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I don't understand how you can be trading on a DOM for 4/5/6 ticks profit but then having trades with losses of 50/100/200 ticks.
I would want to look at your winning trade average hold time compared to you losing trade average hold time. I assume your winning trades are very quick and then you have the odd big loss where you just sit there doing nothing hoping the trade will come back to positive and don't cut until forced to because you are stopping for the day, or you finally can't take any more.
Maybe you are a "set and forget" type trader and you just sit there until it hits your take profit, but if you are actually looking at the DOM and only scalping for a quick few ticks profit, it should be obvious pretty quickly if after getting filled the trade has strong momentum against you and your trade direction at that time is wrong. Then get out quickly and take a small loss. It is not as if you are waiting for one setup a day and if you exit you are done. You just exit quickly and then wait for a new setup. You can't take losses that big.
I would also look at the Maximum Adverse Excursion of your winning trades and use a figure a few ticks larger than that as a hard stop if you have problems exiting. If almost every winner has an MAE of less than 5 ticks say then a trade that goes further than that is more likely to be a loss, or at least have momentum in the wrong direction so get out.
If all your winning trades have a much larger MAE in ticks than you actually make in profit then your entries are poor.
If taking pullback entries for example, then try and enter further away to reduce MAE and increase potential profit. Entering 5 ticks further back could allow you to double your profit potential and reduce MAE for better reward/risk. Some trades may be missed and not filled, but the overall results might be better.
If taking breakout entries then you could try setting an alert at the the level instead of a stop entry order, and when the alert is hit then look for a small pullback (based on the MAE for winning trades), to get a better entry price before price continues in the direction of the breakout.
Just a couple of thoughts.
You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
I honestly don't have a good response. I am trying to take losses faster, but part of me just wants to hold onto them longer until the market comes back to my entry price and I can get out for a 4 tick profit. I do need to cut my losses faster.
Not to break your excitement, but all the trades you took, roughly 80% went to commissions? What's left after that? (Take it as a joke please. Keep your confidence growing. )
This is something I was kind of waiting for, and am glad to see.
When I read a post from you where you basically laid out your idea of taking a small profit but accepting larger losses, I basically said "uh oh," but didn't want to be negative or to speak without knowing more about your plans.
Here's the post I mean:
You may not still be sticking to this exact plan, but here's the point: we see a lot of people who notice that if they just wait out a loss, it sometimes goes to a profit, and indeed it often does. So it is not unusual for people who are inclined toward scalping (taking small quick trades and many of them) to have something like a profit target of a few ticks and a much larger allowance for losses, whether using stops or not. If using stops, a stop of around twice the size of the target is not unusual. (I have never seen a 10-to-1 loss to profit range like this, but it doesn't matter because the principle is the same: let your losses grow because price will always turn up at some point -- and maybe it will -- but grab that profit fast because they are rare and valuable -- as they certainly are.)
The problem is that you have to be an almost supernaturally good picker of winning trades to not go deeply broke with this strategy. You mention having an 80% win rate. I'm not going to figure out the math because it doesn't matter anyway. No one is going to have a sustained 80% win rate, or anything close to it. Not anyone on this earth. What you are going to have is some big losses and a very small number of very small wins, which is not a great idea.
On the other hand, a lot of people are right about half the time, so they're at about a 50% win rate, but they cut their losses early, while they are small, and let their profits grow, so they take them when they are larger. If you keep the losses low and don't cut your profits too soon, you can even do well with less than a 50% win rate. (Well, not much less, )
I'm not trying to tell you how you should trade or how you should think about trading, just trying to point out some things that other people have found out the hard way, in hopes that you can put some of them to use.
It is generally a very good idea to not let those losses go too far, and always a good idea to not cut the profits too quickly. If you do, you're cutting what you want most to keep.
Good luck, and I know it is not an easy thing to find what works for you. I wish you well.
Bob.
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Edit: PS, and I notice that you are doing well with counter-trend trades, which make up a good part of the trading day, on some days. The strategy of assuming the losing trades will come back and go into a profit is most likely to succeed in that type of market situation, and there is always going to be times when that's what is going on. But certainly not always.
My only point would be to not have too great a tolerance for losing trades, as well as to not be too quick to grab a profit and end the chance of it getting larger.
It's hard to balance out what will work in any given situation, since how things will develop is not known until they already have done what they will do, and that's too late.
When one door closes, another opens.
-- Cervantes, Don Quixote
Entries will be buying weakness and selling strength which is what I always do.
Exits will be very different from the past two weeks. I will be implementing a 2 to 4 tick stop on every trade. This will cut down on my losses but increase my commissions substantially. For profitable trades I will implement a trailing stop. If the trailing stop is not triggered I will hold the winning trade until the end of the day. I will be flat by the end of the day.
This change in strategy will result in potentially 50 to 200 losing trades per winning trade. The losses will be difficult to handle mentally but this is the direction I want to go.
There will be no limit to the number of trades I am taking each day. I could make 100 round turns in one day if I so wish.
Markets that I will trade will include MES, MCL, M6E, MGC, MYM, and ZN.
In additional to holding winning trades until the end of the day, I will be adding contracts to winning trades. My plan is to add one contract to the winning trade for every 40-60 ticks that the trade is up.
Thanks for following me on this wild journey. Have a great weekend!