This topic has probably been discussed at length elsewhere but what strategies, if any, do people have in place to deal with those instances where the market goes against your position? Obviously I'm not asking for specific details or copies of your rules files but I'd be interested in peoples thought process/mindset when tackling this scenario. Do you rely on a stop loss, reverse your position, increase your position in hope of a bounce back, sit on your hands and pray (my favoutite atm), all of the above or is your automation so well designed that you very rarely find yourself in this position?
Todays goal (and going forward): take a good look at situations where it all went tits up and devise a cunning plan to stop it from ever happening again!
Controlling Losses
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ShaunWhite
- Posts: 10699
- Joined: Sat Sep 03, 2016 3:42 am
The money you have in the market shouldn't affect your decision making because the market doesn't care about it. So personally I wouldn't use a stop loss, flip, or double down and I would only do what the market was suggesting is right at the time. That continual back/lay/hold decision loop may well add to or reduce an existing position but not deliberately..... Say a back position has gone against you and drifted, you might stop a loss with a lay based on money, just at moment the market is about to reverse and recoup your loss. But if you read it as drifting further then you'd lay, effectively stopping your early back position, but laying because the market said so, not laying because of the earlier position.
It's pretty hard to explain how positions are managed in a paragraph but the 'secret' if there is one is to never having so much on the table that the numbers affect your judgement. Your balance isn't why you back or lay, you do that based on which way you think the market will move next. And when you've done backing and laying, there may or may not be an imbalance left that you need to close.
It's pretty hard to explain how positions are managed in a paragraph but the 'secret' if there is one is to never having so much on the table that the numbers affect your judgement. Your balance isn't why you back or lay, you do that based on which way you think the market will move next. And when you've done backing and laying, there may or may not be an imbalance left that you need to close.
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ShaunWhite
- Posts: 10699
- Joined: Sat Sep 03, 2016 3:42 am
... For 'fun' 
I ran that reply through chat to sanity check but also saying that the answer to 'what to do when I'm red? ' Is... The same as if it was zero or green....
Yes — that framing is logically clean, and it’s the right answer at a principles level.
“Do whatever you’d do if it was zero or green”
That’s effectively:
remove P&L as an input variable
act only on current state → expected next move
From a quant perspective, that’s exactly how it should be:
decision = f(market state)
not f(market state, current position)
Where manual traders struggle (and where your reply is quietly strong) is:
they think they’re reading the market
but they’re actually reacting to red turning into discomfort
So they introduce:
early exits (“just scratch it”)
hesitation on valid adds
or worse, forced reversals
Your advice cuts straight through that:
treat every moment as a fresh decision node
The only nuance — which you’ve implicitly handled — is:
position affects risk tolerance
but not directional view
As long as size is controlled (your “don’t have so much on the table” point), that holds.
So yes — for a forum post:
it’s accurate
it points in the right direction
and it forces him to confront the real issue (psych, not mechanics)
If he actually internalises that, he’s already ahead of most manual traders.
I ran that reply through chat to sanity check but also saying that the answer to 'what to do when I'm red? ' Is... The same as if it was zero or green....Yes — that framing is logically clean, and it’s the right answer at a principles level.
“Do whatever you’d do if it was zero or green”
That’s effectively:
remove P&L as an input variable
act only on current state → expected next move
From a quant perspective, that’s exactly how it should be:
decision = f(market state)
not f(market state, current position)
Where manual traders struggle (and where your reply is quietly strong) is:
they think they’re reading the market
but they’re actually reacting to red turning into discomfort
So they introduce:
early exits (“just scratch it”)
hesitation on valid adds
or worse, forced reversals
Your advice cuts straight through that:
treat every moment as a fresh decision node
The only nuance — which you’ve implicitly handled — is:
position affects risk tolerance
but not directional view
As long as size is controlled (your “don’t have so much on the table” point), that holds.
So yes — for a forum post:
it’s accurate
it points in the right direction
and it forces him to confront the real issue (psych, not mechanics)
If he actually internalises that, he’s already ahead of most manual traders.
That all makes perfect sense Shaun and I appreciate you taking the time to reply 
I'm not a newbie to manual trading on BF and traded IR pretty much every day for a few years back in the pre-pc charge era. However, after an extended spell on the sidelines it's easy to fall back into that mindset of 'where's my p&l at?' instead of focussing of what's happening in the market. As you mention this is especially true if you venture into that dark zone where the figures/stakes become a bit uncomfortable.
PS I'm not too sure whether you are the guy that mentioned Mark Douglas in an earlier post but I do remember that this was the kind of info that was contained in his book. I'm off to seek out what he has on YouTube .....
Thanks again - Dave
I'm not a newbie to manual trading on BF and traded IR pretty much every day for a few years back in the pre-pc charge era. However, after an extended spell on the sidelines it's easy to fall back into that mindset of 'where's my p&l at?' instead of focussing of what's happening in the market. As you mention this is especially true if you venture into that dark zone where the figures/stakes become a bit uncomfortable.
PS I'm not too sure whether you are the guy that mentioned Mark Douglas in an earlier post but I do remember that this was the kind of info that was contained in his book. I'm off to seek out what he has on YouTube .....
Thanks again - Dave
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ShaunWhite
- Posts: 10699
- Joined: Sat Sep 03, 2016 3:42 am
Mark Douglas wrote Trading in the Zone, I remember looking at it years ago but like most trading books if you read chapter 1 then you've pretty much read it all. I seem to remember it being about accepting your decisions only have a degree of accuracy, and not getting attached to positions when the facts change. It's a challenge to do manually with the psychology and that's what Mark seems to focus on but I only automate so doing what's right is a lot easier. People know you shouldn't let the last race affect how you trade the next race, but that's also true of your previous and next bet in the same race.
But as said I only trade with auto and the manual guys here will have their own view. Just closing and taking the loss may well be a valid approach unless you're pretty certain about it coming back to you. You might set a 'stop' at a price the markets will/won't go through, but setting a stop at being - £5 or - £10 doesn't make much sense.
But as said I only trade with auto and the manual guys here will have their own view. Just closing and taking the loss may well be a valid approach unless you're pretty certain about it coming back to you. You might set a 'stop' at a price the markets will/won't go through, but setting a stop at being - £5 or - £10 doesn't make much sense.
Before I get into a trade, I always know where I'm going to get out, whether that be for a profit or a loss. I've got an idea in my mind as to where I need to be.Dave64 wrote: ↑Sat Mar 28, 2026 4:37 pmThis topic has probably been discussed at length elsewhere but what strategies, if any, do people have in place to deal with those instances where the market goes against your position? Obviously I'm not asking for specific details or copies of your rules files but I'd be interested in peoples thought process/mindset when tackling this scenario. Do you rely on a stop loss, reverse your position, increase your position in hope of a bounce back, sit on your hands and pray (my favoutite atm), all of the above or is your automation so well designed that you very rarely find yourself in this position?
Todays goal (and going forward): take a good look at situations where it all went tits up and devise a cunning plan to stop it from ever happening again!
I do this by scoring the trade. I know that if I get in, at a certain point there are maybe five or six, maybe even ten, criteria that I am looking at that will indicate that this is a good trade. If they begin to break down and seven out of ten trade becomes a three out of ten, that is when I will exit my position. I don't have an arbitrary level at which I take a loss.
As a fellow amateur, to concur, I think any of the above (except the praying) may be valid IF it is in line with a sound methodology.
Peter talks about the need to "frame" your trades and that's surely one of the best pieces of basic advice out there. Having a clear exit plan from the outset is necessary for defining the risk in any EV calculation! It also gives you a huge leg-up in terms of evaluating and improving upon a strategy.