I've just uploaded 2 new videos describing some of my trading ideas and thoughts based on Tuesday 4-14-09 trading.
Let me know what you think!
LT
Posts
The Psychology of Handling Large Drawdowns
6 days ago
Saturday, April 18, 2009
4-18-09 Saturday Videos
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8 comments:
Hi LT, First of all I love the blog. I scalp in a similar style (thankz to jjrvat). I just wonder your thoughts on opening 2 positions (with correct money management). The first position having a take profit large enough to cover the risk in both the positions. If that take profit is hit, trailing the final position with adjusting the stop at logical levels (i.e if short, every step down adjusting the stop above the previous lower high). Just wondered what your thoughts are?
PT,
There are a lot of ways to manage multiple positions. What are your goals is the first question I always ask?
If your goal is for consistency then you should have a high winning % and low R:R (i.e. 1:1 or even inverted). If your goal is to maximize profits then a lower winning % and higher R:R is warranted.
For what you are suggesting you would end up with a low winning % and high potential R:R. A scenario that can easily be done with 1 position. Ratcheting your stops as you suggests works great in a strongly trending market - but that is maybe 15% of the time. Can you survive the rest of the time with the chop? Can you trade it psychologically?
The answer may be yes to the above questions. In that case then great. Just remember there are a lot of different ways to trade but ultimately we must find something that works for our personalities.
LT
Thanks for your thoughts LT. The way i have just started testing has a 10 pip inital take profit on the first position, with the inital stops on both positions at 4pips.
The goal that I am looking for is maximising on the larger trends (when i say larger, I am happy with 30+ pip on the 2nd position).
You raise some great points in terms of psychologically. Currently its ok, Im unsure how i would handle larger position sizes.
I have only started trading this way - I'll see how it looks over 100 trades.
Keep up the good work, thanks again!
PT,
A 4 pip stop is extremely tight even on the EUR/USD. To be honest I think that you would be better off with a minimum stop of 6-10 pips, otherwise even the slightest noise in the market will knock you out.
LT
LT,
I think the videos are great. Voice and explanation are clear, so you're easy to follow. You've fit your charts and your market depth trading window on one screen, and it's a little hard to see them. Maybe just 1 chart on the screen at a time?
Jules,
Yeah a couple other folks suggested that. Next video I'll try switching between timeframe views to make things a little clearer.
LT
Very interesting to see a different style to my own, I love the sound analysis/reasoning (which is what it is all about whatever the market/TF).
Just one criticism, the charts are a bit out of foucs, actually clearer for me if I take my glasses off!
Thanks again for taking the time to produce these.
long and wrong,
I'm glad the analysis was useful.
A couple of folks have mentioned that the resolution was a bit weak.
"it was clearer with my glasses off". Too funny!
LT
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