The post bears the validity of the idea of positional trading only.
In view of this, what I find in the comments of my blog those, who is critical of my recent ES trades, I have to clarify the situation. Criticism may well be justified, but I haven't heard any normal justification from anyone. To say simply why I trade against the trend cannot be perceived unambiguously, that's why this post. Possible, that for purely system traders, my post may not be particularly useful. They live in a different world. Good luck to them.
As well as, then , what I say below, many people know, but for someone it can clarify the situation. Everyone derives by virtue of their understanding.
Think, that it's not a secret, that there are many different financial participants and each has its own agenda. But I think, that most of them are traders by nature and therefore there may be some confusion about why I am doing something, which contradicts the well-known canons of trading.
First, let's define, that for an investor, the best market behavior is gradual growth without much volatility, which allows you to sleep peacefully. As a matter of fact, why not. After all, markets one way or another, but for certain periods of time they grow together with the economy. If you take 30-40 years investment period, then, in principle, anyone will be in a good plus. But this is our nature, that I only want to see growth, and the market has its negative periods, which can take longer, than the investor desires. The tactics of such a participant should be simple.- find good companies, who you think won't go out of business( although this is also not always easy to do) and during periods of strong market crashes, you just buy and forget.
But there are traders too, who understand, that the market is not a straight line and has its peaks and bottoms, therefore, the principle arises to buy at the bottom and sell at the top, and for some, on the contrary, sell at the top and buy at the bottom. At the same time, it is understandable, that everyone has their own timeframe, which is often a function of a person's psychological profile. Besides, regardless of the direction of the market movement, trader can make money like on the rise, so on rollbacks. Is considered, what is better to trade with the trend, because even if the entry is wrong, then the market trend will take you in the right direction. From my experience I can say, that there are different types of traders. Some simply cannot buy and wait for the opportunity to short., while others like to buy and wait for the opportunity to go to the long. Many professionals work according to different principles and this is also a function of the psychological profile of a person., and also one feature. They, who trade for living like to be short for one reason- the fall is always faster , than growth. Therefore, many traders, whom I at least knew, prefer to make quick money on the fall. Why fast? That's why, that the longer you stand in position, the more there is news risk or the risk of someone big, who can move your position in the opposite direction from you. Markets are particularly prone to gradual gains and quick corrections and often gapped down, which can kill an entire long position of several days or weeks in one or two days and no stops will help. Traders have a lot of tactics and trading styles. Trading Rules, which have been developed by traders for a long time and relate mostly to novice traders in order to protect them from basic mistakes. An experienced trader not only has the ability to recoup his losses over time with regular trading , but also understands how to correct the position. This also applies to options traders.. There are strategies, allowing repositioning in different contracts and " fix" its losing strategy.
There is also a class of professionals, who manage money and considerable. They have their own agenda . Many of them quit traders, and some straight from " Ivy League School". Often the former show better results.. The tactics of such pros in hedge funds and in mutual funds is completely different.. They have a lot of capital and therefore the tactics and strategy are different from those, what i said above. If you look at SOT, you will see periods, when these pros accumulate positions at the time, how the trend is moving in the wrong direction, where do they expect immediately. In doing so, you can see not just, that the trend is not in favor, but the fact that the deviation from their average price can reach, can reach, can reach , can reach………… 30 and more %. This is certainly not acceptable for many traders.. Each fund has its own strategy and tactics of execution. There are funds, who trade very actively and intraday, and there are those, who may not leave positions for months. Many funds are purely technical and many are purely fundamental. And we know how much the fundamental can differ from the behavior of the market..
Back to " our sheep & quot;. They, who have been watching me for a long time, know perfectly well, that I am a risk obverse and usually liquidate bad trades right away. From the beginning of my blog, I was mainly focused on short-term trading, mainly scalp swing. I did this for one simple reason- some people repeat my transactions and take recommendations and therefore I did not want, so that their positions fluctuate greatly and that they, like me, they took quick profits and liquidated positions immediately. There were very few positional trades. I usually say in advance, that my deal is not positional. As for the latest ES trades, then in view of the achievement of certain technical conditions without much change in the fundamental picture, I decided to focus on positional SHORT, which I wrote in advance. What positional trading is fraught with, I have already said in some post. Primarily, it is difficult to enter a trade ideally, so the tactic of such positioning is to initiate a position and then add it in the course of the expected reversal. The difference between me and private or public foundations is, what am I ( as a private trader in this context) I do not allow my position to deviate significantly from the entry point. Therefore, I will liquidate the initial position under adverse conditions., at the same time I use tactics within the day trade around , which allows you to minimize loss in the event of an unforeseen market movement, understanding, that this is an anticipation of a reversal and the market can go higher. This tactic allows you to minimize the risk of capital loss., since the preservation of capital, the most important task of all market participants and at the same time not to lose the main focus. It should also be noted, that I do not choose the point for positioning from the bulldozer, it is weighted and has a good probability, but not always the best probability guarantees the result. Sometimes trends are protracted and this must be borne in mind.. Someone who speaks , what am i scalping, not trade round, I have already explained the difference, that the scalp or swing in this case is not an end in itself, and the way to improve the average price. I also want to tell you, that at the same time I do not resort to averaging as such. Averaging is when a person completely leaves the initial position and continues to be added periodically with a negative outcome.. I can add a position, but I also eliminate completely and do not allow any significant movement against myself. If I just scalped, then the trend does not matter, i can make money in any position, even in trend, at least a counter-trend. Exist. As I said, different tactics.
Some say why I am persistent in my positioning. That, what is above is part of the answer, the second part of the answer is, what if " throw in the towel ", when the very essence of the idea of a positional short has not changed, then you get the following:
" Tree sticks, I was shorting – shorty , threw the idea, and the market took and failed ''. I think , that this feeling is familiar to many traders, whether bulls, whether to bears. The main thing is to focus and understand whether there have been changes in the original concept..
What else touches me, so this is when people have no experience, or they just don't understand, what i said above, and try to tell me, that I am trading against the trend. There is one character in LJ, which the " catches" fish and he has a profit-generating plant on the market. Therefore, I would like to end this topic with the words. When you catch a fish in your swamp and you see nothing else and don't understand, then don't talk about the captain of a fishing vessel, who has seen much more and caught a big fish, maybe. The fisherman only knows about gudgeon, but judges ….. This captain survived more than one storm at sea. And the fisherman with a beach hat and a fishing rod in his hands, except for reeds, did not see anything.
I also want to emphasize, that I am not perfect and I can make mistakes in trading and ideas, but the main thing is, what i always think about capital preservation, which allowed me to remain one of the few, who started in the early 90s. And there are still them from among the beginners, I think many people know.
It is possible that chaotic , it would be possible to delve into tactics and strategy, but don't blame me.
