The risk management part is something I really needed to hear today. My account is down 10% this month even though the indexes are up. I caught a couple failed breakouts in a row and then started assuming more and more risk to try to get back positive, which of course turned out exactly as you would expect it would, in compounding losses. After catching yet another failed breakout on FIVE yesterday (that tight consolidation and high volume breakout looked so promising too, I had been stalking that stock patiently for weeks) I seriously felt close to throwing in the towel altogether. I've really been having a hard time learning how to trade this sideways, news driven market. Do you have any recommended reading on risk management and position sizing? I found the article on your site, but it was very general and the only real functional advise was to never go above 20% in any one position. I haven't been able to find much useful info so far with Google. I think the keys to getting myself to profitable in this sideways market are improving my risk management and also leaving the growth stocks alone until the market volatility stabilizes. I think it would be a better idea for me to stick to ETF's exclusively until I can get a handle on how to trade in this difficult and hard to read environment. Any advise you have would be greatly appreciated. Thanks!
Hey Philip, thanks for sharing, I know 100% what you are going through. A couple of thoughts come to mind. There are 2 primary avenues to think about and explore to help you get through these situations. The first is risk management & position sizing, and the second is implementing some market filters or contextual awareness that keeps you trading less during choppy environments. You solved your own problem in your response. You knew the market environment is choppy and difficult but you were still trading breakouts or momentum setups in what I would consider a lower probability environment for them. I'm not suggesting you can't or shouldn't trade at all, but maybe you need to risk less per trade in these types of subpar environments, or maybe you need to limit yourself to just 1 or 2 positions max. Here's the position size algorithm I use: www.thetraderisk.com/position-size-calculator/ Here's an article on market conditions: www.thetraderisk.com/adapt-to-dynamic-markets-or-fail/ What I do to help me through drawdowns: www.thetraderisk.com/how-to-emerge-from-a-trading-drawdown/ Hope that helps Phillip, keep at it!
Thanks for taking the time to respond Evan, that is helpful. I've done a lot of reviewing this weekend and it's pretty obvious where my issues are coming from. I found myself down and then I started to bend my rules to try to hit home runs to get back ahead quickly, instead of listening to the market and growing more conservative by trying to focus on just getting a couple of runners on base consistently. It is also probably an ample time for me to try to learn how to trade some reversion swing strategies, as breakouts have been failing for me more often than not lately (and when they haven't failed, they also haven't been good enough to make up for the slew of small losses). It's also not highly probable that the headwinds that are troubling breakouts lately are going to resolve themselves until at least mid-term elections are in the rear view. Instead of getting frustrated and throwing in the towel, I would be better off using this time to scale back my trading a bit and diversify my knowledge and skillset to be able to profit in choppy markets.
This market scares me. I know nothing about trading (just started 3 months ago). I'm already around 15% annual.... feels like it's too easy.... like it will all fall soon.
I just write them myself on an "as needed" basis. If there's conditions or setups I am interested in trading or researching, I write the scan conditions to find them in TC2000.
So help me understand, when you ask about what scans someone should compile, I assume you are really asking about a specific trading strategy? For me, the only scans I write, are those that are directly related to my trading strategy. For example, if I have a strategy that aims to trade stocks "breaking out" I will go ahead and come up with various scans/ideas that return to me "stocks breaking out". So my recommendation is to start with your strategy/hypothesis/setups and build the necessary scan conditions from there. Does that make sense?
I've got another video I recorded, How to Develop Simple Swing Trading Strategies that might be helpful: ruclips.net/video/rip48hxQXTo/видео.html I've also got 10 articles on various strategy techniques and development here: www.thetraderisk.com/category/trading-strategy/ Hope those help.
You're asking a good question but that statistic alone doesn't give you enough information to come to that conclusion. Theoretically someone could only win half of the time but if their winners are 3 times the size of their losers and they can repeat that trade multiple times per day or week then suddenly it makes a lot more sense to trade that system over buy and hold. A more complete list of performance metrics and equations you would want to use can be found here: www.thetraderisk.com/trading-system-performance-metrics/
Outstanding organized lecturer. The best on RUclips so far.
Glad to hear it! Thanks for the nice comment.
Super-excellent ongoing reminders - thank you so much for sharing Evan.
Thanks Amalia, always glad to hear it helps!
Thank you for your information. I can actually understand you. You speak plain English and you even answer the questions I'm mentally asking.
Thanks! Nice to hear, glad this was helpful.
The risk management part is something I really needed to hear today. My account is down 10% this month even though the indexes are up. I caught a couple failed breakouts in a row and then started assuming more and more risk to try to get back positive, which of course turned out exactly as you would expect it would, in compounding losses. After catching yet another failed breakout on FIVE yesterday (that tight consolidation and high volume breakout looked so promising too, I had been stalking that stock patiently for weeks) I seriously felt close to throwing in the towel altogether. I've really been having a hard time learning how to trade this sideways, news driven market. Do you have any recommended reading on risk management and position sizing? I found the article on your site, but it was very general and the only real functional advise was to never go above 20% in any one position. I haven't been able to find much useful info so far with Google. I think the keys to getting myself to profitable in this sideways market are improving my risk management and also leaving the growth stocks alone until the market volatility stabilizes. I think it would be a better idea for me to stick to ETF's exclusively until I can get a handle on how to trade in this difficult and hard to read environment. Any advise you have would be greatly appreciated. Thanks!
Hey Philip, thanks for sharing, I know 100% what you are going through. A couple of thoughts come to mind. There are 2 primary avenues to think about and explore to help you get through these situations.
The first is risk management & position sizing, and the second is implementing some market filters or contextual awareness that keeps you trading less during choppy environments. You solved your own problem in your response. You knew the market environment is choppy and difficult but you were still trading breakouts or momentum setups in what I would consider a lower probability environment for them. I'm not suggesting you can't or shouldn't trade at all, but maybe you need to risk less per trade in these types of subpar environments, or maybe you need to limit yourself to just 1 or 2 positions max.
Here's the position size algorithm I use: www.thetraderisk.com/position-size-calculator/
Here's an article on market conditions: www.thetraderisk.com/adapt-to-dynamic-markets-or-fail/
What I do to help me through drawdowns: www.thetraderisk.com/how-to-emerge-from-a-trading-drawdown/
Hope that helps Phillip, keep at it!
Thanks for taking the time to respond Evan, that is helpful. I've done a lot of reviewing this weekend and it's pretty obvious where my issues are coming from. I found myself down and then I started to bend my rules to try to hit home runs to get back ahead quickly, instead of listening to the market and growing more conservative by trying to focus on just getting a couple of runners on base consistently. It is also probably an ample time for me to try to learn how to trade some reversion swing strategies, as breakouts have been failing for me more often than not lately (and when they haven't failed, they also haven't been good enough to make up for the slew of small losses). It's also not highly probable that the headwinds that are troubling breakouts lately are going to resolve themselves until at least mid-term elections are in the rear view. Instead of getting frustrated and throwing in the towel, I would be better off using this time to scale back my trading a bit and diversify my knowledge and skillset to be able to profit in choppy markets.
Sounds like you're thinking of all the right things and headed down the right path. Keep it up, completely agree with your line of thinking Philip.
This market scares me. I know nothing about trading (just started 3 months ago). I'm already around 15% annual.... feels like it's too easy.... like it will all fall soon.
Where do you get and how do you compile scans for TC 2000v12
I just write them myself on an "as needed" basis. If there's conditions or setups I am interested in trading or researching, I write the scan conditions to find them in TC2000.
For a newbie where do you learn, do you know of any good books to start learning “what to compile and how”
So help me understand, when you ask about what scans someone should compile, I assume you are really asking about a specific trading strategy?
For me, the only scans I write, are those that are directly related to my trading strategy. For example, if I have a strategy that aims to trade stocks "breaking out" I will go ahead and come up with various scans/ideas that return to me "stocks breaking out".
So my recommendation is to start with your strategy/hypothesis/setups and build the necessary scan conditions from there. Does that make sense?
as a newbie, the hows of how to develop a strategy and then write code for pcfs - a structured learning programme, to develop skill sets
I've got another video I recorded, How to Develop Simple Swing Trading Strategies that might be helpful: ruclips.net/video/rip48hxQXTo/видео.html
I've also got 10 articles on various strategy techniques and development here: www.thetraderisk.com/category/trading-strategy/
Hope those help.
Thats a great help, a start, thanks /// ed
If half of your trades lose, and the market goes up 70% of the time, doesn't buy and hold make more sense?
You're asking a good question but that statistic alone doesn't give you enough information to come to that conclusion. Theoretically someone could only win half of the time but if their winners are 3 times the size of their losers and they can repeat that trade multiple times per day or week then suddenly it makes a lot more sense to trade that system over buy and hold. A more complete list of performance metrics and equations you would want to use can be found here: www.thetraderisk.com/trading-system-performance-metrics/