Trading the Pivots

Quote from DonKee:

No, that would be a recipe for disaster. lol

That 4.25 is my maximum stop loss. Once we hit +2.00, my options are:

1) Move stop to break even (always) for a free trade.

2) Bail on all, half, or none of the position.

3) For any of the position that remains, use a stop of 2 ticks above/below the previous 30 minute bar.

IF you're going to give yourself 4 points of movement against your position, you MUST have trades that will give you 2 to 3 times your risk.

One of the biggest problems I see with my trading and others is we sometimes try to minimize our losses rather than maximize our gains, which winds up minimizing our gains and maximizing our losses :(

I'm trying to de-leverage my trading enough, so that I will be skipping item #2 above and just letting the entire position free-roll once the trade is ahead by 2pts (no bailing on any or half).
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That is truly excellent money management there Don Kee.

It's not dissimilar to the MM I use in my proprietary model, giving me an extraordinarily good hit rate.

I find however that most of those moves (over 80%) are good for at least 3 pts, if not 4pts or more, so I move my stop to up by 8 ticks at 2pts, breakeven at 3pts and look for 4pts on the 1st and let the second 1/2 half ride (until MOC or trend change).

Best,

JJ

edit: Of course, I try to catch the change in trend before the 4pt stop loss is hit ...
 
Quote from JimmyJam:

That is truly excellent money management there Don Kee.

It's not dissimilar to the MM I use in my proprietary model, giving me an extraordinarily good hit rate.

I find however that most of those moves (over 80%) are good for at least 3 pts, if not 4pts or more, so I move my stop to up by 8 ticks at 2pts, breakeven at 3pts and look for 4pts on the 1st and let the second 1/2 half ride (until MOC or trend change).

Best,

JJ
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Good info, Thanks
 
If you pull-up a chart you will see that the price action continues to ride between the 18 and 40 SMAs and the CCI Histogram is still in-the-red.

For a proper Continuation Buy trade to setup we need the Price Action to rise above the 18 SMA, and the CCI Histogram to go in-the-green.

Until then, no trade is initiated.

See chart.
 

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Quote from JimmyJam:

If you pull-up a chart you will see that the price action continues to ride between the 18 and 40 SMAs and the CCI Histogram is still in-the-red.

For a proper Continuation Buy trade to setup we need the Price Action to rise above the 18 SMA, and the CCI Histogram to go in-the-green.

Until then, no trade is initiated.

See chart.
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The trade setup and initiated a Buy @ 1283.25.

Now, here are a few options for taking profits.

1. 2 pts (leaves too much on the table for a good run).
2. 4 pts (that's a decent take).
3. Next Pivot Level (that would R2 @ 1288).

I personally have this trade setup for 4 pts, but may extend it by a couple of points if the run looks strong. But no matter how it plays, if I make my target, as they say in basketball a win is a win.
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Now, if the trade moves against my position and closes back over the 40 SMA through the strike zone between the two SMA's (crosses back over the 40 SMA, moving downard, in this case).

P.S. It don't look like that's gonna happen :) .
 

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OK,

There is where the Money Management strategy comes in.
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2.00 pts +8 ticks
3 pts breakeven +1
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At the very least, this trade that I'm in right now goes to breakeven, (and if so, that's fine, just wait for the next setup).
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So my options for a trade are:

1. Lose 4 pts (using the aforementioned strategy to close the trade makes this one a rare occasion)

2. Lose X pts (usually 2 or 2.5), this is if a trade goes against your position and you have to pull-the-plug.

3. Breakeven +1 (no harm, no foul, just wait for the next setup).

4. 4 pts on the full set of contracts (or first set, if you want to let the second set run).
 
Quote from JimmyJam:

The trade setup and initiated a Buy @ 1283.25.

Now, here are a few options for taking profits.

1. 2 pts (leaves too much on the table for a good run).
2. 4 pts (that's a decent take).
3. Next Pivot Level (that would R2 @ 1288).

I personally have this trade setup for 4 pts, but may extend it by a couple of points if the run looks strong. But no matter how it plays, if I make my target, as they say in basketball a win is a win.
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Now, if the trade moves against my position and closes back over the 40 SMA through the strike zone between the two SMA's (crosses back over the 40 SMA, moving downard, in this case).

P.S. It don't look like that's gonna happen :) .
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Why 2 points? Why 4 points? Seems rather arbitrary to me.
 
Quote from LondonUSTrader:

Why 2 points? Why 4 points? Seems rather arbitrary to me.
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Oh, lots and lots of observation tells me that these are parameters that I am comfortable with.
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Here's how the trade is doing so far.

P.S. This one is taking a long time, so do you take your money off the table or let it ride ... I'll let it ride, some of the trades are going to lose and some are going to be breakeven.

P.P.S. Hey LondonUSTrader, the reasoning is that if most guys can make $100 a car (contract), that's pretty good, if you're trading 10 or 15 of those babies at a clip you can make some really nice pocket change on a weekly basis .. you might not win everyday, but if you win consistently enough you will do very well for yourself.

Observation has shown me that about 60-80% of the trades that went for 2 pts, could have gone for 4 pts, so with odds like that, I am willing to hold for the bigger win, which I will get often enough to offset the small losses/breakevens that I will get when the trade does not deliver 4 pts.

... and what I'm not saying, but what is inferred, is that a lot of trading is psychological, the mind relaxes when you have money in the till, you get an EGO BOOST, everyone thinks you're wonderful, yada yada yada.

So traders like to take that 2 pts and get that rush more often!
 

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Quote from LondonUSTrader:

Why 2 points? Why 4 points? Seems rather arbitrary to me.
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Thanks for your questions.

They help me to actually think about and explain things that I have learned from other traders, and that it is assumed most traders know. So yeah, it IS arbitrary, because trading is to a large degree psychological, irrantional and emotional!

Best,

Jimmy
 
While I'm watching the NQ break to new highs as the ES take its sweet time, I'd like to mention that ALL of these concepts, data and methodologies are applicable to that market also.

As we have determined from previous threads, NQ has greater trendiness than ES, so you will get a purer trade.

I'm just basing this thread on the ES because it is one of the most popular (if not the most popular) vehicle to trade, and also the hardest!

Here's a chart to show what I mean.
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If you were using the next Pivot as a Profit Target (that would be a good target, because all the traders can see it - psychology). You would have already made your money if you were trading the NQ, and while I'm betting that the ES will get there, it might not.

Best,

JJ
 

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Quote from JimmyJam:


P.P.S. Hey LondonUSTrader, the reasoning is that if most guys can make $100 a car (contract), that's pretty good, if you're trading 10 or 15 of those babies at a clip you can make some really nice pocket change on a weekly basis .. you might not win everyday, but if you win consistently enough you will do very well for yourself.

So traders like to take that 2 pts and get that rush more often!
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Congrats on an educational thread.

In my view, what you say in the above statement is not good trading advice. The ONLY reason to close any trade is because the current market action tells you to do so. The amount of money you are up or down is irrelevant. The market doesn't care.

Still, if something works for you, good luck.
 
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