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Trading since 2003. Irish in France.
Amigos
3
Cian Murphy
Ha publicado MetaTrader 5 señal
Medium term trend following trading with entries on false short term breakouts. Trading 30+ markets currently, 20-30 trades a week. System that trades on catching trends so it takes small losers and big winners
Cian Murphy
Negative spirals, mistakes and markets
Like anything in life, in trading we learn from our mistakes, or at least that is what we like to think. It is true to a point. We learn that doing certain things can provoke unintended, and unwanted results - however that does not necessarily mean that we will not make the same mistakes again. The most dangerous thing in trading is a negative spiral, in that I mean a vicious circle of events that lead to consistent poor decision making and repeated losing trades. Worse still is the destruction of confidence and emotional turmoil that comes with and from a negative spiral. I should explain... A classical trading negative spiral would be something like expecting $GOLD (why not?) to fall and having tried to get into a good short position (selling) several times getting stopped out by the noise (market spikes etc that hit stops) at the turning point. This probably happens in the first place from the stop being too tight (too close to the entry price - greed - not willing to risk a loss). SpiralDespite getting stopped-out, being convinced that this is the moment to get short but having had a few losses the trader tightens up the stop (again?) and increase the size of the trade ("Hit and hope"). This kind of last ditch effort might work the odd time but overall will end up losing as the stop being too tight will repeatedly frustrate the trader by losing and eliminating the trader's short position. Loss begins to add to loss, and the trader getting frustrated but being stubborn then tries a quick trade in the other direction as they have already been stopped out so many times that they begin to wonder if they are wrong. They may not be wrong at all, they may just be greedy and placing their stops too tight! The market rises a bit looing like this was in fact a good idea, and quickly turns south and never looks back, creating yet another loss fro a trade in the opposite direction which can only annoy the trader more as this was their "trade of the day/month/year". The negative spiral can continue as deep as the the traders pockets are, and the real mistakes are lack of patience - not willing to sit out of the market after a couple of bad trades and come back more objective, and greed - trading too big with too tight stops for a big win. My own most dangerous and sometimes recurring mistakes are probably the following
Too tight stops, particularly after losses - "Hit and Hope"
Not protecting some profits after a few losses. The psychological benefit alone of taking a win - "putting some points on the board" is very important in terms of breaking of out any negative spiral or negative activity cycle.
Increasing trading aggressively size after a win & risks getting recent gains wiped out directly - as an ex-collegue said "the bright lights of vegas". Allowing one trade to make or break your day/month/season shows a complete lack of faith in strategy and destabilises your entire game plan. This is no way to ensure long term performance in any field.
How might a trader avoid negative spirals and self destructive activity?
Trade smaller
Take breaks when things are not working, and trade smaller.
Increase size only when winning, and make sure of being comfortable with the potential losses.
Rules and guidelines can help in markets, but remember that markets have no rules, what a trader needs to have control of is themselves.
Like anything in life, in trading we learn from our mistakes, or at least that is what we like to think. It is true to a point. We learn that doing certain things can provoke unintended, and unwanted results - however that does not necessarily mean that we will not make the same mistakes again. The most dangerous thing in trading is a negative spiral, in that I mean a vicious circle of events that lead to consistent poor decision making and repeated losing trades. Worse still is the destruction of confidence and emotional turmoil that comes with and from a negative spiral. I should explain... A classical trading negative spiral would be something like expecting $GOLD (why not?) to fall and having tried to get into a good short position (selling) several times getting stopped out by the noise (market spikes etc that hit stops) at the turning point. This probably happens in the first place from the stop being too tight (too close to the entry price - greed - not willing to risk a loss). SpiralDespite getting stopped-out, being convinced that this is the moment to get short but having had a few losses the trader tightens up the stop (again?) and increase the size of the trade ("Hit and hope"). This kind of last ditch effort might work the odd time but overall will end up losing as the stop being too tight will repeatedly frustrate the trader by losing and eliminating the trader's short position. Loss begins to add to loss, and the trader getting frustrated but being stubborn then tries a quick trade in the other direction as they have already been stopped out so many times that they begin to wonder if they are wrong. They may not be wrong at all, they may just be greedy and placing their stops too tight! The market rises a bit looing like this was in fact a good idea, and quickly turns south and never looks back, creating yet another loss fro a trade in the opposite direction which can only annoy the trader more as this was their "trade of the day/month/year". The negative spiral can continue as deep as the the traders pockets are, and the real mistakes are lack of patience - not willing to sit out of the market after a couple of bad trades and come back more objective, and greed - trading too big with too tight stops for a big win. My own most dangerous and sometimes recurring mistakes are probably the following
Too tight stops, particularly after losses - "Hit and Hope"
Not protecting some profits after a few losses. The psychological benefit alone of taking a win - "putting some points on the board" is very important in terms of breaking of out any negative spiral or negative activity cycle.
Increasing trading aggressively size after a win & risks getting recent gains wiped out directly - as an ex-collegue said "the bright lights of vegas". Allowing one trade to make or break your day/month/season shows a complete lack of faith in strategy and destabilises your entire game plan. This is no way to ensure long term performance in any field.
How might a trader avoid negative spirals and self destructive activity?
Trade smaller
Take breaks when things are not working, and trade smaller.
Increase size only when winning, and make sure of being comfortable with the potential losses.
Rules and guidelines can help in markets, but remember that markets have no rules, what a trader needs to have control of is themselves.
Cian Murphy
Match-making and markets
Every trader needs markets that ressembles them as a person – their moods, their dynamism (or lack thereof!), their timezone, and any other more ridiculous aspects that you might think of.
Timezone makes simple sense as there is little reason trying to play a game who’s rules change each night while you are asleep. Being in markets means watching them, eating them, and breathing them. It doesn’t mean trading them all the time, but that IS the best way to feel the mood of the market. These are the things that give a feel for why a market is acting why it is, and how it might be best to react or adapt. This may start to sound like relationship advice but bear with me.
Being in markets with a plan is important. Having an idea of what time-frame you expect to trade, how many trades per day/month/year you expect to do, can really help structure an approach, but these things should naturally appear out of any apprenticeship/novice period. It can be very tiring to trade high frequency for some people, while for others it suits their personality well to only be active for short periods dedicating the rest of the time to training: charting, reading, & watching. Some people are more comfortable taking a position and sitting on it, particularly on a winning one – which can be difficult. One should never sit on a loser.
Some markets and an idea of their personalities:
$eurgbp is a typically slow paced market with relatively low volatility, as are many mid term bond markets.
$OJ (Orange Juice) and $NG (Natural Gas) among others are very illiquid (not much volume trades consistently) and jumpy markets that can drive a mind demented and a body to ruin but can of course provide great opportunity with good discipline!
$EURUSD , $SPY (S&P500) , $RX (German 10 year Bund) are the biggest animals of them all (very high volume and liquidity) and as such for me are great markets as when they move they really move, and as far as I am concerned the “behave well” technically (a break-out is a break-out, and a failure is a failure among others!). These can be nice in the very short-term (as a technical trader) and in a medium termbut often noisy in the “wrong” time-frame.
Try them all in all time-frames and the right one *should* find you!!
Every trader needs markets that ressembles them as a person – their moods, their dynamism (or lack thereof!), their timezone, and any other more ridiculous aspects that you might think of.
Timezone makes simple sense as there is little reason trying to play a game who’s rules change each night while you are asleep. Being in markets means watching them, eating them, and breathing them. It doesn’t mean trading them all the time, but that IS the best way to feel the mood of the market. These are the things that give a feel for why a market is acting why it is, and how it might be best to react or adapt. This may start to sound like relationship advice but bear with me.
Being in markets with a plan is important. Having an idea of what time-frame you expect to trade, how many trades per day/month/year you expect to do, can really help structure an approach, but these things should naturally appear out of any apprenticeship/novice period. It can be very tiring to trade high frequency for some people, while for others it suits their personality well to only be active for short periods dedicating the rest of the time to training: charting, reading, & watching. Some people are more comfortable taking a position and sitting on it, particularly on a winning one – which can be difficult. One should never sit on a loser.
Some markets and an idea of their personalities:
$eurgbp is a typically slow paced market with relatively low volatility, as are many mid term bond markets.
$OJ (Orange Juice) and $NG (Natural Gas) among others are very illiquid (not much volume trades consistently) and jumpy markets that can drive a mind demented and a body to ruin but can of course provide great opportunity with good discipline!
$EURUSD , $SPY (S&P500) , $RX (German 10 year Bund) are the biggest animals of them all (very high volume and liquidity) and as such for me are great markets as when they move they really move, and as far as I am concerned the “behave well” technically (a break-out is a break-out, and a failure is a failure among others!). These can be nice in the very short-term (as a technical trader) and in a medium termbut often noisy in the “wrong” time-frame.
Try them all in all time-frames and the right one *should* find you!!