Stop-loss: Trail or not?
- Thread starter Ates
- Start date
Me too, but then missing those big moves cause other issues
A bit off topic, but my margin is conservatively set at $12500 / contract (for ES). So when a method yields that much $, I add another contract.
12.5k / 1 contract, at 1000 ticks, account =25k, now trade 2
25k / 2 contracts, at 500 ticks, account =37.5k, trade 3
37.5k / 3 contracts, at 333 ticks, account =50k, trade 4
50k / 4 contracts, at 250 ticks, account =62.5k, trade 5
On an on
At each jump, my baseline is reset to 1000 ticks. I have a different method for scaling down in case I hit a protracted losing streak/drawdown, but it's a bit more complicated to explain.
Getting from 1 to 2 took the most time because it required 1000 ticks before the jump, every jump after get's easier (500, 333, 250...) because it requires less. Not saying this is "the way" to do grow an account, it's just the way I do it. Scale up based on math and not feelings of confidence or discouragement.
imjohn,
When you exit the first contract, do you bring your second contract to breakeven?
Stop trail is such a tough nut for me that I cannot yet crack.
The idea being, well, you got your first target off, so bring the second to BE. Well, why not just take off the two contracts at that first profit target? That's it, right there. Toughest thing in trading to try to maximize profit on multiple contracts. (I am currently of the mind of just catching all profit with the multiples when I can, due to the spiky nature of the current market movements.)
The idea being, well, you got your first target off, so bring the second to BE. Well, why not just take off the two contracts at that first profit target? That's it, right there. Toughest thing in trading to try to maximize profit on multiple contracts. (I am currently of the mind of just catching all profit with the multiples when I can, due to the spiky nature of the current market movements.)
Overnight,
Because the first profit target is smaller than the risk it takes to get to the first profit target. And mentally once price goes well beyond your first profit target, the mental mind will regret it. In addition, you will then need the confidence to take another full trade after the first profit target.
If only it were that easy. Here's an example of a strat I was messing with early on when the markets were sublime...
In this example, 3 contracts.
You take off first target at 6 ticks. Second target is 10 ticks after. When that second target is hit, the 3rd contract is on a trail at the BE of the second contract, and every time the price moves up 1 tick, the stop loss moves up one tick.
Something like that.
So why not just go 3 contracts to the first target of 6 ticks, rather than risk 3 contracts on a weird trail at a ~25 tick loss?
I just plugged this into sim while I was typing, and two contracts are off. Let's see what that final result will be.
Overnight,
Good example and believe sir, I completely understand what you are saying. There are MANY trades I see on the regular where I my stop can be at +20 ticks and profit target (local support and resistance) is within a 10 tick distance.
Why I do not just take the 10 tick profit? Well because, I rather wait for more profit (the old let the winner run) and just trail the winner.
I have a journal where I record the stats of taking exiting the trade at first profit target versus stop trail method. So far the stop trail method exceeds the first profit target.
Another advantage of the stop trail method is as price moves in your favor, you reduce risk and you feel a bit accomplished knowing you exited the trade as price turned against your position, versus exiting all at first profit target, and have to structure a new trade position.
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