So...do you risk the same on all trades?

If all trades have 60% win %, it then depends on your target. For example lets say I see a very high prob 90% scalp trade, I took it last night real money and made profit. Now lets say I see a 60% win % swing trade, I would not take it, unless it had the ability to generate a higher target amount than my scalp trade.

So for example a short term trade per contract gives you $ 100, a longer term trade per contact gives you $ 400 then and only then would you consider taking longer term trades. If the longer and shorter term trades only give you the same $ 100 profit, than only take shorter term trades. This is why I don't trade during certain time periods anymore since a slow market could take 5 hours to complete the same amount of profit or loss vs 10 min during a fast market.

So now lets assume for sake of argument, your longer term trades generate more profit $ AMT than your shorter term trades. Let's assume for sake of argument, that they really have a 60% win%. With a 60% win%, you can easily afford to risk the same amount of money for your stop as you expect for your profit since over time, you will generate more money. It does not matter if for example you risk $ 100 on short term trades that generate you a possible $ 100 or you risk $ 400 on long term trades that generate you a possible $ 400. Your risk vs reward is even which is fine, and usually what I do on a scalp.

Now if you want to refine the amount you risk per trade, you look at how much money you have in your trading account, and determine how much money you can afford to lose per trade based on trade management and psychology for example, being comfortable in being in that position.


Quote from daniel_tysen:

I'm a discretionary trader so I don't have a system to measure etc. Also I don't believe I'd be good in that stuff.

So let's say my trades all have a 60% chance of winning. Doesn't matter if they last a day or a week.

But my problem is that psychologically it doesn't seem to make much sense to me to get in a trade wait for a week to see maybe a nice profit of 1.5R and then do a swingtrade that lasts 8 hours and stopps me out with -1R.

Also just thinking about it logically, if you use a tighter stop odds are higher you get stopped out on some intraday-news event or whatever as when you're using a wider stop. Of course the risk:reward tend to be better with smaller stops but it gets equalised by the trades you get stopped out.

So wouldn't it make more sense to risk less on a trade with a small stop and lifetime? Just thinking about it logically...
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Quote from daniel_tysen:

So wouldn't it make more sense to risk less on a trade with a small stop and lifetime? Just thinking about it logically...
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Since a swing trade means a longer period of exposure to the market and a stop loss that's wider than a day trade, position size should be smaller than a day trade.

Protective stops should be placed in a price zone that would invalidate your reason for the trade, no matter what time frame you're trading.

As an example, let's say that today you wanted to put on a long ES day trade position using 5-min price bars (March contract). Around 11:00am ET you see an excellent long setup and decide to place a buy stop for 8 contracts @ 1233.00, with a protective stop @ 1231.00 in case the breakout fails, because a failed breakout invalidates the reason you went long. You use a 1:2 risk:reward, so your profit target is 1137.00. The breakout succeeds, you move your stop to break even and your target is filled no later than one hour later. You've been exposed to market risk for one hour, your stop is small, your target is small and your size is max size for your account trading ES.

Now let's say you wanted to swing a long ES position. Since there is no particular setup on a daily chart that I'd want to swing long right now during the dwindling holiday volume, let's move back in time to a decent swing long setup. On 11/29 and 11/30, ES honors a well-established support level just above 1165.00. You want to buy a break through the 20-day moving average. So you place a buy stop @ 1185.00 with a protective stop @ 1167.00 (below the low of 11/30). Your minimum target is a retest of the 1219.00 high. Again you have a 1:2 risk reward, just as in your day trade, but since your stop is much larger and you may be exposed to the market for many days, you only trade 1 contract. In this case, your target is filled 2 days later.

Assuming each trade achieves target, the end result of the individual trades is about the same. The major difference is that a day trader can take several such trades in a single day, because 5-min bars are similar to daily bars on a daily chart for a swing trader. This is why experienced day traders with good risk management usually generate minimum annual returns of well over 100%.
 
nono guys! That was not really the question.

Of course if I want to risk 1% on a trade I have to trade more contracts with a stop of 5 ticks than with a stop of 50 ticks!

The question was (leaving out trading methods completely) if you'd risk for example 1% on a daytrade and 1.5% on a swing-trade because the trade itself takes more "time and space" ;)
 
Quote from daniel_tysen:

Of course if I want to risk 1% on a trade I have to trade less contracts with a stop of 5 ticks than with a stop of 50 ticks!
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It is the other way around. You have to trade more contracts with a stop of 5 ticks than with a stop of 50 ticks, accuming you can cover margin.

# of contracts or shares = risk % x bankroll/risk per contract or share
 
Quote from intradaybill:

It is the other way around. You have to trade more contracts with a stop of 5 ticks than with a stop of 50 ticks, accuming you can cover margin.

# of contracts or shares = risk % x bankroll/risk per contract or share
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Yup of course, sorry, corrected ;)
 
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