Chronicles of an Idiot

Quote from wally_:



This may or may not work out. You need to know what MFE and MAE your method has and optimize both stops and targets knowing these parameters. Tightening the stops is not always a good idea. In fact, with a 6 pt stop loss you are more likely to get 2 pts than with a 2 pt stop loss. Breakout's method tries to save single ticks, this may work, but if you want to go for 3-4 pts you cannot be that conservative about the stops. No pain, no gain. Of course, if you use the 1 min time frame 1 to 1.5 pt stops are probably good, but then you also should not expect to hit 3-4 pts very often.
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I realize this is a public forum and you need to take advice with
a grain of salt.(I think that's how the saying goes...lol) But, just
so you"ll know I'm not talking out my nose, here's a couple of
quotes from two successful traders concerning initial risk when
they place a day trade on the S&P's. Keep in mind the words day trade. This is advice for day trading, not swing trading.


"When I day trade the S&P, the smallest movement I am interested in is one where I can select spots to
limit losses to between 3 and 5 ticks..."

Trader Vic-Methods of a Wall Street Master...pg 25


Initially, I'll typically risk 50 points. That's enough heat. note:50 points is 5 ticks on the S&P

Bill Greenspan...read the interview here.

Hope this helps...
 
Quote from Breakout:



I realize this is a public forum and you need to take advice with
a grain of salt.(I think that's how the saying goes...lol) But, just
so you"ll know I'm not talking out my nose, here's a couple of
quotes from two successful traders concerning initial risk when
they place a day trade on the S&P's. Keep in mind the words day trade. This is advice for day trading, not swing trading.


"When I day trade the S&P, the smallest movement I am interested in is one where I can select spots to
limit losses to between 3 and 5 ticks..."

Trader Vic-Methods of a Wall Street Master...pg 25


Initially, I'll typically risk 50 points. That's enough heat. note:50 points is 5 ticks on the S&P

Bill Greenspan...read the interview here.

Hope this helps...
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Thanks Breakout. Interesting article. The advice about trading reminds me of the advice on gets about their golf swing. 50 people will do things, 50 different ways. The goal is to put a little ball in the hole 400 yards away with 4 swings.

When I read about people like Bill Greenspan, I often wonder where he's at in the income category. He makes a lot of trades in a day. Unreal.
 
Quote from Breakout:



"When I day trade the S&P, the smallest movement I am interested in is one where I can select spots to
limit losses to between 3 and 5 ticks..."

Trader Vic-Methods of a Wall Street Master...pg 25


Initially, I'll typically risk 50 points. That's enough heat. note:50 points is 5 ticks on the S&P

Bill Greenspan...read the interview here.

Hope this helps...
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5 ticks in the big SP contract is 1 pt and 1 pt is $250 which corresponds to the risk of 5 pts in the SP e-mini. Also, I guess, these are historic observations from the times when the ATR of SP was smaller. Sperandeo was a successful trader in 80-ies, early 90-ies. Times change, it's important to keep this in mind.

I do not recommend anyone keep loose stops particularly when they don't even know how to trade, but stops and targets are also a matter of strategy and should be viewed in this context and not as something absolute. Each trade is different too.
 
Quote from VisionTrader:


He makes a lot of trades in a day. Unreal.
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Good point, 60-80 a day, so no wonder that he has to keep his stops that tight because his targets are also small, probably of the same size as his stops.
 
Quote from wally_:



5 ticks in the big SP contract is 1 pt and 1 pt is $250 which corresponds to the risk of 5 pts in the SP e-mini.
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Actually, I am not sure about the tick size in the big SP. Is 1 tick 0.10 pt or 0.20 pt? I thought it was 0.20, but since I have never traded the big contract, I could be wrong.
 
Quote from VisionTrader:



Thanks Banjo. Deering man probably. I'm a guitar. Taylor.

Still wondering what these mean though.
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There is another thread on ET right now that talks more about these. It's related to the market noise and the stops and has these names in its title.
 
Quote from wally_:



Actually, I am not sure about the tick size in the big SP. Is 1 tick 0.10 pt or 0.20 pt? I thought it was 0.20, but since I have never traded the big contract, I could be wrong.
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Hi Wally...yes, 1 tick is 0.10 pts. The article was fairly current...Oct of 1999. When
Mr. Greenspan says he risks 50 pts, he means the same as 5
ticks or $125.

Here's a
link to contract specs.
 
Quote from wally_:



Good point, 60-80 a day, so no wonder that he has to keep his stops that tight because his targets are also small, probably of the same size as his stops.
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You didn't read the article, did you Wally!...hehe:D


You'll notice in his article that he has a profit objective:""Initially, I'll typically risk 50 points. That's enough heat. So, you have to go for at least a 250- to 350-point profit."So, in other words, he's looking for
a 5-1 to 7-1 reward/risk ratio.

Also, his statement that he makes 60-80 trades is a little misleading and I should have said something, before.

The reason he makes so many trades is because:"I've been standing in the same spot in the pit for 12 years, working with the same brokers. You have to be good to the deck (work with the brokers, rather than fight them). I'll move in and out because I want to satisfy some of these customers." In other words, a lot his trades are just quick in and outs
as a favor to his customers.

I met him once, and I was under the impression he takes somewhere around 10 to 15 trades a day, in the same way
that we might trade breakouts, pivots, supp and resistance, etc.
 
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