tyro's Post
let's say you got short at noon at 1500. Could you have it go down to 1484 then come back up to 1497? That's 13 pts unrealized down to 3pt.
31 Replies:
You'd need to do that to capture the bigger moves. Retraces happen and you need to hold
that's why I've always thought the ideal strategy is to take your 13 points and then re-enter at 1497.
even if it keeps going without you, you've still made 13 freakin points.
Depends on your goals.
also depends on your stops. Is 13pts large relative to your risk?
Tyro, what you're saying is that you need to use wider stops to capture the big moves.... well, all you need is one or two stop outs and your account would be hurting big time.... capturing trend days is very high risk....
My view is that the market doesn't give a flying *** about my goals. honestly, I think some people's trading plans hinge on being able to tap into latent psychic abilities. Predicting a trend continuation is just as hard as picking tops and bottoms (it's just two flavors of the same thing IMO). So, knowing that I personally suck at that, I have to take profit when I'm lucky enough to have it.
I don't have the balls nor the account size to afford two or three 10pt stop outs....
Richard is correct, capital preservation has to be priority number one, which pretty much eliminates capturing the trend days....
RT - when I say "goals", obviously they have to be realistic and backtested. P'raps "strategy" is a better term. A swing trader will go broke in weeks if he takes 13 pt profits. Am I really that unclear?
P - The NQ is printing 5-10pt candles on the 5min chart. That means that at 10-15pt retrace doesn't mean the trend has stopped. You can find low-risk entries to have lower initial stops, but you'll need to give up a lot of unrealized profits to capture the move. If that doesn't appeal to you, forget trends and focus on the shorter time frames & scalps. No biggie, profits for everyone.
I'm using 10pts on the NQ, which is only $200. 10pts on the ES would hurt more, yeah. Fortunately, it doesn't move as many pts in a day as the NQ.
yeah, I'm assuming for this conversation that you have nice positive-expectancy profits by the time you are deciding whether to take them or let it retrace. If I've got a $1 stop, I would never say "damn, I had 6 cents of profit and then let it retrace on me," for instance. So, normally a swing trader would be showing more profit before the decision point happens, since their stops will tend to be wider.
I think it's pretty well understood that if trend-following is your whole game, you need deep pockets, right? I'm skeptical about people's ability to reliably predict trend days in advance, and then switch strategies in real time, though maybe it's possible. Never say never!
Do you think you could have captured at least 50% of today's trend ?
1514 downto 1474 on ES, 50% would be 19pts, 808 downto 785 on ER2 (50% = 11.5pts), 2024 downto 1970 on NQ (50% would be 27pts)
Depends. Today is an extreme example, but each day generally has a few "trends" (ie: 1-4hr moves). You don't need deep pockets to capture these. Trying Turtles/Donchian Channel style trends does take deep pockets. I'm just saying that, if you want to hold for 1-4 hrs for a bigger move than a quick scalp, you need to let price move against you. How much that is will depend on the strength of the move, your conviction, whatever other signals. If the trade is still good, why exit just because of a natural and expected retrace?
Traders exit because the urge to protect profits is compelling, plus there's no way to know at that point in time whether the trend will continue
p - I was saying to myself that the pattern of gap down followed by gap close and bounce has been a great opportunity to go short. If you went short around 2020 with a stop at 2028 (above the high) or 2015 with a stop at 2023 (consolidation), then what's your exit signal? Why wouldn't you still be in?
tyro - my problem was that the past two days of not being able to capture trends damaged my psyche enough such that I wasn't fast enough to recognize the opp. in real-time. That is also what makes it tough to capture trends - when you're wrong, you have to shake it off fast enough to try for the next one.... it's hard to do that in real-time.... at least for me...
Ah yes, I know that feeling. Do you think that you'd be able to avoid that feeling with different styles of trading?
I've always thought there was a logical flaw in that strategy (I should hold through natural and expected retraces), which is: it seems to have a built-in assumption that I can tell the difference between a retrace and a reversal. Otherwise, why would I ever exit my trade? If I wait until it's obvious, I've found that I usually make the same or less profit than I would have if I just took my profit early.
ok, I think it is possible to capture trend days, but there are a lot of factors working against you (risk mgmt, entering at the right time, frame of mind, market conditions, the urge to protect existing profits, etc.) such that the odds are stacked against you. But it can be done, just need to find a way to to make it a part of my own style.
I guess if there are a couple retraces before the reversal you would end up making more money. I suppose I'm used to stocks being choppier than that. Perhaps trading indices is a smoother ride.
RT - it does mean that you'll tend to exit too late at times, but that's not a logical flaw. Isn't the logical flaw in thinking that you'll know when retraces will happen and how long they'll be so that you can exit and re-enter at a better price?
RT - look at today's NQ. Lots of retraces, but none ever broke the 20 EMA until now. You'd want to watch around the 2000 mark but once it broke that, it has been clear sailing. It isn't smooth, but it isn't totally wild either.
maybe that's why I've never been able to re-enter at a better price :-)
tyro, my frustration only started because I attempted to capture trend days.... I was never frustrated when I took my 1 or 2pt scalps.... I tried a new style, it didn't work, so I have to regroup to think about how I can do it better.
I don't scalp because it frustrates me. If these moves bother you, use a slower chart, use smaller size or maybe stop trying for trends and focus on scalps again. No need to do everything.
tyro - the break above 20 MA by itself is not a reliable indicator. ES broke above 20MA multiple times, but they were false breakouts. I think we need to also look at divergence in indicicies, or at least additional indicators to confirm....
or, you can jump in small and get larger as additional indicators confirm. Seems to be what the successful ones do.
P - I'm not using it as an entry, rather as an exit. For today, the downtrending channel is broken. Maybe it chops sideways, maybe it bounces, maybe it resumes. But the rush down is over for now. I'm certainly not about to go long!
