Are You A Price Chaser? I Bet You Are!
You sit down in front of your computer screen. Open the platform and you are ready. You have maybe even done all your homework and you feel you have a great feel for the market today. After all it did exactly what you expected last night. You are poised and confident. Price moves to where you expected it to go and you see your first set up.
You take the trade. Set your stop and are ready to rake in the cash.
Then it happens. Just as suddenly as price has been moving the way you thought it reverses and stops you out for no reason at all. No news, no order flow, no nothing. Just a hard move in reverse right to where you stop was or slightly past it and then it reverses again back in your direction.
You are a little shaken but still confident. You figure well that is the way the markets are and there is nothing at all you can do about the loss (that is if you have some experience taking losses).
Another set up appears. You get ready. You take the trade and low and behold price reverses again and stops you out.
You are a little bit shaken at this point. You are not really sure that your strategy is a good one and you wait for the next trade determined to protect what little profit you might get. So the third set up comes. You take the trade. Presto the price begins to move in your direction. It gets a little bit ahead of you and then it makes a bounce back. You set your protective stop at break even and you are stopped out for no gain plus commission loss. Then the market continues in your direction for another 50 ticks before stopping. You sit puzzled and frustrated.
"Darn I should have held it", you think.
"Why didn't I just follow my strategy", you think again.
Another trade looks good and you take it determined that the price will indeed reward you and you get stopped out again.
Sound familiar?
I bet it does for most of you in the futures market. Especially if you are using a lot of leverage which most traders are in this market.
This is an all too common mistake.
The very first thing you have to realize is you compromised your system by being over protective. Then you need to realize that this is nothing more than chasing market noise. Market noise is simply the liquidity providers adding and subtracting contracts at given levels. The markets bounce around and stops are hit.
Stops are hit for exactly the reason above and failing to let profits maximize themselves.
Chasing price is what we do when we day trade especially during the open. You simply have to see where the set ups are (as you have heard me say numerous times) or it is going to be you. The adding and subtracting of orders is all the market is during the day around key liquidity areas or where the markets are made (more commonly called volume or market profile).
The idea as with most strategies is you should be able to lose most of the time and still make some money. I know there are guru's that execute off every volume node but look at your commissions at the end of each month before you get too excited about doing this.
Execution strategies and how aggressive you are determines how you will do. You cannot move the market so why are you trading as if you can.
Knowing how many stop outs you are prepared to take and what you want to make in a day determines generally how much you make in a period of time.
Expect losses to mount. They just do so don't make the classic mistake of going for high win rates. That is going to eventually lead at some point to disaster. It is simply a matter of time.
How far away your targets are is another key area that you want to look at. The further these targets are away the harder it is to reach the target.
So when you chase price learn the strategies that work best. Cheers!
You take the trade. Set your stop and are ready to rake in the cash.
Then it happens. Just as suddenly as price has been moving the way you thought it reverses and stops you out for no reason at all. No news, no order flow, no nothing. Just a hard move in reverse right to where you stop was or slightly past it and then it reverses again back in your direction.
You are a little shaken but still confident. You figure well that is the way the markets are and there is nothing at all you can do about the loss (that is if you have some experience taking losses).
Another set up appears. You get ready. You take the trade and low and behold price reverses again and stops you out.
You are a little bit shaken at this point. You are not really sure that your strategy is a good one and you wait for the next trade determined to protect what little profit you might get. So the third set up comes. You take the trade. Presto the price begins to move in your direction. It gets a little bit ahead of you and then it makes a bounce back. You set your protective stop at break even and you are stopped out for no gain plus commission loss. Then the market continues in your direction for another 50 ticks before stopping. You sit puzzled and frustrated.
"Darn I should have held it", you think.
"Why didn't I just follow my strategy", you think again.
Another trade looks good and you take it determined that the price will indeed reward you and you get stopped out again.
Sound familiar?
I bet it does for most of you in the futures market. Especially if you are using a lot of leverage which most traders are in this market.
This is an all too common mistake.
The very first thing you have to realize is you compromised your system by being over protective. Then you need to realize that this is nothing more than chasing market noise. Market noise is simply the liquidity providers adding and subtracting contracts at given levels. The markets bounce around and stops are hit.
Stops are hit for exactly the reason above and failing to let profits maximize themselves.
Chasing price is what we do when we day trade especially during the open. You simply have to see where the set ups are (as you have heard me say numerous times) or it is going to be you. The adding and subtracting of orders is all the market is during the day around key liquidity areas or where the markets are made (more commonly called volume or market profile).
The idea as with most strategies is you should be able to lose most of the time and still make some money. I know there are guru's that execute off every volume node but look at your commissions at the end of each month before you get too excited about doing this.
Execution strategies and how aggressive you are determines how you will do. You cannot move the market so why are you trading as if you can.
Knowing how many stop outs you are prepared to take and what you want to make in a day determines generally how much you make in a period of time.
Expect losses to mount. They just do so don't make the classic mistake of going for high win rates. That is going to eventually lead at some point to disaster. It is simply a matter of time.
How far away your targets are is another key area that you want to look at. The further these targets are away the harder it is to reach the target.
So when you chase price learn the strategies that work best. Cheers!
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