Tuesday, July 27, 2010

How to milk from your ride...

Here's some tips for withtrend trader. And you should consider to become a trend trader rather than a fade trader.
1. Most of trends have pullback. If you entered at the early trend, you're in luck. If there's pullback, especially if your first entry is already far far behind, then enter every withtrend break after pullback is a good idea. However, the pullback entry must be treated separated from the first entry. So the SL is different, which is closer than the first entry. The idea is to ride the trend with a minimum risk. Let's say if you trade full size on the first entry, the SL may hurt deeper than let's say half size or even quarter size. It's more convenient to stopped out 3x times in a row with quarter size then 2x with full size. Do the math, plus the effect from your mentality breakdown. It's not guaranteed that you will make profit with this method but at least you play safe but aggresive when opportunity come.
2. After a pullback, most trends will make a new hi/lo. This is a 101 technical analysis. If you want to get out, wait for a pullback and enter at the new hi/lo for additional bonus. Not work everytime, but quite reliable especially for semi scalper like me.
3. Saving some capital for this opportunity is priceless. I used it today and will do it later. I rather loss small than missing the big ride. And I have bad habit not running my profit long enough. Adding size while the market is on your way is like adding gas for a boat flowing with the wind.

This tips may help your mental state a lot. At least for me. I can bear skipping some small profit while waiting for the big ride. Cause I know the big ride will erase my small losses and give me bigger chunks of profit.

The idea for this tips is also maintaining the mental state of the traders. I can assure you, after taking ONE BIG LOSSES, it's DIFFICULT TO GET BACK TO THE PREVIOUS GOOD MENTAL TRADING STATE IMMEDIATELY. Done that dozens of time and if you don't agree, please do it by yourself. I was tilt and unwilling to trade for one week after losing my 2 weeks profit in 1 day. It took me a whole two weeks to get back into my trading state again.

Hope this tips help, please add some comment if I missed something :)

5 comments:

  1. It's great the way you put the whole thing and I couldn't agree more with you. :)

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  2. nice post... hope for more post like this!

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  3. Tks FFXD and RCM
    your encouragement give me more motivation for sharing more ideas about trading :)

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  4. Premium grade advice. Much appreciated. Thanks De Trader

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  5. U're welcome TST, wish u a great trade :)

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