Monday, 4 April 2011

Stop/Exits - Biggest Cause of Losses

I was in and out of the DAX early this morning. It really reminded me that wrongly placed stops or exits are one of the biggest causes of losses.

The DAX this morning was trendless in the 3 tick range bars. It was a matter of just fading every swing. As I was jobbing around, I was thinking about who was on the other side of my trades and it reminded me of how people react to price rather than to order flow. Understanding what is happening - context - is such a big part of trading. This aspect is very difficult (impossible?) to correctly program into an auto trader and hence my advocating Hybrid Trading (HT). Nothing beats a trader with discretion, once he knows what he's doing.

There was not much joy in the ES during RTH. It spent the London afternoon filling in the "cave" of Friday's trade. There was just about 5 ticks to be made as it ranged up and down. Pretty boring, which I guess is good.

1 comment:

  1. I was the one on the other side of your trades this morning (actually was trading CL but similar type of market pace/structure). What are some of the "order flow" signs that you use that tell you that this is a ranging market? I can only seem to process this information in hindsight.