God Bless Averaging Up

Quote from Sponger:

AustinP, Apex82, and Neet made me realize that trading just one contract was actually working against me psychologically - couldn't hold on long enough with winning trades, getting out too often on retracements that later continued. (new futures trader here)

So I tried it today trading the YM contract, added another contract as the trade went my way. And it definitely helped me hold on longer for the ride - could exit one contract at a profit, then keep the other for more of the ride.

Now my next big issue is exits - my stops levels are too tight and close - I'm not giving positions enough breathing room, keep getting shaken/taken out, even though I'm right on the direction.

Anyone care to give some pointers on YM stop placements in this volatile environment?
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It's not exactly what I use but a good rule of thumb is to take the range of the previous trading day and use 10% of it.

For example:

Past trading low was 100 high 300, thats 200 point range, your stop should be no LESS than 20 points.

Now take what I described above and adjust it to your personal risk tolerance and/or risk:reward ratio.

Happy to hear you experimented with scaling up, it's the way of the pros...

Good trading.

Neet
 
Thanks Neet, I'll have to expirement with that.

I've been trying to risk 10 points to make 30 and more, but its way too conservative in this market. This market can rip in one direction so fast, even a wider stop can get torn through, just to have the market reverse again.

Do you ever attempt to fade the extreme moves of the day?
 
If I have learned anything over the last week, I believe it is this - I am now over the "trying to pick tops and bottoms phase"!
 
Hi there neet.

If you've built a position up with 20-30 contracts, each with its own stop, do you trail them by hand or let the platform trail them for you? Or use some kind of custom automation to do it?

I don't trade futures yet but I'm looking at trying this technique on Oanda for forex trading. Problem with Oanda is no trailing stops. So I'd have to trail 'em by hand, which is why I ask.

(I just skimmed the whole thread, and I may have missed this point if it were made.)

Also, do you add at fixed intervals, or discretionary based on "good" price action?

I find this approach interesting because I've done the all-in-scale-out thing with some success. The lingering doubt I always had was that if I was stopped out right away, I'd take a full hit - not good.
 
Steve,

Unfortunately, I have to trail them by hand using the Matrix on Tradestation. The plan is to eventually learn enough easy language to do this automatically.

Ya I know, its indian style lol
 
Sorry I was editing my previous post when you replied.

Do you add at fixed intervals, or discretionary based on "good" price action?

Do you start trailing immediately for each point in your favor, or trail in jumps?
 
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