I don’t use a set stoploss in terms of $$ amount or point amount. The stop is determined by the market action. So I use a price action stoploss. It can be wide or it can be tight. It depends on what is happening in PA. I usually start with 1 contract and add if I need to. There are some times if I deem the trade a high probability I will start with 3,4,or 5 contracts but i will not expect a big reward. It is next to impossible to have low risk, high probability, and big reward. There is always a tradeoff on one or the other. So, if I see a high probability setup with low risk I will load up but I will settle for a small reward unless it just keeps moving in my favor with little adversity. But I know that in most cases High probability, low risk trade will not go very far.
A low probability, low risk trade can have a big reward if it works. A high risk, low probability trade, can also have big reward if it works. I know that sound backwards but think about it.
In a strong BO say north the stoploss has to be big. I know that too sounds backwards but that is just the way it is. Why? On strong BO’s or big spikes you can have a deep PB before the BO succeeds. So IMO you have to employ a larger risk or chance getting stopped out and then see an immediate reversal back in your direction while your eyes are bulging and coke bottles are flying. You may even think they took the market down and went two ticks past your stop just to get you! When I say you here, I am talking about any trader AND not you, in particular, as a person.
In the afternoon I traded the NQ and netted over 1595.00 and actually had more but made a couple of mental errors that cost me. Even so, I still had over 72% win rate. However, in the last 60 seconds of the session I got flat and payed my dues back to the market for the mental errors. But i still ended up +1595.00. I did not trade the ES in the afternoon.
As far as explaining the dynamic vs form. In a simple illustration two artist could paint the same picture. Lets say, just for arguments sake, both of their finished products looked exactly alike. Same drawing..same colors...same size. That is the form. But artist #1 painted it over 2 months in 15 minute increments as he was able to find time to do it. Artist #2 painted it in one 8 hour day. Now, if both artist were on the verge of painting each one a second picture on which one would you place your money as being the one to finish first? That is the dynamic. In trading the dynamic i.e. (how a bar is formed over time) can influence the probability of a trade, on the next bar or next few bars, being profitable or not being profitable. But a trader has to see and interpret that dynamic live action within the larger context in which it is taking place or the probabilities, risk, reward can get skewed.
A trader will see average win/average loss be closer together when he employs averaging in to a losing position like I did today. In both instruments that I traded today I employed that technique. When I don’t employ it, and maintain a high win rate, then i can, many times, see average win being at least twice average loss. However, context sometimes (like today) has me employing the technique and that hurts the average win vs the average loss. But in the end what trumps all is being net profitable by the close. I was this afternoon in the NQ although i made some errors and had to pay for them in $$$.
The biggest size i traded today was 6 contracts and it was a scale into a losing position that eventually in my favor. In the Es I think the largest size was 3 or 4 but don’t remember. Most of my trades start with one contract and end with that or I may add up to 10 but that is rare.
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