Friday, September 14, 2012

FAT 8023 4th week, Friday

Trader put a stop at entry level for the CAD, the order was filled with a slippage of 6 ticks when the Fed announced the QE3. He called to ask why the order was filled so far away. I told him he was lucky the ordered was filled only 6 ticks away as most of the professional orders would have been pulled out just seconds before any news announcement. I told him that he should put the stop at least for 5 ticks profit to cover slippage and comm. A lesson learnt.

From his trade, I can feel he is conservative, no hurry to get into any position and doing small trades, one at a time for the moment. I am comfortable, no pressure on his side to perform and time for him to get use to futures trading.

So, I was wrong on the market, I managed to take small profits on the S&P and the GBP before the market rally and cut loss in Simsci, damn it, from a long postion to turning short.

But I was caught on the Euros and the Yen, didn't respect the market, deserved to be punished. But lucky it was just a very small position. I am now paying to learn, and should heed my trader's advice, "DIE DIE must put stop, no matter how far away", so I must act on what I teach and preach.


coconut said...

that was fast haha!

one news and all positions "collapes"! in this situation i think you did well.

i have a different view on stops. they are used only when i cannot control the situation. and they usually deployed further away from my exit point.

i usually will exit manually, cos in a running market, exit or entry point changes all the time.

Fat88Trader said...

Where to put the stops also depend on the volatilty of contracts you are trading and how much pain a trader can endure.

coconut said...

unless one is willing to change the entry and stop orders all the time, based on market movement.

i don't believe in "fix" entry and exit point, based on fundalmental or technical analysis.

i "moves" according to current market conditions, price is my only indicator. no price are too high or too low, yesterday prices are all history.

but like all traders, i too have opinion you know haha.

coconut said...

yes i agree, we can't control market volatility but we certainly can control ours. there are many ways to do it and not just using stops.

as far as stops, it means "limit" to me, and i never want to be close to the limit i can trade, there is no room to move!

certainly, in position trading, you don't want the market to push you to your breaking point/limit all the time.

coconut said...

if one is insisting of using stops for force exit, he should use it as force entry (a position) as well.

Fat88Trader said...

Yes, using stops as force entry is a good choice too.

The reasons for using stop is to limit our losses, we will be wrong in our judgement some of the time and the chart fail us too.

coconut said...

understand but..

in a nut shell (don't know i use it correctly or not), as a position trader, what is important is the positions ofcos.

yes, we must control our losses but more important is our profit and profit can only dereive from having position. no position, no profit.

protecting my position is most of the time more important than take our losses and run.

coconut said...

that is also why i believe, and in my opinion good traders always have fear of missing a trend. and they (not me) will always try to get in (a position).

while not so good trader (like me) will just stay side line and watch, especially after they had cut their losing positions.