You can be in the 3% that make a consistant profit

[tech/a]

Yep agree.

Another question, what if in the above trade, you get to a R/R of 2.5:1 and the trade starts to move against you, say right down to 1.5:1, would you use a trailing stop to gain a portion of that profit? Or wait for it to either hit your 3:1 or stop out?

Cheers

Breakeven and trailing stops used.This actually brings your final R/R up as your not losing your Initial Risk very often.
I only move my stop to B/E at 1:1 R/R

Julius.

Each trade has a variable R/R its not set at 3:1 however less than 2 and I dont take the trade.

 

[julius]

The price action is dictated by the technical set-up. It doesn't matter where I enter the trade, support/resistance is constant. This is where the historical average comes from because the max return will depend on how early I enter the trade.

So again you have another push / pull relationship, this time between accurary and profit - as you longer wait to confirm the signal you gain %accuracy at the expense of potential $return. The 'risk' remains the same because it defines the point at which the set-up becomes invalid...

 

[tech/a]

Yes agree.

But would your "Timing" of your setup be helped by taking the signal then trading it off say a 60 min or 120 min chart.

Perhaps using Supprt or resistance in those timeframes going forward and as such minimisim=ng risk and in doing so taking larger positions -- larger profit.

Just wondering.

To make it easier for some to understand taking a weekly signal and trading the entry setup and risk part from a daily chart.

This is ROC weekly



Now Daily



With confirmation from Tradeguider.



By coming down a timeframe I can deminish risk and manage the trade tighter with Trailing stops and exits but still have the same Target exit in place.

 

[julius]

I use dynamic support & resistance levels which are based on a number of different timeframes, so it doesn't matter which timeframe I 'trade', the levels remain the same - ie. the exit point is static.

I don't use trailing stops at all. Breakeven trigger is technical level, ~25% of the profit target, but it varies.

I agree that you can wait for confirmation from higher timeframes...otherwise you can use more reliable signals (with more lag) on lower timefames. That comes back to what you prefer in terms of return vs. accuracy.

 

[MRC & Co]

Excellent, great info there fellas.

Thanks for the charts tech (always a LOT easier to understand things through charts, thanks for taking the time to post them), great use of EW and VSA. Exceptional use of this on FMG by Radge.

I have found lately that VSA alone on breakdowns is a lot more reliable than on breakouts, due to the downward momentum of the market in general lately.

Would I be right to say, wave 5 down really took off on the very next trading day after those charts? (or are the charts live). That final bar was ominous!

Cheers

 

[tech/a]

MRC

As your aware Elliott is dynamic.
One of the most difficult concepts for most to come to terms with.
You'll oftn hear complaints that Elliott is useless as the wave counts keep changing.Once you understand how waves are built then you can see a number of different counts (At times) and you can also see going forward what can occur if price action PROVES the count that we are currently in to be incorrect.

I'll use ROC as an example in this case to also hopefully answer your question.

The software is Advanced Get.
If we go to "Training mode" we can watch as the waves are constructed.











While not a purist in Elliott analysis I find their addition for analysis to define "Where I am in a point of Entry OR Exit" within a move to be very helpful.

 

[MRC & Co]

Yes, thanks Tech.

Any particular book you can recommend on learning EW and its basics, without going right into the real detail such as a purist would.

I understand the basic concepts, however, would like to learn a bit more on it so I can really get a good grasp of Nicks recommendations and analysis.

Cheers

 

[tech/a]

2 favorites

Dynamic Trading by Robert Miner
ISBD 0-934380-83-X

Breakthrough Strategies for
Predicting any Market.
Jeff Greenblatt
ISBN-13:978-1-59280-268-5

 

[MRC & Co]

Thanks.

Will try Dynamic Trading by Robert Miner first and see how I go.

 

[Progster]

A way to look at loss-taking

From an early post in this thread:

There is something depressing about accepting that you made a mistake on a trade and taking a loss. Has anyone got any hints on how I can overcome this problem?

This question is forever relevant.

I would say that when one gets "depressed" about a trade moving against them, one is committing a significant psychological error: internalizing the action of the market and feeling responsible for it.

You are not responsible for the direction of the market!

You can't make it go one way or the other - not by wishing, not by hoping, not by winning or losing, not by throwing your capital at it, not by any means whatsoever.

What you are responsible for is pulling the trigger to get in and pulling the trigger to get out.

When a trade moves against you and you have a loss, you are being offered the opportunity to do the right thing - which is to GET OUT WHILE THAT LOSS IS STILL SMALL RELATIVE TO YOUR ACCOUNT.

What is "small"? Pick a number, either by elaborate study, or by rule-of-thumb - but just pick a number and stick with it. (e.g. 1 or 2% of your account size)

If you honor your loss number and GET OUT, then you have DONE THE RIGHT THING. There is no reason to be depressed about doing the right thing. In fact, when you do the right thing, you are entitled to a minor bit of self-congratulation.

You can feel good about:

• Having a plan
  
• Following your plan
  
• Understanding the basic math of why you MUST take small losses
  
• Demonstrating self-discipline and foresight
  
• Avoiding negative emotional tar pits
  
• Having plenty of capital left for your next trade

If you feel good about yourself, about trading, and about your relationship to trading, your likelihood of success will be FAR higher than if you are unhappy or depressed about same.

Trade very small until you have mastered yourself and your method. Congratulate yourself every time you DO THE RIGHT THING. When doing the right thing becomes a reflexive habit, success will likely be close behind.

 

[BrendonC]

Hi All,

Am new to this thread so am catching up. I hope my experience may help anyone here.

There are many traders trying to find a crystal ball set of indicators that is going to predict the direction with a probability greater than 50%, i.e more wins than losses over time. I refer to this a directional based trading mentality which requires getting your indicator fine tuned so as to enter at a precise point so as to hit your profit target hopefully before it hits your stop loss. This works very well for index trading and FX which I do most of. With stocks however, predicting price is very difficult when you have fundamental announcements, and unplanned price gaps on a regular basis (unlike indexes).

So When I trade equities I like to use a non direction based trading system which does not focus so much on getting the direction right but more so focusing on enter at a point where your stop loss will most likely not get hit before your profit does. This does not rely on indicator crystal balls but rather on good analysis of Support and Resistance levels that can provide pivot levels in which to enter. The main focus is placing your stop loss below the fluctuation of prices ( below support levels ). If you then place your profit target at a price level that is not to greedy but still greater than your stop loss % then you stand a higher chance of being a consistant profitable trader. Look for key support levels at historical low levels avoiding descending triangle patterns into the support. If you want to add indicators on top of this then using good backtested divergence indicators will help. Always back test divergence indicators on each stock.

Bottom line: Good money management using price pattern as your main indicator. Of course always diversify and choose fundnamentally sound companies. Never try to predict with stocks because no one really knows, all we can do is take calculated guesses and use the money management principles to ensure over time your profits will outweigh your losses.

Cheers
Brendon