ES Journal Archive (2009 - 2010)

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Quote from No.Heat:

I don't trail stops, I'm either wrong or I get my targets, no bullshit in the middle as this kills my expectancy.

Breakeven trades do not exist in my trading only winners and losses.
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That's a very good strategy, IMHO. The way I trade currently results in a lot of b/e trades, but I admit that although it's psychologically "comfortable" to have very few losers, this tactic cuts my overall profitability a lot.

How do you set targets and how do you determine that the market may have more to offer and adjust targets accordingly?
 
70+% on total initial capital allocation. In that case I used £20k to collect stats running it for 1 year. It is classed as high risk, but a client will be aware of it & allocate according to his own risk criteria. I don't intend for that to be a big pool. Most that trade sifs on high leverage fall within high risk bracket. A wipeout is of course possible, just like any high risk enterprise. You could reduce risk by either underleveraging and spreading risk.
 
Quote from NoDoji:

That's a very good strategy, IMHO. The way I trade currently results in a lot of b/e trades, but I admit that although it's psychologically "comfortable" to have very few losers, this tactic cuts my overall profitability a lot.

How do you set targets and how do you determine that the market may have more to offer and adjust targets accordingly?
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I don't have fixed targets per se, only fixed max pain, stop loss.

If I'm short and price is approaching support, I wait until I'm wrong or support is broken and then do the same on the next level(s), I understand counter trend traders might give the illusion that support is holding, so I'm prepared for the wait/heat however you want to call it, but as someone said earlier, downtrends do make lower lows, so it's only a matter of time.

In summary, fixed stop, never fixed exits, exit is always a product of price action.
 
Quote from No.Heat:

In summary, fixed stop, never fixed exits, exit is always a product of price action.
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Thanks, that's about what I do with the exception of moving stops to b/e when +$100 move on counter-trend and +$200 move on with-trend trades per lot (this is for CL; ES is stop to b/e after +$100 on all trades). My targets are flexible, but always a minimum $200 unless I was late to the party and just scalping the tail end of a move. I only trade intraday at this point; swings would have to be adjusted wider but with the same R:R.
 
Quote from No.Heat:

...However, he is underusing capital a great deal, and this is a problem.
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That's what most traders do when a scale in strategy is used. When a directionally biased trader starts scaling into a position his expectation carries a higher risk of loss than of a trader that is not directionally biased but rather banks on range expansion no matter which way that breaks. So far I have experienced almost a 100% win rate when looking at cluster of range based trades in the last 8 months. This strategy is based on your ability to spot turning points & trade both ways, 100% unbiased, by way of reducing initial size expecting a series of losing individual trades. It's hybrid form of a scale in.
 
Quote from No.Heat:

it's hard not to make money averaging down in choppy instruments.

This of course assumes a great deal of capital.
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Here is the main problem with it:

To make a decent profit compared to the size of the account the trader needs almost always the trade to go against him so he can enter with more contracts, making a good return for the size. Of course holding the position once it starts to move in the correct way is also essential.

But to get immediately in profit is almost bad, because then he is in just with 1 unit/contract and the profit will be minimal....
 
Quote from Pekelo:

Here is the main problem with it:

To make a decent profit compared to the size of the account the trader needs almost always the trade to go against him so he can enter with more contracts, making a good return for the size. Of course holding the position once it starts to move in the correct way is also essential.

But to get immediately in profit is almost bad, because then he is in just with 1 unit/contract and the profit will be minimal....
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It's the part about holding the position that usually causes the trouble and it's especially troublesome if the trade is counter-trend.

Let's say for example, I expect ES to eventually pull back to 1088, I feel it may be nearing a turning point, and I decide to scale in 3 times if it runs against me with a disaster stop in place. So I short 1/3 @ 1105, 1/3 @ 1110 and 1/3 @ 1115, stop @ 1120. I'm now short a full position avg price 1110, with a 22 pt target and a 10 pt stop, decent R:R.

Price turns around after hitting 1117 and pulls back to 1107 where I'm finally green, then buyers step in and run it up to 1112, then price comes back down to the level where it was profitable and moves lower to 1102. So now the reversal is confirmed and the chance of my target being hit is far better than it was at any time during this trade. A seasoned professional sticks with his/her plan, but a lesser trader such as myself is in a position where I'm likely to take my profits early, before the 1088 target is reached, because I endured heat on the trade twice and now it's profitable and a profit's a profit's.

Allowing a full stop to remain in place but taking profits early skews the R:R and removes the profit cushion necessary for consistent profitability.

Now let's say I waited for a confirmed price reversal. Price dipped to 1107, tried to make a new high, failed and left a lower high, then came back to visit the first pullback low. I place my sell stop for a full position @ 1106.50, targeting 1088, and my stop is @ 1112.50 (just above the lower high). I have an 18 pt target and a 6 pt stop, good R:R, and same position size as my scale-in trade. It's now a lot easier for me psychologically to stay in the trade until full target is hit, because I entered on a breakout of a level, my stop is actually smaller and chances are better that I'll take much less heat on the trade because I'm trading in the direction of the new trend.

That's me personally, though. As I said a professional who's experienced with fading a move by scaling in as it runs against, would recognize the confirmation of a reversal and patiently wait for target to be reached.
 
Quote from Pekelo:

Here is the main problem with it:

To make a decent profit compared to the size of the account the trader needs almost always the trade to go against him so he can enter with more contracts, making a good return for the size. Of course holding the position once it starts to move in the correct way is also essential.

But to get immediately in profit is almost bad, because then he is in just with 1 unit/contract and the profit will be minimal....
More...


Well first of all, I trade big timeframes, not small ones, therefore the possibility of me being precise is quite low, so ya, the need to scale in my positions.

If I had precision on these big timeframes, geez, I suppose I would be a world class trader like some of the traders here on ET who consistently enter on 1-2 point stops and ride the whole trend.

Unfortunately, I'm mortal :D
 
Quote from NoDoji:

It's the part about holding the position that usually causes the trouble and it's especially troublesome if the trade is counter-trend.

Let's say for example, I expect ES to eventually pull back to 1088, I feel it may be nearing a turning point, and I decide to scale in 3 times if it runs against me with a disaster stop in place. So I short 1/3 @ 1105, 1/3 @ 1110 and 1/3 @ 1115, stop @ 1120. I'm now short a full position avg price 1110, with a 22 pt target and a 10 pt stop, decent R:R.

Price turns around after hitting 1117 and pulls back to 1107 where I'm finally green, then buyers step in and run it up to 1112, then price comes back down to the level where it was profitable and moves lower to 1102. So now the reversal is confirmed and the chance of my target being hit is far better than it was at any time during this trade. A seasoned professional sticks with his/her plan, but a lesser trader such as myself is in a position where I'm likely to take my profits early, before the 1088 target is reached, because I endured heat on the trade twice and now it's profitable and a profit's a profit's.

Allowing a full stop to remain in place but taking profits early skews the R:R and removes the profit cushion necessary for consistent profitability.

Now let's say I waited for a confirmed price reversal. Price dipped to 1107, tried to make a new high, failed and left a lower high, then came back to visit the first pullback low. I place my sell stop for a full position @ 1106.50, targeting 1088, and my stop is @ 1112.50 (just above the lower high). I have an 18 pt target and a 6 pt stop, good R:R, and same position size as my scale-in trade. It's now a lot easier for me psychologically to stay in the trade until full target is hit, because I entered on a breakout of a level, my stop is actually smaller and chances are better that I'll take much less heat on the trade because I'm trading in the direction of the new trend.

That's me personally, though. As I said a professional who's experienced with fading a move by scaling in as it runs against, would recognize the confirmation of a reversal and patiently wait for target to be reached.
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NoDoji,

Couple of observations.

I only trade one timeframe and I don't countertrend.

If the chart has an uptrend I look/build for longs to exit at new highs at an absolute minimum.

My only real counter trend trading is if the chart has a range, I'm willing to play contrarian here and fade both sides but only at the extremes, looking for the head fake, if it truly breaks out I lose.

A plan is a plan and no psych should interfere, that's for amateurs not for traders trading for a living.
 
Quote from NoDoji:

It's the part about holding the position that usually causes the trouble and it's especially troublesome if the trade is counter-trend.

Let's say for example, I expect ES to eventually pull back to 1088, I feel it may be nearing a turning point, and I decide to scale in 3 times if it runs against me with a disaster stop in place. So I short 1/3 @ 1105, 1/3 @ 1110 and 1/3 @ 1115, stop @ 1120. I'm now short a full position avg price 1110, with a 22 pt target and a 10 pt stop, decent R:R.

Price turns around after hitting 1117 and pulls back to 1107 where I'm finally green, then buyers step in and run it up to 1112, then price comes back down to the level where it was profitable and moves lower to 1102. So now the reversal is confirmed and the chance of my target being hit is far better than it was at any time during this trade. A seasoned professional sticks with his/her plan, but a lesser trader such as myself is in a position where I'm likely to take my profits early, before the 1088 target is reached, because I endured heat on the trade twice and now it's profitable and a profit's a profit's.

Allowing a full stop to remain in place but taking profits early skews the R:R and removes the profit cushion necessary for consistent profitability.

Now let's say I waited for a confirmed price reversal. Price dipped to 1107, tried to make a new high, failed and left a lower high, then came back to visit the first pullback low. I place my sell stop for a full position @ 1106.50, targeting 1088, and my stop is @ 1112.50 (just above the lower high). I have an 18 pt target and a 6 pt stop, good R:R, and same position size as my scale-in trade. It's now a lot easier for me psychologically to stay in the trade until full target is hit, because I entered on a breakout of a level, my stop is actually smaller and chances are better that I'll take much less heat on the trade because I'm trading in the direction of the new trend.

That's me personally, though. As I said a professional who's experienced with fading a move by scaling in as it runs against, would recognize the confirmation of a reversal and patiently wait for target to be reached.
More...
this trade is easier from the short side , it moves faster,you get your suspicions partially confirmed sooner,so the patient part is less taxing,its extremely helpful to have multiple s/r levels visible and check how it reacts ,any buyers coming in...picking bottoms or turns from below, the market can take forever to grind up,i find it much harder
 
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