Traders Most difficult Problem- Trading with Stops

Lets say you go long the market at XX, but the market moves lower, so at this point you think that you've got an even better deal to average in on your original entry. Do you really know the future and how far this trade will go against you?

I'm bringing up a point of a major problem that I've faced as a trader. STOPS.
When I'm in the zone, I will exit a bad trade for a small loss and move on to the next one. When I'm trading relaxed or I've built a cushion of profits from previous days I will let my guard down and give a bad trade more room to breath and end up losing more money than I should have. Have you ever lost weeks or months worth of profits from being too relaxed or by breaking your "rules"?

Have you ever averaged your trade or widened your stop? There are a couple ways to deal with your problem of NOT taking stops.

1.Take out excess money in the account to the point to where you can only put on 1 trade and not be able to average into it.

2.Trade with a platform that has an automated risk management parameter that will close your position when you are down XX amount for the trade or reached a max daily loss.

3.Start working with another trader that can help train you on using stops.

4.Realize that you are not trading with a plan/system before you put on a trade, because your plan was for the trade to work in your favor immediately and not let it run against you.

5.Develop an Automated Trade System that will trade for you and take your emotions out of the trade.

Here are some of my Key Posts dealing with stops and problems traders face-

Realistic Expectations of your Trading Results

Dr. Brett goes over A Few Trading Psychology Observations

The stock market ruined my life

For FX.

Traders Most difficult Problem- Trading with Stops

Lets say you go long the market at XX, but the market moves lower, so at this point you think that you've got an even better deal to average in on your original entry. Do you really know the future and how far this trade will go against you?

I'm bringing up a point of a major problem that I've faced as a trader. STOPS.
When I'm in the zone, I will exit a bad trade for a small loss and move on to the next one. When I'm trading relaxed or I've built a cushion of profits from previous days I will let my guard down and give a bad trade more room to breath and end up losing more money than I should have. Have you ever lost weeks or months worth of profits from being too relaxed or by breaking your "rules"?

Have you ever averaged your trade or widened your stop? There are a couple ways to deal with your problem of NOT taking stops.

1.Take out excess money in the account to the point to where you can only put on 1 trade and not be able to average into it.

2.Trade with a platform that has an automated risk management parameter that will close your position when you are down XX amount for the trade or reached a max daily loss.

3.Start working with another trader that can help train you on using stops.

4.Realize that you are not trading with a plan/system before you put on a trade, because your plan was for the trade to work in your favor immediately and not let it run against you.

5.Develop an Automated Trade System that will trade for you and take your emotions out of the trade.

Here are some of my Key Posts dealing with stops and problems traders face-

Realistic Expectations of your Trading Results

Dr. Brett goes over A Few Trading Psychology Observations

The stock market ruined my life

For FX.

The day after panic and AAPL falls

Well, a lot of people that have never traded before are laughing at the video I posted and they don't even know what a futures contract is. However, my video connects with tens of thousands of people that have lost money in the stock market. You have all heard of how 90% of day traders fail, but the truth is a lot of swing traders lose too. As much as I hated reading his post, Bill Rempel made a post in regards to my over leveraged trading blowup and how you should trade with the correct position size for your account and have a plan and an edge. I hated his post so much because he was right, I was over leveraged and I shouldn't have carried a trade that big over the weekend.

My blog has always been about learning how to trade and sharing it with whom ever wanted to read. Dr. Brett Steenbarger from TraderFeed linked me and he is a guy that has always been about helping traders learn and helping them solve the psychological challenges that traders face on a daily basis. I read his book a year ago and it helped me in my trading a lot. Dr. Brett is simply a good guy and I recommend his book to all serious traders.
Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology (Wiley Trading)

Right now I'm looking at AAPL and it looks like a lot of long term investors are going to experience the same type of pain I felt yesterday.

April 23 Trade Summary

I used the NYSE A/D and NYSE TICK to leverage myself into a short setup that was my big winner for the day. My goal is to find one good setup per day where I can use increased size with a profit target of 0.7-1.4 pts when trading ER2.

P/L= $402

This weekend I reviewed some of my recordings and noticed some good things that will help me in my trading. I noticed that I'm missing out on making more money because my trading execution platform was limiting my abilities. I have been trading from the basic IB order entry page, which is a really slow way to make trades if your looking to make your money by scalping. I was watching some of my videos and some of the ninja trader instruction videos and realized that I'm missing a lot of trade signals by not having a trading execution system that is fast enough to take my trades. So, today I started trading from IB's Book Trader, which with a single click, will execute my trade within a second. I missed about 3 scalp trades this morning from being to greedy in waiting for my entry to get hit. I was trying to sell the ask when the price was on the bid, and buy the bid when the price was on the ask. With time I should get better.

SCALPING-
My motivation to start scalping more is from reading an old chat transcript posted over at Linda's Rascke's website. The chat transrcipt was an interview with trading coach Jeff Quinto from Photon Trading. He said that he tells his new traders to make many scalp trades and to look for 3-6 ticks as a profit target and to stratch the majority of trades. Doing this will give the trader more exposure and experience in the markets and should help that trader in their execution skills. This is also something that Dr. Steenbarger; from TraderFeed, talks about in his new book "Enhancing Trader Performance". The chat talked about when you should PRESS trades, by adding to winning core positions, and that he never adds to losers. If he has a loser he cuts it, because something has happened that he didn't expect and he doesn't know why, so he exits the losing trade. I also like how he went over the time frame he holds his trades. He said that he holds winners for an average of 6-7 minutes and 3 minutes for losing trades. This is interesting because my winning trades normally last 3-6minutes, and my losing trades normally last longer than 3min, sometimes 15min from averaging into the loser, so this is something I need to work on. I need to start looking to cut my losers as soon as they are a few ticks against me, or after 3minutes when scalping. To checkout the chat transript checkout Linda Raschke's website.

Here is my new monitor setup showing Book Trader for ER2 and YM along with all my other charts that I use to trade with.





Market Observations-

I missed the big move in ZN, I saw the setup and didn't take it. I was skeptical because there was light volume between 7:30-7:40am, and I was expecting a pullback, but it never happened and the trend continued. O'well, at least I'm getting better at my intraday analysis on ZN. I guess I should have gone long on JPY if I was afraid of the higher risk trading ZN.



Tommorow should be interesting with these key #'s out tommorow:

07:45 ICSC-UBS Store Sales
08:55 Redbook
09:00 Bank of Canada Announcement
10:00 Consumer Confidence
10:00 Existing Home Sales
01:00 5-Year TIPS Auction
01:00 4-Week Bill Auction

The weather out here in Cali is looking beautiful, so I'm going to enjoy it. Have a good day ya'll.

Learnig from Dr. B's book

This weekend I read some more of Dr.B's book, Enhancing Trader Performace, and realized that I'm still missing a lot to my game.
I think I work hard, but I need to work so much harder. I need to analyze my trades more; moreover, what time did I place the trade, where was the trade at in relation to the POC and trend for the day, and how did I do in terms of P/L on different types of trading days when comparing my trading performace on range days, trend days, and reversal days.

Something I need to start considering more when taking my signals is the time of day. There are key time periods during the day that have a high probability of being a time point where reversals occur, and time periods where the price has turned from range bound to trending. I will be looking at the program trades that occur at 6:45am, and at time periods 7:15am and 8:30am as key reversal points. If the price is making a new low or high of the day with volume and all the indices are participating and the time is AFTER 9:30am, then this could be a good sign that the afternoon session could turn into a trend. Also, watch out for the 12pm reversal on big trend days, this always seems to be the time point were big money exits for the day.