LET'S THINK ABOUT TRADING

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TheRumpledOne
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LET'S THINK ABOUT TRADING

Postby TheRumpledOne » Mon Aug 06, 2007 10:04 pm

LET'S THINK ABOUT TRADING

Pretend someone gives you an account with an OPEN POSITION but you do NOT know what the entry was... WHAT WOULD YOU DO?

How would you manage the trade?

This may change the way you look at trading!
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

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Postby rrobin » Tue Aug 07, 2007 2:18 pm

My first move would to find support place a stop order to protect the money.

rr

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Postby LuckyPimp » Tue Aug 07, 2007 2:24 pm

I would ask them why they were in this position, if they could not give me a good reason then I would close it.

4x=0
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Postby 4x=0 » Tue Aug 07, 2007 4:24 pm

I would open an equal and opposite position*




*unless the person gave me an efx account.

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Postby dbw451 » Tue Aug 07, 2007 8:06 pm

Ahhh, now those are excellent questions. Most new traders think that if they can find a few high probability setups, they can make a lot of money. High probability setups do help, but it's what a trader does after entry that utimately determines whether or not they will be profitable.

The golden rule of trading is: "Cut your losses short and let your profits run". Think about it. The rule is about managing trade exits not about finding trade entries. TRO's rule about "Don't be greedy" is also about managing the trade and locking in profits before they turn into a losses.

There's a thread in the strategy forum that gives some details on some ways to determine exits and manage trades. The thread also contains several good links to reference material about trade exits:

http://kreslik.com/forums/viewtopic.php ... sc&start=0

Just because a trader has high probability entries and a good methodology for exits does not mean he/she will be successful. The hardest thing to overcome for any trader are their own phychological weaknesses and biases. Traders need to be able to execute their trading plan and find ways to identify and overcome those personal obstacles that hinder their success. This is usually not an easy task in a profession where it's easy to succumb to emotions during open positions.

The questions remind me of the related topic of money managment (i.e. how much to risk on a trade). I read about a system by Dr. Van Tharpe a few years ago where the entry of a long or short market order was based on a coin flip. I don't remember the details but I think the system had fixed stop and targets and did nothing but employ money management. The system was profitable. That really opened my eyes to the importance of money management. It also made me realize how similar trading is to gambling. Professional gamblers increase their bets when they know the odds are in their favor; many professional traders do the same thing.

What would I do if I was handed an open position? I would analyze the position with respect to the current market. If I think the current market supports the trade, I would manage it to an exit. If the current market does not support the trade, I would close it.

Regards,

David

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Postby obx » Tue Aug 07, 2007 9:38 pm

In real life, I would simply get out. It's not my position. It's someone else's position. So I would just exit - unless in some wierd context I had agreed to manage or keep it

Hypothetically.....

Question is a little bit unclear - so 2 scenarios answered

If the ONLY information provided was account number (and not the direction or size of position or size of acct,etc.) - I would buy the buy signals and sell the sell signals and soon the size and direction of the mystery position would reveal itself.

If the size, direction(long or short) and equity of position information was provided :
if position underwater I would liquidate it.
If above water but not by much, would go to charts to see if could find good stoploss places and then buy buy signals and sell sell signals.
If position was in high cotton, then would step to higher timeframes and on higher time frame buy buy signals and sell sell signals ie let it run until it was done running.
Last edited by obx on Thu Aug 09, 2007 2:45 pm, edited 1 time in total.

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Gert Frobe
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Postby Gert Frobe » Tue Aug 07, 2007 10:10 pm

i would trade it w/ the zone and use the probility of a price moving in one way or the other in time. what happened in the past cant be traded but we can trade it forward w/ the zone.

airball

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TheRumpledOne
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Postby TheRumpledOne » Tue Aug 07, 2007 11:06 pm

obx wrote:Question is a little bit unclear - so 2 scenarios answered

If the ONLY information provided was account number (and not the direction or size of position or size of acct,etc.) - I would buy the buy signals and sell the sell signals and soon the size and direction of the mystery position would reveal itself.

If the size, direction(long or short) and equity of position information was provided :
if position underwater I would liquidate it.
If above water but not by much, would go to charts to see if could find good stoploss places and then buy buy signals and sell sell signals.
If position was in high cotton, then would step to higher timeframes and on higher time frame buy buy signals and sell sell signals ie let it run until it was done running.


LOL... You would know the size and direction of entry ( long/short ) just not the entry price.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



Please do NOT PM me with trading or coding questions, post them in a thread.

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LET'S THINK ABOUT TRADING

Postby mg11993 » Fri Aug 10, 2007 12:45 am

First principle I follow is is to preserve capital. I shall close the position, then decide what to do next.

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Postby jstockman » Fri Aug 10, 2007 6:00 pm

TRO

1. I would make sure the size of the postion fits my investment capital. You said that you did not know the entry price. You would know the direction of the trade either long or short. I will assume long

2, I would look at the direction of the hourly candle. Hopefully it is green.

3. I would look at the 5 minute candle.

4. If the 5 minute show higher highs and higher lows I would stick with the trade.

My stop would be the prior 5 minute candle low. IF it breaks this I am out.

5. My profit out would be a gut then be driven by market and price action.

jstockman

2. If it did not I would bail.

3. If it does here is what I would do

Look at the 45 minute candle and see that the

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