SAW

The SAW method (stop at a winner) has long been discussed on its merits with horse racing, and I’m beginning to wonder if it holds any water with trading. Yesterday I managed to get to +50 fairly early on and was happy with that and pleased to register a positive figure on the board. However, 2 TUFXP GG trades signalled and with some hesitation I took them as I reminded myself to stick to my rules and follow it through. Low and behold both lose and wipe out all of my gains. Feeling mightily frustrated, another GG trade signals and I exited at +20 as 1.5000 was approaching and I really wasn’t comfortable in trying to get past it without a hefty retrace.  It ended up losing so I’m thankful I took a dose of common sense and exited when I did. The new strategy also provided me with a win to claw back a few more pips.

Speaking to a friend in the chatroom, he thought I was overtrading and should be happy with +50 100% of the time and on reflection I agree. I’ve made a good start today and now I face the problem of taking/leaving any further trades on TUFXP.

I’m going to run some numbers and see what happens if I stop after winning 1 trade and also 2 trades. It should make for interesting results anyway..

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    • Andy M, UK.
    • March 10th, 2010

    For a moment I thought you’d mispelt SORE 😉

    Overtrading is certainly a problem that is discussed a lot so I’m sure this study will be interesting. If you do conclude that you need to reduce the number of trades that you are taking each day, look to the brightside and think of all the extra time you will free up.

    • Haha, I wouldn’t know what to do with myself especially with summer fast approaching!

    • Matt
    • March 10th, 2010

    Hello,

    I’d completely agree. You hit +50 for the day, and should have stopped trading and gone outside and enjoyed the day.

    This is advice that is easier to dispense than it is to act upon I know, but in my own trading I’ve decided to be happy with 1 winner.

    I’d be interested in seeing numbers as concrete evidence of course, but there is psychological factor of quitting while you’re ahead to take into account.

    Best of luck anyway, I enjoy your blog as I’m also a bit horse racing/sports trading and betting fan.

  1. I suspect your research will find in the long run SAW is not as profitable as letting trades run if you have a clear edge but I have also decided to implement this as well as a daily stop loss in my trading. Psychologically it is less stressful and protects you against fundamental changes to markets, permanent or temporary.

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