Question for YM (mini-dow) traders.

Different setups, timeframes, trading methods, bias, etc. require different stops. I would decide on a stop according to the setup and the timeframe I see it in. That may be 5 points, 20 or more.

TM Trader

 

I'm attaching a chart of 1m YM from 7-25.

Where would you place your stop on this set up ?

Of course this assumes that you would take this type
of set up.

I annotated the price at the breakout and the prices
at possible stop levels at the bottom of the candles/pivots.

The stops in this example would range from 7pt to 18pt, of course depending too on your entry/exit/slippage.

 

I am not terribly bright and my trading reflects the state of my mind.

My set-ups are very simple and require no more than 5 point stop.

The target is always 20 points from entry (stop moves to break even after 10 points).

My trading day ends at the bell or after four lost trades in succession.

That’s it!

 

A

 

Anyone know who loses all the money you guys make?

 

The guys with no plan and no discipline. Which is just about everybody.

 

Funny you chose this setup. It is the most critical point of the day, where many traders failed and took the Double-top trade instead of the breakout.

In this particular setup I place the stop 1-3 pts under point A and will trail it just under the MA and the various bottoms the uptrend makes for maximum gains.

TM Trader

 

I too was thinking double top, however, in reminding myself to trade what I see and not what I think, the breakout was taken.

Actually, I'm just saying that to sound like a trading hero.

I was thinking double top, but my one little indicator that I use didn't show enough weakness. So, I didn't short.

 

Oh yeah, I too would have used a couple points below point A.

 

Although usually much more risk-averse (I would have entered a little later, on the actual consolidation), If you ask me on this particular entry, I would have actually taken it as low as 5pts below A / 2pt below B at 9128.

Because:

-Strength wasn't high enough to justify straight breakout, but rather short consolidation.

-But speculative strength, and correlation (ES/NQ) was far too strong to statistically allow for a double top.

-9130 was the next closest dectile number / less likely to be penetrated.

-9129 was were the "semi-smart" traders had their "below dectile number stops". The smarter traders/professionals would have picked up longs here to buy out these stops and get a low-risk entry into the breakout. 9128 penetration thus deemed unlikely.

-Since the speculative market (NQ) was already moving and strengthening, alongside with ES, it was likely that some traders would have fallen for the beartrap in the YM, but pretty unlikely for a double top to happen. Also, there were many other indicators that were in favor of breakout.


To contribute to the actual topic of this thread, and answer some of your questions, Fast_Trader, here some advantages to trading YM;

-YM have lower intraday volatility in terms of ATR per bar in smaller timeframes. ES have to battle more volatility because of the larger ticksize.

-Lagging market - You have two leading indicators (NQ & ES) rather than just one, like in the ES (NQ).

-More precise stops, so better scalping.

-Less competition / dumber traders


Disadvantages would be (IMO):

-Less "emotional leverage", in that I mean that people act more heavily on fear/greed on the larger indexes since tick-losses lose more money, thus create more opportunities to exploit stupidity (=emotions).

-High commissions?

-Trading ES is more prestigious. Most of the great wannabe ES-experts don't even know what the YM is, and get confused.


Well. That's it for now. I might look into trading the YM sometime soon... But I reckon it's probably a great medium for beginners.


Cheers to You all...
~The Scientist