I decided to use tight stops of 4 ticks today, and ended up poorer by USD 499 1 hour before noon (local time), after taking 17 trades. I was checking out properties, waiting for sellers' agents to get back to me, and entering trades AT LIMIT at the same time. Having a tight stop did give a false sense of security - I wasn't really concentrating on my trades.
Total for the day: + USD 200
Charts
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When I returned from a meeting with a friend, it was already 5pm my time (5am ET), and I decided to give all the FX futures a miss. I also unchecked the "Use Attached Orders" option on Sierra's chart trading feature, and went back to using manual stops and market orders for my NG and CL trades.
I am certain by now that I will never be profitable using limit orders and tight stops.
SIGH.
Total for the day: + USD 200
Charts
6A
6J
NG
CL
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1 comment:
Jules,
Stops are there to protect your account in case you are radically wrong.
Overly tight stops are psychologically comforting. They are purported by the trading books and gurus. They are also dead wrong. Do what feels uncomfortable in the markets - that is what the herd fears. Follow the herd and the smart money will take your 4 tick stop and eat it every time.
I don't think it's a coincidence that many of the successful daytraders I know use larger stops in proportion to their targets. Changing this one thing has helped my short-term trading tremendously. This way I don't exit a trade until proven right or wrong.
Needless to say we will suffer large hits on occasion. It is natural to doubt during these times. Do I really deserve to win? No one can beat the markets. Every possible mental trial imaginable will torment you. But trading really has nothing to do with money and everything to do with being a better human being. The markets can evoke every beautiful trait we have or reduce us to mindless monsters. It is our choice.
LT
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