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Veteran Contributor

Re: Ag chat rooms are full of con men

Thanks to all that share their viewpoints on this website.  Learning tool.  It takes a lot of different people doing their thing to make the ag world turn.

 

Half the time the market moves against me.  How can that be?Smiley Happy

 

I appreciate the different perspectives.

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Senior Contributor

Re: Ag chat rooms are full of con men

Half the time the market moves against everyone. "Cut losses early and let profits run long" is the phrase to profit even when your batting average is only .500.

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Veteran Contributor

Re: Ag chat rooms are full of con men

I usually stay on a winning horse too long.  Timing is hard for me.

 

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Senior Contributor

Re: Ag chat rooms are full of con men

Two rules on that :

1) The first loss is the cheapest, like the old Ronstadt song The First Cut Is The Deepest. Have a plan when you set a trade - what;s your target price and what is the price where the market is telling you you're wrong and need to get out. Then follow the plan as hard as it is to do, especially when the market goes against you, Generally, you target profit should be at least what you're willing to lose on the trade. The greater the Reward to Risk ratio, the better the odds of you winning.

 

2) No one ever got fired for taking a profit. You can always get back into a trade, but you never want to lose a profit you have in a trade if its a decent amount. The moment you sense your plan is not working and you have a profit in the trade so far, take the profit and re-evaluate the reasons why you put the trade on. Even if you don't get out, set a stop out order that allows you to keep some of your profit if the market goes to that level. The stop out should be at a price where you definitely will start wondering if you're the right way on the trade. 

 

Additionally, if you have not done so already, learn to read charts, they are the xrays of the psychology of the market. They will help you to figure out where your stop out orders should be, as well as guide you as to where your entry and exit points in your trade plan should be.

 

The rest is luck.

Senior Contributor

Re: Ag chat rooms are full of con men

The character you referred as "Seasoned Citizen" was known as Senior Citizen. He never did reveal his real name. Rumor was Senior Citizen was a women from Des Moines!

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Honored Advisor

Re: Ag chat rooms are full of con men

Smiley Very Happy   Hey Slim, I called him or her "Seasoned Citizen" as to not infringe on international copyright laws 

 

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Senior Contributor

Re: Ag chat rooms are full of con men

Rayfcom, how do u set stoplosses without getting them knocked out by the marketmakers who can see them on the level 3 quotes?
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Senior Contributor

Re: Ag chat rooms are full of con men

Do you set automatic stoplosses? Or are you able to watch market all day and set mental stoplosses?
I would think a fall below price support would be a pretty good indicator on a long position would be a pretty good indicator that you are in a losing trade. However price can be manipulated very easily by market makers after hours due to low volume trading. So what in a percentage would your stoploss below support be? Assuming that you went long in a trade at support.
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Senior Contributor

Re: Ag chat rooms are full of con men

You know, I never care if marketmakers see my stops, because what's more important to me is if the market trades at a price for which my trade plan says is wrong, I just want to get out because if my work to make the plan was correct, if that stop out price trades then the market will keep going in the wrong direction to what I thought. 

 

So sure, the market players might screw around and run stops just for a quick in and out trade, but that does not concern me. Having confidence in how I set my stops and make my trade plan,. I know that if the market trades at my stop out price that I am wrong about what I thought would happen, and so I should get out and take some time to re-evaluate. I can always get back into the position if I find that my stop out was poorly conceived, but I cannot regain lost money if I do not follow my trade plan and it turns out to be correct. 

 

If I find that I consistently am getting stopped out of a market and then the market proceeds to do what I originally thought, then I have to allow for a bit more leeway in figuring out where my stops should be. 

 

Remember something else...unless you're a really big player, the marketmakers are not going to focus on just your order. If they are going to play games and run stops its because there are a lot of people who thought the way you did and set their stops at more or less the same price as you. Which is why I tend to set my stops a bit (~5 cents in corn) higher or lower than where the technical chart points are if my stop levels coincide with those points. 

 

You know, its like a game plan for a football team. You go into the game with a set of plays you want to run, and as the game goes on you make adjustments depending on how the plays are working. Similar to making a trading plan, except the adjustments are not made while the position is on, but rather you adjust your parameters during the trade plan construction to adjust for methods that are not working exactly as you had thought they would. 

 

But bottom line is this...you spend a lot of time conceiving a good trade plan, so stick with it and don't waste time thinking about what anyone else is doing. If your trade plans are not working, identify what parts of the plan are causing you problems and adjust you method of preparation. 

 

btw, this is also why its best to take small positions looking for big moves rather than taking big position looking for a small move. The smaller position gives you more leeway in setting your stops because the reward you seek to earn is large enough to tolerate a bit more risk. If I am looking to make 10 cents on a trade then every penny counts, and my stop out prices if the market moves against me must be very tight. The normal ebb and flow of a market make it almost inevitable that my stop out price will be hit faster than my profit target. But if the trade I am doing is designed to make a half dollar in price movement, then I can be more generous in where I set my stop so it will be beyond the normal ebb and flow of the market. Which means that if the stop ptrice is hit, the market probably is going further in that direction so its wise for me to get out.

 

Hope that helps...

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Senior Contributor

Re: Ag chat rooms are full of con men

My trade plans always calculate the prices where the market is telling me I am wrong, and at those prices I set my stop out orders and stick with them. I learned that many more times than not, if you change your trade plan while the trade is on (as in, oh I will give it a little more space before I get out), I wound up taking bigger losses than I wanted to take. So in that sense, the stop is pre-set and automatically triggers if the market touches a stop pout price. Same for a profit objective...I don't care what the market looks like when it gets to the price my trade plan said was the place to take the profit, I get out. Then I can re-evaluate and re-enter if something has changed. But I stick with my plan until work I may do subsequent to its creation gives me reason to adjust the plan.

 

Example, I am short a small position in December corn now in the $3.60s, and I will sell more if it goes higher with the objective of being net short at about the $3.80 level. My profit target is $3.29 and lower, and I am only willing to risk less than my potential profit.  I also know that if the market trades above the $4.1225 level, I definitely am wrong. Sp thee trade plan is get short with a net average price of about $3.80, seek to make 50 cents, and risk 32 and a quarter cents to make 50. I don't care what happens up at $4.1225, if the market trades above there regardless if its market makers or God Himself buying, then I am wrong and getting out. 

 

Now as time goes on while in this trade, daily I watch what the market action was, seeing if any of the parameters I used when I set the trade have changed. For example, what if the market trades below the lastest low at $3.60, should I add to my position or still maintain the idea that I will be able to achieve a net short at $3.80 ? Well that requires study, I want to see why the market traded through $3.60, what's the volume and open interest changes, what's going on fundamentally, etc... But until I have reason to change my mind on the original trade plan, I leave it alone. If I have reason to change it I will, but not based on some spur of the moment comment or marketmaker nonsense. 

 

That's how I do it and its been rewarding for me to employ this method. 

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