Problem with trading 1 contract only

[minmike]

When you "split your play" between 50% positions... at the end you're glad you did one (at least relatively... you know, in case they're both losers), sorry you did the other.

Big time market success is mostly about:

1. Taking large, unhedged bets on direction on an issue

2. Liming losses when your play fizzles.

I know... you can be a "pairs" trader... and hedge this-and-that positions with options... trade "non-correlating markets", and that's all fine. If successful, you might nickel-and-dime your way to some sort of financial accumulation... and there is certainly nothing wrong with that. But for the most part, if you want to make any real money, you have to stick your neck out and be right about your play.

That's it. Rinse, repeat. K.I.S.S.

That is horrible advice. I was going write almost, but ALL of the big traders that I know in Chicago trade spreads or one kind or another. I'm sure there are some big trend followers out there somewhere. I don't know any.

Do you really believe that Jump, DRW, Citadel or Ronin make the majority of their profits off of outright directional trading?

 

[EPrado]

May be controversy about this... but I've never believed in "targets". Just because you have an "ideal price" in mind, doesn't mean the market has the same.

(OK... now that I've said it the polite way, let me say it the realistic way... TRADING BASED UPON TARGETS IS STUPID! You should buy when the "last indication is for higher prices", and you should sell when the "last indication is for lower prices"... scrambling as best you can when the market jerks you around. You want the market to be more predictable and reliable than that for you to risk your money? Sorry. It isn't.)

You should buy when the "last indication is for higher prices", and you should sell when the "last indication is for lower prices"..

Come on man ! Unless you have a magic eight ball, you will have a lot of trouble doing this on the fly. I am not saying that you HAVE to trade with an exact price in mind every time, but if you are just going to sit there with no idea where you want to take profits and wait for this magic "indication", you will be chasing the market a lot when it does turn. I know guys who wait for the RSI to turn, and by the time it turns they have given up a decent chunk of profits.

The problem of trading without targets or a general idea of your out is emotions become a big part of your trading. How many times have you heard of a trader who is long ES at let's say 1900. It shoots up to 1909, then turns south, now trading 1907. They figure ok the market is turning , but I don't want to sell 2 points below the high. I'll offer it out at 1908.50. Then the market goes to 1905. They get pissed, but move their offer to 1907.50 now. They cant stomach to sell it here. Then it goes to 1901....now it's at 1900......adios profits.

Have you ever seen this? I have. It was me years ago. I think all traders have been down this road. I won't go as far and say trading the way you talk about is stupid, but it takes a TON of discipline, and emotionally can screw with you. If it works for you, great. But to say that trading with targets is stupid...well...come on man.

 

[loyek590]

You should buy when the "last indication is for higher prices", and you should sell when the "last indication is for lower prices"..

Come on man ! Unless you have a magic eight ball, you will have a lot of trouble doing this on the fly. I am not saying that you HAVE to trade with an exact price in mind every time, but if you are just going to sit there with no idea where you want to take profits and wait for this magic "indication", you will be chasing the market a lot when it does turn. I know guys who wait for the RSI to turn, and by the time it turns they have given up a decent chunk of profits.

The problem of trading without targets or a general idea of your out is emotions become a big part of your trading. How many times have you heard of a trader who is long ES at let's say 1900. It shoots up to 1909, then turns south, now trading 1907. They figure ok the market is turning , but I don't want to sell 2 points below the high. I'll offer it out at 1908.50. Then the market goes to 1905. They get pissed, but move their offer to 1907.50 now. They cant stomach to sell it here. Then it goes to 1901....now it's at 1900......adios profits.

Have you ever seen this? I have. It was me years ago. I think all traders have been down this road. I won't go as far and say trading the way you talk about is stupid, but it takes a TON of discipline, and emotionally can screw with you. If it works for you, great. But to say that trading with targets is stupid...well...come on man.

if he buys at 1900 and he's still bullish at 1909 what should he do?

 

[wrbtrader]

Right now I am still in the learning boat of trading futures consistently and successfully.

My question to you guys is how do you manage trading 1 contract?

For example, let's say your short 1 ES contract. You see ES coming into a support level, that you know the markets will react to but you still have a target level that is further away.

Do you just get out and take profit at the first level? And reshort at any bounce the market gives you? Or do you stubbornly hold onto that 1 contract position until it reaches your target?

Obviously with ETF's/stocks or larger contracts, I can sell 1/3 of my position on a small target level, and hold the rest until it reaches the level you have set.

Easy answer...

Backtest both and stat your past trading results to get your answer instead of listening to everyone that's obviously using a different trade strategy than you.

 

[EPrado]

That is horrible advice. I was going write almost, but ALL of the big traders that I know in Chicago trade spreads or one kind or another. I'm sure there are some big trend followers out there somewhere. I don't know any.

Do you really believe that Jump, DRW, Citadel or Ronin make the majority of their profits off of outright directional trading?

The spreaders in Chicago I talk to have been telling me for years that spreading is becoming a way too crowded field. I also didn't realize that 95% of the traders in Chicago worked at the ones you mentioned. You do realize that they aren't the only ones making money right ?

 

[EPrado]

if he buys at 1900 and he's still bullish at 1909 what should he do?

If he is still bullish then I guess his indicators are saying stay in. If he is waiting for some indication that's fine. All I am saying is he'd better be quick to hit the bid when it does turn. A lot easier said then done. Probably a good idea is to use a trailing stop. When trailing stops are hit, that's usually a good indication that things have changed.

Personally I think if you have a very good reward:risk ratio then trading with targets is an excellent way to trade. If you read interviews with the best traders of all time, a lot say that next to knowing when to take a loss, the next thing is to know when the hell to get out/take profits.

I just think for someone to say target based trading is stupid......well...that's moronic. But I like the guy who said it. Hope he doesn't take it personally.

 

[minmike]

The spreaders in Chicago I talk to have been telling me for years that spreading is becoming a way too crowded field. I also didn't realize that 95% of the traders in Chicago worked at the ones you mentioned. You do realize that they aren't the only ones making money right ?

I'm not sure where you got 95%. I also never said they were only people making money.

Who else do you see making $288,000,000 a year like Jump?

Anything that works is going to get crowded. Nothing is static. I really don't get your point.

http://www.bloomberg.com/news/artic...dy-about-this-story-on-hft-power-jump-trading

 

[loyek590]

and now you are talking about trading. 90% is just money management, but 10% involves actually reading the market, particularly the ebb and flow. Should I take my profit here? If I do will I be able to get back in at a better price? If I take my profit and it keeps going what should I do? If it moves against me should I take my loss or add more? If I am small and it moves in my favor should I add more? That's trading. 90% is just managing your money so that no matter how wrong you are you will still have enough to put on another trade. But 10% is guessing what the market will do. Everybody is looking for some secret formula that will spare them the agony of guessing what it will do. They just want a strategy that will tell them what to do.

 

[EPrado]

I'm not sure where you got 95%. I also never said they were only people making money.

Who else do you see making $288,000,000 a year like Jump?

Anything that works is going to get crowded. Nothing is static. I really don't get your point.

http://www.bloomberg.com/news/artic...dy-about-this-story-on-hft-power-jump-trading

I was being sarcastic with the 95%. I just don't get you saying that nobody makes money directional trading. That's how a lot of these huge hedge funds make money. Making directional bets.

I never traded spreads, but do know a few who do. The little I hear is that their game is getting harder and profits much smaller. But hell..............a lot of people are bitching these days about not making as much money. I guess it's par for the course.

 

[loyek590]

Kind of pathetic isn't it? They start out wanting to be independent, and end up just wanting a strategy to tell them what to do.