ES Journal Archive (2006 - 2008)

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Quote from dmartin:

So let me see if I have this straight. For example, let’s say your trading account is $200,000 and your TLNW (I suppose is total net worth) is $1,000,000. You will risk $20,000 of your trading account? That seems like a fairly risky trade. A clarification of what TLNW is would help.
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Yes, the maximum risk would be 20,000 in this example. 2 percent of TLNW. It is a very safe program :)
 
Quote from smilingsynic:

Trend followers in general (position traders, not daytraders) tend to experience 20-30% drawdowns or more. They aim for a return around twice the drawdown (40% returns with 20% drawdown would be regarded as exceptional).

Trailing stops explain some of your returns, but most trend traders use them, so there is nothing magical about that. I have never heard of a position trader have a return 15 times the drawdown. You must have something else.

What is it?
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The difference is that I trail my stop up closer as time goes on and I accelerate it somewhat like the PSAR. Most trades end up being winners or small losers. (I rarely have a full 2 percent loss on a trade ). My initial stop is far enough away that it doesn't get hit and then I trail it closer. I make my position size such that the initial stop is not in jeopardy of being easily taken out. --For example-- I have my ES stop at 1517 on the upside, but what are the realistic chances that that will be taken out? Virtually none and by the time I have the stop trailed down, the loss is small and many times there is a gain. Most trend followers experience bigger drawdowns due to bad stop placement and failure to use indicators thinking that price action alone tells the story. :)
 
Quote from Buy1Sell2:

I risk no more than 2 percent of TLNW on any trade. That represents 10 percent of the trading account value.
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...and if 100 points stop loss represents 10% loss on the trading account you are using 1 contract for every 50K, correct?
 
Quote from Pekelo:

...and if 100 points stop loss represents 10% loss on the trading account you are using 1 contract for every 50K, correct?
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Of trading account balance yes. However, I think the time has come to clear up my exact entry short because the numbers are throwing everyone off and I want you to understand what my stop loss is in actuality. --As you know I had not been posting regularly for a while and as such I had not been posting real time trades. I don't like that when people don't post real time so I chose to announce that I was short when the hourly chart went negative and I sold at at 1416.75. I will reveal here now though, so as to clear the water, that my entry short was on 12/27 at 1488.50. I didn't want to reveal this because I think it is disingenuous to post non real time, but right now I need to bring it up because everyone is having difficulty with the 100 point stop out. The stop started at 28.5 pts. I hope that clears things up. For purposes of calculating gain on this trade though, let's use the 1416.75 number because that is where I posted real time. --:)
 
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