Quote from SteveH:
Hooti,
Remember, Al Brooks is a self-professed, over-confident perfectionist. He said that even to trade his methods, you need to have at least a 67% winning pct in order not to blow out your account. Why? Because his scalping methods on the ES call for risking 1 dollar in order to extract 50 cents on average from the market. He is placing buy/sell stops, giving himself a 2 pt stop and looking for a 1 pt target.
Because the CL contract has such great volatility, you can get out many times on a break even on the false breakouts in order to get to the good ones. Otherwise, why on earth would Donna be getting farked out of her positions 50% of the time if buy/sell stop with-the-trend was so great and STILL be making $400+ per day just on 1 CL contract? Answer: because she chokes off all of those potential losers for b/e + 1 tick. That's not skill. That's taking advantage of the higher volatility levels the CL provides in order to protect the position.
The ES is different. You get no such leeway there on using that loss control method simply because the ES has lower volatility characteristics. The big money in that contract thrives off of faking out the non-pros, draining their accounts as they buy/sell at the wrong times relative to readings on the NYSE TICK.
Al Brooks survives price pullbacks differently (and he has to because of the nature of how the ES moves). He gives a wider stop and takes 1 pt scalps because he (personally) can get that 80% win pct level consistently. He makes up for the small wins by trading large size. If the majority of his trading days were 67% winners or lower, he's already warned that he too would be dead meat.
Common sense should tell you that the higher volatility contracts offer you more trading opportunities where your winning pct does not have to be a key factor in your long-term success. Why? Because you can find more reward to risk ratio opportunities which are 2 : 1 in your favor WITHOUT interim pullbacks to achieve them.
Best of luck to you. I'll say this one last time. Once you start trading the CL, you won't want to trade the ES. The higher volatility is your friend.
