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Peedee
My reply may not be what you were looking for in this thread but I trade the same amount regardless of conditions however I recently changed how I manage an open position. I reviewed my entry signals to show which was the best entry point and proved to be the most reliable. This ensured my daytrading became more selective as I was guilty of over-trading.
Anyway instead of looking to take quick profit and then re-join a trend for a second bite of the cherry I now enter all, take 5 points as soon as I have got it with a 33% and then let the rest run with the trend. I work from 66% accounts so as to avoid confusion because I use an additional signal often seen mid-way in the trend and go back in for another 5 points while the 66% is still in the market.
There is a problem with this approach in that it requires you to put your total amount in one hit, that can have the effect of delays or re-quote when trading in larger amounts especially when using SB. Currently trading at a level where the order is filled instantly but while using SB have had to place deals in lots of £25 so I do not always get the same entry price.
I know that some opt for the pyramid style where they enter 25% and as the trend develops providing confirmation they enter another again and keep doing so until they reach the limit unless the signal to close is seen before that occurs. The chap I know is using 50 lots an order so as to avoid problems with fills for 200. He will exit with 4 x 50, or 2 x 100.
The reason I take the 5 points is partly to deal with my emotions and a narrow range developing. It helps to safeguard the overall position coming away in profit should the trend not develop. I get between 2 - 6 such deals a day depending on how strong the days trend is. Backed up with a few secondary deals when the trend does develop.
Not sure if this is what you were looking for.
My reply may not be what you were looking for in this thread but I trade the same amount regardless of conditions however I recently changed how I manage an open position. I reviewed my entry signals to show which was the best entry point and proved to be the most reliable. This ensured my daytrading became more selective as I was guilty of over-trading.
Anyway instead of looking to take quick profit and then re-join a trend for a second bite of the cherry I now enter all, take 5 points as soon as I have got it with a 33% and then let the rest run with the trend. I work from 66% accounts so as to avoid confusion because I use an additional signal often seen mid-way in the trend and go back in for another 5 points while the 66% is still in the market.
There is a problem with this approach in that it requires you to put your total amount in one hit, that can have the effect of delays or re-quote when trading in larger amounts especially when using SB. Currently trading at a level where the order is filled instantly but while using SB have had to place deals in lots of £25 so I do not always get the same entry price.
I know that some opt for the pyramid style where they enter 25% and as the trend develops providing confirmation they enter another again and keep doing so until they reach the limit unless the signal to close is seen before that occurs. The chap I know is using 50 lots an order so as to avoid problems with fills for 200. He will exit with 4 x 50, or 2 x 100.
The reason I take the 5 points is partly to deal with my emotions and a narrow range developing. It helps to safeguard the overall position coming away in profit should the trend not develop. I get between 2 - 6 such deals a day depending on how strong the days trend is. Backed up with a few secondary deals when the trend does develop.
Not sure if this is what you were looking for.
Not market conditions peedee but price range. e.g. £1 per point (penny) for a 150p share is whole lot different to £1 / point (penny) for a 450p share.
So stake on 150p share would be 3 times stake on 450p share to give equivalent cash risk/reward. Way of neatly replicating same size of holding with different stakes on different shares.
So stake on 150p share would be 3 times stake on 450p share to give equivalent cash risk/reward. Way of neatly replicating same size of holding with different stakes on different shares.
Peedee
With respect to the issue of risk management the suggestion is that you should aim to risk no more than 1% - 2% of your total capital on anyone deal. The idea behind this is that you are trading at a level that will ensure you remain in the game should 1) a large and sudden reversal such as an opening gap catches you out and
2) Your system is such that you take a series of losses that they build up to wipe you out
3) or that because you over-trade in terms of the % size of your deal in relation to your total trading capital such losses reduce your trading capital significantly that you are unable to follow your rules so easily forcing you to trade badly.
Trading at 1% of your capital allows you to get hit 100 times on the trot before you are out and in any event if you are getting that many hits you should start to see that your system is no good and its time to go back to the drawing board.
Trading at 2% obviously has a similar effect just that it gives you 50 opportunities.
I have been trading for nearly 4 years and when I first started I was over-trading at between 5 and 10% and this certainly hurt when it went wrong. Now that I have confidence in what I am doing I trade at 2.5% simply to cover the situation where a sudden price change or the exchange suspending trading only to open very much against you. I have seen it mentioned that the DOW for example lost 200 or 300 points one day in the blink of an eye. The basic message is that you should trade at a level that ensures you remain in the game.
With respect to the issue of risk management the suggestion is that you should aim to risk no more than 1% - 2% of your total capital on anyone deal. The idea behind this is that you are trading at a level that will ensure you remain in the game should 1) a large and sudden reversal such as an opening gap catches you out and
2) Your system is such that you take a series of losses that they build up to wipe you out
3) or that because you over-trade in terms of the % size of your deal in relation to your total trading capital such losses reduce your trading capital significantly that you are unable to follow your rules so easily forcing you to trade badly.
Trading at 1% of your capital allows you to get hit 100 times on the trot before you are out and in any event if you are getting that many hits you should start to see that your system is no good and its time to go back to the drawing board.
Trading at 2% obviously has a similar effect just that it gives you 50 opportunities.
I have been trading for nearly 4 years and when I first started I was over-trading at between 5 and 10% and this certainly hurt when it went wrong. Now that I have confidence in what I am doing I trade at 2.5% simply to cover the situation where a sudden price change or the exchange suspending trading only to open very much against you. I have seen it mentioned that the DOW for example lost 200 or 300 points one day in the blink of an eye. The basic message is that you should trade at a level that ensures you remain in the game.
J
junkbondtrader
kevin what is youre additional signal midway during the trend.i realise you are letting two thirds run but the additional signal should be safe as house??
junkbondtrader
I apply an impulse system using a 10 sma on 5 min chart entry coming from value area and when price seen to resume trend.
When dealing through D4F then I have to contend with another 3 point spread so taking 5 points maybe getting out to early but in terms of success rate it is high. Remember I still have the trend deal running which represents a higher stake. I am not suggesting this is the best way to trade just that it is currently the best way for me ensuring I am disciplined and push hose emotions away. Maybe in time I will be able to hold the second deal longer to when the price gets close to an extreme channel position but for now this is safer to grab a few additional points.
I apply an impulse system using a 10 sma on 5 min chart entry coming from value area and when price seen to resume trend.
When dealing through D4F then I have to contend with another 3 point spread so taking 5 points maybe getting out to early but in terms of success rate it is high. Remember I still have the trend deal running which represents a higher stake. I am not suggesting this is the best way to trade just that it is currently the best way for me ensuring I am disciplined and push hose emotions away. Maybe in time I will be able to hold the second deal longer to when the price gets close to an extreme channel position but for now this is safer to grab a few additional points.
I often will use up to 50% of my available margin for 1 trade.I'm not a great believer in only using a small amount of your margin for any one particular trade.Not an advisable strategy I suppose but if you are a daytrader and looking to scalp anything from a 1/4p to 2p in a short time frame on a large trade , then it makes sense to me.Strictstops are paramount naturally.
And before anyone advises me that you must be mad , i've been using this strategy for the past 4 years successfully.
And before anyone advises me that you must be mad , i've been using this strategy for the past 4 years successfully.
nobrainer
No problem with your approach, if you are daytrading then you have more chance of controlling your deal; just very unlucky if there is a sudden and dramatic change in price if trading indicies particularly the US.
I have traded a number of set-ups over the past 3 years one of them was just to go for 5 points on the FTSE. It was easy to get them but just as easy to chase the price and I found myself taking small points from the bigger moves. I also got caught entering a trend at the end and did not manage my stop as well as I should have.
Since changing my set-up I can see how I could have traded more selectively yet got a very good return on a specific signal. I think the 1 - 2% is a good example of some safeguards particularly for those starting out and yet to reach a proven level of trading. At least it gives them a chance to trade while learning the risks and testing whatever set-up they think might work for them.
However I do agree that for a seasoned trader then with the right controls you can adapt accordingly. Bottom line the greater % of capital you commit to the markets the greater risk if it goes wrong. Most will not wish or be unable to daytrade due to other commitments so placing a greater % of capital in the market when trading overnight strategies could be risky. Even at 25% you only have 4 chances of a profit which you may get from daytrading but not necessarily from conventional trading. There you need wider stops to play IMHO.
Coming back to small points when I first used Futures I found myself lured into taking just 2 points because of the price moves it was giving me the jitters, lol.
Having reviewed what I was doing I could put a much larger stake into my first 5 point deal but I have found that often much more is available if you trade it according to the price trend of the present sequence during the day. Most intraday trends or direction changes on the FTSE appear to run for an hour or 2 unless there is a strong daily trend so I find I am happy to put a smaller figure in and let the remainder run on. As I build up capital I will probably increase the first 5 point stake as well as the trend deal but there is a limit to what you can instantly get into the market from D4F. I have yet to fully test IB (futures) although I expect to be able to get larger deals in.
As a matter of interest are you trading futures, how long do you trade during a session and on average how many deals are you making from your session. One of the problems for me when going for small points was it lead to undisciplined trading and chasing the trend so over-trading.
Clearly with discipline and selective trading there are set-ups in the day where 2 - 6 very safe opportunities may present themselves if all you were targeting was 2 points. If I may pry what size of deal do you enter and what set-up do you look for from one of your daytrades.
No problem with your approach, if you are daytrading then you have more chance of controlling your deal; just very unlucky if there is a sudden and dramatic change in price if trading indicies particularly the US.
I have traded a number of set-ups over the past 3 years one of them was just to go for 5 points on the FTSE. It was easy to get them but just as easy to chase the price and I found myself taking small points from the bigger moves. I also got caught entering a trend at the end and did not manage my stop as well as I should have.
Since changing my set-up I can see how I could have traded more selectively yet got a very good return on a specific signal. I think the 1 - 2% is a good example of some safeguards particularly for those starting out and yet to reach a proven level of trading. At least it gives them a chance to trade while learning the risks and testing whatever set-up they think might work for them.
However I do agree that for a seasoned trader then with the right controls you can adapt accordingly. Bottom line the greater % of capital you commit to the markets the greater risk if it goes wrong. Most will not wish or be unable to daytrade due to other commitments so placing a greater % of capital in the market when trading overnight strategies could be risky. Even at 25% you only have 4 chances of a profit which you may get from daytrading but not necessarily from conventional trading. There you need wider stops to play IMHO.
Coming back to small points when I first used Futures I found myself lured into taking just 2 points because of the price moves it was giving me the jitters, lol.
Having reviewed what I was doing I could put a much larger stake into my first 5 point deal but I have found that often much more is available if you trade it according to the price trend of the present sequence during the day. Most intraday trends or direction changes on the FTSE appear to run for an hour or 2 unless there is a strong daily trend so I find I am happy to put a smaller figure in and let the remainder run on. As I build up capital I will probably increase the first 5 point stake as well as the trend deal but there is a limit to what you can instantly get into the market from D4F. I have yet to fully test IB (futures) although I expect to be able to get larger deals in.
As a matter of interest are you trading futures, how long do you trade during a session and on average how many deals are you making from your session. One of the problems for me when going for small points was it lead to undisciplined trading and chasing the trend so over-trading.
Clearly with discipline and selective trading there are set-ups in the day where 2 - 6 very safe opportunities may present themselves if all you were targeting was 2 points. If I may pry what size of deal do you enter and what set-up do you look for from one of your daytrades.
Peedee-
I DO!
Regardless of time frame, I tend to risk say 2% if the long term AND short term confirm entry, 1.5% if just the long term time frame shows a good spot, and only 1% if the trade is only in the shorter time frame.
These percentages may also vary depending on how well I am doing generally, and how much 'in gear' I feel with the markets, but I hope they give an indication of what I'm doing.
My theory is, is that the trade should have a higher probability of success if confirmed in two time frames.
Others have different suggestions which for me are quite mind bending - as can be seen in the other thread on Money Mgt.
Hope it helps.
I DO!
Regardless of time frame, I tend to risk say 2% if the long term AND short term confirm entry, 1.5% if just the long term time frame shows a good spot, and only 1% if the trade is only in the shorter time frame.
These percentages may also vary depending on how well I am doing generally, and how much 'in gear' I feel with the markets, but I hope they give an indication of what I'm doing.
My theory is, is that the trade should have a higher probability of success if confirmed in two time frames.
Others have different suggestions which for me are quite mind bending - as can be seen in the other thread on Money Mgt.
Hope it helps.
