Yeah, I dont think you're too far out. My stop will be 8-12 points (less if I can get away with it) and target typically 20 I guess, but I can see the benefits of being happy with taking 10 here, 10 there - 'cos sometimes that's all it will give you, before you get a sharp reversal.
i have to agree and my posts on the intra day dow [idices] with my charts will show how i trade too! [havent posted for a couple of weeks ..if ur interested, use the find all posts and look at feb]
one question...how many contracts do you trade?
i ask here to see what you can get away with easily without slippage..i trade 1 or 2 and hope to get to 10 +10 as i split my position [first 5 points is my stop loss , arbitrary i know but it kills worry!
thanks in advance for your candid response
I'm glad you brought up the whole 3:1 risk:reward thing. Therefore implying you can keep your head above water w/ a 1 in 4 success rate, etc., etc., , but ignore potentially profitable opportunities that dont achieve this ratio . Although I get the concept behind it I always felt that it lacked the factor of expectation in it.
I've been looking @ (i.e paper trading) dow futures on short time scales (, 1 - 2 mins,) using similar targets as yourself, i.e 10 tics w/ a similar stoploss => 1:1. Using "gut feel" around support/ ressitance/ trendlines & assuming each call was right 70% of the time then 1:1 has a positive net expectation:
(0.7 * 10) + (0.3 * (-10)) = 4 tics per trade
If you can achieve a 70%+ success rate on gut feeling then you are in business... However I find that sharp reversals literally wipe you out in a flash. Which leads me to the question can you use trailing stops??
You can use trailing stops - depends on your setup.
For example, I use NinjaTrader in conjunction with IB's TWS, which allows you to create a strategy which will, for example, move your stop to b/even + x amount of points once the market has moved x amount of points past your entry. The same system can then be programmed to trail the stop by an increment of x, or liquidate the position entirely at x points profit - or sell one contract/s at x, and run the other contract/s to y.
My own view is that trade management (scaling in - and out), risk management (total no of contracts/pot size + trade costs) + exit strategy together contribute more to a positive performance than entry picking (although of course scaling in is just another form of entry picking and scaling out another exit variation - water muddying maybe). Discounting indicators, patterns etc, the odds should be about evens that you will pick the right direction by simply tossing a coin. It's what you do after pressing the entry button that is probably the bigger determinant of success over the long haul - IMHO.
That's not to say I personally toss a coin to decide an entry - but frankly I sometimes think it would make life a lot simpler - might even get around to trying it sometime
I've been using IB with Bracket trader, trading about 3 contracts on the in. Usually look for about a ten point stop-loss place or less if possible, sometimes it's a little more. I will add an extra one or two contracts if price comes close down to stop, but still keep same stop !! I scale out starting with about 5 point profit then start moving the stop tighter, bar/pivot lows/highs etc. I try to always keep one contract in for those bigger moves. Though if price just seems to stall I will unload and maybe just keep one contract on. Pretty much I guess it follows Mark Douglas's idea of taking a little profit yet still being in for the big moves- so far it seems to work, guess we'll see after a few more months.
I know and I've tried it alot of people say adding to a loser is a big no, no, but as long as I keep the first stop I've convinced myself it's ok. Especially if I can get in within a couple of points of my stop-loss, I figure I'm risking a couple of points for 5 or more. again my original stop is placed at support or resistance, why not get a good price.
I'm sure I'll hear arguments against this practice, that's ok. I'm all for trying to become better.
Just so you know I'm still not making a big living at this (slowly scratchin by), but I am trading real money and still trading - do not want to give the impression it's the right thing to do. So far it seems to work for me.
With IB the unbundled price for me comes out at either $1.92 or $1.67 (if i over-trade each way. Does anybody use a cheaper broker ? I know some offer less but then you have to use X-trader or something at over $500 a month. So far it doesn't seem to look overall cheaper to me.
p.s. Does anybody know how to place a limit order to add to a position, once your already in a trade with bracket trader ? Or do I just by-pass Bracket trader and place it directly on TWS ? I hate to add at buy the bid/sell the offer when adding to a position, seems I'm never quick enough to catch those quick little spikes and end up with a couple of extra point slippage:-(
Nice thread sun. By saying "gut feeling" I interpret that as you have no specific setup you trade, but eventhough you trade what feels right there must me some hints and signs you look at do come to the conclusion to go long/short.
So, what do you look for when watching the chart go by tick by tick? To teach how your feeling takes you one way or the other is hard, if not impossible, but by feeding us with the variables in your equation we might get a hint of why you did what you did.
This also makes it easier for us to give you constructive feedback on your trades, if that's something you would like.
I also scalp the YM, but then using predefined setups with some discretion to filter the good and bad trades.