Hello.
Do you all think that stops are meant to be hit? Let's say that you risk 2% per trade (I believe this is where traders go wrong, will save argument for later date). You all know that trading is a game where you will lose more then you win (You are competing with the best of the best). The word "more" for most traders (90%) represents money, but I believe the word "more" for the professionals represents trades.
Now, that I have said this, I will put the above in a simple expression.
Professional Trader = Lose more Trades
Other Trader = Lose more Money
When loosing more trades, you can't be risking 2%, because you will quickly develop a drawdown with loosing streaks which are quite common (too common ). I would say that professional traders set hard stops at 2% (emergency stop), but close the trade a lot earlier in order to avoid the psychological impact that this loss would bring.
For example, I never let price hit my stop-loss, I take advantage of the fact that I trade intraday (nothing below 1H) and it does not take to long to know that your wrong. I do close out some trades prematurely, but price would have stopped me out at a 2% loss and then returned in my favor. There are some trades where my setup becomes invalidated and I exit at a small loss and price then continues to my profit target, but one thing that remains constant is the little amount that I lose. It is all part of the game. Money Management has allowed me to have what I consider a emotionally tough week, 3/17 winning trades and still come out on top.
I know that I went a little of topic, but let me ask. Do you think at stops are meant to be hit?
Also, I must ask. Why would you risk 2% per trade? How much are you trying to make? The pros are just trying to beat the S&P and get about 10% a year. By an individual risking 2% per trade, they are clearly trying to make high returns. Lets look at an intraday trader risking 2% per trade and having about 10 setups for that trading day. Does this trader know that there is a possibility that he can make or lose 20% for that day (both tails). Do you know what nature does to things that are out of equilibrium? My trading mentor once told me, "The people that win the lottery usually lose everything because they broke the odds and nature has a way to bring extremes back to equilibrium". A 20% loss unfortunately is something that is tough to recover from despite the argument of things returning to equilibrium because you have other factors working against you. I know I got off topic, sorry .
Do you all think that stops are meant to be hit? Let's say that you risk 2% per trade (I believe this is where traders go wrong, will save argument for later date). You all know that trading is a game where you will lose more then you win (You are competing with the best of the best). The word "more" for most traders (90%) represents money, but I believe the word "more" for the professionals represents trades.
Now, that I have said this, I will put the above in a simple expression.
Professional Trader = Lose more Trades
Other Trader = Lose more Money
When loosing more trades, you can't be risking 2%, because you will quickly develop a drawdown with loosing streaks which are quite common (too common ). I would say that professional traders set hard stops at 2% (emergency stop), but close the trade a lot earlier in order to avoid the psychological impact that this loss would bring.
For example, I never let price hit my stop-loss, I take advantage of the fact that I trade intraday (nothing below 1H) and it does not take to long to know that your wrong. I do close out some trades prematurely, but price would have stopped me out at a 2% loss and then returned in my favor. There are some trades where my setup becomes invalidated and I exit at a small loss and price then continues to my profit target, but one thing that remains constant is the little amount that I lose. It is all part of the game. Money Management has allowed me to have what I consider a emotionally tough week, 3/17 winning trades and still come out on top.
I know that I went a little of topic, but let me ask. Do you think at stops are meant to be hit?
Also, I must ask. Why would you risk 2% per trade? How much are you trying to make? The pros are just trying to beat the S&P and get about 10% a year. By an individual risking 2% per trade, they are clearly trying to make high returns. Lets look at an intraday trader risking 2% per trade and having about 10 setups for that trading day. Does this trader know that there is a possibility that he can make or lose 20% for that day (both tails). Do you know what nature does to things that are out of equilibrium? My trading mentor once told me, "The people that win the lottery usually lose everything because they broke the odds and nature has a way to bring extremes back to equilibrium". A 20% loss unfortunately is something that is tough to recover from despite the argument of things returning to equilibrium because you have other factors working against you. I know I got off topic, sorry .