I vote for 1-2 micro contracts. You're in this for the long run and clearly progressing, so I don't see why you should be changing things up. Do you have a standard or average stop? What's the typical R/R on your trades?
@Laissez Faire Right now my stop is "get out immediately if the market is going against me" but if that fails then I just pull it at about 60 ticks. This should get back to 40 soon, I hope, and eventually 20 ticks. Again, this is an emergency stop. The whole idea of getting out "immediately" is NOT the way that most people trade. But it is working for me. I owe this idea to Mike Reed of Tradestalker.com and he got it from "The Phantom of the Pits." Here is a link to the interview that the The Phantom did with Art Simpson: https://www.mypivots.com/online-trading-book/text/phantom-of-the-pits As you have been able to surmise, my R:R ratio is INVERTED. Even though the market is highly volatile, my ratios have not changed much. My winners are about 50% the size of my losses. (Including winners and losers, my average trade is about 10 ticks right now. My win rate is around 80%.)
Thanks, @sstheo. I will check out that link, too. The reason I asked was because I had the impression that you used fairly large stops relative to your trades and seem to take a bit of heat on them. But as long as you can maintain a high winrate, you should be fine. A few big losses can quickly do some damage, though. Do you always exit on limits? Have you ever considered just trailing a stop and seeing if you can get some more juice out of some of your trades? For example this one seemed to have quite some more juice. Stop placement and exits is certainly not easy and I'm still finding my way, but I like to trail a stop when I find myself in a trade where the market is picking up momentum in my direction while at the same time making sure I take profits.
Yes, sometimes the stops seem huge. Right now 60 ticks is unthinkable. And risking 60 to make 10 is nuts. Or is it? I don't really risk 60 all the time. I try to get out much sooner. Looking at today's 4 consecutive losses-- the average was $14 or 28 ticks in the wrong direction: Yes, I almost always get out on limits near the next S or R. But thanks for the trailing comment. I have been considering the trailing stop idea. I really have. But the scalping mindset and the trailing stop mindset seem mutually exclusive. I am sure I am wrong, and I will figure out a way to make it work. Even Mike Reed, mentioned above says "Every trade starts out as a scalp." The implication is clear - many trades go on to be big winners for him. So I need to figure out when to hold 'em and when to fold 'em. You have to understand that before the micros came out, I traded "scared" ALL the time. Even after 10 months of micros, I am still trading the same way, and I recognize this. The $5k in my account is awesome, but it may take another 5k or 10k to change my brain a bit. Trading scared means that just a few losses in a row wipes out the entire account. Imagine trading THIS current market with a $1500 account and an E-mini. You must "Be perfect or die!"
Well, you couldn't, because even the most lenient of discount brokers are now requiring full margin on daytrades, which on e-minis is over $10K. Including AMP.
Since I know you use AMP, I hope you are heeding it... ---------------------- updated 8am - Monday - March 17, 2020) Due to the Extreme Market Conditions, we have decided to maintain Exchange Maintenance Margin for BOTH Day & Overnight Sessions. This will remain in effect until we send out notice that is has changed. See Exchange Maintenance Margins: https://www.ampfutures.com/trading-info/margins/ For example: If your Account Balance is lower than $9K required for ES, you can trade the MES for $900. If your account balance is less than $900 - you can make a deposit to bring your account balance above $900, so you can trade MES. We will continue to update the CME Price Limit Halts Daily - Please know them >>
In case you missed this one from this morning... (updated 8am - Monday - March 19, 2020) Due to the Extreme Market Conditions, while taking into consideration our customers need to hedge their stock portfolio - we will make the following Margins Available during the US Day Session. These be in effect on all trading platforms during the US Day Session: 8:30am - 4pm CST. We will maintain as long as market conditions allows. If any changes, we will update this post and send email notice to all clients. VERY IMPORTANT - Your responsibility and Your Acceptance of the risk in trading during them extreme market conditions. You are solely responsible for any trading losses including if any debit balances are occurred. If markets trigger price limit market halts, no new orders are executed. If you are stuck in an Open Position, you are at the mercy of the next market open price. By YOU placing orders - you are Fully Accepting this Risk. If you do not accept this risk, DO NOT PLACE ANY NEW TRADES. We will continue to update the CME Price Limit Halts Daily - YOU must know them >> Overnight Session time: 5:00 pm CST (Chicago Time) to 8:30am CST. We will continue to require 100% Exchange Maintenance Margin. They are updating THIS link... https://news.ampfutures.com/tempora...ins-increase-effective-immediately-march-2020
The exchange margin should be the only thing one should trade by. It keeps you from over levering. And that means 1 micro per 10K in the account, basically. Yes, it is really nice we have discount brokers like AMP that facilitate the "cheapest broker anywhere" paradigm...That does not mean we should exploit it. Especially in these times. Ignore day-trade margins. Always use the full monty when placing your trades. You'll be saving your broker a lot of ageda in the morning, as it were. Heh.
To each their own. Besides product selection, amount of margin should have no bearing on HOW one trades. No one is advocating using 100% of account value... you must always have a cushion to allow wiggle room, how much wiggle is up to the trader and the ability and/or desire to continue trading in the event of losing trade(s).