Thursday, November 27, 2008

Morning chaos

Well it wasn't chaos, but when you look at that chart..
I was scalping, so I should have take profits when I have them. No matter if it's just 3, 5 or 8 pips. On few of the trades I had profit but I didn't take it. I than got out at b/e or I got stubborn like with that trade marked purple. I let nice profit turn in a loss, 27 pips from bottom to top. I was looking for bigger swing but market didn't want to go down. Why did I short in the first place?
Because that uptrend wasn't the thing that I would like to buy. Before 9 market was moving down so I expected to resume. Price didn't move strong, it all looked like as it can fall apart any moment.

I wasn't by the screen for that brake up after 10:30. Gbp moved 70 pips in 4 minutes after 1 hour of 10 pips range.
On those last two shorts, on lower picture, I was looking to lot's of charts from chf to gbp/jpy to time them. I decided to use lesson learned, take scalp profits when you have them and don't wait for the swing. With last three positive trades I brought down loss for the day to -3 half size pips.
I was probably under impression from two days ago of big swings, so I neglected taking scalp profits. Well trading isn't about trading, it's about profits.







10 comments:

ORION MACHINE said...

I chose not to trade today because it being a holiday and all, price did not want to move. It may break out later this afternoon, but I don't mind taking the day off. keep it up.

StockHunter said...

Yeah, I'm looking at the spreads right now (2:22amEST 11-28-08) and about the only thing thats tradeable right now is EUR/USD. Kudos for being able to make trades.

Are the bigger spreads expected during a major US holiday like thanksgiving/christmas?

FX said...

Well now one hour later it's all normal, maybe slightly higher on some pairs.
Well bigger spreads are regular for holidays and days around holidays especially in December.

Jules said...

FX,
I think trading is about trading. If the focus is to trade well, the profits will follow :-) It's all very zen, I know. The first time I heard it, I went "HUH???". But it makes a lot of sense. Focus on trading well first (which means getting all the edge you can - from managing your risk to handling your state/emotion to acquiring the necessary tools and market knowledge etc etc).
And I also think that luck plays a big part in trading. Sometimes the market will give you 80 pips in minutes, sometimes it gives you 20 pips in hours, or nothing in days. Even if you have the skills and the right psychology, how much you make is still very much dependent on market momentum. That's why people say they "caught" a huge run, or "missed" one. Coz absolutely no one knows when it happens. And when it does, and they're there to "catch" it (of course the veterans will already be patiently waiting), they're LUCKY :-)

ORION MACHINE said...

Jules you make a great point that trading is about trading, but i do disagree with you about luck. It is arguable, but isn't it also true that without discipline, a trader will not stay in the trade for 80 pips even if the market will offer it to him? Luck is not going to keep that trader in the winner longer than his loser, confidence and discipline will.

Fx: Whatever your beliefs about the market can make you money as far as system/method goes, but remember it is a numbers game. I do not agree that you should have taken profit @ 3,5 or 8 pips. By doing that you are severely limiting the size of your overall "average winner" which must be larger than your average loser. To end up profitable taking such small winners, when your stop is 40 pips for the day, you would have to be right 5 out of 6 trades just to break even. Thats 83% accuracy for a break even trader. and thats just assuming you were willing to take 8 pips at a time.

The other day you did well in my opinion for one reason alone. You actually bagged some winners and came out ahead by multiples of your Risk. It didn't matter so much that you actually picked up over 100 pips, because your stop has become 40 now with your half size. I was proud of you to finally hold a winner.

Think of how much easier that would be if your risk were only 1% of the average daily range instead of 5% or more? Just some thoughts.

FX said...

About trading and profit. I think that for my style of trading it's necessary to have goal oriented mind. So the goal is to grab few pips, be it 4 or 40. If I don't play like that I end up in the dance with market. It's taking me up and down and I follow. I lose objective from my mind and have many trades but no profits. I got to cut myself in that dance and just grab profit after profit when I have them. I to much like to trade and it's not healthy. Nobody is paying me for trading and thinking inside of the trade.

Orion I have to disagree with the you on math. See that post on Lonely Trader site http://thelonelytrader.wordpress.com/2008/11/22/correlations-trading-philosophy-and-etc/
where his friend full time trader say that for him outsized gain is anything above 2R. Yesterday I had 7 losing or scratch trades and three winning. The biggest loser was around -15. I do not have -40 on all my trades. I get out quickly if the trade is not working in my direction. So for those trades 4, 5, 8 is usually R. So I'm happy with 1R when I take it.
I admit than sometimes get stubborn and leave the trade to my max loss of -40. That's mistake in probably 80% of the time. Well I'm now at least happy that I quit at -40 when I trade bad mentally.

ORION MACHINE said...

I did read that post and it makes perfect sense, and it in no way contradicts what I said and suggested in my first post really. I will send you an e-mail explaining exactly what I mean just so this does not become a book here.

The fact that you make that mistake nearly 80% of the time is what I am talking about, thats what makes the math not work so well for you right now. I too am fine with 1R, as long as you end the day or week positive thats all that matters. My math was just to remind you of the importance of keeping the long run in mind.

You can do well with how you are trading now if you can just let those other losers be less and less over time. That sounds like an obvious statement, but I gather from your trading sometimes that you forget that a lot or your emotions get the better of you.

FX said...

I agree that path for me now is to let losers be less and less over time. I'm glad that I managed to localize my problems of big losers with that -40. It's not perfect but it's improvement. I see now more and more that there is no way that -40 on one trade is good for me. It isn't and every loss should be probably under 20 to make sense. Anything bigger than that clearly it's a losing trade and beyond of point of return in profit.

ORION MACHINE said...

That is a great realization for you! good for you!

Jules said...

Yes, Orion Machine, conventional wisdom is to let your profits run and cut losses early, and our friend apparently knows that too :-) I was merely referring to trading timeframe. If I start out just looking for a scalp, I can't afford to overstay. Once the immediate trend is exhausted, I'll have to take whatever's on the table or risk giving everything back or more...