|
PureBytes Links
Trading Reference Links
|
Brian Massey wrote:
>
> Ok. Let's talk money management.
First, let me say that I think you are mixing in tactics and
strategies with your money management practices. That being said...
You said:
"I've played the waiting game before. It's hell. I feel stupid when
I wait for something to come back. This has hurt me more than once. I
may exit an eventual winning position prematurely with a small loss,
but I'm assured of staying in the game. My timing is not so bad that
I know within the next few trades I'll have a winner or two."
I think people should view their opportunites as 'capital.' By that, I
mean that if you stay with a losing trade for four days because you
don't want to take a loss and that trade goes against you 4 big figues
in bonds [from 121.00 to 117.00, let's say] and then pops back to your
level on an economic figure and you get out at flat, you have just
missed a potentially great down-trend trade[from 121 to 117] and an
additional up-trend trade [from the 117 low back 121]. And yet all you
did was sweat for those days and end up breaking even. Sometimes, it
helps to just get out of a struggling trade and look at the market
fresh.
And then you said:
> Sometimes I like to stop and reverse. I can't count how many times I would
> have made back everything I'd lost plus a ton more if I had a consistent
> stop and reverse policy. How do you feel about that? Have any of you
> incorporated this into your methods?
If you have the trading ability to recognize a 'failure' of a signal
or trend and then reverse and go the other way, I think it is often a
very profitable trade. When you do this, you often reverse before many
of the other traders have hit their own stops and/or done their own
stop and reverse, thus carrying your new position on to nice profits,
often above and beyond the loss you had from the original trade. So,
yes, I do reverse my position when I think it is a 'failure' of a
trend breakout, etc.
And you said:
> I think diversity is extremely important. Both technically and
> psychologically. I used to believe that it was better to put all your eggs
> in one basket so that when you were right, you were really right! But this
> never seemed to work for me enough. Staying diversified seems to work. I
> like at least 3 markets in my position trading portfolio.
Well, for me, that depends on the trader. Some traders do well to
concentrate on one market and get as intimate as possible. If you are
trading 5 minute charts in the S&P's, I think you would do well to pay
attention to every tick and wiggle. And some traders that trade even
in the longer-term mode find they are more profitable when they
concentrate on one market and use a bit more leverage during the day.
On the other side of this argument, if you are using technical
analysis and looking at things like breakouts from congestion or a
trading range, because these setups often do have fake breakouts, you
may be better off using these same trading techniques on a variety of
markets.
Tim Morge
|