That's correct. That's why trade selection, a smallish 1st target, and the ability to read price action is critical to the method's success. You need about 75% winners for the strategy to work well. Also about 30% of the time, the market will hand you a big win which is where you make most of your money. The rest of the time (25% losses, 45% winners) you get small profits and losses.
Been trying to do this for a while http://www.flickr.com/photos/33826180@N00/sets/72157606033677639/show/ Nasdaq 100 till END of year
sounds good except for the 1 -2 tick loss,seems a little tight,you'll take a 2 tick loss and then the trade goes your way
Exactly which part of "stop loss criteria is not a function of target price or vice versa" were you unable to comprehend? st
Maybe you guys are thinking too hard with the numbers and therefore are not following the price. The ES is lurching from level to level and in doing so it becomes momentarily unbalanced from time to time. This is your chance to fade the entry so that your entry and pro stop are within 3 tics of each other. If you get my drift, you should be correct more than 70- 75% of the time and your potential win/loss should be greater than 3:1 If you do not follow my drift either give it a great deal of thought or simply ignore this post. regards f9
I understood "Initial catastrophic stop is 4-6 ticks" per unit, not per trade with 3 units. May be Bilbod can verify this.
If you let your greed get the best of you, you will keep widening your stops so as not to miss any moves. The above strategy is a very low risk strategy for entering trades. What you are looking for are trades that quickly move in the expected direction. If prices do not quickly move in the expected direction, just exit the trade for a small gain or loss and wait for the next trade set up. Let me give an example. Let's say there is strong overhead resistance and prices have been trending up for a while so a lot of the buying energy has been used up. If prices stall in the resistance area, I will place a limit order to short 1 tick below the high it just made in the resistance area. When filled, I place a stop 4-6 ticks above entry price (it's above the resistance area and recall that it is a catastrophic stop that I never expect to get hit). This is a high probability setup. Most of the time it will bounce off S/R and quickly give me my 1st profit target. If prices start to go against me, I exit as close to BE as possible. If prices just go sideways too long, I reduce my profit target to 1 or 2 ticks to try to get something out of the trade. Here is a quote from Mike Reed's "10 Steps To Professional Day Trading": "Practice exiting trades at break-even, using a one-tick target, a two or three tick soft stop (mental stop) and a 1.5 point hard stop. Never *allow* the market to hit your hard stop. Exit by moving your target toward your hard stop, not by moving your hard stop towards your target. With time, all of this must become a reflex. You won't always be able to keep your losses down to 2 ticks, but only on rare occasions should you find yourself letting the market hit your hard stop. ("Rarely" means only about once every 50-100 trades after you get the hang of it.)"
Let's say your unit is 1 contract so you are using 3 contracts for each trade. A 4-6 tick stop will generate a 12-18 tick loss. The purpose of a catastrophic stop is to protect you on occasions when something unexpected occurs (power outage, dropped Internet connection, computer crash, unexpected news event, etc).
f9, you said: "The ES is lurching from level to level and in doing so it becomes momentarily unbalanced from time to time." Can you elaborate a little more? Thanks in advance.
I noticed something profitable today: When the MA(6) crosses the MA(240), trading in the direction of the cross is profitable on the GBPJPY.