I completely agree with what you said but is not what I was talking about. As a reminder...we don't know the details about his strategies or strategy. My comments were based upon one strategy only with the assumption he knows via statistics of his trading in combo with other variables about the market itself... Knows when to reduce his position size and when to increase his position size. Here's an example of what I'm talking about. Lets pretend his stats shows his afternoon trading averages - 4 ES points. Whereas his morning trading averages +3 ES points. Results by the end of the day is a losing trading day on average about - 1 ES points. Now...he has too choices: 1) Stop trading the afternoons 2) Either reduce his position size in the afternoon or increase his position size in the morning or both The above is just a simple example. Here's another example via one I personally use myself. Lets say we know some market seasonal tendencies about our trading instrument. Lets say we know that between Oct 28th - Nov 14th of each year since 1990 the S&P 500 will move up on average about +31-33 points. I will increase my position size without violating any money management rules on particular Long signals between Oct 28th - Nov 14th and intentionally stay in the trade beyond my profit target when that target is reach because that target is far less than the +31-33 S&P 500 points. (anybody with access to historical charts of the S&P 500 can easily verify the above is a fact about the average point gain in that particular duration of the trading year) Whereas in comparison to other durations of the trading year...I reduce my position size. Now...lets say I know a lot more other market seasonal tendencies besides the one I mentioned above. Here's another example...lets pretend my stats show that my first trade of the trading day has a 72% chance of resulting as a loser in comparison to my remaining trades of the trading day that have a 32% chance of resulting as a loser... Would reducing my position size in that first trade have any kind of impact on the performance of my system ??? I say yes. Simply, you can change the performance level of your system via position size management... It's very revelant to some traders whereas it may be completely unimportant to other traders simply because of different methods. Don't get me wrong...I'm not saying that one trader has an advantage over another trader... I'm saying this... We don't know the in-depth details about Buy1Sell2 trade methodology and because of such we cannot tell him if his position size management that he's been showing so far in this thread is revelant or irrevelant. That's all I'm saying. Mark (a.k.a. NihabaAshi) Japanese Candlestick term
For me there is only one choice: Stop trading the afternoons. It is like my example: Treat your morning trades as strategy A and your afternoon trades as strategy B). If your stats are telling you that your system loses 4 points in the afternoon why trade it at all? A 4 point loss will be a 4 point loss independent from your position size. Your âmoney managementâ will only help you to lose less in the afternoon. Nothing more. I absolutely agree. But not all performance changes have to do with pure money management (see previous examples). I only increase my contract size when a trade has a better expectancy than another trade (assuming that all trades have a positive outcome). Nevertheless I think we should no longer discuss these things in this thread as it leads off topic. But you can PM me if you wish further discussion.
========== As much as i like moving averages [a rather witty invention] on derivatives & stocks; probably more useful on stocks. Use them anyway.
very busy today with other things. Only one trade and I am still holding that --just in the money .25 pt. I was just looking for a new short. Could have taken 5 pts but did not due to activity in other pursuits. Should have more time Monday
============= Well you lived your nickname ; short ''2'' Even though plenty of ES trends are up, actually figured by the very end of the day , there would have been more selling with that gap
To me it is clear: never trade against the trend. A week ago i said that the monthly and the weekly were long and the daily would turn long again in the next days. This happened and if things turn out bad we might go much higher. With a loss of about 7 to 8 points per contract it is difficult to take your loss now. But if things go worse the loss can become much bigger. To prevent these kind of situations i personally never take a loss bigger than 2 points. At least im sure to stay alive. Discipline is essential in daytrading. Every time you break the discipline you will get slaughtered and in the end your account will be wiped out. Even with small positions; because a loss is always a loss. But when you are lucky this still can become a profitable trade. But counting on luck in trading is not a good idea.