Flipping a position vs flipping a thesis.

We have all been stopped out and then flip (reverse) our position only to get stopped out again. Two things help me.  One I need to separate myself immediately.  If I am not at my screens I can’t trade.  No one likes to get stopped out and that most certainly changes the way I view the market in that moment. Get up and come back even if it is for 15 seconds.

After sitting back down, I begin to evaluate the market again.  Flipping my position has worked sometimes and sometimes not. I have a higher win rate in flipping by thinking about it in terms of my thesis changing.  A trade does not work because it was a bad price (patience/news driven/fat finger, etc) or a bad thesis.

If I flip because of a bad price I will almost always fail.  If I flip because my thesis changes than I have a much better chance at success. The first thing I look to when I get stopped out is to see about news. Knowing when releases happen will help.  I then make sure I saw all of the variables, it does not happen often that I miss something but it does happen.

If those two things didn’t happen it means my thesis was wrong.  At that point, I will start to look at the opposite thesis. From their I will make a judgement on where that potential of the trade is and where it is in relationship to current price.  Very important.  I can evaluate this pretty quickly because I make it a habit to see both sides of the trade at all times. In tighter ranges, I am much less likely to reverse a position because there isn’t as much room. That is the time when opportunity cost is the most expensive.  A risk that all traders must accept in a tight range.

What do you in those situations?  What worked, what didn’t?

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  • Emini_All_The_Time

    I trade ES and you have to admit ES  is very efficient in how it trades.   For me it seams whenever I reverse positions I buy the high/low of the channel and it bites me since I trade with tight stops.   So for me I get best results if I wait to watch the market for a few mins after a stop out since I tend to feel a reverse trade in many ways is a impulse trade that I do not realize until it is too late.   2 mistakes hurt more than one.    Thank you for making this blog it is first rate work !
    Cheers,
    EminiAllTheTime

One Response to Flipping a position vs flipping a thesis.

  1. Emini_All_The_Time says:

    I trade ES and you have to admit ES  is very efficient in how it trades.   For me it seams whenever I reverse positions I buy the high/low of the channel and it bites me since I trade with tight stops.   So for me I get best results if I wait to watch the market for a few mins after a stop out since I tend to feel a reverse trade in many ways is a impulse trade that I do not realize until it is too late.   2 mistakes hurt more than one.    Thank you for making this blog it is first rate work !
    Cheers,
    EminiAllTheTime

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