ND, I know you trade CL (I read the thread frequently) and you seem to be looking for 20 ticks now that you are letting you trades run a bit. Given a 20 tick objective can you tell me how much heat you are typically prepared to take? I don't mean where you might place a catastrophic stop but at what point (even a range would help) you frequently bail if the trade heads against you. I'm thinking of trading crude but do not yet have a feel for it.
Bill, You have this just right. The win rate and your objective might not dictate your stop but it will certainly indicate what can't work. And you must be ready for that next trade just as you describe.
My minimum profit target is 20 ticks (if a counter-trend trade or a with-trend breakout trade), but on most trades my target is 30 ticks or more. My maximum stop loss is 15 ticks, though I recently placed one at 21 ticks when I got into a short position a bit late, but bailed out at a 14-tick loss 5 seconds before a major economic report I somehow overlooked despite the fact that this report has been released every Thursday at the same time for as long as I've been trading. Nice thing about CL is it gives you a very clear "tell" that news is coming in a few seconds and the minute I saw that I said oh shit and whacked the offer :eek: I don't place catastrophic stops in CL, because I trade intraday off a 5-min chart. I place my stop 1-2 ticks outside an S/R level or a fixed 15-ticks if the S/R level is greater than that. Sometimes I impulsively jump into a trade based on price momentum without looking at a chart, and I just throw in a 15-tick stop when I do that.
Perhaps not many people agree with me that stop and target are measurable. I solely use candlestick to trade ES. In my way of projecting price behavior, stop and target are not constant, but directly proportional to the size of ( preceding ) candlestick(s). The stop and target are true over 90% of the time, unless the 'signal' is faulty as it does not actually herald a repetitive price behavior. Do your homework.
Agree with this post. Stops adjust based on volatility and behavior of the instrument you trade. Heres a quick way to check. Have your stops in the past worked on the instrument? This is minimal homework imho before trying to implant the way you work on any market. The market should tell you where to put the stop, not vice versa.
Absolutely agree! If stop-loss is hit exactly (as opposed to slipping badly against you), that is GOOD thing, that is proper trade management. And if it's hit and then comes back and you don't have re-entry signal... So what? No signal, no trade. Being addicted to single trade outcome is the sign of an undeveloped trader. Trader should care not about taking good losses, but about being disciplined enough to execute his strategy correctly.