What management strategy do you use to catch big trends?

Hi there!

Taking partial profits of +80% or more of the position and letting the rest running, trailing the stop loss beyond the MLH (bears) or MHL (bulls) until it gets hit. 

(Long post warning)

Respondido por: Josep

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Hi there!

Taking partial profits of +80% or more of the position and letting the rest running, trailing the stop loss beyond the MLH (bears) or MHL (bulls) until it gets hit. 

Follow-on question on the price action yesterday (April 30, 2024) to @Josep and anybody else who traded this:

How do you manage your swing trade when the context is good but the market hasn’t yet reached 2R (or even 1R) and turns sharply against you? Do you rely on your stop or get out early?

For example, after close of bar 12, I was very sure that the market was going to break down for a measured move. We had a weak bull leg on open, sustained selling at the MA, a lower high, and then bar 12 on the 5-min chart coincided with bar 4 on the 15-min chart which was also a glorious short signal showing breakout below the MA.

I know there are certain arguments against shorting the close of 12, eg, bottom of possible TR, proximity of the 60-min MA, etc. But let’s say you shorted the close of 12, as I did, with a stop above the day’s high.

Then after 14-15, I’m having serious doubts about my analysis. I know that if the market is going to become a bear channel, bears will sell again at the MA, and 14-15 are possibly a bull trap (as is common with bear channels), but by the close of 15 the uncertainty became too much and I exited at a loss. After 17, I’m literally gnashing my teeth at the market as I short again, because now I have even more proof that my premise is valid, but I’ve just closed a good trade at a loss!

I had a good day in the end, but could do without the stress of that trade.

In such situations (disregarding the specifics of this trade, eg selling near the bottom of the TR etc) what do you do? Do you rely on your stop, or do you take the hit early and look to re-enter?

PS: I don’t scale into losers. I only take stop order trades.

My market analysis is pretty good. If I could find a simple set of management strategies to cover all the different scenarios, my returns would be insanely better! This is one area where both the BTC and the Trading Room are severely lacking. I have listened through at least 100 hours of BTR recordings, both Al and others.

I just wish there was a section on BTC with simple, concise management rules, for example:

• Open: manage this way.
• Suspected BTC / STC: manage this way.
• Reversals with strong premise: manage this way.
• Middle of a small pullback trend: manage this way.
• Late in a small pullback trend: manage this way.
• Showed promise of a small pullback trend but turned out to be a leg in a TR: manage this way.

Etc, etc.

Or simply: No matter what kind of market it is, manage this way.

At the end of the day, it boils down to a simple choice. Do you rely on your stop or do you get out on disappointment, and which do you do under what circumstances?

Hey PB,

It doesn't answer your question about management, but I had the same type of problem and always had doubts about what to do during a trade. Here are some tips that might help you understand your own trades and what you can do to improve the management:

• Use a excel spreadsheet (or anything you like) to take notes about every management decision you make, how many points you won or lost because of it and how many you would won or lost doing it in a diferent way.
• Analyse the spreadsheet in a choosen period of time (I do every 2 weeks) and see what decisions you're taking that are affecting your results.

For example, you can be able to see that 60% of the trades you got out early, you could actually hold on your stop and you'd be profitable, and instead of losing 10 points you would make 20. So, if your result of the period was 30 points, it would be 60 had you stick to your stop. (in this case, remember to also increase the loss of the trades you got out early and it would be an actual loss)

This type of analyses helped me a lot, but it takes some time for this data to actually reflects the reality, so if you try it, be patient for some months.

Now, about the management of this specific trade you took, I'd say you used the "skunk stop". You were probably expecting immediate follow through and got disappointed with 13 and 14 (bars reinforced that the market is in a TR), but because you hold after it, it was reasonable to stick to the stop. 

If your market analysis are that great as you say, then you should really be looking at what might be the real problem in your trading. Trading isnt suppose to be stressful, if it is, you should be looking at your position size, how your expectations really are and as Cleyson Terra says, track the trades. If you are not writing down/recording what you think or say while trading, you should really start with that.

You wont get any answers from anyone else about how to do, this is the part you and only you self can do, its about what fits you and what dont, its as simple as that. Trading is a lot of work, and this part is one of the mountains you need to climb. Theres so many ways to do this, trust me.

How you add to your positions and as some people do, scale out, you need to find out whats working for you.

For example, I never scale out. I dont use stop orders either, only market orders. I add to positions that are going my way, as I tend to find the intraday swings when they appear. I tend to look for theese ones.

The point is that you will get 100 different answers from 100 different traders.

I know this doesnt answer your question, but its the answer you need to hear.