Maybe some of you have a sniper habit, shooting after aiming a very long time. But how about your shot doesn't hit? After waiting for 3 hours, you are focus and calculate everything and the environment is perfect, you shot your target and it miss. Worse, after being stopped out exactly in 1 tick, the price goes into your way, breach far above your profit target. Feel exhausted, you don't re-entry. Big chance are you are angry and start shooting spree to make matter worse.
Are you a discipline trader? Yes
Are you a patient trader? Of Course
Are you still lose? Yes
I tell you one thing, no matter how good your entry are, no matter how perfect your execution (admitted by yourself, of course), there's a chance it doesn't work. That's the flaw of high winning ratio setup. That's the cost of pursue the perfection, which is never exist in trading world.
My CL trade today, though it's not a very good example. The pattern gave a Triple wedge which is an almost perfect condition. Plus it already did one time fade break. So I entered, and stopped out at the exact ticks before reversal. I entered again at the same price. I was ready to enter at the worse price than my first entry. If I'm getting stopped out again, I will double my size!!! Since my single size only half percent loss, then my double size will be one percent, which is still rational for me. It can still lose, but everytime it failed, the probablities of success increased greatly. Of course, my setup is a very powerful one that I have faith in it.
You may have a sniper habit, which is a very good principle. However, you also must prepare for the worst and still focus in it. Most of the time, the 2nd attempt worked, if not then the 3rd attempt. A very few days it may not work at all. But those few days will only a fraction loss from your overall profit by doing re-entry.
If you are a disciplined trader, martingale system won't hurt your account much but it rarely worked for me. What happens if you lose the 4th time? Would you double up again risking 8% after having lost 7.5%? I did it once and it was a big blow. But since if you are disciplined, you would know when you can't go in further and have to stop. I wish you good luck and hope it works for you.
ReplyDeleteHi FFXD,
ReplyDeleteYeah, sometimes it won't work. Let's say I failed 4 times. That would be 2% losses. Then I'll double my size 3 times. That's 5% losses which will be my max daily drawdown. I can live with 5% loss. I hoped it won't happen.Tq for ur comment :)
would you mind posting a chart to show what a double wedge or triple wedge is? thanks
ReplyDeleteHi learningtotrade,
ReplyDeleteif you know about wedge then double wedge is wedge inside a wedge, that's triangle inside triangle. I can't show the chart since it's a lot of variation and may confuse you.
You can look at my previous post, I drew lot of chart before :)