I'm a futures trader and i trade e-mini micro ES contracts for now. No doubt that this market is very complicated. That's why most of traders lose money. I realised that I move my stop-loss to BE very quickly. And decided to think what else can I do instead of moving stop-loss to BE? By moving stop to BE you are only paying commissions. Still a losing trade! However, your probability being stopped out is now higher than the time you executed the trade (especially if you are trading breakouts). I realised that the best thing to do is not to move stop-loss but close half of my position at 1:1 and i'm still in a free trade. Now, my probability being stopped out is less than moving my stop to BE. I have not tried this a lot but i know my probabilities. You need to trade at least 2 contracts each time. What do you think about this approach?
you should build a simulator to model this properly. HFT have made scalping almost impossible these days as you are competing with them
I did one. 41% win rate in EURUSD and profitable. However i have matched it. So still my own strategy beats this.
I run trend-following trades and almost always attach a trailing stop-loss to them, based on volatility by ATR. If the trade starts to fail it will normally show me some weakening TA which I can use to justify a manual exit well before the volatility TSL is hit. Because the trades are trend-following, weaker TA giving an exit signal is also an indication of improving set-up for a new entry. I'm happy to manually exit on a pull-back in the morning only to find I enter with a new position in the same direction that night when the trend has resumed. I ignore transaction costs when making trade decisions. I suppose strictly speaking a SL based on ATR should be continually adjusted but I don't find it makes much difference if I do or if I don't.
Trailing stop is to limit your loss but the real exit should be a separate calculation whether manual or not.
I set my first target to 1:1 to make it a free trade. Then use a trailing stop for the second target.
I use trail stop to ride winner intraday. I use trail stop to limit my risk by constantly moving the stop based on price behavior at the moment in time. I want a logical reasoning for entering the market and a logical/non emotional reasoining for exiting the market. I do not exit based on Risk vs Reward. I exit when price is turning the opposite way I took the trade. And just to make my life a bit more simiplier, I use an EMA to tell me when to exit the trade, if I am up like +30 ticks. Once price close above the EMA, if long, I put stop 2 ticks above the high, and Exit the trade.
YMMV, but when my clients use a trailing stop, they get taken out WAY too early. Instant regret. So I emphatically discourage trailing stops and instead teach hard profit targets based upon a targeting system utilizing on-the-run modeled historical trading range. And we stay with the trade until either the target gets hit or the indicator package flips. The problem with trailing stops is that you can’t place them within “normal” trading range parameters. To put it another way - “normal” trading noise and the back and forth market action between buyers and sellers are a great danger to trailing stops. And nothing feels worse than taking $100 out of a trade that’s worth $500 a short time later. I wish everyone good fortune !