Trading day types losing money
BPA trading room Q&A: December 15, 2015
Question: What kinds of trading day types do you find it easiest to lose money on?
Video duration: 3min 37sec
I’ve lost money on every kind of day that you can possibly imagine. I’ve traded close to 30 years now. I’ve done every stupid thing. I’m a smart guy so I came up with all kinds of stupid things you wouldn’t even think of. So I’ve lost money on trend days, trading range days.
I think, in general, it’s easiest to lose money on trend days, especially on a small pullback trend day: small pullback bull, small pullback bear. Because they’re constantly looking like they’re about to reverse. But if you look to the left, you’ll see lots of little gaps, where pullbacks stay above breakout points. Over the years, I learned that when I’m seeing a lot of gaps in a small pullback trend, not to go against it. Only trade in the direction of the trend.
So I think in general, scalpers tend to make less money. When they get good, they make money on trend days, but they make less. Beginning scalpers lose money on trend days because they’re constantly betting on regression to the mean. They’re constantly betting that the trend will not go very far.
Trading range days
Trading range days, it’s easy to lose money buying high, selling low. Buying 4, buying 38, buying 58. Selling 13, selling 28, selling 48, selling 73. For me it’s just a reflex when I see a lot of trading range price action like this, and I see a bar like 13, or 28, or 38. I’m doing the opposite by selling the 38 close, buying the 28 close, buying the 73 close, betting on reversals. Or I’m pretty quick to buy, once the reversal up takes place. I’m pretty quick to sell, once the reversal down takes place.
I don’t think it matters if you have one particular style of trading. Like if you only take swing trades and then the day’s a tight trading range, you’re going to lose money. If you’re a trader who only takes reversals and the market’s a trend day, you’re going to lose money. If then if you do both swing trade and scalp, but go with trends and bet on reversals, when there’s a lot of trading range price action, and you do it correctly, you’ll do well.
Always In analysis
From an Always In perspective, I think we were Always In long on bar 1. A lot of the bulls either get out below 5, or when 7 reversed down. I think they bought again above 14, and maybe they get out below 17, I don’t know. I think they probably get out below 24, the Wedge Lower High, even though not a bear bar. then the bears get short maybe below 24, 25, or 26.
Bears get out above 29. Bulls get long either above 29 or on the 30, 31 close. Bulls get out below 43, or 44. Bears sell. I thought bears probably get out above 50, around the 50% pullback, a Double Bottom 34. But I don’t think it was that strong a buy. If I had to buy or sell at around bar 50, I would buy.
And I think the bulls get out either below 56, or 59. And the bears get short either below 59, or maybe below 64, and certainly by the 67, 68 close, they get short. They get out above 74. Bulls get long above 74, and the bulls probably get out below 76. Bears, I think it’s too late to trade.