Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)
Firstly I have posted in the XAO thread and I believe we are at an important cross roads right now.
So Yes I do look at the background market.
But prospects tend to dry up as well and we have noticed that
in the last few weeks. To the point that those on watch lists aren't triggering.
We are having quite a few pattern failures.
To the main topic.
That where stops are questioned with regard to performance.
In a Systematic approach there are fixed entry/exit and stops. These don't float.
As such a value is returned for trading the system against your universe.
Its simply a repeat process which if adhered to should return something within the standard deviation of the results found when testing.
Its not about being right its about being profitable.
In a Discretionary trading method we have the ability to alter all 3
Entry/Exit and Stops. The single most important aspect of this form of trading---in my view.
Unlike a systematic approach we don't have to play trade after trade out to its known end.
We can move our Initial Stop. We can alter our entry and we can determine our exit with discretion.
To sit and wait for a stop to be hit as a stock reverses from well above---with clear signs of an impulse move
during a topping pattern or stage of the life of the chart---would be less than ideal.
Initial stops give us a target for Reward for Risk.
That is 1 R
But if we can over a number of trades alter that 1 R to less than 1 R it can and does have a dramatic affect on your results.
Our results were improved immensely.
At the other end exit timing can also ensure you retain more profit.
In the exercise presented we are looking at very short term trades.3-8 days.
We want to be in trades moving in our direction. More of them and more often.
In the end it is and was my intention to show Pav that you
MUST be proactive in your trading.
to sit by passively waiting for a result from your set (Plan) parameters is disaterous for profits.
I want to make this clear.
People spend hrs looking for the perfect entry or exit.
They keep copious notes and review how they could improve their entries/exits and even stops.
In my view.
Its not about being right its about being profitable.
An important aspect in Technical trading.---In fact Id go as far as saying if your not trading a system trade to be profitable skewing your risk and reward as much as you can.
I hope when I post some charts that you'll not only see the achieved results but what you can do to make your trading more profitable.
If your looking for genius entries and exits and perfect stop placement--you wont find it here!
But you'll find profit!