The profit target is the initial profit target, but if the market says no, then I'll take whatever it gives me. My stop loss is small 1.5 ES points. I have a problem with the loss not the amount I think. Because I'll run after it even if it is small.
The way I trade, the market says "no" when a) my protective stop is hit or b) a reversal is triggered and I'm stopped out for a smaller-than-max loss or a smaller-than-minimum profit and am now positioned in the opposite direction (stop-and-reverse). Letting small profits turn into losers is the right thing to do unless you're taking a profit or loss smaller than your initial plan and switching sides for good reason. Assuming that you know a small profit is all the market has to give on a trade implies that you believe you can predict what will happen next, which if true means you will never have a losing trade. The majority of my trades that reach minimum profit target or better begin profitable, reverse to red, then resume the move into profitability. Sometimes price comes within a single tick of my stop loss and then works its way to target. This is normal price behavior with the exception of breakouts, which by their very nature should break out with enough conviction that the S/R level remains intact very close to the breakout price. If your risk:reward ratio is 1:2 or better, and your strategy has positive expectancy (>50%), letting small profits turn into losers protects your edge and results in greater profits over time. I posted an example of "trader's mindset" the other day on a small series of trades I took. Had I assumed (as I used to) that the market had no more to give on my third trade (following two back-to-back losers), when price staged a failed breakout of a crucial resistance level, my result on the three trades would've been -16 ticks. By allowing the trade to run until either a reversal signal triggered an exit and reverse, or my stop loss was hit, or my target zone was reached, my result on the three trades was +27 ticks. Not too long ago I began letting my trades play out fully. I used to have rare losses, many break even trades and a few winners each day. I now have more losses, very few break even trades, and many winners for minimum target or significantly more. For me, more losses and less micromanagement = greater profits. I discovered this many months ago via my daily analysis, yet it took me all these months to finally take the leap of faith. âYou block your dream when you allow your fear to grow bigger than your faith.â - Mary Manin Morrissey "Faith is taking the first step even when you don't see the whole staircase." - Martin Luther King âAs your faith is strengthened you will find that there is no longer the need to have a sense of control, that things will flow as they will, and that you will flow with them, to your great delight and benefit.â - Emmanuel Teney
Insight from experience and study. Here it is. The greater the distance from the turning point (tops or bottoms of price gyrations) at which you enter your trade the more certain is the profit you are attempting to capture. Now with obvious caveats, this in general can work well. If study of a market is continued you can find the optimum difference (from the last top or bottom) which is 'the greater distance from the turning point'. That of course is not everything. It is, though, the answer to this implicit question. What is it that most everyone can see, even some newcomers I suspect? The secret of success is buried among the numbers on the prices chart: for only those who begin to listen, the numbers keep whispering, "Work with me and I will make you rich".
Thank goodness I am retiring from the fun of daytrading in two months, been at the game 25 years, too long in ES and indexes. I no longer see changes in market behavior, I don't see much of anything really. It is just the same patterns week after week, maybe a few might not happen but a few times a year, but generally same old. Volatility expands and contracts, if too large, I don't trade, the same as the brokerages, just the smaller trader trades higher volatility. If contraction, tells me target must be smaller and risk. ES is so great a market, luvs to take out tops by couple of tics and pullback, if it goes a point above last pivot high, usually won't pullback soon if early in the trend. Like in many instruments, distance between one high to next are important, slowing down makes for "rounding". The problem I see is two fold, you show no consistency in your trading since you lose money? And yet you say 4 hours is king? Are you going to stay in a trade for 4 hours? What is the "mean" in time on your winning trades? Bet it not 4 hours. I think you are in overkill on your charts, maybe you doing so as a way to reduce trades, here is a plan, trade for 90 minutes, turn off computer and leave house. Then during evening, play playback for rest of the day. But I clearly don't see much of a method, you only pretty much describe for entries, anyone can enter, my cat has certainly put me in trades when I left for a few minutes, he is so lucky he didn't burn a life. You only need 1-2 entry methods and at least 30 rules plus on exits. Most of the moves occurs in first 90 minutes, you only need a few trades to make decent coin, why make you health bad by sitting in front of the screen all day. Sitting in front of computer for so many years took huge toll on my health, cancer, couple diseases, leg cramps, there are other things in life, and yes, I do exercise in my office, treadmill and bicycle. I think you are too rigid on 2pt profit min.. So there are many trades that go 1.75 and you take a loss or breakeven? So if you get 5 trades that go 1.50pt, losing day for you? WOW, many would give there right...they would be happy to have them go in right direction. I think I have gotten one 10pt trade in last six months on the fewest of contracts I have left. I think traders doing 1-2 contracts will never become profitable going for so much. Get something on each trade, even one tic and learn to accept it be thankfull to get it. Winning trades you will find allow you to get in and don't hang around for long, they take off. The psychological aspects is what you have to overcome, try hypnotize, worked pretty good for me long ago, stopped me from taking goofy trades. Now losing trades is more of an annoyance, you want to study your winning trades, why were they winners? Daily/60 minute trendlines are great S/R for ES, then trade off 3 or 5 minute bars, less is better. 20-50 trades a day is showing out of control player or you in chop up the wazoo. Until you can control your urges of being right or to get back what you lost, you will continue to lose money. I tried reading books, never did me much good. I concentrated on percentages and not money, it the risk was too great, I either pass or make market come back to me more to reduce the risk. Good luck to you.
First day. If the market gaps up, chances it will reverse. So far the 5 minutes chart suggests a steep pullback. If it comes down around 1316.5 I'm in for 1.5 points risk and 5 points target. I'm not going to short in this market. If it goes above 1325, I'll look to enter long at the first pullback.