

So lets get back to our stop discussion.

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.

Reply With Quote
The following 2 users say Thank You to monpere for this post:
 
  #92 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,352 given, 83,230 received

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.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
The following 3 users say Thank You to Big Mike for this post:
 
  #93 (permalink)
Elite Member
Austin, TX
 
Futures Experience: Master
Platform: ninjatrader, r-trader
Favorite Futures: CL, NG, TF, NQ, YM, GC, ES
 
liquidcci's Avatar
 
Posts: 862 since Jun 2011
Thanks: 609 given, 1,051 received



monpere View Post
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.

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."
Reply With Quote
 
  #94 (permalink)
 Vendor: www.thestrategylab.com 
Quebec, Canada
 
Futures Experience: Advanced
Platform: X-Trader, InfinityAT, Saxotrader
Favorite Futures: Emini ES, Emini RTY (TF), Crude CL, Eurex DAX, EuroFX 6E, Forex EurUsd and Hang Seng HSI
 
Posts: 32 since Mar 2011
Thanks: 40 given, 36 received

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.

Reply With Quote
The following 5 users say Thank You to wrbtrader for this post:
 
  #95 (permalink)
Elite Member
Portland, OR
 
Futures Experience: None
Platform: tos
Favorite Futures: NQ, SB, 6J, CL, GC
 
Massive l's Avatar
 
Posts: 1,458 since Mar 2011
Thanks: 922 given, 1,822 received


wrbtrader View Post

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.

Reply With Quote
 
  #96 (permalink)
 Vendor: www.thestrategylab.com 
Quebec, Canada
 
Futures Experience: Advanced
Platform: X-Trader, InfinityAT, Saxotrader
Favorite Futures: Emini ES, Emini RTY (TF), Crude CL, Eurex DAX, EuroFX 6E, Forex EurUsd and Hang Seng HSI
 
Posts: 32 since Mar 2011
Thanks: 40 given, 36 received


Massive l View Post
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.

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.

Reply With Quote
The following user says Thank You to wrbtrader for this post:
 
  #97 (permalink)
Elite Member
Portland, OR
 
Futures Experience: None
Platform: tos
Favorite Futures: NQ, SB, 6J, CL, GC
 
Massive l's Avatar
 
Posts: 1,458 since Mar 2011
Thanks: 922 given, 1,822 received


wrbtrader View Post
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.

Reply With Quote
 
  #98 (permalink)
Elite Member
New Orleans
 
Futures Experience: Advanced
Platform: Ninja
Broker/Data: IB
Favorite Futures: TF
 
Posts: 81 since Mar 2010
Thanks: 51 given, 140 received

Stops

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.

Reply With Quote
 
  #99 (permalink)
Elite Member
Bala, PA, USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Mirus, IB
Favorite Futures: SPY, Oil, Euro
 
monpere's Avatar
 
Posts: 1,858 since Jul 2010
Thanks: 300 given, 3,276 received


wrbtrader View Post
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.

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.

Reply With Quote
The following 2 users say Thank You to monpere for this post:
 
  #100 (permalink)
Elite Member
Houston Texas
 
Futures Experience: Intermediate
Platform: Ninja, Multicharts, LinnSoft InvestorRT,
Favorite Futures: Futures
 
Posts: 9 since May 2010
Thanks: 0 given, 2 received


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.

Just a thought.

Anyone in agreement let it be known.

Reply With Quote

Reply



futures io > > > Tight Stops can give false comfort

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Give this a listen RJay Psychology and Money Management 3 March 12th, 2016 11:54 AM
True or False Big Mike Off-Topic 147 June 2nd, 2011 06:19 PM
States Billed $1.3 Billion in Interest Amid Tight Budgets Quick Summary News and Current Events 0 January 15th, 2011 04:10 PM
What Training courses you have please give me your review aqt1981 Trading Reviews and Vendors 79 December 1st, 2010 11:10 PM
Stops, trailing and breakeven stops jonc NinjaTrader 4 November 9th, 2010 01:06 AM


All times are GMT -4. The time now is 02:43 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-14 in 0.15 seconds with 20 queries on phoenix via your IP 54.221.76.68