anyone take the rule of 10 short ?
ES Journal Archive (2006 - 2008)
- Thread starter Buy1Sell2
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...you won't make much money either. It goes both ways. If you trade with 100 points stop loss and it means only a 2% loss, that means a 100 points gain also gives you only 2% gains....
It also means you are using 1 contract for every 250K, which is way underleveraged. 1 to 1 no leverage would be 1 contract for every 70K....
Quote from volente_00:
I disagree, why not trade more size with smaller stops. Your winning percent will increase as well as your account because you are not trying for a low % chance homerun on every trade. Makes no sense to trade 2 contracts with a 18 point stop when you could make 3 separate trades with 6 contracts with smaller stops and smaller profit targets that have a higher % chance of getting it. Plus if you are right on anyone of the 3, you can heaven forbid, SCALE OUT partially and keep perhaps 2 contracts, THE EXACT SAME AMOUNT YOU WOULD HAVE ON THE HOMERUN TRADE on to try for the homerun trade on it. If you are wrong on all 3 and are just a terrible trader then your $ lost is the same risk amount as that huge stop on the small position. Best of both worlds.
B1S2, I still await your reply.
Quote from Buy1Sell2:
By the way, yes I see the potential for a further upward bounce based upon intraday etc. However it is countertrend , so I will hold short through the bounce. Stop is 1517.00. I can do this because I have correct position sizing. This is much more important than the actual stop order and guarantees that I will be less active. Too much activity is one of the main reasons that traders generally lose.
80-100 points stops suggest low risk/reward ratio, which is one of the main reasons why traders lose.
The way B1S2 trades matches his personality the best... thats why he can do it successfuly. Yes, there will be less trades and yes he uses proper position sizing so it would be the same as as making a daytrade. However, it works for him which is the most important aspect. There is many ways to skin a cat but a good trader knows his strengths and weaknesses.
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