TAILIEUCHUNG - Diary of a Professional Commodity Trader Lessons from 21 Weeks of Real Trading_3

Tham khảo tài liệu 'diary of a professional commodity trader lessons from 21 weeks of real trading_3', tài chính - ngân hàng, tài chính doanh nghiệp phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | A continuation pattern during the course of a major trend allows me to advance my initial protective stop in the direction of a profitable trade. A breakout of a continuation chart will be accompanied by its own Last Day Rule. I may elect to move the protective stop from the initial Last Day Rule to the new Last Day Rule created by the continuation pattern. It is also possible that a pattern implying a reversal of trend could develop prior to the attainment of an expected target. I may elect to move my protective stop in relationship to a pattern that carries trend implications counter to my position. As previously discussed in this book taking a profit before a target is reached can be very challenging to a trader. This area of my trading is most likely to be modified on an ongoing basis. All too often unfortunately my thinking is governed by the most recent trades. This type of optimization thinking is akin to a dog chasing its short tail the short tail will always be moving just away from the dog s mouth. Trailing Stop Rule There was a time in my trading when I never moved my stops away from the Last Day Rule. A market would either reach its target or stop me out at the Last Day Rule. There was an inherent risk management problem with this strategy. Assume for example that I entered a trade with a risk of 800 per 100 000 of capital and a target equal to 3 200 per trading unit. The initial relationship of reward to risk was four to one. Next assume that the position went my way and reached a point where I had an unrealized profit of 2 400 per unit. This meant that I had 800 left to gain before taking profits. Leaving my stop at the original level meant that I was now risking 3 200 to the original Last Day Rule stop in order to gain the final 800. This was insane money management so I had to come up with some means to readjust my risk and reward parameters. For the sake of brevity I will not take the time or space to discuss the popular concepts of a trailing stop

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