lets put today into perspective

[#1]

As a discretionary trader, I always keep a set of rules pinned up next to me, to keep my emotions out and to remain clinical. Today's setup was pretty obvious - as pointed out in another thread. The entry was determined by what I term - opening price rejection. Usually I get this entry on the premarket action but today I had to wait for the cash market open. The opening 5 minute candle tells the whole story. I find that the 1st 2 hrs on the JSE are the best for counter trend trading. Now - normally, I would let a trade ride, but it is stupid to think that such a bull market is just going to up and reverse itself, so when trading against the trend, I take profits - always. My targets were again fib retracement levels. The fact that we shot past them is irrelevant. Now, I am looking for a long entry, but this drop is a bit too far for my comfort levels (past the 61% retracement level), so I will wait for bottom confirmation (normally I would make use of my 3 strike long system - but that is another story).

[SimonPB]

what you using to pace fibs ?? yesterday high/low ??

[SimonPB]

my entry was just an engulfing candle, entry was 9.00 and just got stopped out .. 360 points which is a big trade for this system ..

[#4]

Yesterday high low on the futures - but they are really just to give perspective - they give a rough idea of range, and are not cast in stone levels.

[john_1]

Skaap, having listerned to your post over the years, it is remarkable to me how far you have come, of all the traders I know. I recon you will end this game a very wealthy and successful trader...keep it up

[SimonPB]

an I exit contracts onthe eway down, so only a few get the full points ..

[john_1]

simon, I have been your engulfing and I have found it to be a very good trigger for the morning gap close..or trend reversal..like this monrbing.. much better odds then at other times of the day, but it has not been a statistical obsevatio just subjective.. have you found that with your results?

[#8]

Well, still have my weaknesses, and letting my emotions run is still the most expensive habit I have. That is what makes discretionary trading so difficult. This last month has been disastrous for me, with a premeditaded bearish approach which has cost me both money on the wrong side of the bull run, and, worst of all, missed investment opportunities.

[john_1]

trying to trade without emotion is like trying to see with out eyes..you have to use your emotions as an indicator, yours and the markets

[SimonPB]

err, explain to me how emotions help your trading ??

[john_1]

well we are trading in emotions... fear and greed, if you can feel either rising in yourself it is a good indicator, that there is money to be made. Also if you are feeling high levels of either it is often an indicator that the market is about to trade on you ie about to take your money..

[john_1]

its a bit like the forum indicator... if everybody is shouting short...its probably not!

[#13]

So you would perhaps advocate strapping a heart rate monitor to your chest - and if it enters into the anaerobic zone - then there is sufficient volatility for you to enter your trade - only you have to enter a trade that is countrary to your current state of emotion? That is cold man! Cold! (but I like it - if it is doable?)

[#14]

john - the ultimate counter trend trader!

[SimonPB]

ya but what is the emotion you are feeling ?? fear, fear of either losing money or losing out on making money .. either way you are than more likely to trade outside of your system and lose ..

[Preston]

For me it is both, but i also scared abt this market, after yesterday rally, i feel that the market is waiting for fools to enter now. Only fools will buy at those share price now ie VOD at R90.77. Sorry not me. I will wait for a massive pullback (if any) and then buy into weakness. This market reminds of those horror movie, there is danger lurking somewhere.

[SimonPB]

exactly the point.. so fear means you woud ignore a buy signal .. that's the overall probem with emotions and discretionary trading ..

ignore the noise and trade the price ..

[#18]

Simon - not sure of your definition of discretionary trading - but it is not about emotions at all - it is about adapting systems to reflect market dynamics, for example range trading vs trend following, etc. I challenge you to find a system that would have put you long at 27200? My rules did - because FTSE price action dicated that our selloff was overdone - and my 3 strike long system then kicked in. I was originally not going to - because of the selloff was too severe, but when put into perspective - it appeared overdone - and the risk reward potential of the trade kicked in. Emotions told me to stay out, but price action and discretionary interpretation told me to take the trade.

[SimonPB]

come on, there are infinate number of ways to get an entry at 27,200 .. there always is for all levels ..

discretionary is trading on big picture/world view ..

[#20]

OK - I concede the point regarding entries at 27200, but not your definition of discretionary trading. In its broadest definition, it is a style of trading that uses human judgement and decision making at every turn. My point was that it doesn't use emotion. Even Van Tharp pointed out that the most succesful traders in the world are discretionary. But my original point is that it is very difficult to keep emotion out of it, so discretionary trading still has to be systematic.