I just read your statement saying that "cut your losses short" rule doesn't really work for you.. Do you mean that allowing average losses to be bigger than your average wins, in which case your system would have a greater than 50% (most likely better than 65-70%) accuracy? Or do you mean that you simply do not use stops at all? and simply reverse your position given a signal, therfore being in the market all the time? Or do you mean you simply ride each position till it turns positive come what may? (I hope not! although it would be very interesting..) Re: following a "losing' system in reverse. I remember going through various systems and being frustrated that system 'x' would lose me money etc., and then thinking, but wait a minute, if it loses money, then all i'd have to do is reverse the signals and make money. (So, for all the "markets are random" people, losing OR making money (apart from commissions) should be impossible. ) This should work with systematized entry AND exit rules, but I doubt it would work for someone just trying to "fade" himself. Let's say someone was going to buy, but he thinks, i'm such a bad trader, i'll sell instead. He is still faced with the problem of exiting the trade. If he thinks, ok, i'd better buy now and close out, he'd have to fade himself and sell more - he'd never be able to exit.
Chasing the trend is what I sometimes do. Right on direction but wrong entry. I'll buy breakout, when i should be buying pullbacks. Its a clear sign i'm trading on emotion. Is that what you mean by "buying up movement". Its amazing how precisely wrong my stops can be when trading under this influence.
To me stops are a function of the way you trade. By that I mean that there is a big difference between buying 10,000 shares of one stock and buying 100 Shares of 100 stocks. I don't use "defined" stops, but obviously have to suck it up and take my lumps at times. I also don't put on any one trade that will bankrupt me. But if I were to do a 10K block, damn strait I would use a tight stop. But I also know that psychologically 10K is not the right way for me to trade.
every time i enter a stop and walk away from my desk hoping i don't get stopped out, i always get stopped out. when i get that feeling to enter the stop and leave, i should just get out of my position immediately.
what type of stocks do you trade , time frame and how far away do you set your stops??? maybe you are setting your stops to tight, in which case she will always wiggle you out..
Yeah, I have had the same experience. So basically I just don't do it. When I first was able to do trailing stops on Nasdaq stocks, I thought I found a foolproof thing. Turned out I was the fool. And of course, it worked great the first couple of times I tried, so as usual, I would have saved if this new "great tool" had failed me at first. Seems that I always got sucked into things with beginners luck (if you want to call something that ends up costing as "luck"). I have decided that as a professional trader, that stops are just a lazy way of trading. They are a way to avoid actually working. If I can't be around to watch and trade my positions, I am not doing my job. So unless the market is closed, I am watching my screens.
i usually always use a mental stop which i am very disciplined with. i'll set a stop where i see support or resistance... no specific amount away. however, sometimes when i'm having a frustrating day, i'll send an actual stop order and then walk away because i'm sick of watching losing trades. i'd rather get back to my desk and either be out of the trade or have a nice profit... it just never seems to work for a nice profit when i do this. this basically tells me, that i need to sit on my hands more when i'm having a frustrating day and not trade out of boredom and hope.
The way i look at it...If my stop is hit and i'm out, that is a successful trade; nothing to be frustraded about... ever read "trading in the zone" by Mark Douglas...
yep, got addicted to this thing for sure. Hasn't hurt though. Better than playing gin which is what I had been doing during the down times. This I can do and trade simultaneously. Not so with gin.