Comfort mostly. No reason to keep going up and up on contracts that I can see - for me, that would be just begging for a disaster. At some point, enough is enough - no reason to try for more just because you can. Funny things tend to happen to me when I start getting greedy. Or not so funny.
I want to thank quah for adding another arrow to my quiver. This is a really unique approach, and it's refreshing. It wouldn't be what I would always use or even prefer, but perhaps there are days where an approach like this is better for my mindset or the market conditions. To stretch AAA's baseball analogy a bit, there's a time to hit homers, and there's a time to hit singles.
Quah, If you didn't sweep your account each month, your capital base would grow and, if you increased contracts, you would still be taking on the same amount of risk each time as compared to your net worth (percentage of risked capital would remain the same). However, it is important to do what you are comfortable with.
quah, can you explain this a bit more? for others: rtharp said stochastics don't work well in trends. above is quah's response.
Hey AAA... Just so you won't be waiting too eagerly, I don't intend on posting my results. I don't want to appear as though I'm giving the definitive approval or disapproval of Quahs idea. Besides, I'm not using his idea,verbatim. So, it wouldn't be right to post poor or great results. But, since you were eager... , I'll send you a PM with what I ended up with.
No, I can't really explain it any more than I already have. It doesn't really matter if stochastics don't work well in trends. When you make a statement like that, the assumption there is that the stochastics are being used in the "normal" way, and that they are the only thing being used. This system obviously does care about trend or chop - that's not part of the rules. If we are in a trend at 10:59 that isn't going to change anything about where the stochastics sit at 10:59. You ever use a kitchen knife as a screwdriver? It doesn't make a very good screwdriver, does it? But it works okay as long as the screw isn't too tight.
I do think rtharp brought up a very valid point. There is usually only ONE way someone can use an indicator -- because if you could use it TWO ways, how would you know when to use either one? If your system relies on the Stochastic being in an oversold position to enter, that oversold position may either signify: a) A dip of an oscillation period * OR * b) A strong trend pusing up Obviously, the guesswork of when to take the trade has been removed as it relates to both time and money-management. You've already determined how much you are willing to win and lose for each trade -- and you know when each trade is to take place. That merely leaves a decision of "Do I go LONG or SHORT" at each of these times. So far, you've been right more than you have been wrong. I'm not sure how you are using the Stochastic or how you are using other indicators, but it will be interesting to see how it performs when the market changes gears and starts running strong again. These past few days have really been somewhat choppy at times.