i am currently trading ES . i heard many theories of position sizing . some use 3 lots , and sell 1 lot after each point. some start with just 1 then add to position when it goes their way or some target 1 point with many lots which one you think is better money management. chad
Hi chadik12000 Which is better money management and which is more profitable are two different things just in case this thread develops into one or the other. Lets assume your question is about money management and not about profitablility. You named three choices when there are much more than that. However, sticking to what you've named... I use two of the three. * I scale out - Yep, I've backtested scaling out versus not scaling out. I'm more profitable via my trading style when I scale out. However, a close trading pal of mine is more profitable when he doesn't scale and most likely due to the fact he's using a different strategy and has a different trading style. * I also ADD to a profitable position on some trades for various reasons. One reason I may add is because I got another pattern signal in the direction of the trade while I still have an open position. However, the ADD has one goal...quick profits and I dump it as soon as I reach that goal to allow me to go back to managing the initial position. * I don't use profit targets because they are counter-productive to my trading style. My profit targets are based upon volatility spikes as expansion intervals that I call Wide Range Bodies (WRBs). I also use s/r zones as profit targets for about 30% of my trades. All the above is more profitable to other trade managment and money management variations. As for the money managment issue, it allows me to be more discipline in managing my trading day and account whereas in comparison which other variations... I tended to have problems sticking to the money management aspect of the trading plan. Therefore, there's a possibility you could be using a money management technique that may be the best but too difficult for you to stick to it... Discipline problems of using such causes less profitability. In comparison, you could be using a money managment style not as good as one used by another trader. Yet, is much more profitable because you have less discipline problems in sticking to it. Getting back to profit targets, I've met more profitable traders that don't use fixed profit targets versus those that use fixed profit targets. Fixed profit targets will more often than not leave too much money on the table. Yet, those that don't used fixed targets tended to be more experienced traders whereas those that tended to use fixed targets tended to be new traders or traders new to a particular trading instrument or new to a particular trading style. However, if your very profitable and happy with your results of using fixed targets...keep doing it and more power to you. With that said, you really need to backtest for yourself along with keeping stats of your real trading to determine which is more suitable for you knowing it may not be suitable nor profitable for someone else due to... Different strategies and different trading styles. Mark (a.k.a. NihabaAshi) Japanese Candlestick term
==================== Chad; I use profit targets in ES; but i do have permission in my business plan to raise them or lower them & do, according to trend strength. Volentee00 had some good ideas on targets in YM,think his journal was over 777 pages.Good read, Actually could make a good case for OR against profit targets in ES Think your first 2 ideas are better than 3rd choice, but all those sound like profit possibilities. Why a target in ES which i can/do raise or lower according to trends??? 1]Enter an exit order profit target with IB ; because even my back up system[ups] takes time to kick on. Reliability of IB ,is more so than my home office set up 2]Targets require more planning; like to plan 3]Es moves fast enough with my personality, ; profits disappear without them Brief recent story on targets; saw a trend last week which looked better than average, tried to cancel exit order/raise target but had tek troubles . But my original exit order did fill. So i did leave .25 on the table; but got my much researched profit target And could easily have gotten nothing without a preplanned prepositioned profit target entered. Discretion helps.
And Mark made a good case against fixed profit targets; Paul King did also against fixed/rigid targets in Futures magazine this month. In summary these gentlemen dont have my trading personality; and sure dont have my personality & trade ES. And also ES & YM trends differently from many markets; stocks & other derivatives in particular Remember the top trader next to Mike Masters; John Bender/Jack Schwager interview , that derivatives trader also noted /traded, one size does NOT fit all.
actually i have been trading for just 2 weeks with real money . i must say i am happy so far with my results , especially that i work in my store and i am not 100% looking at the charts all the time . but in the 1/2 hour or so that i can from time to time out of 10 trades 7 were profitable and i got around 15% return in those 2 weeks . i do like you mentioned above , i enter the tradeon LIMIT and i enter the exit LIMIT directly on IB a point profit . i thought since i am new , bite size profits are safer . i use TREND < MOMENTUM < TIMING as my guide . the only draw down to my method is that if i plan to make 1 point and the trade goes against me 2 points then i lost 2 profitable trades in one . what do you suggest me to put my stop at knowing that ES is volatile at it is ... chad