Cycling contracts during a trend

Discussion in 'Risk Management' started by Kovacs, Jan 27, 2009.

  1. Kovacs

    Kovacs

    I'm sure many here have already tried it and I was wondering if you could share your thoughts.

    The only S&R levels I pay attention are on the 30min timeframe and higher. I watch 30min, 60min, 120min and daily. The entry and exit chart is 5-min.

    Now, let's say there's a confluence of support across the 30, 120 and daily. You also see volume coming in and things look good for a rally up to the next major resistance 12 points away.

    My trade method helps me take 2-4 points at a time with good entries and also get back in on retracements. But sometimes the retracements are missed, or poorly judged which results in a small loss.

    Say you trade 4 contracts, what would be the long-term effect of:

    A) Getting long with 4.

    B) Taking 1 out at the first exit signal

    C) Buying one again at the retracement entry signal

    D) Taking two out at the next exit signal.

    E) Buying one again at the retracement entry signal

    F) Getting out of the entire position at the next exit signal.

    If no retracements are available, no contracts are added. If the longer timeframe resistance is reached, then entire position is exited.

    Here's an example from today. This is a composite image of the 5-min, 30-min and 120-min. The red circle is considerable support.

    On the 30-min, that area has the globex low (red dash), settlement (grey line), and hourly support (thin black line). The 120-min has the bottom of the channel, and the 5-min keeps closing above globex low with multi-level size on the DOM.

    My target was the blue circle, which was resistance on the daily. I traded that move in pieces and netted 7 points. Would cycling have done better?

    [​IMG]