What Trading is About....
I am consistently amazed at how most traders manage their positions. It boggles my mind at the risk they are prepared to take for meager rewards. I want you to look at the chart below. I managed to gain some very nice ROI on my account today by management and management alone. You can see how I used profile to gage my entry. However there was really nothing other than order flow to tell me that the market was likely to turn. Now I read it basically the opposite to what most traders do. If I see a lot of shorts building on one side of the market I suspect we are near a turning point. If I see a lot of longs all trying to defend an area then I suspect there is further downside.
Now why do I do that?
Would you rather be on the LP (Liquidity Providers) side or the retail side?
Well of course you want to be on the LP side. These guys win and generally win big. That is why my risk to reward was so big. At least three to one.
It is one thing to say you look for trades with three to one reward to risk and quite another to find those trades knowing why it is likely to move in that direction powerfully. If you are using Fibs, Volume or anything else you are guessing.
With winners you have to hold for a while. Losers not so much. Today I took about five trades. two were winners and three losers. I used my trades to position myself lower in the market to reduce the risk. Taking deliberate small losses before hitting the winner. The price came to within one tick of my stop and turned.
Remember I did NOT average down even though I added to my loser at first. As it moved a little further down I took deliberate losses. Small and manageable. I had already booked seven ticks so I gave them back in my small losses. Either I was going to do very well or take a small loss and look for another trade. I did really well. It doesn't always happen but Most times it does. In a very range bound market a 25 tick win is good.
Now why do I do that?
Would you rather be on the LP (Liquidity Providers) side or the retail side?
Well of course you want to be on the LP side. These guys win and generally win big. That is why my risk to reward was so big. At least three to one.
It is one thing to say you look for trades with three to one reward to risk and quite another to find those trades knowing why it is likely to move in that direction powerfully. If you are using Fibs, Volume or anything else you are guessing.
With winners you have to hold for a while. Losers not so much. Today I took about five trades. two were winners and three losers. I used my trades to position myself lower in the market to reduce the risk. Taking deliberate small losses before hitting the winner. The price came to within one tick of my stop and turned.
Remember I did NOT average down even though I added to my loser at first. As it moved a little further down I took deliberate losses. Small and manageable. I had already booked seven ticks so I gave them back in my small losses. Either I was going to do very well or take a small loss and look for another trade. I did really well. It doesn't always happen but Most times it does. In a very range bound market a 25 tick win is good.
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