Professional Traders: How many pips!?

This is actually very poor advice, especially for a relatively inexperienced trader. Psychological research indicates we are wired to be scared of losing what we have - a.k.a. cutting winners short. This sort of thing can be overcome, but it takes experience and/or a rigid system.

Iā€™m saying this based on both the literature I read during my PhD, and also my own research findings.

IDK I think Iā€™m going to side w/ TURBO here, b/c I know exactly what heā€™s getting at.
Thereā€™s something peculiar that happens, especially when scalping, when youā€™re watching your charts and you get this feeling in your gut that you need to get out, but you donā€™t. You sit there, and you watch your position retrace and the market comes back down to your entry point and eventually you puke out.

Not knocking your research or literature youā€™ve read, but this to me is similar to a conversation being held between a CO and an NCO (US Military leaders). A commissioned officer typically goes to college, gets a degree and learns in books about war and strategies and how to lead. A NCO is an enlistee who has been deployed 3,4, 5 times to war-zones and has been in the trenches fighting the enemy head-on. They are in a position to lead other enlisted soldiers, but, arenā€™t commissioned.

One is battle-tested, the other is book-tested.

There is a ā€œfeelingā€, and 9 times out of 10 (personally speaking) if I listen to that feeling while trading, Iā€™m shutting down my computer @ the end of the day happy with some profits. When I donā€™t ā€œlistenā€, Iā€™m laying awake @ night saying ā€œI should have listenedā€. That feeling is snap judgements made @ the subconscious level before your brain can process and interfere. It can be developed over time to recognize patterns that are beneficial or negative to your current market bias/positioning.

Not 100% sure on your trading background, just going off what I see here.
Jake

Youā€™re pretty much making my point. Presumably, youā€™ve been watching your charts day-in and day-out for some time, just like the NCO has been doing it (whatever it is) for a while. If experience is giving you a gut feel, then you should listen to it. If youā€™re a newbie trader you donā€™t have a gut feel yet. Itā€™s a gut guess.

Not 100% sure on your trading background, just going off what I see here.

My trading background is getting up toward 30 years now. I started in the markets (stocks then) post Crash of '87.

yes you are completely right and i agree. telling a new trader to get out when hes scared makes him go out immediately after seeing brake even. the sentence alone is a poor advice to a new trader. therefore i added in the next sentence that he must not take profits before he has a 1:1 ratio minimum. after that he can do what he wants and let them run and take profits when he feels scared for his profits.

if somebody would have said that to me in my beginning it would have spared me a lot of headeck trying to find points where to take profits. running after fixed ratios and seeing the profits melt away because the predefined TP did not get hit by 2-5 points and you close the trade at break even is a real game killer for new traders. then they start questioning themselves and their entire way of trading.
someone once said ā€œyou cabt get broke taking a profitā€ and thats especially true for new traders as that gives them the time to build up experience and in future have the ā€œgut feelingā€ to know where to take profits. in my opinion for a new trader itis most important to stay allive and not get broke. noone makes profits in the beginnibg but the people who succed are either:

  1. the people who have a lot of spare capital to finance even big losses
  2. the people who manage to make as few mistakes as possible and therefore have the necesarry time to learn

and a taken profit is a huge boost to a new traders motivation while a taken loss is a huge downer for a new trader.

in the end the trader must learn to stay in his position as long as possible. if you managed to have 10 trades you took at smsll profits or closed at brake even you are psychologically more able to have the 11th trade run long and go deep into profits than when you had 10 loosing trades and you are scared for your account and close the profitable trade too soon.

in babypips its stressed out to have a market timing. money management is stressed out a lot. trading plan is stressed out a lot. win ratios, statistics, analysis is stressed out a lot. but one thing which is just as important or maybe even more important that every trader needs is position/trade management. what to do after youre in a position or more positions. thats the really tricky part. analysis takes time. to enter a position takes a second but to manage the position well so it can become a big winner is what sucessfull traders do 99% of their time.

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Wonderful post, Turboā€¦ Are you on Babypips to escape from your wifeā€™s family visit? Haha :wink:

I will make my fiftieth (FreeFX) video all about my long-term trades , hopefully if I survive the Brexit vote and I will be able to take my long-term trades forward: the video will focus on managing long-term trades, and the psychology of risk-management over significant time, drawdowns, and fearfulness.

your post is a perfect example of someone who managed to have enough time to develop hinself into trading as a fiel/front officer and later on, while or after, beeing deployed on the warzone (several times) to read books and educate himself in the strategic way aswell. this way beeing a great leader to his troops by knowing what they are going through and to be a great strategist in the bigger picture. to be a good trader you either need field experience by beeing on the front several times or you need theory/book experience to know the bigger picture. but to be a fantstic trader you need both, book and front experience.

it reminded me of a person who had both, front/warzone and book/knowledge and after his death not too few people said he was one of the best generals and leader in human history;

thank You PMH! yes sort of. but they left today early morning so i am finaaalllyyyy freeeeee and can clear out my head :smiley:

by the way, cant wait to see your 50th video and im sure youll survive brexit as i know how wide your pip span can be. in the end it will all turn into smoke. uk stays in eu and nothibg changed and we will all be laughing what a big fuzz this all was and how unnecesarry it all was

My head agrees with what you said 100%! My heart knows that it should listen to the head :slight_smile:

Glad that you are free againā€¦ Time to relax and prepare for the week ahead!!

I did a music examination with three pupils and had an ice cream in the rare Scottish sunshineā€¦Now off to buy nappies, for that is my nickname, PipMyNappy :slight_smile: haha

I fear that the markets have already discounted Brexit, but implied FX volatility for the next two weeks I think is about 50% for the Pound, which is the level we saw all the way back in 2008 - and never sinceā€¦ Thus there really is a distinct risk of capital flooding out of Pound-based assets, and of any other asset that is globally connected to the repercussions of a Brexit outcomeā€¦

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Between you and me (and anyone else glancing at the page) I think youā€™re probably more likely to survive it, in the long term, than David Cameron is ā€¦ :57:

I agree, he is in a very tight cornerā€¦

So would you guys n gals say that our trading systems and methodology goes out of the window this week and that we had better have the week off and sit on the sidelines. Or should we do our normal thing (at least at the beginning of the week) and see how things develop ?

Absolutely, itā€™s going to be a strange week. If you usually trade Gbp pairs and, to a lesser extent, Eur pairs, youā€™ll see spreads widen and margin requirements change. There could be some big swings as volume is likely to drop as we get closer.

If I can leave a trade running with some profit locked in, I might do that. Otherwise Iā€™ll close

i booked wednesday till friday in switzerland. simoly knowing that i dont want to touch markets in uncertain times im going to do absolutely nothing. not even watching news. the positions that are open stay open and on friday evening ill see what exactly happened.

Excellent idea, Turbo!

I will be watching the charts on the day, particularly from the end of voting time (10pm GMT),

when the vote count will startā€¦

Thankfully I have nothing in my calendar for Thursday night or Friday daytime, so

I will be able to keep an eye on thingsā€¦

Just a quick note. Should be ā€œbreakā€ even, not ā€œbrakeā€. :slight_smile:

ā€¦the sentence alone is a poor advice to a new trader. therefore i added in the next sentence that he must not take profits before he has a 1:1 ratio minimum. after that he can do what he wants and let them run and take profits when he feels scared for his profits.

I know where youā€™re trying to go with this, but Iā€™m going to disagree again - at least in one context. If someone is a trend trader (which Iā€™ll admit seems like a minority given what Iā€™ve seen of retail forex positioning data), then you absolutely cannot take profits when you feel scared. You make your money on the small minority of trades that end up big winners. If you cut those short the system falls apart.

but the people who succed are either:

  1. the people who have a lot of spare capital to finance even big losses
  2. the people who manage to make as few mistakes as possible and therefore have the necesarry time to learn

I would add #3 the people who made their inevitable mistakes as inexpensive as possible (meaning making low risk trades).

and a taken profit is a huge boost to a new traders motivation while a taken loss is a huge downer for a new trader.

Donā€™t disagree, but would suggest that just as much as taking a loss can create an overly negative reaction, so too can booking a profit create an overly positive reaction. ā€œI won, so I must be good at this!ā€

in the end the trader must learn to stay in his position as long as possible. if you managed to have 10 trades you took at smsll profits or closed at brake even you are psychologically more able to have the 11th trade run long and go deep into profits than when you had 10 loosing trades and you are scared for your account and close the profitable trade too soon.

Not sure I agree with this. Yes, financially it is easier. I think, though, that all the ā€œsuccessā€ of taking the early profit can train the trader into thinking thatā€™s the right thing to do. As a result, it becomes harder, not easier, to let trades run.

to enter a position takes a second but to manage the position well so it can become a big winner is what sucessfull traders do 99% of their time.

Absolutely.

Look, if youā€™re not already positioned for ā€œBrexitā€ volatility, then youā€™ve missed the trade.
If you have any doubt in your mind on the reason as to why youā€™ve put on a position to trade the event-risk, then you shouldnā€™t have a position on.

Chances are, itā€™s going to be a non-event and the world will continue spinning. Either way, if you think thereā€™s a trade out there you can ā€œget intoā€ @ this point in time, then you are way behind the curve and just exposing yourself for no reason.

Do you want to know one of the keys to long term success? Identify an edge (a trend) and trade when your gut tells you to trade it, before everyone else can identify it. Exploit it until it doesnā€™t work anymore, then move on. Itā€™s all about gaining an edge, exploiting it, then bailing when everyone else catches on.

Jake

Bravoooooo! I should print this and attach it to my studio wall haha Excellent post!!

I think I read somewhere that the job of a full time trader is in fact part-time trading and full-time strategy research and testing. That is pretty much where I am starting out at.

Good point :wink: