ES Journal Archive (2006 - 2008)
- Thread starter Buy1Sell2
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Quote from Buy1Sell2:
Per contract is not an important consideration. Percentage of TLNW, however,is. Stop losses must be chart based. Once you define your stop out point, you can then figure how many contracts to trade. If it is less than 1 contract, then you do not take the trade or perhaps you could go to the cash index.
Per contract basis is certainly an important consideration in determining TLNW. It is not an either/or proposition. If one's potential loss is high on a per contract basis, then one must trade small. There is nothing wrong with that, but large stops mean smaller potential profits on a risk/reward basis.
Of COURSE stop losses must be chart based, if one is a technical trader. But if the stop is too far from entry, the risk/reward ratio cannot be favorable.
ES is unlike other commodities in that there are significant pullbacks even in strongly trending markets. It makes more sense, if 1440 represents a change of trend, to wait until the ES trades closer to that number before shorting. That would ensure a better risk/reward ratio. Meanwhile, there is a tradeable rally here, and one does not have to be a frenetic daytrader hopped up on caffeine to take advantage of it.
Quote from Buy1Sell2:
Per contract is not an important consideration. Percentage of TLNW, however,is. Stop losses must be chart based. Once you define your stop out point, you can then figure how many contracts to trade. If it is less than 1 contract, then you do not take the trade or perhaps you could go to the cash index.
Mixing your Trading Account up with your TLNW has no merit at all. If your trading account is 20% of your TLNW (as youâve stated) what happens if you blow out your trading account risking 10% per trade (as youâve previously stated) in your trading account? When you risk 10% per trade in your trading account it is not important that itâs 2% of your TLNW unless you plan on supplying your trading account with monies from your TLNW if you blow up. Otherwise what is the point of risking 2% of your TLNW? In addition, liquid cash outside your trading account should have entirely different strategies and goals.
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