You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Personal intraday circuit breakers
- Thread starter chinook
- Start date
And a bloody good one at that! Of course I fully agree, spreadem, and this is what happens when I quote one part of my (latest) trading plan in isolation from the rest. Trading rule (3) is :Quote from spreadem:
Just an idea !
Trading Rules
- ....
- ....
- Maximum contract size (MCS) = Equity / 5000, rounded to lower integer for (Equity < $30,000).
MCS = 5 for ($30,000 <= Equity < $42,000).
MCS = Equity / 7000, rounded to lower integer for (Equity >= $42,000).
Maximum value of MCS is 10.
eg. for $18,000 account, MCS = 3.
This is based on the CME Current Initial Spec ES margin requirement of $3,563 - any future changes will result in proportional readjustment of the MCS parameters above.
- ....
[/list=1]
http://www.elitetrader.com/vb/showthread.php?s=&postid=137203#post137203
I have already said in another post so I just repeat that this is the abc to understand: higher frequency <=> higher leverage <=> higher risk, this is just rational probability.
If you understand that (I mean not just read but assimilate that) then you should understand how idiot it is to overtrade or make higher bets.
People thinks that they can recoup their losses because they believe that they can't lose more than x times for probability reason this is just wrong because the premisces are false: the trades are not independant and probability law assume independancy.
If you understand that (I mean not just read but assimilate that) then you should understand how idiot it is to overtrade or make higher bets.
People thinks that they can recoup their losses because they believe that they can't lose more than x times for probability reason this is just wrong because the premisces are false: the trades are not independant and probability law assume independancy.
Quote from gotta_trade:
Almost everytime that my trading volume is a lot higher than usual for the day, I can almost guarantee that it's a BIG losing day for me.
When I make good profit early in the day, I tend to increase my position size. When I double # of contracts, it feels as if my stress level goes up by a factor of four! This sometimes makes me freeze when it's time to collect profits or cut losses. Well, at least I'm well aware of this problem now.Quote from gotta_trade:
When I'm not trading well, I will cut my position size in half.
That helps me get back in the grove.
When my position size is small, I'm not worried about having a bad trade. It won't hurt me. Then little by little, I find myself myself trading for the trade, not the money.
That's what I'm attempting to do with my swing trades, which are new to me. If I traded size. I would experience fear and greed. My mindset would change, and I would act in a fashion that would almost certainly result in losing money.
When I'm not worried about the money, I will at least have a fair chance.
Quote from harrytrader:
I have already said in another post so I just repeat that this is the abc to understand: higher frequency <=> higher leverage <=> higher risk, this is just rational probability.
this is incorrect. a trader doing 10 trades a day can have the same risk/reward scenario as the swing trader trading 1 or 2 trades a day, and so on.
the market works in fractals, so what you are trading is always multiple timeframes -- its just the same ratios throughout.
Quote from chinook:
When I make good profit early in the day, I tend to increase my position size. When I double # of contracts, it feels as if my stress level goes up by a factor of four! This sometimes makes me freeze when it's time to collect profits or cut losses. Well, at least I'm well aware of this problem now.
this is a risky way to trade. even though you might think you are a discretional trader, you, in fact, are really trading your 'system'. unless your strategy requires that you trade bigger directly after large profits, then you could be (without knowing it) lowering your overall results.
the market goes through waves of trend and chop. recognizing these times are of the utmost importance. the inability to do so will make all of this inconsequential anyways. usually the market goes into chop with high velocity and dies quickly. you MUST be able to reconize this immediately and sit tight.
Quote from funky:
.....
the market goes through waves of trend and chop. recognizing these times are of the utmost importance. the inability to do so will make all of this inconsequential anyways. usually the market goes into chop with high velocity and dies quickly. you MUST be able to recognize this immediately and sit tight.
Yes, this is exactly what's happening. When I make good profit early in the day, it's usually from catching a good trending move and riding it all along. That trending move usually ends up being the single best move of the day or at least up until 3 pm EST or so. That's why I decided to trail my profit and quit when I reach a certain drawdown % from the maximum profit of the day.
Quote from peterfigliozzi:
How would you feel if you follow your rules, take some losses, stop trading, and then the winning trades are on parade, by your rules..?
......
Good question! I admit to myself that there's a fair chance of missing good opportunities once I pull the plug for the day. I'll be OK with this situation since I actually followed my rules by stopping trading that day.
Quote from peterfigliozzi:
.....
How would you feel if you don't follow your rules, take some losses, stop trading, and the the winning trades are on parade,
....
In this case, I'll feel like an idiot and tell myself: Look you moron, you broke your rules and had to stop trading and missed these winning trades--Do not ever break your rules again!
I came up with my rules by realizing that everyday brings new opportunities and I have to be in good mental shape to take advantage of these opportunities. Once I feel like I'm not "mentally strong" during the trading session, I raise the red flag since I know that I'm capable of turning a winning day into a losing one.