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PW, this is probably a dumb question but does your system give you trades that go a 100 ticks? The system I'm using doesn't give me license to hold a trade any further than the next S/R level and then I've got to bail. I mean, I don't think my entry signals give me big trades.
If I hold a trade beyond the first S/R level, unless the next one is seriously close, I keep thinking, what gives me reason to stay in this trade? What makes me think I shouldn't bail out before a retrace kicks in and takes 25%, 50% or all of my profit away from me?
Isn't it better to bank the profit and then look at the action around the S/R, getting back in if the price action gives another entry signal?
This is Euro/US I'm talking about - maybe Crude is different.
You can discover what your enemy fears most by observing the means he uses to frighten you.
Crude regularly has 150-300 and even larger tick days. Its not that I want 100+ trades, its that I want to give myself the opportunity for trades greater than 1:1 based on risk and potential reward that CL has typically granted to traders more patient than I. If my R:R gets me in the 100+ tick range for possible targets, I want to develop the ability to sit in the trade long enough to realize it. Some days this can happen in a few minutes on CL and other days it can take all day.
For me, the question about taking profits before a pull back has haunted me my entire trading career. Its a valid question. I think if you take profits off before a retrace, just get good at finding the swings. I am attempting to solve this issue with staged exits at pre-determined R:R levels with the potential for a longer runner. Its the only way I can solve the emotional issue you've described. Its less than optimal in terms of absolute return but in the long run, it probably works better than an all in all out scenario where you often settle for far less than whats possible due to the problem of taking profits early or letting winners turn to losers. With scale out, you can take risk off and then be able to think more rationally about the remainder of the trade. At least that's the theory anyway.
I think the way you mentioned is valid, you need good skills to overcome the slippage and transaction costs. Its possible but I am beginning to believe that fewer trades holding for larger targets is far better. The only real caveat is this...make sure the targets aren't arbitrary. Make sure they are based on some sort of repeatable logic, otherwise its just random.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
well two and done....got taken out by an outside bar while trailing one bar back....two bars back is better but still haven't got the stomach for that just yet but getting there.
I got to the charts after a sell off had already happened which always makes me pause and think. So i waited a bit for price to make its mind up. I almost went long but decided to just wait it out and sure enough, got an inside bar closed short. I went short there and got my first scale. Then trailed and got taken out.
Then I waited until I saw another outside bar and went short at the bottom of the bar. i tried to get short a bit higher but no fill so had to settle for the close. It was also the bottom of the opening range bar I use and so this represented a decent area to get short.
However, I elected to use the same targets as the first trade as that trade was still valid. This turned out to be a good idea as price reversed hard after reaching those targets. I scaled out at what would have been 2XR on the first trade and then had my target at 4XR. Price got within about 15 ticks of 4XR and so i trailed to +20 ticks. This got taken out and subsequently price went to 4XR and reversed.
While i am typing this, price has reached 1XR on the counter trend signal. But I really don't like counter trend trades that much but I do see them. I would have been all out at 1XR on a CT trade.
I am expecting some non directional momentum at this point. We'll see. I'm mostly gonna watch from now on.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Thanks Brian. I will be careful. I sure enjoy reading your progress over the months. I believe your a true inspiration to a lot of traders here at futures.io (formerly BMT). Keep up the great work!!!
Thank you for sharing,
Rick
"If you're going to panic during a trade............. panic early."
