More than 80% trades i took a loss on would have been a winner < 24 hrs later

started full time trading 3 months ago, just went through a trade by trade analysis. frankly i am bit stunned by this discovery. but i have this cynical view that, the day i decide to ride it out rather than cutting the loss (or letting it hit stop loss) would also be the day i blow up the account.

i would appreciate if people on this forum can share some thoughts on this. does this imply stop loss is over-rated, especially for someone trading small lots?

thanks,
3-month newbie

A stop loss is a vital part of trading IMO. It cuts you emotions out of trading. You are afraid to take a loss for as simply as you say 80% of your trades that were closed in a loss would have been in profit in the next 24hrs. Sometimes you will be right but the issue lies when it dont and keeps going into a loss. Dont look at the fact your trade would have been in profit if you just left it open. Instead keep looking at the chart and figure out is your stop possibly to tight? Or maybe is your entry on a little bit of to much a hair trigger. Trades in drawdown are inevitable as is losing trades. Sounds like you might be placing your trades to tight. Without knowing your strategy it is impossible for me to tell. But perhaps you could find a way to widen the stop without increasing risk i.e. lower your lots. Granted your profit will be smaller but if thats what it takes to make someone go from a losing trader to a profitable trader then IMO thats an good deal. Slow profits are always better than fast losses.

thanks, bobmaninc

Nope … it implies simply that yours, over the trades you analysed, weren’t wide enough. :slight_smile:

thanks, lexys, i guess you are right, although i haven’t lost that much, i surely act like someone deeply traumatized by the fx market, i.e., trigger happy, sl set at the price so i won’t lose more than a fancy hamburg, etc…

I guess we need a bit more detail on this! You mention that 80% of your “losses” would have been winners later but whether this is actually a problem at all depends on how many wins you are getting. E.g. if you take 100 trades and win on 90 trades and lose on only ten trades, of which 8 would have also been winners then I guess there would be no problem here! :slight_smile:

But I assume this is not the case and that you are losing significantly otherwise you would not be posting it here. The other issue that you do not describe is your trading style. Do you have a strict and disciplined method or are you trading “off the cuff”?

Whilst it would appear initially that the problem lies with your stoploss policy, you shouldn’t look at that alone. The stoploss is only one element in your overall strategy “package” which should also include a reliable entry/exit method that is traded consistently and with discipline and a clear risk/reward parameter combined with sound money management principles. For example, yourstops could be just fine but they are getting hit too frequently because your entry timing is faulty.

Perhaps if you describe your trading strategy in more detail it might be possible to help identify where the problem is occuring.

thanks, manxx. here is a brief overview of my OWN trading in the past 3 months:

  1. mainly trading cable
  2. have gone through about a dozen systems
  3. most trades are scalping, rarely carrying trades overnight or over the weekend
  4. 103 wins vs. 45 losses
  5. small risk < 0.5%

though my own trading has yielded a small profit, overall i still lost about 7% of my acct. i have used 3 signal services so far, one of which kills 5% of my acct, as i risk significantly more on signaled trades. as a newbie, i am not confident enough to rely on my own research.

would appreciate feedback / comments. please let me know if you need any other specifics…

thanks,
3-month newbie

Thanks for the info, Kingfish, I think we will start to get some input here for you now :slight_smile:

…But as it is just short of midnight here for me I will come back to this tomorrow.

I offer just one quick thought (pending Manxx’s reply tomorrow): maybe the people selling the signals [I]need[/I] to do so for income, because they’re not confident of their own profitability and can’t make a living from trading them? :45:

lexys, you are probably right. one of the signal services i used has a track record of monthly positive pips since last sept when it started, but after i joined in june, it has been negative pips all the way LOL. it now has lost all the pips made since this march…

Sorry to hear it, but that’s how it goes, I’m afraid.

There’s a reason for that.

There are thousands of signal services “out there” (and unfortunately quite a few of them “in here” as well!), and at any one time, out of those thousands, it follows that there will be a small number who happen, simply by the laws of chance, to have had a run of a few good months.

There’s also a process at work which statisticians call “selection bias”, which predicates that [I][U]those few are usually the ones you see advertising and promoting and being recommended most prominently[/U][/I].

Unfortunately, the fact that they happen just to have a few good months has very little (or “no”) bearing at all on their chances of having a good few months [B][U]again[/U][/B] when you subscribe, because they had it by luck and “because someone has to”, not by skill. They’re successful marketers, not successful traders.

And that’s the “hidden reason” why it’s so common to join a successful service and for it all to turn sour as soon as you start paying for it. :frowning:

Ok I will first start by saying stop the signal services as it is still impossible to tell what your trading alone is yielding and that makes a huge difference in the advise we should give. I will say most of all signal services will eventually burn you. Most I see dont take a loss when the trade goes south on them. Instead they will hedge that trade which most of the time in spot forex is a waste of time. Sure sometime you can get out of a losing trade completely and sometimes not and you wind up tieing up capital that you could have traded with. By hedging a trade you only pause it which is pointless just cash out free up the cash and forget about it. But they dont want to have the losses show on there stats which is why when you look at there trading stats they look good but when you follow them you lose. Eventually unless they get lucky they will have to answer for them losing trades.

Manxx brought up a few really good points about maybe your entry could be tweaked as well but if your stop is getting hit then goes into profit adjusting the entry and not the stop will not prevent the stop from getting tagged. But it can adjust the R:R on the trade to still give you a profitable strategy so something to look at for sure.

I know while shorting the aussie for a couple year I traded only the aussie and only went short. Even though the market moved down over those couple years I still got stopped out over 65%-70% of the time but wound up in proft in the end. The reason why is most of my trades had less than a 15 pip stop but the profit targets where well over 100 pips. giving me better than a 1:10 risk to reward ratio on any given trade.

So even though you are getting stopped out to see it go into profit is seriously telling me you are on to something you just need to tweak a few things and you may be onto something to give you an edge. I am going to assume you are demo trading if not you should be so set up a demo to make tweaks as you go without losing your hard earned dollars.

Its a hard game out here but you seem to be on the right track you have a strategy you like obviously so stick with it just figure out how to tweak it to give you that edge. I will keep tagging along and see if we cant get you where you want to be. You got some very good members following and I feel with a little info some great things might come of this

thanks everyone, diving into every posts, much needed diagnostics

80% recovery stats is for my own trades ONLY, not those by the signal providers. haven’t looked into those as closely as my own, since i took the s/l and t/p recommended by the providers.

appreciate all the help!!!

To help we need to know how you trade. Perhaps show us a trade and explain why you took it. With little to no information to go on we can very little at best. Its going to take us understanding how you trade to see where you migt be off. Even then I dont like to offer trading advise anymore as it is a lot easier said than done but lets start from square one. Show us a trade and lets see what happens from there.

hi, bobmaninc, thanks,

went thru about a dozen systems / styles in the past 3 months, still trying to find my “edge”. all my trading is time frame m15 or below. i rely signal services for trading higher TF.

one of my most frequently used methods is the “momentum exhaustion” play, for lacking a better term. essentially looking at the cable m15 charts, if a bar grows rapid and sticks out comparing with other bars (preferably with the same color), i will trade against it in the other direction. my reasoning is that the PA bounds to exhaust itself and pulls back. i haven’t been able to define a strict & mechanical entry & exit rule yet, which probably makes it a very risky way of trading.

you should really rethink your strategy.it will do you no favour.
the fx market is a ranging market in nature. so any position you go in today and out at loss can be a profit at sone point again. so the 80% you described is logic at some point. but what i see from your post is that your trying to be counter trend trading and thats very wrong.

please checkout the “three ducks trading system” in this forum. its a easy to learn system and will give you anidea of how to trend folow instead of countertrend.

read it learn it and try to stick to the rules and your account will survive much longer.

First thing: Lets exclude these signal services totally from this discussion because you are only following their given trades with no personal input of your own and so their results are nothing to do with your own trading profile. They are simply another form of “investment” and you can decide yourself whether they are worth it or not. Either way, we have no influence over them here so including their impact on your results is only clouding the issues here.

We can only be concerned here with [B]your [/B]trading based on [B]your [/B]analysis and [B]your [/B]decision-making. :slight_smile:

OK. Most new traders [I]do [/I]seem to choose the shorter TF’s (1H>1m) to begin with perhaps because they facilitate intraday trading, avoid overnight risk, the stop levels can be smaller, and they generate more trades. There are traders who do make consistent profits from, e.g. 15M TF. However, one has to be aware that price movements on short TFs are more erratic and the signals less accurate than with longer TFs. It also requires great precision with your entry levels because the targets are normally only 10-25 pips and a late entry (or entry after a big candle) often leaves little room for any follow-through movement before reversing.

It is also worth remembering that 15M TFs often meander up and down without any special reason and will cover the same ground many times even in the same day. Therefore even if your stop levels are relevant to your trade setup, the market will often return to your entry levels even after a stop-out - that is just a characteristic of short-term markets. But it emphasises the need for precision with your entries.

I understand your need during your early months to test a variety of different approaches to trading but, on the other hand, trialing a particular method for only a few weeks/ months will not give a very accurate picture of its long term effectiveness.
It is worth defining clearly what is your preferred trading profile to avoid being distracted. Some basic things that should be clearly defined include:

  • decide whether you are an intraday trader or longer term.
  • select which TF suits your circumstances and selected trading method best
  • identify what times during the day the market is active enough to produce profits
    -select which instrument(s) you want to concentrate on
  • decide whether you wish to develop Price Action and/or indicators for your signals
  • decide what kind of target/stop ratio suits your trading profile
  • define your money management policy concerning number of lots per trading, target earnings, loss control, profit protection, etc

Once these basic areas are clear it is maybe easier to select and study those trading styles and methods that especially suit your profile.

You should be encouraged that you are already yielding a profit! :slight_smile: Also your win/loss ratio is very good. What would be worth looking at as well is your average win vs. average loss. If your wins are normally only a few pips whilst your losses are 10-15 pips then it changes the situation considerably.

With this kind of trading, I think it would be worth considering using multiple TFs. Using a higher TF like 1H to identify the underlying trend (or lack of) whilst using the 15m TF for your entry/exit signals can help avoid fake moves. Often moves on 15m charts that are contrary to a longer term trend are more erratic than those going with the trend and therefore increase the risk of spiked stop-outs. Also the longer TF can help identify stronger S/R levels that are not readily noticeable on a 15m chart. This helps a) avoiding fakes, b) identify more accurate target/stop level, c) decision whether to run with the trade or take a quick profit.

In principle, your stop level should not just be a certain/set number of pips from your entry. It should reflect the level at which, if reached, your original reasoning for entering the trade is invalidated. The fact that the market may then subsequently return back to what would have been a profitable area is irrelevant and only the sign of a ranging market - it does not justify having remained in the trade without any reason just in case it might later “come right”. That is not disciplined trading.

If, having done all this for a reasonable period you are not seeing the results anticipated then most likely the method you are using is not suitable and needs reviewing.

If I have understood your method right, then you are trading against significant candles on a 15m timeframe? If so, then I would consider this quite a risky method because the actual turning point is very unclear! Many traders may well be treating the same candle as a significant breakout (such as Bollinger Bands) and enter in the same direction with a stop beyond the opposite end of that same candle. There is therefore a significant possibility of erratic movement following these points that can cause “accidental” stopouts from spikes even though the logic in the trade was correct.

Again, with this reverse trade style it may be very relevant to compare it with the longer term trend and, indeed, if that large candle on the 15m is actually against the long term trend it may well bounce back very quickly and strongly!

Personally, I think this is maybe not the best method for trading 15m charts without a lot of experience and consideration of other factors affecting the price. But there are many different views on which methods are “best” so I won’t go into that any further! :slight_smile:

As it stands, you seem to be making profits with your method so maybe it is worth sticking with it if you are comfortable with it (although it [B]is [/B]a counter-trend method, which is [B]not [/B]recommended) and trying to improve it. If so, I suggest you pay attention to:

  • the underlying current trend on the longer term TFs
  • the precision of your entry timing and levels
  • the level for your stops with regard to your risk/reward and the price action preceding your entry decision.

If you are still here after all this rambling ( :D) - let us know what thoughts you have yourself about your own trades and method. Maybe then, if you are interested, we could look at some of these issues in more detail.

Manxx,

great answare as always mate.

but Kingfish? are you realy making profits?
im asking because the fact that someone has 104 winning trades and 35 loosing trades doesmt necesarrikiy means that at the end its a profit.

are you using a risk/reward ratio that is at least 1:1 or some of those 104 winners were closed at 1 or 2 or 3 pips profit while the loosers all are beeing closed at -15/20 pips?

manxx / turbonero, thank you so much for taking time to review & comment on my posts. appreciate the help greatly!!

  1. yes, my own trades in the past 3 months yielded a small profit. probably not much would left after the transaction costs:15:

  2. probably expected, i also got out profitable trades too quickly as well. haven’t scrutinize the winning trades as thoroughly as i did with the loosing trades, but suspect about 50% would have turned greater profit if i held onto them.

  3. absolutely good suggestion to trade along the trend in higher TF to increase the safety margin. i would put that into practice right away.

  4. as you probably can tell, i need some work on trading psychology, would appreciate the comments on that as well.

  • decide whether you are an intraday trader or longer term.
  • select which TF suits your circumstances and selected trading method best
  • identify what times during the day the market is active enough to produce profits
    -select which instrument(s) you want to concentrate on
  • decide whether you wish to develop Price Action and/or indicators for your signals
  • decide what kind of target/stop ratio suits your trading profile
  • define your money management policy concerning number of lots per trading, target earnings, loss control, profit protection, etc
  1. yes, the above are good questions i need to make up my mind on asap. somehow im under the impression that if one wants to trade for a living, he has to start on higher TF’s then move down. if that’s the case, have i started with the wrong foot then?

thanks again
3-month newbie

you got 100 scorre bullseye with number 5.

yes. start higher time frames. the better you get then you can scale down to lower time frames.

compare it to driving a car. you learn on slow speed (higher time frame) before you go make races (low time frames/quick movement).

and anyways keep one thing in mind. no time frame is more or less profitable then the other. you will not make more profit when you trade on low timevframe than on high time frame. you will thou make much more trades
if that is good or bad is up for you to decide.

i rather wait 2-3 days and make a profit of 400pips than have 10 trades on 4 days and beeing glued to screen 12 hours a day to make 400 pips (40 pips each)

and if you want to comoare thevtime/value factor:

to make 10 trades in 4 days with 40 pios profit you are glued to one pair 12 hours a day and cant do much else than watching/monitoring it.

my trade stile on the other side allows me to watch 10 pairs. after i entered in one pair my 400 pips position itvtakes days untill i reach the point where i take profit. so after the trade is set up i move to anotzer pair amd look for another 400 pips trade. if im having a good time its possible to open up to 3 trades today which all 3 yield together 1200 pointds in few days. simply because trading in higher time frames gives you the time to actualky think and plan and not only react to fast changing environmemt.

(those numbers above are only figurative spoken and with the fundamemtal knowledge that not every trade is a winner in no trading style)