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In a message dated 3/29/99 8:51:30 AM Pacific Standard Time,
brente@xxxxxxxxxxxx writes:
<< None of the original post reflects how I trade
at present, I simply wanted to generate some thought about some difficulties
that I have faced in the past and why many even advanced traders get into
such traps. No one suggested using options, or strategies like straddles, or
bracketing etc. etc. >>
<<You simply can not win if you don't find a way to get around these traps. In
> my opinion there are ways to do that. I'd like to hear how some of you think
> that they can be avoided or made to work in your favor.
>
> Brent>>
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Brent:
I don't think my answer will be what you are looking for but it still may
help. The situations you describe are reactions to market movements. If you
trade reactions, you will lose. Stop trying to read emotions into market
moves, it takes you out of your game plan. Focus on your trading methods and
take your signals.
You appear to be a position trader based on your ideas of looking for options
and straddles for these market reactions. I am a daytrader so the situation
would have to be unusual for me to use these methods. I am either long or
short with a firm stop, I don't use mental stops except on rare occasions.
Focus requires attention to the things you can control. You control your
entry and exit. Don't burden your methodology with mental guessing games
about what the market is doing and why it is doing it. That will drive you
batty but mainly it shows that you have lost focus on what you can control.
Now having said that, examine your entries first. If you play breakout
trades, be prepared for large amounts of slippage. Therefore examine how your
entries could be modified to get in earlier or after a retracement. True
there may not be a retracement but there is always another trade coming. If
you have to take this trade, then mentally you have lost your focus. You have
deviated from your method of trading and succumbed to the action of the
market. You will lose a majority of the time if you reaction to what the
market is doing and not on your method of trading. Don't let the market take
you out of your game plan. Stay focused.
Lynn
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