Tight stops and re-entries, or wider initial stops?

Gambitman · May 7, 2022

I don’t see how you can daytrade ES with stops less than 40 ticks. You need a break of your premise/idea to know you are wrong. With 40-50 handle moves becoming common you need to widen out.

maxinger · May 7, 2022

studentofthemarkets said:
What do you guys use for ES? I have been trying 5 tick, 10 ticks and 20 ticks, depending on how volatile it is. I like those trades that go straight to target and never retrace, but the ES is about to drive me up a wall with how much it retraces. I'm currently trying to only place trades when a trend starts so that I avoid all the whipsaw. With a 5 tick stop loss, within a matter of minutes you can rack up a lot of losses when the ES is chopping around if the target is far away and you re-enter over and over and over and over again, stupidly (I really hope I've learned that lesson). I haven't figured out how to make the reverse happen....small targets and no losses and just rack up the profits. Maybe because I can't let myself try it with a large stop loss.
So, I am trying to watch for getting in on a push that I HOPE won't retrace. Seems much harder to find those on ES than NQ, but every once in a while I get them. Just have to be more patient, maybe?

Also, I tried using 2 contracts in demo this week and that really helped. 1st target is small and I try for the first push and then move the stop loss closer, or maybe to BE and then hope the 2nd doesn't get taken out. When it doesn't works, it's a two contract loss. When it does work, it's really great. And it all boils down to picking the best trade entries. High momentum, no retracements and not missing the entry point is what I strive for.

I have been using 12 ticks SL for day trading for quite some time.
2 decades ago, I also used 12 ticks SL.

when the market is very violent, I increase the SL by 2 or 3 times.
I rarely use SL at 3X.
When the market is so violent, the chances of getting STOPPED out are
high. Also, my brain CPU is not powerful enough to handle such
a market.

studentofthemarkets · May 7, 2022

Gambitman said:
I don’t see how you can daytrade ES with stops less than 40 ticks. You need a break of your premise/idea to know you are wrong. With 40-50 handle moves becoming common you need to widen out.

Thanks for the feedback. 40 ticks makes sense because the 1 minute candles are sometimes about 40 ticks in length. That's a lot more than I was hoping to use, but I'm tired of being stopped out of good trades, so I'll take a look at this amount.

studentofthemarkets · May 7, 2022

maxinger said:
I have been using 12 ticks SL for day trading for quite some time.
2 decades ago, I also used 12 ticks SL.

when the market is very violent, I increase the SL by 2 or 3 times.
I rarely use SL at 3X.
When the market is so violent, the chances of getting STOPPED out are
high. Also, my brain CPU is not powerful enough to handle such
a market.

Do you mind sharing what timeframe you're using where you can use a 12 tick stop loss? Thanks.

maxinger · May 8, 2022

studentofthemarkets said:
Do you mind sharing what timeframe you're using where you can use a 12 tick stop loss? Thanks.

My charts are all volume-based.

I use

> small volume 200V chart
during the Asian & European sessions.
Nowadays it hardly moves during the Asian session.

> medium volume 600V chart
during the US session

> big volume 1800V chart
also during the US session
(with wider SL)

Lately, a big volume chart is more suitable for the US session.

Similarly, if you use the time-based chart,
there is no such thing as one-size-fits-all time based chart.

too short time frame - lots of fake signals
too long time frame - you missed out on many opportunities

danielc1 · May 8, 2022

The smaller the stop, the bigger your r returns can be. The smaller the stop, the more chance you have been stop out. There is a sweet spot: small enough to get 5 r or bigger, big enough to have a win rate above 30%, and before you know it, you have a holy grail system.

studentofthemarkets · May 8, 2022

maxinger said:
My charts are all volume-based.

I use

> small volume 200V chart
during the Asian & European sessions.
Nowadays it hardly moves during the Asian session.

> medium volume 600V chart
during the US session

> big volume 1800V chart
also during the US session
(with wider SL)

Lately, a big volume chart is more suitable for the US session.

Similarly, if you use the time-based chart,
there is no such thing as one-size-fits-all time based chart.

too short time frame - lots of fake signals
too long time frame - you missed out on many opportunities

Thanks for sharing this!

heispark · May 8, 2022

As a breakout trend following trader, mine is below the breakout candle or previous swing low on your trading timeframe. If they are taken out, mostly that breakout is a fake.

SteveH · May 8, 2022

Any decent trend on any timeframe is going to either be supported by the 10 or 20 ema. You avoid larger stop losses by staying closer to them for your entries. Typically, new trends stay to one side of the 10, then to the 20 as they protract.

wrbtrader · May 8, 2022

maxinger said:
It depends on the market conditions and the products.

Eg for day trading NQ, my usual stop is 10 points.
When the market is violent, my stop could be 20 or 30 points.

For day trading hangseng, my usual stop is 25 ticks. When it is violent, my stop could be 30 ticks

I prefer the word "volatile" or words "high volatility".

Yet, I'm curious why some use the words "violent" in their description. It's as if crime is increasing in the markets and/or people are running out of financial institution buildings screaming in pain and yelling for help.

Another way or back to your word use, when the markets are "violent"... they're beating the hell out of traders and investors.

wrbtrader