ES Journal Archive (2006 - 2008)
- Thread starter Buy1Sell2
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Hrmm, that is very interesting. That may help explain a bit of my difficulty. I have been using a 2 - 3 point stop. I am currently undercapitalized so that was representing about 1% of my TLNW. I may have to reevaluate what I am doing, take fewer trades with larger stops.
1 percent is fine. Just as long as it doesn't exceed 2 percent. But the key is to stay in the big winning trades and the only way to do that is to trail a stop. Like I said--I may get stopped out of my trade today after it went into the black for a while, but I am interested in the larger winners. If I am stopped out, I will only be looking short for the next trade after incurring a small loss (defined as less than 2 percent of TLNW) .
Quote from Buy1Sell2:
1 percent is fine. Just as long as it doesn't exceed 2 percent. But the key is to stay in the big winning trades and the only way to do that is to trail a stop. Like I said--I may get stopped out of my trade today after it went into the black for a while, but I am interested in the larger winners. If I am stopped out, I will only be looking short for the next trade after incurring a small loss (defined as less than 2 percent of TLNW) .
Sounds like you have a nice set of disciplined rules, the recipe of a successful trader.
Quote from Buy1Sell2:
Could be, but I don't think it matters really, Stops should trailed so there is less decision making.
By the way, there is a nice place here for a bullish divergence to set up on the hourly. I will not be going long if that occurs. Rather, I will tighten my stop.
Bullish divergence very obvious now on hourly chart.
Quote from Buy1Sell2:
Example-- My initial stop was at 1435 and represented .9 percent of TLNW. We have a bounce going right now, but there is no reason for me to panic. I will not lose more than .9 percent of TLNW no matter what happens. Also I have trailed my stop now to 1431.50, so it is even less. Bottom line-- I am giving back profits right now, but I am not concerned because I am limiting my actual losses. I play for big wins and small losses. It will be argued that I give back too much. On individual trades taken by themselves, that may be true. However, I am in on the bigger winners and the only way you can do that is to live through give backs from time to time. Learn to embrace the bounces and retracements--Learn to enjoy them
This classic trend-following approach does not work as well with stock indices as it does with "pure" commodities--agriculturals, bonds, notes, currencies and such.
I'd suggest that the best way to get big winners and small losers with ES by looking for false breakouts and signs of diminishing demand in uptrends and diminishing supply in downtrends (what I have referred to here in the past as the classic Wyckoff approach). This approach offers extremely rich risk/reward ratios, if applied consistently and with discipline.
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