I hope I'm not flogging a dead horse but from my post #1532 I wrote about how reducing my lot size from $10/pip to $1/pip removed my fear of losing.

It's those gremlins, demons, inside all of us that want us to make a killing to better our standard of living. By following the gremlins and demons we trade $10/pip hoping to get $1000 from a 100 pip move. Unless we have a $50,000+ account, this is way too much for our "real and logical" emotions to handle when the trade turns into a 40 or 50 pip loss.

We have to fight those gremlins and demons and not let them interfere with our logical and "real world" thinking. As others have said, drop down to a $/pip level that is comfortable for you to accept WHEN YOU LOSE. The trick is to base it on LOSING and not WINNING. Forget about thinking how much you will win and instead focus on how much you will lose. Doing this controls your losses and you will find the winners just take care of themselves.

I was told this a long time ago and rejected it - it's taken me 9 or so years (and many $thousands lost) to finally realise and accept this and put it into practice. After doing this, I was finally able to treat my trading as a business - some you win, some you lose and after a loser, just quietly move on to the next trade.

Also, with a lower $/pip, you can put on multiple trades. Bank a third after say 20 pips and move the rest to break-even. This way you make 20 pips no matter what the rest do. If all goes well, bank another third after say 50 pips and then trail the final third.

Don't be an idiot like me, Spitfire, and wait 9 or so years, DO IT NOW!

 

My stops go either at swing highs or lows or major S&R and are NEVER by pip value.

Most of my entries are breaks of highs or lows - I only want to be in a trade when the market is moving in my direction (momentum).

I use a combination of everything I know to forecast direction and only get it right about a third of the time (even less in these turbulent times).

BOJ is buying boat loads of Treasury Bonds again forcing the $ up (and the Yen down) and in sympathy, the other Yen pairs. They and China will continue to do this until they weaken their currencies to the point that their exports are attractive again.

This makes the forecasting part of technical analyis difficult and strengthens the argument for funny mentals.

At least they can't mess with Rock n Roll!

 http://www.forexfactory.com/showpost.php?p=2580385&postcount=136

Good man, Brian.

But remember, I am only posting for educational purposes not for trading purposes and equally as important, I do get a lot of them wrong. Lots of losers and a few big, biggies.

How you manage the trade is at your discretion. There is no right or wrong way. I really don't like trailing stops so don't use them. Jacko doesn't know how to do it on his laptop so he moves his manually. I don't look at anything less than Daily as it might cause the gremlins and demons and the man in the mirror to come out and play.

Before I visit the land of nod tonight around 10 -11pm PST, I will take a look at what the Asian boys are doing with regard to cycles and momentum. Today's action is weaker than yesterday with declining volume and equal momentum.

With it being "their" currency, I have a sneaky suspicion that they will take some profits off the table before going higher but let's notjump the gun.

 

Bloody hell Jeeve, I've done me 'ed in trying to answer this!

With regard to stop loss, if that is how Trader Dante did it for his method then he must know it works for him. There are as many ways to set up your Forex ATM machine as there are traders. I cannot comment on what works for one method compared to another. The way I trade, Price Action using Support and Resistance, I would be stopped out on most trades if I did what you suggest. Since I'm trading reactions to Support and Resistance, my stops have to go either above/below Support and Resistance or at swings. For me, they have to be away from the noise of all the time frames below the Daily. This is all part of the PLAN. If you have done your analysis correctly then you will set stops according to that and let the market work it out for you. There are no emotions. You either believe in yourself and your plan or you will never make it in this business. When I place my stop loss, I EXPECT the MMs to run the stops and clean everyone out BUT I believe in my plan and let it run accordingly. I also don't put in hard stops.

I only read a post about a week ago on FF about a guy that was complaining that he set his stop and the market came back and took him out only to turn around after a further 20 pips and go in the direction of his trade. It will ALWAYS do that if you put your stop in front of resistance and support. Support and Resistance are proven areas in history where buyers have bought and sellers have sold.

One more thing, if you take a piece of method A, and a piece of method B with a squirt of method C, it won't work. A method is an all embracing strategy.

Time difference. I was going to go into a long disertation of time frames but it will not serve any point. The time is set based on the data feed from your broker. Yes different brokers wherever they are in the world have different time feeds. This means that what may appear as a hammer on my data may not be a hammer on someone with a different time data feed. It is not worth worrying about because at the end of the day we are all trading PROBABILITY and things like this, always average themselves out. You should not worry about what is happenning on a different time data feed because you cannot trade that. You can only trade the data presented to you by your broker.

Only control that which you have the ability and resources to control and ignore anything you cannot control.

Damn! I've just written that and realised why the trouble and strife is always asking why I ignore her! Need a new plan for that!

Hope this helps,

 

I struggle with getting SL to break even also. It's a toss up between hanging in for a longer move or getting out with some profit. I try to look at where the next roadblock (support/resistance) is and work back from there. It also depends where you are in the trend (or not in a trend).

From the trading psycho view, it is always best to grab some profits while you can and not let a profit turn into nothing, or worse, a loser. However if you do screw up and end up with nothing or a loser just take it on the chin and move on to the next trade. The absolute worse thing you can do is mull over it and think what might have been -forget it, let it go and move forward.

 

I have finally made the time to answer this. Thank you to everyone who participated - at least you had a go - not like the lurkers and guys in the background who think they know it all - you know who you are!

Attached is a later chart so let's get into it. I wrote something like I hope everyone had their sell stop in place at 97.52 I think it was. Then I later wrote that there was a HUGE PROBLEM with it.

So let us start there.
The first thing, after identifying a trade MUST ALWAYS BE - WHAT IS MY RISK? Remember my earlier posts about millionaire and professional traders? The ONLY thing they care about is how much they can LOSE. Amateurs and all other traders think just the opposite - how much can they make.

When professionals PLAN THE TRADE, the very first thing that goes down on their sheet of paper is HOW MUCH WILL I LOSE? Their whole plan is predicated around LOSING. If they are not comfortable with the amount they WILL LOSE, they will either reduce their positions (lower $ per pip) or NOT TAKE THE TRADE. They don't concern themselves with winning because they are successful traders, know it's all about probability, and will come out winners in the end (total number of trades).

When they are comfortable with HOW MUCH THEY WILL LOSE, they go ahead and place the trade. This IMMEDIATELY takes all decisions and emotions away from you on this trade leaving you with a STRESS FREE TRADE. You then TRADE THE PLAN by letting the market either (i) take you out (stop loss hit) or (ii) put you in profit. Once in profit, your plan should tell you when to take profits, go to break even etc. It may not have hard numbers but just something like take profit at 50 pips on the first contract, bring rest to break even at 100 pips or take profits at first S&R, second S&R etc.

If you feel the need to interfere with your Plan then you have not planned it correctly. Once in a trade with a plan - just let it go and do it's thing! If you plan it correctly, those demons, goblins, voices inside your head, man in the mirror no longer have a base on which to trick you on.

So back to this trade. If you had a sell stop in place below the 97.52 support line, say 97.42, did you measure your RISK? Where did your SL go on such a move? If you did it correctly, your SL should have gone ABOVE THE SWING HIGH at say 99.23. That is a 181 pip SL! That is HUGE!

Would you have been prepared to LOSE 181 pips? That is the FIRST question you should have asked yourself. If not, then either adjust your $/pip or do not take the trade.

Now for those who are going to tell me they dropped down to H4 to identify a smaller SL, then at that point, they were no longer trading the Daily. You cannot trade a time frame with a shorter time frame's S&R. There are 6 H4 price bars within one Daily price bar and if you set a SL from H4 then it would be hit within that Daily price bar.

If we managed our trade correctly, we should have taken profit when it hit support again at around 96.20, so we did make 132 pips. For those who do the Risk to Reward ratio, this was lousy.

Now that huge down bar was not the normal range for this pair and we should expect the elastic band theory to take place after it completed. If you are not familiar with the elstic band theory, take the elastic waist band in your under pants or knickers and pull it out as far as it will go. Then let it go! This is also true for the distance price is away from the 20 - the further it is away, the more likely the elastic will pull it back.

That being the case and since we all know what to do when price hits support, it provided another magic trade PROVIDING you knew where to put your SL. If you did know where to put your SL then you are back at the beginning of this post because it is another HUGE SL

So, since no-one came even close to this, tells me you are all acting like rank amateurs.

You will NEVER make serious money at this UNTIL you turn your logic upside down, forget about profit and CONCENTRATE on HOW MUCH YOU CAN LOSE.

I promise you with 100% certainty that if you do this, you will turn your trading career around BIG TIME!

Good analysis and THINKING like a professional not a rank amateur - a good trade DISQUALIFIED by excellent Money Management DISCIPLINE

Did you consider a reduced position size or reducing your $/pip so that you could take it?

 

The more aggressive you are in trading means you accept MORE RISK - if you are comfortable with this then that's your decision.

Let's look at your trade entry "x" pips above the OPEN

The first thing to notice is that we are very near a psychological round number level (psycho 1.2500). Banks, funds, hedges, trading houses and large institutions automatically trigger orders at round number levels especially a "00" number. That being the case, there will be a lot of action around this area as there will be a mixture of buy and sell orders. There are some threads that suggest placing orders at these levels but being the rebel I am, I like to stay away from the crowd (noise) and either get in before or after but, it is a personal choice.

Now if you place your buy order above the open, that means it is within the high. If the market comes up to test the high before resuming it's prior trend (remember probability and there is a 50/50 chance that it can do this), you will be filled and in a drawdown situation. If your plan allows for this, then it is fine.

Your SL placing is that which worries me most. A price reversal bar does not care where the 50% fib is or any other levels. The CRITICAL levels which MUST be respected for the safest and lowest risk trade on price reversal bars are the high and the low.

Let's assume you got filled just above the open and price took off and then hit the sellers at 1.2500 who had more volume (orders) than the buyers. What do you think happens? Prices start to fall, triggering other sellers AND traders STILL holding shorts who missed the first opportunity to get out at the low. They will then drive the price back down to the "old" low to get their second chance to get out. This is your double bottom.

In this case, bj, you have been taken to the cleaners and wrung out to dry.

For me, my buy stop goes above the high and any round numbers (giving up pips doesn't bother me) and my SL goes below the low or below any round number or below support if there is an immediate support below the low of the bar.

This way, you don't get filled (Stop Running excepted) if prices don't reverse and you live to fight another day.

This is not just aimed at you but at the many guys here who are still thinking "PROFIT" first instead of "LOSS".

We must forget how much we are going to make, believe me, if you are trading PRICE ACTION, it will take care of itself. What we MUST control is HOW MUCH WE WILL LOSE.

PLAN your trade with whatever is your risk tolerance and then let it play itself out until the next bar. Review everything again and then, if necessary, revise your plan (maybe move SL) and let it play out again.

bj, you should know this as you are often on Jacko's thread and he is the best at planning a trade and letting it run

 

I thought it was clear but obviously not. Without a thought, my SL ALWAYS goes below the low; it's not conservative, it's just a fact of Price Action. I would NEVER, EVER ignore a nearby S & R level. If the low is slightly above support then the SL goes below the support. If there is a psycho number nearby, then it would go below that.

"'I understand that but in this particular case, with the very long tail on the reversal bar, it would seem to me that if it headed that way very far, you would realize that you had guessed wrong and would want to get out of the trade after some point before 300 pips."'
Those bastards who create these long tails, the brokers and the MMs, don't care how long the tail is, they will drive the price to wherever they want to clear everybody out. Go back and study your charts. You should be able to see many, many instances of all types of bars with long, long wicks - the exotics are notorious for long wicks. How many times do you see a tweezer bottom? That is the work of these assholes!

This goes for everyone, you have to get rid of your "little minded trader mentality" because you are the fodder that the predators (brokers, MMs, banks, funds, hedges, institutions, trading houses etc.,) feed off.

Until you think like the King of the Jungle, you will always be the FOOD for the jungle!

 

To Trail or Not To Trail - that is the question

Nicole, I must have tried every stop that's been thought of. As I posted earlier, it is all about preference. It also depends where you are in a trade. If you are early in a trade, then you want as tight a stop as PA and your MM allows. When you have profit locked in and are in a trend a la EURJPY, you want to give it room to breathe by trailing behind each swing but that can leave a lot on the table. You can trail by a stop above the high of two days ago or 3 days ago. You can even try PSAR.

If the ATR is 181, then if you really want to trail, that is what it should be trailed by but that is a lot to give back.

You can use all these methods and then use a PA signal in the reverse direction to get you out rather than wait to be taken out

If the question is trail using your brokers platform then I personally don't like doing it. I prefer trailing manually at the end of each day. I give enough to brokers without giving them CONTROL over my positions.

Sorry it wasn't the answer you were looking for but I hope you get something out of it