Sorry, didn't see this. I no longer base on percentages of profit, I switched five years ago, now it is all about losing percentages I concentrate the greatest amount of my time whether day trading or staying in years in stock and commodity trades. I don't know if a matter of age or reaching monetary goals or wanting to prove to myself I have become good at my craft and would violate all cardinal rules of doing what you should never do like averaging down or possible mental states as I have periods of OCD, ADHD and bi-polar episodes and only take supplements. Let me tell you, if I had known those with bi-polar should never ever become a day trader back in the 80s, I would have sent them ten cases of Angus steaks, it was extremely hard trip emotionally for me to learn dealing with mental issues and certainly no book could heal all self doubts and highs/lows, believe it or not there were many more highs and 72 hours of non stop back testing than lows, but the joke of how low is low, I have often thought how the hell did I got through that. Thank God I lost concept of money long ago. It is not about how many trades I can do in an hour of ES, it is about not losing and keeping percentages around 5% losing trades per week in ES. I have spent 30 years day trading S&P500 futures, so I see this market as a friend as I have no friends left of that duration. The old saying of you spend enough time, you will learn something, then at some point you learn how to dissect price in areas that 99% don't do to get even better. ES has a very natural flow of quick times of trend and falls back into readable reverses and chop, it is like no other market. I never trade with hard stops, you stay more focused and it is one more thing I have to either move or cancel and change my thought away from the Dome volume/price. I generally will try to risk $112 approx. on any day trade as limits, now early in session, first 1-12 minutes risk can get close to $200 and I will often drop down to 30 second bars but try hard not to do so as much more chance of bad signals, but you still learn patterns of what I call "Dog and Pony" pattern on 30 second charts where sharp low put in, looks like it is going to go up but one minute not showing this sharpness, then drops down again on 30 second chart to wipe out inexperienced newbies trying to pick bottoms, on 30 second it often shows triple lows whereas on one minute is double bottom and I don't trade double bottoms as this does not produce low enough losing percentages. And no, I would have a heart attack risking 50 ticks on each trade, I am a cheap S.O.B., and I never stay married to any day trade, right now averaging less than 3 minutes 45 seconds being in trade regardless of any market I day trade, this shows me greatest possibility of not losing. It has nothing to do with ego, it has to do with what I can mentally live, I have my own set of unique problems, I often see life much differently than most people and be happy living in a cave., but cable can't run out to caves easily and Starbucks be too hard to get to, damn bats crapping up the place too. But I think most who trade for a living and when people ask what you do for a living they have that blank stare when you try to explain it, and girlfriends I stopped trying to explain long ago. Thousands of times of same question "How do you sell something you don't own"? well, honey, I go next door to neighbors and steal it then wait 4 minutes and buy it and return it to neighbors, he had 1,000 of them laying around and was still brushing his teeth whole time I did that, he never noticed it gone. "Honey, I had a coupon when I bought it back and returned it", yes they don't have much of limits of the product.
%%%%%%%%%%%%%%%%%% And its most likely, not even accurately named-as if computers are free + as if power bills are free-LOL. And imagine the business goal-break even??? Could help some who never have done the idea of actually taking a loss-admit wrong..................................................................................................
Not the point, nor is "break even" an objective. There are 4 possibilities on a trade.... small loss, small gain, large loss, large gain. The only one you can control is avoiding "large loss". The sum of all your large losses, small losses, and break evens is likely to be around "break even"... those are the cost of doing business in trying to capture the "large gain". Protecting your capital is rarely a mistake. You don't have to "get them all". You don't have to "get this one". But it is advisable to ALWAYS protect capital.
I think the next logical question is.....what's the max uncle point for a trade? If most of us are willing to take some heat on a trade, and not use a BE stop after it's gone in our favor for some direction, at what point should we throw in the towel if the trade doesn't work out? For me, I don't don't let any one trade go more then ~3.3% against my account equity ...and I can't take many of those. -1% is okay. -2% is okay. -3% meh. -4% definitely not.
It's simple: the max uncle point is the point where the trade is invalid/wrong and that's where your actual hard stop is. Where it retraces enough that the level you entered around is not going to hold - that goes for a level price is moving away from or a level that its just about to break through and not significantly retrace back through (not my preference). If you cannot place an "I'm wrong on this trade" stop without violating the risk parameters for your account at the preferred size for the trade you either reduce size if possible or simply don't take the trade. You determine risk parameters for the account on standard n percentage/risk of ruin type stuff but you also apply different drawdown levels based on conviction of the trade, realistic targets, and expected retracing while adhering to your max (ie don't take an 8% max loss trade just because its a "swing trade" and don't take a 2% max loss on a trade that'll return 1%). Only take good setups. Don't trade for the sake of doing something and if you're not DOM scalping the vast majority of time will be spent 90% waiting / watching and 10% actually doing anything. Overtrading is a killer - *don't* encourage it by throwing half ass trades on just because you want to be in a trade or can't stop the FOMO.
Other than correct position sizing,the OP,s initial post is strictly one mans opinion based on one mans style of trading.It is far from a universal truth,and implies that there are magical support and resistance levels that the market adheres to and takes precedence over statistical measures that can actually be quantified. In no way am I saying your techniques dont work for you,but to state unequivocally that break even stop,or moving stops up is a psychological crutch/or soley used by sub par traders is utterly absurd at best and much closer to categorically false.
%% Good points+ good post; for preserving capital+ profit plan. And no doubt many tried to preserve capital /brake even stops + overtraded + made no profit @ end of the year.Surely some profitable short term traders must use break even stops. But trading is one of the few businesses where people brag about gross profit with no net profit.
That's absolutely correct Murray! Folks are too focused on win rate and not focused on making money.---Ishmael.