Day-Trading 2.0 for small traders

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This is one of the situations that my type pf entry (see my previous post) is better, at least pshycologicaly...

Quote from IronFist:

I need to work on this type of situation:

SlowMA = up
FastMA = just turned up (see yellow line and candlesticks turning green)

So you go long at the close of the first green candle:

ouch.gif


If you can stomach that initial drop of 19 ticks ($95 per YM contract) (meanwhile the fastMA is staying positive) you will eventually be rewarded with a profit.


In this situation is it better to just let yourself be stopped out and then reenter when the price comes back up to the level of the open of the second green candle?
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Ironfist,

Instead of going long at the close of the first green handle, how about going long at a limit price no greater than the FastMA? That would reduce a lot of the heat by getting you in at a better price.
 
Quote from Retief:

Ironfist,

Instead of going long at the close of the first green handle, how about going long at a limit price no greater than the FastMA? That would reduce a lot of the heat by getting you in at a better price.
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That would cause you to miss out on rallies that pick up quickly where the price never goes below the FastMA.

rally.gif
 
That's not much of a rally. How many ticks do you gain by taking that trade? Six ticks? How much drawdown in the other example? 19 ticks? Six up and 19 down, doesn't seem like a very good risk-to-reward ratio.
 
Quote from Retief:

That's not much of a rally. How many ticks do you gain by taking that trade? Six ticks? How much drawdown in the other example? 19 ticks? Six up and 19 down, doesn't seem like a very good risk-to-reward ratio.
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Each horizontal line in that chart is 10 ticks. The entry (beginning of second green bar) was 12839 and the exit (beginning of second red bar) is 12859.

I guess the thing I'm not understanding is how people are determining their risk-to-reward ratio.

Just because one trade had a loss of 19, does that mean you can use that as a "risk" number for future trades?

I thought "risk/reward" was like where you set your stops. Ie. "this trade will close after a profit of [reward] or a loss of [risk]." Is that wrong?
 
If you're going to take the trade with the drawdown of 19 ticks and profit from it, your stop will have to be at least 19 ticks. Otherwise the trade will be a loser. So your risk in that situation to profit will have to be at least 19 ticks. The reward is more difficult to calculate, unless you just exit based upon a predefined target.
 
Quote from IronFist:

Each horizontal line in that chart is 10 ticks. The entry (beginning of second green bar) was 12839 and the exit (beginning of second red bar) is 12859.

I guess the thing I'm not understanding is how people are determining their risk-to-reward ratio.

Just because one trade had a loss of 19, does that mean you can use that as a "risk" number for future trades?

I thought "risk/reward" was like where you set your stops. Ie. "this trade will close after a profit of [reward] or a loss of [risk]." Is that wrong?
More...

With the experience and time you'll learn to see what is your success rate and hence, what should be your R/R. I calculate my R/R based upon what I lose and not upon my stops. for two reasons: 1) The trades that usually goes wrong are the trades with tighter stops. Strange enough but that true, so my average loss is smaller then my average stop. 2) If there is a trade with a too much big stop I usually don't take it or I wait to get in in a better price to reduce my stop.
Anyways on the overall you're right about your definition of R/R but what really matters is your PF and that relies apun what actually happned and not upon your plan.
 
Ok. It sounded like you were saying to define your R/R after the fact...

But when I enter a trade, I don't know if it's going to go against me a little, a lot, or not at all, or if it's going to turn into a huge 70 tick winner like this one:

win.gif




Part 2

Scalpers: would you have jumped out of that trade after a few ticks or would you have ridden it until the end?
 
I would follow my plan.

If my plan is to take 5 ticks and exit that is what I do.

If my plan is to exit part of my position at 5 ticks and then use a trailing stop or other exit, that is what I do.

The worse thing to do is CHANGE YOUR PLAN midtrader.
 
I would follow my plan.

If my plan is to take 5 ticks and exit that is what I do.

If my plan is to exit part of my position at 5 ticks and then use a trailing stop or other exit, that is what I do.

The worse thing to do is CHANGE YOUR PLAN midtrader.
 
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