OK, I stopped reading this thread right there. A newbie thinks it is reasonable to net 8-10 points per lot a day in the ES. He has cut back from his previous assessment that 20 handles was reasonable. Paul Tudor Jones and Buzzy Schwartz aren't making 8-10 per day. Once in a while, sure.
Yea and pay little heed to those who say you can't do this or you shouldn't do that. Rely on your own observations, devise and test a strategy and if it works it works. Every trade plan is different. The only arbiter is profitability.
No worries there. Those who think fixed targets shouldn't be used have a completely different philosophy on extracting profits from the market than those of us who use them. I am only interested in consistency, not maximizing my ticks in a trade, and I believe using appropriately sized targets helps achieve that goal. If I want to increase my profit, I simply need to increase my lot size. The key to increasing lot size is consistency, imo.
With the recent volatility, it has been sir but definitely not "everyday". I thrive in 2011/2015 type of years vs 2013 ride the trend up type of market. I have been trading for 7+, finally moving to the futures market(since I love global macro) and trying to master trading 1 contract before moving to 2. Shorted the ES at open today, netted 14 points but trading 1 contract limits my ability to scale out. I try to never let a winner turn into a loser as well as sell on strength so I had to cover at 7:05AM PT. Otherwise I would be able to sell 1/2 or 1/3 position, and ride the rest but trading only 1 has me fearful of sharp bounces. Now if I had actually traded 2 or if I were trading SPY, I would be able to sell 1/2 instead of 100%, take partial profits at that support area, and ride the other 1/2 to even more points-this is the problem I am having with trading just 1 contract. But yeah I was aiming for $1000+/day through futures when I first started out. With leveraged ETF's I was making more than that....I had no conception of what the average ES trader made with using futures. It's only recently that I have understood that the professional traders scale in by just adding more contracts, but it's strictly the same trading as they are doing with one contract which makes them more $. Thus my goal has changed from earning a certain amount of $ a day to being consistent and successful at least targeting the average points/day to eventually start adding size and not going for the target of 8-10/day....although with recent volatility I shouldn't stop trading just because I hit 8-10 in early trade. My biggest problem still is that after making 8-10 points in one day, I think I can make more....sometimes I do, sometimes I give back 4, sometimes the whole 8-10. This is something I am still trying to fix about myself. I should be happy with a $100/2 points in one day.....but it just seems so little.... Or should I just move to 2 contracts and be happy with the 2 points????
Sorry if i sounded overly negative. You sound like you know what you're doing. It's just that a lot of people have very unrealistic ideas about what is possible. I don't think scaling out is a terrible idea, provided you have a good idea where to scale out. I think over time you will find what No Doji said to be true though, ie it evens out. Ideally you ride the whole position in strong markets and scale out in choppier markets but that is easier said than done. The problem with doubling size with an eye to taking partials along the way is you have double size if it goes against you. How do you handle those exits? Do you scale out or just dump the whole thing?
No problem, I welcome criticism and it's good to have someone slapping me with reality so thank you. For example today, I was up about 4 points in open($200), but due to no sense of limit/greed, traded YM to $700+ on 1 car, but ended down $30 today(futures) since I was prodding the market at resistance areas when I should have been buying dips instead. I was still up for the day based on my silver and gold mining stocks, but that's irrelevant. I still don't know if I should stop trading when I hit the average ES points in a day. Or just keep trading if you spot opportunities, or at least if you do continue trading....to have stops in your next trades that preserves the average ES point in a day. That is something I still have to work on. For example today, I went long pretty much near the low but at the first resistance area I sold my 1 contract. I still knew we held key support levels in the indices, but I never know what the market could do after hitting the first supply area. Had I traded 2 contracts, I could have sold 1 in the first supply area, and hold on the other to see just how high it can go. Well market blew my expectations out of the water! Double the size when it goes against me is exactly the reason I am still trying to master trading 1 before I move to 2. I think if I had traded 2 cars and was up 4 points, I would be happy with profit and probably rest. But with 1 car, I feel like 4 points wasn't enough so I kept trading. I was able to trade the YM to 140 points, but my risk management needs a lot of work because after being up 4 points on ES, I should never give back all of it for the day and try to preserve at least those 4 points. But to answer your question, if I am trading let's say 2 contracts....if it goes against me from the start I tend to dump the whole thing... if it starts moving in my favor for a few ticks I will place 1 stop for 1 contract to at least preserve partial profit of either 1/2 or 1/4 of the move it's made while having the other stop in my original area. With this, if it comes back to original entry, I will at least have made some money and can let the other trade run. If you have any suggestions, I am all ears!
My experience has been that I tend to make most of my profits in a month on a few trades. It's imperative to get all you can out of those big winners. Of course the trick is knowing which ones will turn into big winners and which ones will not. I don't really understand your question about stopping trading when you hit the "average Es points in a day." Are you talking about what people have claimed is their average daily profit? Your average profit? Or are you talking about the average range during the day? How much total profit you have on a trade is probably the most irrelevant thing you can be thnking about, except of course as it relates to your loss discipline and protecting break even after a positive move. So I'm sure you can recognize that you were not reasoning correctly when you thought "if I had traded 2 cars and was up 4 points, I would be happy with profit and probably rest. But with 1 car, I feel like 4 points wasn't enough so I kept trading." The market doesn't care if you have a 100 lot position. It's irrelevant.
I would have two suggestions: 1 If you have a viable trade plan...take your signals and ignore your P&L. 2 Don't fade a trend day.
It's almost impossible to make money with only 1 contract. Some entries deserve 1, some deserve 2, some deserve 10. Not to say that the money made on a good day or week is usually disappointing. Start with 1, because you are a newbie and your purpose as a newbie is not to make money, but to learn how to control your emotions, learn the market behavior, feel the market, learn the technical rules and mechanics, etc. Most stuff is only learned with real money (real emotions and real fillings), but aim for the minimum money amount as possible. Eventually you'll learn what to do to avoid losing big. By losing, you'll learn to be disciplined, to set limits for yourself. Forget about the money, now it's not the time to make money. So you will increase your positions. But not every trade will deserve 2 contracts. Sometimes you can see it's a high probability trade, but the stop-loss is too big, so you trade with only 1 contract. Sometimes you will see a strong trend and opportunities offering 1:3 or better of risk-profit ratio. These are the trades you should do with more contracts, 2 or 3. I have a trend following strategy that consists of a number of contracts, but is doubled at the pivot breakout and then closed soon after the breakout, mixing trend following and scalping.
Then I suppose those of us who trade all in/all out should have Jack Schwager interview us for the next Market Wizards.