How to handle losses - keep them small

As a PS to my post below.......

In fact, showing losses and understanding how to keep losses small is so important that I will show two losses on the 3min NQ on Wednesday as well. There are so few software vendors and so called Gurus that never mention losses, it is no wonder so many amateur traders never know how to handle them when they come along.

Here we had two losses, on a day when the larger degree trend was unclear, so it would have been difficult to filter them out using the 15min chart.

But do you see how they were kept small, so two -1R losses here then added to the nice +6.5R Profit on the 3min ES made money over all. Small losses and Big profits, that is the key to successful trading.

But it is important to know, and understand, that losses can and do unfold when trading.......

Steve

+6.5R Profit on the 3min ES

Hi Everybody,

I was out of the office yesterday, so could not post. But Wednesday was another good day on the US eminis with some very nice trades, the best of which was the TS4 buy that unfolded late in the day on the 3min ES.

As you can see, this results in a nice +6.5R Profit as the ES rallied strongly into the close.

Note how we swapped to use the ATRStop (which held the long into the close) once the STF had exceeded its strength band. This is our standard trade management guidelines.

Thanks

Steve

PS. It is always important to remember that although this was a good trade, losses can and do unfold. But because we use correct Position Sizing, these are kept small as just -1R. So even with 2 or 3 losses, the +6.5R profit on the trade shown here would more than cover 2 or 3 losses. But I just wanted to make sure that everybody does understand that any methodology will have losses. The trick is to keep these inevitable losses small and the profit large.

ES training lesson on larger degree trend

Hi Everybody,

I am often asked whether you should take “all” the automatic setups, so I always have to point people back to the Trading Course where I outline how it is always best to only takes trades “in the direction of” the larger degree trend.

Yesterday was a good training lesson on this, please see the chart to the right. Here the first TS3 buy setups should have been avoided as it was against the red STF (this is standard trade management guidelines), but I want to consider the losing trades later in the day (shown by the small green triangles on this eSignal chart using our RT add-ons).

Here these 3min sells were against a larger degree 15min up trend as the 15min chart was rallying off DP support (15min Chart not shown to save space). But the point being is that you should always look to only trade “with” the larger degree trend, and as such always be aware of larger degree DP levels, and then do not (or be very careful about) trades that are against these larger degree trends. As such this would have avoided these otherwsie losing trades for you.

As such, this 3min ES was a good “lesson” yesterday in how to always try and trade "in the direction of" the larger degree trend, alongside the very good +7R Russell profit that I posted below.

Steve

+7R on the 3min Russell

Hi Everybody,

The best trade of the day yesterday on the 4 e-minis in the US was on the 3min TF (Russell Index). As you can see from the chart, this TS1 sell nailed the high of the day perfectly before the Russell declined nicely, only to reach the projected profit target for a nice +7R Profit

A very nice trade, and one that unfolded exactly as outlined in the Trading Course

Steve

Daily S&P update

Hi Everybody,

It is nice to see the S&P continue its rally off the March 6th low, that came in at our DP support zone........

Will the rally continue up into the 900 area where the next DP lies in wait ?

Steve

3min ES trade for +3.9R Profit

Hi Everybody,

Here is a good example of an Advanced Trade setup (for the Advanced Traders only, as the TS3 buy was against a red STF) that unfolded on the 3min ES yesterday (Monday April 13th).

As you can see, the ES rallied nicely to reach the first projected profit targets. There was also DP resistance in this area as well. As the STF was weak at this time, it would have been a good idea to look to bank the +3.9R Profit at that time.

Yes the markets did rally higher later in the day, but “at that time” the sensible course of action would have been to bank the good +3.9R Profit.

Thanks

Steve

Hi Everybody,

As Friday April 10 and Monday April 13 were holidays (Easter) here in the UK, there were no posts

Thanks

Steve