First you were right in closing this trade since it's not in your plan yet. Good for you. Here's how I do overnight holds: (1) In general, I need a s/r level protecting me, AND a decent profit from the trade already. I never, ever, ever, hold a losing trade. (Rationale: if it does start working later, there will be another chance to get in.) (2) Since I already have a profit, I must re-evaluate the risk-reward. It still has to make sense. Also consider getting smaller. (3) I always have a stop order in. Yes, I get shaken out of thin overnight markets. But sometimes I don't. And this way I can't get killed. (4) I have an alarm set near the profit target to wake me up. When it gets to my target I give it a quick chance to keep going (by making the stop really tight). If it exceeds my target, I reposition the stop at the target and go back to sleep. It's really very simple. It has to make sense. If you are ever struggling with a trading decision, it means that it's a marginal bet- there are equal pros and cons. When this happens in poker a flip a coin. When this happens in trading, I usually just get out, or at least make the stop very, very tight. Example: Shorted the Yen on Weds evening. By Friday's close it got down to, but did not break a key s/r level. I took my profits and went flat for the weekend. When the market opened last night, it broke down thru this key level. There was an opportunity to reopen the short so I did. I baby sat for a few hours. I couldn't make heads or tails of it, so I made my stop very tight (protecting a very small profit) and went to sleep. Around 3am I woke up to alarm bells-- the Yen tanked again after I left, my stop was never taken out-- and it hit my profit target. I tightened up my stop again, it was hit in five min. It ended up just being a shakeout, but all-in-all, I still got most of the move.
Note on (2). If I short at 1000, stop at 1005, target 980, I am risking 5 to make 20. The market closes at 990. Now my target is only 10 points away. I need to have a logical stop around 995, otherwise I won't hold... i'm not going to risk 15 to make 10, or even risk 10 to make 10. One option at this point, if I feel there is a high (>50%) chance to hit the target, is to cut my size in half and keep the original stop. This way, at worst I will keep half of what i've already made, but I could still make a lot more if it reaches my target and keeps going.
Trade 4 : 5/25 15 min : failed triangle Breakout Bought 1096.50 Sold 1103.75 Result + 7.25 took forever to get a signal but it was worth the wait. Once 2 x my stop size was reached, the 3 min bar trailing stop kicked in. I am in the process of backtesting some other strategies, so hopefully soon I my trading will be a little more active. It is looking like this strategy will probably generate about 4-8 trades per month. fan27
so fan, whats da total tally so far? personally i believe trading triangles will whipsaw you to death, even if you play failures. often they dont go anywhere and just flatline, around the apex line. on triangles, the breakouters and the faders get regularly screwed.
4 trades so far. Net : +11.50 ES pts trading 1 contract. triangles can be tricky. Playing the failures seem to work best in the first hour or so of trading. Late day failures can also be good. fan27
Good luck. May I offer one suggestion? Instead of trading one market, take your top 1 or 2 (or 3) best signals, then use them across a wider variety of markets. My best signals occur only rarely in the ES, but when they do they are usually very lucrative. However, if I apply them across all the main futures markets, I can get far more strong signals. It goes from 1 or 2 per month to 1 or 2 per week. This improves returns and reduces risk and drawdowns quite dramatically. Give it a shot.
Hello cutten. Great suggestion. From my experience trading so far, it seems that the really good setups don't happen that often. fan27