Safe trades and risky trades

June 9, 2018by

I was a consistent loser for something like 4 years. I traded as a kid when I was 16, and then again when I turned 18. Between 2006-2011 I basically consistently lost on trades. Top left to bottom right on a screen. The only times when I really had some consistent profits were in 2008 with the huge volatility, and then ironically towards the end in 2011 right before I quit. My trading log is still up at tarigal.com if anyone is interested.

Part of what I am getting my head around now is that often when I felt safest to buy or sell was the exact worst time to trade. It did not really matter what system I implemented; mechanical or discretionary, I would use whatever part of the system was discretionary to play it safe. So it did not matter what system I used, I picked the losers from it. I am actually impressed by my consistency in the matter.

One of the signals now that I know something is a decent trade is when the back of my mind alerts me that this trade is a risk. If I do not get that signal, then I know the entry is probably 50/50, or not that great. In fact the safer I feel about the trade is my greatest indication that it should be avoided.

So to put my money where my mouth is, here is me adding to the winner CRON recently. I will see how it plays out next week. In the past, I would look at a chart like this, see two big red candles after the break out, and think “well it is way riskier now to get in.” So I added to this winner this morning. CRON did exactly what I was looking for. It flushed out longs by dipping below the big green bar from two days ago. Just what I think many traders would signal that the trade is no longer valid/safe. Felt pretty risky buying into this selling, but I have a very easily defined risk point at below today’s trading that would tell me I am wrong on the add.

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