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Gwenn Ael Gautier wrote:
> There is no shadow of a doubt one is much better
> off not canceling replacing.
If this has been your experience, then it must have something to do with
either what you are trading or your style. Now, if you're looking to enter
during consolidation, this is going to be a lot different than playing fast
moving breakouts (as I do). If I didn't use C/R, I would lose at least half
of the good plays, and my performance would take a big hit. I've learned
this the hard way (as usual in this business) - I'd say that, with my
trades, the ones that I have to use C/R to enter are significantly superior
in quality, as long as you can still get a decent entry. I realize that
your experiences may differ significantly from mine, but although it indeed
may be the case that avoiding C/R's may be the way to go for you, saying
that *one* is better off without this tactic may be a different issue
altogether.
As far as exits go - you can get into *real* trouble by refusing to chase
something down. Not getting out soon enough is the number one reason for
getting taken out of this game for good. Without C/R -you are exposing
yourself to a great deal more drawdown.
> So you have to learn when to
> cancel replace soon enough so as not to have to chase the market, but
> only 10% of the time...
On the entry side, it's good to have a range in mind - although I've learned
the hard way that reluctance to chase is worse than chasing. While there
are limitations to moves, allowing small increments of them to strongly
influence your trading will end up seriously limiting your upside.
> Really this is one tick saved per side on average on 90% of my trades,
> or $62.50 for 9 RTs out of 10: a lot of money indeed if you are short
> term trader...
Do you mean 90% of your trades that move away from your initial entry
point? In order to assess this - you would need to calculate the cost of
foregoing this as well - in other words, the profit that you failed to
capture by sticking to your guns during these trades. If you end up coming
out ahead, then your strategy would be a sound one. While this may still
end up being the case for you, I still am skeptical that it would be for
traders generally.
Regards,
A.J.
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