Not sure if this belongs in psychology. If not, my apologies. After reviewing my trading records from this year, and after thinking about my 'bad beats' this past year, I was hoping to get some input from some of the more experienced traders on the forum. The two trades that I am hoping to discuss here were attempts at shorting the 30 Year futures in the spring (around 148-149+), and shorting the Nikkei futures around the 16,000 top. Both of these moves were well anticipated in advance, especially the 30 year (what a beautiful topping pattern around 149 if you just sat patiently for the pattern to complete!) What I did not anticipate was the exact price at which the top would occur. Obviously, if one were to have a crystal ball, they could just go 'all in' using 94% of their capital or what have you, and retire relatively wealthy inside of 18 months. But, through my own follies in times past, I have learned to be prudent with regard to position sizing and stop loss sizing. Even if my trading style sucks currently, at least I have been able to preserve my risk capital (imo, a much more important consideration). Missing valuable opportunities that were well-anticipated can be demoralizing. And, to me, missing these is not much different than taking a loss.. perhaps even worse in a way (especially when the reward is large relative to risk). In the case of these two trades from above, I was attempting to get in at or near the turn, which may be the fundamental issue. This is clearly related to the need to be 'perfect', which is not necessarily congruent with being a highly profitable swing trader. What happened, however, was that I got stopped out on both attempts to get in on the trade, and was quite unwilling to hop aboard once it was clear that the price structure broke to the downside. Especially in the case of the Nikkei, the way it was behaving that day it topped at 16,000 was so wild and volatile, almost purely to the downside, that it was ostensibly a very high probability short trade, even as the price was dropping like a rock (post blow-off). I wanted to hop aboard, knowing that it was a high probability trade, but various factors stopped me: 1) I had already lost a bit more than a typical trade on the losing attempts to 'predict' the turn. 2) The volatility seemed scary once the turn was in progress. "What if the thing does some huge upward spike and puts me heavily under water?" I don't have millions under management (small retail piker) and thus cannot scale into a longer term position. In other words, my account size requires achieving 'separation' into a winning position relative to entry. 3) Getting in at worse prices seemed like a 'loss', even though the point was to make money. This might, on the surface, seem to be related to some psychological need to be 'right', and this might be true in part, but it seems to be related also to a fear of getting in at the lower price only to be shaken out as a weak hand. Some thoughts to fix this: 1) Stop trying to predict the turn. While there are limited circumstances where getting in at 'resistance' makes sense, particularly with regard to risk:reward, it seems better to think of looking for higher probability scenarios (more likely for trade to work). 2) Do better analysis. My charting analysis on the 30 year was crappy and in hindsight the 149`xx top was very clear and clean. This was one of this limited circumstances if one were patient enough to wait for that super clean sniper shot and would have lead to 1:100+++ risk:reward. While it would be nice to discuss the merits and follies of hindsight analysis, the fact is that researching backwards and/or in real time is all we have as technicians. So in that sense, I would ask to stay on topic. Anyway, I can embellish more about this topic, but just wanted to get the basic ideas down first and spark some (hopefully useful) conversation on this topic. I am quite sure that this is not a problem unique to me, and hopefully others can benefit. I notice that there are a number of troops on the boards who are clearly not overthinking things, are not looking to short the US indexes, yet. This makes way too much sense to me, and this perhaps goes back to one of the core issues of needing to get in at the extremes and being unwilling to hop aboard mid-trend on pullbacks or breaks from consolidation. As a general consideration, I seem unable/unwilling to get into a trend that is in progress. This is absolutely a requirement if you are not sitting on standby waiting for the exact break or turn.. so maybe the solution to this dilemma is simple? All on-topic and constructive input is greatly appreciated. Thanks.
What I learned (the very hard way) is that trying to predict price turns only makes sense in a range or the early life cycle of a tradaeable channel (by "early" I mean when you can first connect two swing lows or highs and place a parallel channel across the opposite swing in the middle; by "tradeable" I mean the channel is wide enough that there's someplace for price to go). Price tends to overshoot S/R levels such as trend lines and channel lines and you're more likely to have a profitable trade by positioning with-trend on the approach to such a level and enjoy the stop run that occurs on the overshoot. Same with an overbought/oversold indicator in a strong trend. These indicators are great for predicting turns in a range or wide channel, but in a strong trend, you're far more likely to make money buying overbought and selling oversold. Otherwise, study the price action surrounding price turns in a strong trend and stay away from the counter-trend trade until you get those signals. Another high odds method of fading a strong move is when you think price has run "too far" decide where you'd place a disaster stop on the counter-trend trade and place your entry order at that price instead. I know that last bit of advice sounds just plain silly, but every one of us who've had disaster stops taken out very close to a major trend reversal are nodding their heads right now.
This method sounds nice, given my style. Will give it a try when the next opportunity arises. Thanks.
OP Either fix the root issue(s) â or nothing will make a difference Both are within you btw jm"dumbass"o RN
Cool. Will try taking some non counter-trend trades, and see how it works out. Might be a good way to fix the root problem (simple behavior mod). No frelling way this is a unique problem (tendency to counter trend trade, predict early, etc, etc).
Today, away from the chart youâve bravado to spare Tomorrow, in front of the chart when shtf â youâll revert back to your old ways We all didâ¦.have⦠and many still do ======================== How about getting a pencil and paper, finding a quiet spot, then sitting and thinking through why youâre doing what youâre doing Write down the reasons till you can write no more â that is your root cause find it â fix it â or revert back to it ==================== Damn if it was only as simple as saying â Iâve changed Btw, the money and emotional capital Iâm attempting to save is yours â for now RN
You are right, looking at 1792 or so on ES for tonight/tomorrow... damn! Don't see extremely solid new longs, that's why. Maybe sidelines is wise instead of short. Sounds good, will give it a shot. Thanks man. I'm not losing risk capital, just doing some scalps here and there while waiting for a big setup. Yes, emotional capital is valuable. Thank you.
Some traders aren't trend trader. If your a counter trend trade learn to embrace it. just because everybody says the trend is your friend doesn't mean it has to be your(as in you) friend. Figure out which instrument fits your trading style. The indices are a good place to start for counter trend trading, even though theres times you want to go with the trend but for the most part you can catch some nice counter trend moves. I absolutely hate trend days. Take the last two days, i didn't do as well as trend trading traders and i'm ok with that. Early in the day today was some pretty good back and forth action but over all the market wasn't very kind to me. Over the last two days i've been slightly positive close to brake even. Some people would say how the market went straight up. Trend days are not my strength, the best thing that happened to me is I learnt to except it. Figure out how your mind works as a trader and go with that. Theres no right or wrong way to trade, if your making money thats all that matters. IMO theres only one thing thats constant in trading, RISK CONTROL. Hope this helps.
if prediction is based on information and NOT on noise , then why not?? before further discussion, let's read what actually ' prediction' means http://en.wikipedia.org/wiki/Prediction
Anything is possible! http://www.dailymail.co.uk/sciencet...ics-proves-IS-afterlife-claims-scientist.html " Quantum physics proves that there IS an afterlife, claims scientist Robert Lanza claims the theory of biocentrism says death is an illusion He said life creates the universe, and not the other way round This means space and time don't exist in the linear fashion we think it does He uses the famous double-split experiment to illustrate his point And if space and time aren't linear, then death can't exist in 'any real sense' either Most scientists would probably say that the concept of an afterlife is either nonsense, or at the very least unprovable. Yet one expert claims he has evidence to confirm an existence beyond the grave - and it lies in quantum physics. Professor Robert Lanza claims the theory of biocentrism teaches that death as we know it is an illusion created by our consciousness. "