My trading strategy blows goats... should I change?

[alwaysLearning]

Hey Ivan, if you see this, I was wondering if you could take a quick look at the article at the link below (it's not long):
http://ragheehorner.com/blog/?p=586

Specifically I'm interested in if you agree with this quote from the article and just your general thoughts on it:

I also don’t like the idea because it somehow insinuates that trading is like gambling or craps…which in some ways I acknowledge it is…but I believe there is less left to change when trading. Friends of mine who are great traders and gamblers succeed because of discipline and knowing when to vary their bet size. That’s not luck or a formula, that comes from identifying when the momentum is on your side!

 

[ivant]

Hey Ivan, if you see this, I was wondering if you could take a quick look at the article at the link below (it's not long):
http://ragheehorner.com/blog/?p=586

Specifically I'm interested in if you agree with this quote from the article and just your general thoughts on it:

Mm, without doubt an interesting little response to an interesting question. I definitely agree with this response in the way I trade, because the idea of a stop-loss with a percentage of loss can backfire heavily. For example, let us assume a market trading between 100 and 200 points for a few months in a strong sideways channel. If you believe at 120 that the market will rally, and it doesn't, a stop-loss could in theory stop you out before the market even reaches 100, even though that there wasn't even a confirmation of a break.

However, if your strategy relies on scalping and catching small swings, a stop-loss has a different use, in which it actually works in the correct method. You don't lose more than a particular percentage of your account, and in essence the thing that pulls you through is the positive expectancy of your strategy.

So I guess to summarize, depends for who. For a directional trader like myself, I look for a confirmation of a break of a pattern, and thus my idea of closing out a losing trade is a little different to someone who relies on a stop loss for positive expectancy of their strategy.

Hope it helps in anyway

 

[alwaysLearning]

Mm, without doubt an interesting little response to an interesting question. I definitely agree with this response in the way I trade, because the idea of a stop-loss with a percentage of loss can backfire heavily. For example, let us assume a market trading between 100 and 200 points for a few months in a strong sideways channel. If you believe at 120 that the market will rally, and it doesn't, a stop-loss could in theory stop you out before the market even reaches 100, even though that there wasn't even a confirmation of a break.

However, if your strategy relies on scalping and catching small swings, a stop-loss has a different use, in which it actually works in the correct method. You don't lose more than a particular percentage of your account, and in essence the thing that pulls you through is the positive expectancy of your strategy.

So I guess to summarize, depends for who. For a directional trader like myself, I look for a confirmation of a break of a pattern, and thus my idea of closing out a losing trade is a little different to someone who relies on a stop loss for positive expectancy of their strategy.

Hope it helps in anyway

Yeah that does help. Food for thought, that's for sure. I really need to test a few things out now. Many thanks for your response

 

[DB008]

Great thread!!!

 

[nunthewiser]

thanks danny

 

[ivant]

Thank you indeed

 

[nunthewiser]

hahahah i was just being a tossa ......

havent contributed squat in here

 

[ivant]

hahahah i was just being a tossa ......

havent contributed squat in here

Haha actually you did

this isnt proof of anything actually but hey good luck to ya ..........hang on i,ll just post a result too


DEAL Closing trades 33/12/08 BSWQ78AC Australia 200 Cash (A$5 Mini Contract) - 3500 A$ +5 3791.5 A$77777777777777,287.50


yes i done did real good there

Just joking... hahaha. good times

 

[Tradesurfer]

One thing you may want to consider is defining your strategy. Are you a trend trader or someone looking to a range. One of the challenges of using indicators is that some work better during trending markets and some work best during sideways markets. The key is use them the appropriate way. Many rangebound or channel indicators can be changed settings wise to make them trending ones. Stochastics is a perfect example of this. I prefer the slow stochastics but for a trend trader, it will have you sell at the start of a great trend or worse short sell when it shows overbought only to go much higher resulting in big losses. Take a look at slow stochastics and consider the default 80/20 overbought oversold on the slow study- or to turn into a trending indicator, switch your line to the 40 or 50 level and then when the faster line of the two on the slow stochastics reaches greater than the midpoint- that may potentially be your entry. Traders really need to understand the different applications of the same indicator though. Shoot me any questions and I'd be happy to help more

 

[DB008]

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:stochastic_oscillator

 

[Happy Profits!]

Johnny Come Lately

Wow, what an epic thread!! Most enjoyable. Now I'm gonna hafta dig out the one with TH proving himself.

Reading thru this, I notice 2 distinct tones:

1) Those who are won over and accept;

2) Those who are 'warning' ivant about 'bad things' to come...with an almost malicious undertone of wanting him to fail...altho' I highly doubt that will affect him much. C'mon, you don't think he's already undergone/heard ALL the negative stuff while he was trading his way up? eg. from even his parents.

I'm sure most of us have had naysayers in our lives as we've embarked upon this, The Trader's Path. I mean, when 'Efficient Market' critics like Malkiel harp on about the impossibility of guys like Buffett actually being able to make money out of the markets, we side with Buffett (or at least, I do). So the only difference here is the DEGREE of success that ivant has demonstrated so far. I think, I hope, we're all on the same spectrum, except that we're only on different points (geez, I hope that's the right analogy). Allow me a Hallmark moment here: 'The bumble-bee is not aerodynamically built to fly yet it doesn't know this and flies anyway'.

To ivant, I will NEVER be able to replicate the multiplying you have done (in the same time frame) because I only ever risk* 2-5% of my capital on any one trade but like Cartman, I too have a stupid grin on my face from being happy for you. I salute your testicular fortitude. Very classy of you btw, for apologising to Family Guy for hijacking his thread, of which I'm about to do now...sorry dude

Unlike many, I will not be picking your brains for the SPI movements. I however, would hope that you open a fund of some kind so that I could buy in...on the drawdowns, of course: and only 2-4% at a time.

To Cartman - great sleuthing, my portly fellow. And for providing a positive vibe to the thread and for not summarily dismissing his claims. "Your mind is like a parachute, it only works when it's open" Yada Yada Yada...

At the risk of sounding stupid, what the hell, this thread has already had enough of that, ivant, did you mean Warren Buffett's "Be greedy when others are fearful, be fearful when others are greedy"?

Haha actually you did ...

Just joking... hahaha. good times

LOL, *ZING*!

Finally, to ivant, to Family Guy, to all of us traders, may your wins come swift and easy & may your losses be also swift and easy.

* I started out the right way IMHO. That is, with a loss. My first ever trade was ALL my capital on Telstra-2...we know how that went. I sucked up the pain for 5 years, waited until Trujillo came in, the price spike came and I jettisoned the turd. Meanwhile, I had been ever-learning...about position-sizing, money management etc.