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The First Loss is the Best Loss
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The First Loss is the Best Loss

  #1 (permalink)
 R.I.P. 1960-2010 
 
Futures Experience: Advanced
Platform: NinjaTrader7
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The First Loss is the Best Loss

Have been reading a lot about accepting you are wrong in the direction of a trade lately on the forum.

It is the weakness that must be overcome to be a consistently profitable trader.
What the intent of this thread is to get traders to identify trades where it would have been financially beneficial to accept that the entry is wrong and that by resetting the next decision would have been much more profitable.

So here is the 1st trade of the discussion. It is my 1st sim trade using NT7beta16.

Felt that 6e would rise, but I was way to early and to stubborn to just reverse then look for the turning point.

Later the chart confirmed my reading of the DOM; that 1.2470 was a reversal point. A short where I entered would have been much more profitable. Then a buy at the reversal would have generated 25 more pips.

So, by being stubborn I missed about 50 pips of price movement.

So help me, and help yourself, learn to get out of your losers & reset to increase your profitability.

R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
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  #2 (permalink)
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  #3 (permalink)
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Yeah but what about the trades you pull the trigger on to get out and then they go your way ? A bit of wiggle room can really help sometimes.

Also I find that when I start reversing positions, thats when I start to get really chopped. I guess it can depend on the market you trade, but I have a rule never to reverse a position or add to a position. Some markets seem to be just waiting for you to jump out of a trade and then waiting for you to reverse it seems and they rob you twice in the blink of an eye !

It's not an easy decision, especially when you have 5 seconds to decide and a ton of pressure on you ! I try to think long term and what will work in the long term (key word is TRY !).

Also I try not to do the "would have should have could haves", just move on to the next trade and shrug off the loss, don't beat yourself up. Maybe your equitity balance up for the last week or month, not the last day and try to think long term.

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  #4 (permalink)
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Before you place the FIRST trade, you should know a point in which you consider that trade to have failed. And, at this same time (before you are filled on first trade), you should know the answer as to whether or not you would want to reverse should your first trade fail.

There are many times when reversing is a good decision.

But, if you are making split-second decisions in the heat of the moment, instead of well thought out decisions prior to putting money on the line, then only bad things will happen

I am very pleased you and I agree on the importance of deemphasizing the woulda/coulda/shoulda stuff. There is no benefit in that stuff. So let me also say that as strongly as I believe in not doing w/c/s, I also strongly believe in knowing what to do with the trade BEFORE you get into it.

Mike

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  #5 (permalink)
 R.I.P. 1960-2010 
 
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ATM Moving Stop Strategy

I violate my own rules on this trade, it was a winner that I let turn into a loser and then understood that it would eventually be a winner.

Breaking it down even more: How about a rule as to what is the minimum profit that will be taken once some number of pips is unrealized?

This was a profitable trade, then had a serious downdraft and I waited, it kept falling. Next time (not shoulda at this point) will have a stop in place to at least break even once some number of pips are unrealized.

Big Mike posted (paraphrasing): Being profitable in the long haul is all about where you exit, not where you enter.

Steps to accomplish this: Currently seeking advice from Chipotlebop and reading threads like Gary's blog about using Automatic Trade Management (ATM) strategy to assist with systematic stop-exit moving.

With something like this in place there is no choice but reset, so having a rule hard-coded into the trading system seems to make a lot of sense.

R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
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  #6 (permalink)
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Understood MIke, if you plan to reverse then thats another story ... I don't think that far ahead !

I agree its the exits that make or break you. Its so easy to just see those lovely green numbers at 5 or 8 and say thanks I'll take that, but if you have your stops set at say 8 or 10 (I don't think thats overkill on the CL) then you have to be right more than 50% of the trades just to break even and even more if your scaling out. So its got to be worked out in the long term. By taking those profits early, you can be actually be failing in the long run. On the other hand of course you don't want to hold out to long ! I've done both and neither work, you have to find the sweet spot and that can depend on a few things, like the volatility of the day and the size of the channel and of course the market you are trading.

In back testing its the bigger stops and bigger targets that are always the best performers I find.

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  #7 (permalink)
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I agree with Mike. Once you enter the trade you are executing a plan. As I will be going live with a terribly undercapitalized account, having blown several, I am all to aware of the critical nature of going into battle with a complete plan.

When the ticks hit high speeds do you really think you are going to have time for your emotions to come to a logical decision? No way. Your trade execution must be systematic to the letter.

The holy grail of trading is probably one of the first things you heard, cut the losers quick and let the winner ride. If you have an edge you will make money doing this. If you don't have the discipline of a battleground commander to execute a battle plan, to sacrifice the pons, to compartmentalize your fears and have total faith in the planning process, then you are the pon in a better commanders plan.

As I am going live with a highly undercapitalized account I do not have the luxury of letting losers ride. I don't have the luxury of taking oversized losses. I have a six shooter with three bullets. So, there is no damn way I'm going into a trade without knowing exactly what I am going to do if a trade starts failing.

The plan. Get on the X-Trader Dom. Two hands on the wheel there will be no slippage. Advanced order types will be employed. Stops will be automatic and tight. Trading the Euro, I think 20 pip trailing stop on every execution should work for me. I won't change it. You might get hit and lose 0-10 now and again, but there will be more winners than losers and they will be bigger, 30-70, so, as long as the will and the discipline to execute is found money will be made. Any failure will be my psychological inability to compartmentalize fear, greed and logic.

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  #8 (permalink)
 R.I.P. 1960-2010 
 
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I stopped trading and reset after a bad performance this morning.

Came back and made 5 YM trades: Last not so good.

This stopped me in my tracks. Should have used a tighter stop.

Had +6 pips and let it turn into a loss. Will learn to not let that happen.

This should reinforce that idea of taking a quick loss on trades that are profitable and then reverse.

Better to reset and start fresh.

R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
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  #9 (permalink)
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I think much of this has to do with accepting that there is no way of knowing where the market will go, however good you are or whatever system / method you trade. The best traders i know are not the best technical anyalists but they know how to manage a position and themselves.

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  #10 (permalink)
 R.I.P. 1960-2010 
 
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rassi View Post
I think much of this has to do with accepting that there is no way of knowing where the market will go, however good you are or whatever system / method you trade. The best traders i know are not the best technical anyalists but they know how to manage a position and themselves.


ZTrade101 View Post
This should reinforce that idea of taking a quick loss on trades that are profitable and then reverse.

Better to reset and start fresh.

I agree with the idea that you do not have to be right more than wrong. But what do you think about accepting the idea you are incorrect as quickly as possible as a part of formulating rules?

Some of my best trades are when I have entered early and withstood some significant drawdown. Like the one that started this thread. But that one would have been a stellar trade set of trades if I had accepted the timing was wrong and looked for another entry.

R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
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