How I trade

[kam75]

I firmly believe nobody can predict the market with any degree of certainty. Therefore im not really phased by how i actually enter the market, for all i care i could enter on what the taxi driver says. All i do is try and minimise my losses and let my winners run. I operate with a very low win rate so most charts i post will probably not be winners.

Yes, but correct timing can dramatically improve your Win to Loss ratio, especially if you cut the losses extra short.

 

[beamstas]

Jonnyg, talking about self-analysing, Looks like i've actually had two really crappy trades in this thread so far
FMG & FLX

Of course, i never expect over a 50% win rate, so i can't complain.



kam75; cutting losses short is risk management Im not going to get into this discussion again and i agree with what you are saying

Cheers
Brad

 

[nomore4s]

I'm currently looking into the idea that with each 1R move in my direction I move the stop 1R closer. I'm concerned though that the stop placing will be to aggressive and get me caught up in the 'noise' of the trade.

So much testing to do.....

I use something similar to this. If the trade moves 1R in my direction I move the stop to B/E after that though I tend to give the trade more room to move and use technical levels to place my stops.

 

[skc]

I use something similar to this. If the trade moves 1R in my direction I move the stop to B/E after that though I tend to give the trade more room to move and use technical levels to place my stops.

Definitely depends. Some trade entries are agressive so moving to break even sooner rather than later could be wise. However, I have used tight b/e stops on some recent breakouts which end up being perfectly tagged before the share resume its upward movement.

 

[fmz]

Great post, thanks for sharing your analysis, please keep it updated.

 

[beamstas]

Great post, thanks for sharing your analysis, please keep it updated.

No problem

Some people like 1R to move to BE, some people like 2R. Obviously the more open profits you can handle giving back the less you are going to get stopped out on market noise. I like to not set myself on anything, but generally by 2R my stop is at break even.

I like to look at the Volume and Spread every day, for example if it is an upthrust bar on the breakout i'll look to halve the risk.

Cheers
Brad

 

[MRC & Co]

Do you ever pyramid, if so, on a pullback or try on another breakout from another similar pattern?

Do you ever hit a trade with more size (more % risk), or you believe every trade has the same probability of being successful?

 

[beamstas]

PBG
8th May: This ones had a nice push up from a base with high volume, into another consolodation. What really grabbed my attention on this one is the very last bar in the pattern. Im really liking it so i'll buy it on a breach of yesterdays highs and put the stop loss right under yesterdays lows, which is a very agressive entry. This is an example of using both Volume and Price Spread to look for an entry



Cheers
Brad

 

[beamstas]

Do you ever pyramid, if so, on a pullback or try on another breakout from another similar pattern?

Do you ever hit a trade with more size (more % risk), or you believe every trade has the same probability of being successful?

1. Sometime's i'll pyramid, usually from another pattern forming or just splitting a position up into pieces and entering it each time it makes another multiple of R, dragging the stop up to the last level. I don't do the latter very often because i don't like paying the extra commisions but on a very large account it would be quite useful.

2: I Never hit a trade with more size, I've never really thought about that actually, do you do it and does it work for you? It's something i've never considered, i normally just approach each trade equally

Cheers
Brad

 

[MRC & Co]

I hit a trade sometimes with upto 10x more size than other trades, depending on my conviction (usually based on a pattern I particularly like and a good feeling ) and how fast I think the move will be. If I think a trend is about to accelerate quick, I will try give it a helping hand!

Just my beliefs and a different view perhaps, than the norm here.

 

[johnnyg]

Jonnyg, talking about self-analysing, Looks like i've actually had two really crappy trades in this thread so far
FMG & FLX

Cheers
Brad

I don't know if id call them crappy. Maybe just to aggressive on the movement of the stop. I see myself doing similar things.

In regards to increasing risk % if you had 100 trade samples, with only 30-40 being profitable, perhaps you could look deeper into the 30-40 profitable trades and see if one pattern/analysis sticks out more then others whether its a consolidation pattern breakout along with VSA/buying or selling after a certain % swing from a high or low/is the winning % higher in small cap stocks/mid cap stocks or larger cap stocks?

 

[beamstas]

I hit a trade sometimes with upto 10x more size than other trades, depending on my conviction (usually based on a pattern I particularly like and a good feeling ) and how fast I think the move will be. If I think a trend is about to accelerate quick, I will try give it a helping hand!

Just my beliefs and a different view perhaps, than the norm here.

Good work, i'll keep that in the back of my mind
I guess the more experienced you are the better you can make that judgement call.

I am not very experienced myself so what i think is a "ripper" buy could be an absolute dog!

But the more expereined guys like yourself who have seen the same pattern 1000's of times could probably jump in there with a bigger position knowing that they have seen the market do the same thing in the past!

I'll definitly have to consider this in the future

Cheers MRC & Thanks for the advice
Brad

 

[MRC & Co]

I'll definitly have to consider this in the future

Yes, I think it is something to consider, regardless of who else says what. May work for you one day, may not, but worth the consideration nonetheless. Oh, BTW, I don't hit it with all the size at once generally, I pyramid aggressively, i.e more size every single tick as it moves my way.

 

[beamstas]

I don't know if id call them crappy. Maybe just to aggressive on the movement of the stop. I see myself doing similar things.

In regards to increasing risk % if you had 100 trade samples, with only 30-40 being profitable, perhaps you could look deeper into the 30-40 profitable trades and see if one pattern/analysis sticks out more then others whether its a consolidation pattern breakout along with VSA/buying or selling after a certain % swing from a high or low/is the winning % higher in small cap stocks/mid cap stocks or larger cap stocks?

I can see what you mean here johnnyg,

I just want to keep things simple

 

[ThingyMajiggy]

Keep it up Brad, I find it interesting following things like this.

 

[BBand]

Hi Brad,
My aim is to not let a winning trade become a loser, so I tend to use tight stops - which means that sometimes I get taken out on a simple retracement (before the move is over)

We can never be sure when the move is probably over - so what I do is this:
If I was initially long, and get taken out on a pull back, I put another buy order in at the same price as that which I was stopped out - so if my exit was just a retracement - when price swings around on the way back it will hit my new buy order and I'm back in the trade

Commissions? if you with the likes of IB, then they are negligible.

May be useful?

Peter

 

[simoncar]

I entered a trade in IDL 29/4/09 Beamstas. I couldn't find my calculator so mentally worked out my risk for the trade based on my position sizing model. Result.......i incorrectly bought x no. of shares. i purchased 10,000 shares instead of 100,000. Missed out on $5500 open profit. Did the same thing on PEM. Purchased 7000 instead of 70,000 missed out on $12,000 open profit. I don't mind taking losses on my trades....I am totally unemotional whether I take a profit or loss as long as I follow my trading rules. I know my system has a positive expectancy and I will/do make money so losses don't bother me at all. But I am so so annoyed with myself for making these 2 totally stupid errors. I feel like I momentarily slipped back to being a beginner again. A smart man learns from his mistakes.....a really smart man learns from others as well.

 

[beamstas]

I entered a trade in IDL 29/4/09 Beamstas. I couldn't find my calculator so mentally worked out my risk for the trade based on my position sizing model. Result.......i incorrectly bought x no. of shares. i purchased 10,000 shares instead of 100,000. Missed out on $5500 open profit. Did the same thing on PEM. Purchased 7000 instead of 70,000 missed out on $12,000 open profit. I don't mind taking losses on my trades....I am totally unemotional whether I take a profit or loss as long as I follow my trading rules. I know my system has a positive expectancy and I will/do make money so losses don't bother me at all. But I am so so annoyed with myself for making these 2 totally stupid errors. I feel like I momentarily slipped back to being a beginner again. A smart man learns from his mistakes.....a really smart man learns from others as well.

I'd suggest you use your calculator or maybe set up an excel sheet that will work out your position sizes based on risking a certain % of your account. I am not sure how you are position sizing as both figures are round figures so i can only assume you make up the figure of how many shares you buy in your head. Take a look at using Fixed Fractional Position Sizing if you want to stop making these mistakes

Hi Brad,
My aim is to not let a winning trade become a loser, so I tend to use tight stops - which means that sometimes I get taken out on a simple retracement (before the move is over)

We can never be sure when the move is probably over - so what I do is this:
If I was initially long, and get taken out on a pull back, I put another buy order in at the same price as that which I was stopped out - so if my exit was just a retracement - when price swings around on the way back it will hit my new buy order and I'm back in the trade

Commissions? if you with the likes of IB, then they are negligible.

May be useful?

Peter

This is something i will often do, if i am using an agressive entry i will re-enter if my entry criterea is once again met. I really don't enjoy being taken out on market noise though. I believe if your stops will not allow general market noise then they are too tight and you are not giving the position enough room to move in your favour. I use the same stop loss for every position unless i feel i need to tighten the screws because the volume and price is showing bearishness

Keep it up Brad, I find it interesting following things like this.

Thanks Sam

 

[BBand]

Hi Brad

Re entry:
I suppose this methodology could be used for initial (at start) trade re-entry - personally I find the initial entry the most dangerous part of a trade - for me it iether works or it doesn't.
Infact the best trades are those that do not follow through where lots of traders are trapped - if you know how to trade them!

If you already have a "young" trend and get stopped out on a retracement, then get a ligitimate signal to get back in - you have a high probabil;ity trade in the direction of the trend.

Stops define how much you give back when your initial analysis is no longer valid, how much you give back is your decision

PS If you don't like market noise - move up a timeframe - less trades, potential for higher returns

Peter

Hope the above makes sense, my little grand daughter has just arrived and she keeps asking questions, and she comes first

 

[beamstas]

Hi Brad

Re entry:
I suppose this methodology could be used for initial (at start) trade re-entry - personally I find the initial entry the most dangerous part of a trade - for me it iether works or it doesn't.
Infact the best trades are those that do not follow through where lots of traders are trapped - if you know how to trade them!

If you already have a "young" trend and get stopped out on a retracement, then get a ligitimate signal to get back in - you have a high probabil;ity trade in the direction of the trend.

Stops define how much you give back when your initial analysis is no longer valid, how much you give back is your decision

PS If you don't like market noise - move up a timeframe - less trades, potential for higher returns

Peter

Hope the above makes sense, my little grand daughter has just arrived and she keeps asking questions, and she comes first

I see what you are saying Peter,
Like i said, i will re-enter if i see a legitimate entry where i can put an entry and a stop loss. FMG is an example of something i could have re-entered.

I'll use a re-entry if i feel the position is still viable.

Im too young to open an IB account but i see what you are saying about Commissions.

I trade EOD currently so my stops usually have sufficient room for the trend to develop. I understand that the market will not go directly up, so this in mind i allow enough for it to retrace for a certain number of days.

I havn't actually looked at using tighter stops and re-entering alot, but it's something i'll have a look at

Cheers Peter,
Brad