Good point. The importance of not overleveraging one's account is really overlooked. I think most of us (myself included) have that overarching objective of finding that "perfect" edge and then leveraging the hell out of it. Yet overexposure to risk can ruin any edge no matter how profitable it may initially be. Believe the cliche: slow and steady wins the race.
i have heard that only a few make it in this business.........i can't believe that.....it sounds too easy........am I wrong?
Interesting whitster, I traded YM for 1 year and then switched over to ES and love it. Ym is to choppy to me with the 1 point increments. So you are more of a YM scalper ? How many trades do you avg a day ? How many points do you avg daily ?
=============== Tortoise; Well you certainly have a good nickname;!!! & people tend to live names -nicknames Actually you may want to keep/study records so you can categorize ''which stop'' /stops you have used; as warned earlier, turtles get road killed when they don't ''stop'' as they navigate highways. Certainly could WIDEN stops , an ER2 trader called it ''holding thru the pain''; however that could get capital intensive /very painful and may work if you played football & like pain/ beating your head against pro football helmets . Like Jabez, prefer to stay out of pain when possible Swing stock /position traders , use an eod time frame/ tight stop with good results so it can work there; however NYSE stocks tend to trend longer/ tighter than futures, dividend collectors holding them , no expiration... Ever wonder why you keep hearing cut losses[not widen them]]; let profits ride.????????????????????? Ever wonder why Rich Dennis set up an early multi million $ fund to close @49.9 % approximately stop loss??????? Rich did hit that stop,[ not widen it ] , still managing much money today Mainly because 50% drawdown ; requires 100% to break even , more than that 100% to profit. Most of us didn't think about that @ 6 months.
"Interesting whitster, I traded YM for 1 year and then switched over to ES and love it. Ym is to choppy to me with the 1 point increments." but 10 YM points equals 1 ES point, so a 1 point move is LESS than 1 ES tick (which is a 1/4 point), so i don't understand how that equates to choppiness? the thing about stops, limits and slippage is key for me. if i am setting a 10 pt stop on the DOW, that stop is 1 pt away on ES. the YM can move through 9 levels and not reach my stop. but there is no "space" in ES since it moves only 4 increments for dow's 10. this is simply a more cost effective contract to trade in that respect. the wider the spread, the less cost effective. that's a rule that holds true in all markets. imo, YM moves much more smoothly, predictably, and based on all the statistical backtesting - it simply works better for my setups. of course, that's an opinion thang, but in my opinion it is much smoother. i have seen several knowledgeable traders comment on the choppiness on the ES having to do with all the frenetic arcade traders scalping for 1/4 to 1/2 points with decent size, which tends to chop it up. "So you are more of a YM scalper ? How many trades do you avg a day ? How many points do you avg daily ?" well, my bread and butter is YM scalps. i do also do position trades in futures (and futures option) in YM, ES, NQ, etc. and in cases of position trades, i will often prefer the NQ or ES depending on what my system is telling me. i will go for much larger moves in these trades than my scalps, obviously. but as for SCALPS, imo, the YM is the best scalping instrument available. for ME, it simply works much better. also, since the ES generally LEADS the YM, it gives me a heads up. the reverse would be true for trading ES, since the YM rarely leads it. i make about 30-35 pts on average on the YM a day for the scalp trades. as for how many trades a day, it depends on what the YM gives me. it might be as low as 2, or as high as 8. even in the case of the 2 trades, those might last only 15 minutes, and the entire rest of the day i am waiting and watching. it is totally dependent on what the market offers in relation to my setups. since i will only trade YM scalps that meet very specific criteria, it is up to the YM whether or not it offers me the proper setup criteria to trade. varies widely. what i like about my setups is that they have about 80% profitable trades, and my drawdown is never more than 10-12 pts (that is my largest stop ever on ym), and if i lose on 2 trades in a row (which is exceedingly rare) i have to switch down to 1 car. if i lose that trade, i am done for day. so, i suffer very little drawdown with my scalps, which is what i want since i use them as an income stream, and i prefer consistency to the 'big $$ potential' with the corresponding risk. i'm rambling here, but i will just add this. i have found that, for me, if i don't have exceptionally specifically designed setups and don't follow the rules, i can get my head ripped off in futures scalping. so, i am exceptionally rule based, even though these setups are not purely automated, since there are some subjective factors otoh, i have found with daytrading stocks, that i can be far more fluid and less strict on rules and still do well. stocks are very different animals than futures ime.
whitster, Would you mind sharing more on this? My thought is that there must be more opportunities in stocks (there being > 5,000 of them) than in futures (there being << 5,000 of them). With so many people following the same contract there must be fewer opportunities. Only issues with stocks is the spread and liquidity and leverage..
"Would you mind sharing more on this? My thought is that there must be more opportunities in stocks (there being > 5,000 of them) than in futures (there being << 5,000 of them). With so many people following the same contract there must be fewer opportunities. Only issues with stocks is the spread and liquidity and leverage.." well, yes. certainly on a numerical basis, there are literally thousands of great stock trade opportunities on any given day, and far far less in YM. The reason I trade futures (YM) for income is that with one specific contract, I can get to know it very well, design very specific rule based setups for it, and consistently use it as a source of income. It's always there, it's always a proxy for overall market supply/demand, and it is nicely immune from manipulation. Stocks move differently as a class, from futures, and even differently from each other to an extent. Guys who concentrate on just a few stock issues get to know all the little rhythms that result in those particular issues. I invest in stocks, using about 50% fundamentals and 50% ta. I also swingtrade and to a lesser extent daytrade stocks. But the thing is that it is doesn't matter how many people follow YM. It is that it is a pure supply/demand proxy. So, as long as you develop setups that capitalize on market psychology, and trader psychology, you can consistently make money. The YM *has* to move over time, and people have to win (and lose of course) on those moves. In futures, I find a big part of my edge is determining Long Time Frame Participant Moves from Short Time Frame participants via market profile and other similar things. The reality is that the majority of traders will always lose. The majority of traders will fall prey to emotion, greed, euphoria, panic, etc. all the things that make them net losers and give successful traders a pool of new money to feast off of. This has been going on for over a century. Even looking at charts from a century ago, the same market pain/pleasure cycles emerge. I love playing stocks (been diggin' the Bird flu action/hype stocks), but I have an affection for YM as I have for no other vehicle. Sure, I've made more money on Gold in the last year, but I feel like YM and I get along well together. I never take her for granted, I respect her (always place a stop), never get greedy, and reign in my emotions. I *live* for indicator based traders because they will ALWAYS be late on moves. On stocks you can get away with that, often. On futures on an intraday basis? rarely. find a niche(s). exploit it. rinse, lather repeat. there are zillions of opportunities to win AND lose money. ya gotta find the instruments and trading styles that suit your personality. YM suits mine. Also, as a contrarian, i love the fact that everybody trades ES. that alone is enuf to make me eschew it.
What I mean is ym is noisy to me, 10 in ym is roughly 1 in es. Due to less liquidity a 100 buy in ym can sometimes move it 5-8 points, this is fine if you are long, but if you are short and this happens it can run your stop on the noise before moving back down. I just find that es is smoother to me. I agree about ym being better for stop placements and entries and exits but you do not think it is more whippy than es ? Since I changed to ES, I am only making 1-5 trades a day resulting in 2-10 points per trade, but when I was in Ym, I was making between 5-20 trades a day avg about 8 points per trade. It just seems to me that YM has more fake moves to whip you out than ES does, but since you mainly scalp less tha 10 it really does not affect you.