How many Points do you use for Stop Loss when trading the YM emini futures ??

Discussion in 'Trading' started by jimmygold, Mar 2, 2007.

  1. I am Simulating Trading the YM the last month.......I am basing it on a $2,000 start up equity account. Based on this, trading YM is just too volatile. My stop Loss are getting hit almost everytime.
    ( 2% of 2k on each trade is risked on 1 contract only) So I can give only 7 pts. on stop loss which I have found to be insane and NOT working.

    Is this small amount of 2k just too small to start out with ??
    Its money I can afford to lose. So I am thinking when I Live trade to go ahead and put stops at 30pts to give me wiggle room for trade to come to fruition.
    I know on 1 contract that is over 7% of total equity risked on each trade.

    Too much ?? Maybe, but I do not see any alternative. Like I said this is risk capital I can lose.

    What do you all think ??

    And what stop loss in terms of % of equity and points do you other traders here risk on each trade ??

    Thank you
  2. Speaking just for myself my stop loss is at the next level of resistance/support. So its always differnt.

    If the next level of support/resistance is too far from where I would be buying in I wait for another opportunity.

    Risk/reward ratio baby.
  3. You need to read Van Tharp's book "Trade your way to financial freedom"

    Silly title, yes. But the book explores trading system development with a definite emphasis on position sizing.

    Basically you should be doing the following:

    1) Deciding up front what your max risk % is. Typically you'll see numbers around 0.5% - 5% of capital. In your case, that would map to $10 - $100. I personally like 1% for myself.

    2) Decide on a stop based on support/resistance or volatility (or whatever your system calls for).

    3) Size the position such that if the stop is hit after entry, you would only lose the max risk % you decided upon in item #1.

    That's it in a nut shell. I'd say that you're undercapitalized based on the $10 - $100 figure I showed earlier. It's way too small compared with the slippage and commissions you'd inevitably have to deal with in the market.

    Food for though, anyway.
  4. JA_LDP


    What time frame are you trading?
  5. 3*stdev(C,10) for end of day.
  6. feb2865


    Is this small amount of 2k just too small to start out with ??

    to give you a straightforward answer - yes is too small to start out with

    you're under capitalized especially under current market conditions.
  7. clacy


    It is actually a perfect sized account for a beginer. If you're going to blow out an account, it might as well be only $2,000.

  8. Exactly what I was thinking. I will go ahead and wipe it all out within a few months and chalk it up to experience and education.
    Thats really the only alternative I have right now.
    Of course before I blow this 2k account out , I plan to Max out my time on paper trade as long as vendor will let me.
  9. Nah. It's too small to reasonably trade with. You'd certainly blow it because it doesn't scale well to proper position sizing. May as well just blow it on a vacation.

    Paper trade until you have a system that works for you. Then start trading with enough capital that you can set your max risk at 1% and not get eaten alive by slippage and commission.
  10. feb2865


    unbelievable advice!!!!!! one of the best I ever seen on ET

    well jimmy good luck to you at least I can tell you have a sense on stop-loss/profit target and you're well aware on money management. That's good start

    but if you have the necessity of losing 2 k I will send you my bank acct # and can re-direct those funds to me and keep paper trading!!!!! I won't complaint at all

    Ah ....just teasing with you
    #10     Mar 2, 2007