I trade the NQ/ES.. and looking to trade the Dow emini once it becomes liquid. I avg between 0-3 trades a day. I am trader #2. --MIKE
Mike, Not trying to reach any particular winning % or profit ratio; just trying to find a style that suits my mentality and minimizes my biggest weaknesses -- and perhaps maximize my total bottom line at the same time (one and the same I suppose). For example, when I'm in scalping "mode" I can usually find good entry points because only when the entry is compelling will I pull the trigger. On the other hand, I tend to chase trades/avg down on those longer-term position trades, which I believe I do have an edge in finding yet my poor entry points will likely mar the result. So I'm trying to meld the best of both worlds. Far from looking for 75% wins + 2:1 ratio, instead I'm sure it will mean that many more scalps that were once profitable will end up getting stopped out, and many more positional ideas will be passed on due to lack of a decent entry. I don't think the 2 types you've outlined are mutually exclusive. "Trading around" partials on a core position, for example, takes skills from both sides, yet can be considered a more conservative approach than gunning for full target; even though small fry like me can easily get in and out of my entire position anytime of day, it's just a matter of portioning out risk, a bit of compromise. Well in any case, if I suddenly disappear from these boards after a few weeks, you can shake your head and know why
I sort of agree with Illiquid on this; although I appreciate the logic of Trend Fader's comments (and they obviously come from a very knowledgeable trader), I would suggest that there is no "either do #1 or do #2" demarcation... as a discretionary trader, I will subconsciously flip between both and often find myself on midground between the two... that is both the strength and the weakness of the discretionary approach (adaptability to 'now' vs. a lack of strictly enforced rules)...
i agree. there is not only black + white. most of us discretionary newbies are somewhere in the grey. i always walk my way down from daily over 60min to 15min and 5min and sometimes i only see "scalp mode" and the next day i anticipate a possible larger move ahead. i try to roll with it... trading
Great posts Trend Fader. Very useful and informative. "I do not work with fixed targets. I prefer targets that are a function of the market, not arbitrary. Therefore, I use exit strategy that adjusts to the market. Within this is exit strategy I take many things into consideration. The most important being time and volatility. My exit is mechanical and its rather unique. I designed it myself after realizing the type of trader I wanted to be ( go back to my previous posts)." I think you mentioned that you were Trader type #2 which would be the one that is right less than 50% of the time but has a 3:1 reward to risk ratio. If you do not have targets how do you enforce that ratio? I mean everytime you enter a trade do you not know how many points are at risk beforehand and therefore how many points you should be aiming for to maintain your 3:1?
I dont enforce any ratio.. and I dont aim to maintain a 3:1 or even 2:1 ratio. My strategy is designed to make more than 1:1.. thats pretty much it. For example, my stop loss will be adjusted to the market conditions. And my profit target would be a function of how well my system rides out the gains. The exit is not an exact multiple of the risk taken. Going into the trade my results can be a loss.. 1:1, and profits of 2:1. 3:1, and higher.. Only looking over the results I realize that my avg. is over 2:1... thats how I come up with my ratio. Hope this makes sense. --MIKE
Had some decent rhythm today and did ok. Woke up this morning and I wasn't as hyped or excited as I usually am, felt calm and relaxed. Maybe that helped some. Still playing a very conservative game but hey, seems to be working a little so I'll stay with it. After I was up a few points on the NQ, I decided to dip my toes in the ES waters a bit. Took a few trades and ended flat. Got discombobulated with the point/value ratio with the two. A few times I was up a little but it didn't seem like much (points wise) so I got shaken out way too early, even though dollar wise, I was doing alright. Obviously even though I knew the difference before hand, my actions did something else. The killer was my ES entry short @ 861.25 at 14:08 then getting nervous and covered @ 960.50 at 14:23... we all know what happened after that. Actually it did proceed to somewhere around 963-64 fake out point after I covered so I would have taken a loss anyway. Still... after stalking that consolidation period, and then watching it go whoosh, just SUCKS. Nothing like blowing an almost perfect entry to fear. <GGGG> Like I said before, I wasn't gonna let crap like that bother me anymore. And it doesn't. <----- (LIAR!) NQ> +10 points / 6 RT's ES> flat / 3 RT's Net for week: +21 points
"Still... after stalking that consolidation period, and then watching it go whoosh, just SUCKS. Nothing like blowing an almost perfect entry to fear. <GGGG>" I did the exact same thing today, and it didn't even hit my stop at any time. That fear bailout caused me no end of agonizing, since, just as in your case, the trade would have been a very good one making me slightly profitabel overall for the day. I had a true conniption fit after I realized I had just bailed on the best trade of the day.
Tony-- The only thing I can do is laugh about it, otherwise it would drive me bananas. It's happen so many times now, that I've given it a name: Dick. Not terribly original I know but it fits him. Screws me at least twice a day. He constantly keeps me from doing my job properly by getting in the way and draining the blood out of my brain. No offense to you other Dicks out there. No annotated chart today. I'm in and out and don't have the time. It really takes me awhile to mak'em as I'm a dullard. I'll post my acct. statement when I can.