A SUCCESSFUL TRADE: THE CROSSHAIRS TRADER LOSS RULE WORKS AS PLANNED

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Trading involves risk (interpreted: possible loss of money) and it is this risk that must be considered BEFORE a trade is made.  Period!  This consideration is in the form of rules. 

Although I have become very confident in the highly probable success of the CROSSHAIRS trade system I have developed, I also know and accept that anything can happen. 

Anything can happen because there is no way for a trader to control who is on the other side of a trade nor can a trader control any surprising news that could bust an otherwise perfect trading edge.  AND IF A TRADER TELLS YOU HIS SYSTEM IS 100% FOOLPROOF or IF A TRADER ONLY REVEALS HIS WINNERS AND NEVER THE LOSERS YOU BETTER RUN AND NOT LOOK BACK!

QUESTIONS

Why do you think trading systems work for some traders and not for others? 

Why do you think disciplined traders can take almost any good trading system and make it work whereas undisciplined traders can take the same system and rack up nothing but losses?

Why do successful traders have a consistently rising equity curve in their trading accounts with few, if any, large losses and a high percentage of gains, while the unsuccessful traders have a falling equity curve made up of many large losses and a few small gains?

ANSWER

The answer came to me when  1) I learned to accept the fact that not all of my trades are going to work;  2) I determined a loss point before entry; and 3) I accepted the loss by abiding by the loss target NO MATTER WHAT!  “Deal with it and move on,” I said.  Which is exactly what I did when I developed my loss target using THE CROSSHAIRS. 

DEVELOPMENT OF THE CROSSHAIRS LOSS TARGET

Entering a trade is the easy part; it is taking a loss, and deciding where to do so, that is the hard part.   Since I am a visual person, I developed THE CROSSHAIR as a way to give me the entry AND the exit AT THE SAME TIME. 

The following recent trade is a good case in point.  Let’s look at two charts of GOLDMAN SACHS (GS): one a DAILY chart and the other a DEPLOYMENT chart.

GS DAILY CHART:

GS “DEPLOYMENT” CHART:

 

CROSSHAIRS DECISION TO ENTER THE BATTLEFIELD

I decided to enter into a GS call trade on two separate occasions this month-both for the same reasons:

1. My bigger chart-the DAILY-indicates a trend line support at the 21 simple moving average (21 TANKS).

2. The indicator and moving average crossover I use formed the CROSSHAIR on the DEPLOYMENT chart.

RESULTS:

The first entry on June 4 was a success with my quick profit target met.  The second trade, although for a loss, was also a success because I obeyed my loss target (the horizontal crosshairs line) and exited the trade when the red candle closed below this  line.  Looking at it now, not taking this loss would have resulted in a much greater loss. Even if GS would have recovered and flew past my profit target (or if it soon does), the trade is a success.  Why?

BECAUSE TRADING RULES ARE NOT MADE TO BE BROKEN! 

Do I believe there is something wrong with my system?  No.  Do I need to correct it? No.  Did I miss something? No. The other side of the trade decided that for right now the 21 simple moving average is just not going to be the support it once was.  Live with it and move on because anything can happen. 

When TRADING IN THE CROSSHAIRS you do have to put the cart before the horse or should I say the chart before the trade. Make the decision now to follow the rules or your cartload of money won’t need a horse to pull (or push) it anymore!

 

 

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