Understanding the Risk vs Reward of Multiple Contracts

SimpleMeLike said:
Hello,

I am trading sim testing a method.

I have been trading the ES with one contract for a very long time my R:R is generally 2. I understand with one contract if I risk $100 (stop loss at 2pts) and exit at $200, my ROI is 100% in of that trade. Good. I look for 4pts per trade and lately, I would like to try 2 contracts for more profits and catching a runner. Like today!

Now I am trading 2 contracts and I kinda confused how I justify the risk vs reward for the following options. :

1. 1 off at 2pts, trail the other by 2pts
2. 1 off at 4pts, stop to breakeven, the other off at 8 pts
3. both off at 4pts, maintaining my existing 100% ROI that I am use too.

Does scaling out depend on your win to loss ratio or just practicing what works best for me and my planning?

Thanks,
More...
Just use the same relation, ie. same percentage(s) regardless of # of contracts... :) All should be seen as relative...
I would stick with the stop and target percentages that work for you.
Sure you can experiment for more profit, but there is no general formula for stops and targets. Much depends on volatilities (HV, IV), volume etc. And I doubt it has anything to do with the # of contracts.

Btw, are you saying you make 100% per trade? What is your monthly performance?
 
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speedo said:
I trade all in and all out. Have tried various optimization strategies and have found them to be more trouble than they are worth. As stated in this thread, it's a matter of personal preference but I am fine with wins more frequent and larger than losses (but not 2-1).
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Thank you speedo. I appreciate it.

Thanks for sharing. Yes, after thinking about it and keeping it simple thoughts, I am will stick to simplicity and play the all in and all out for now. However, I will monitor each trade to see how well it does when scale out.

Testing is the approach for now.
 
marsman said:
Just use the same relation, ie. same percentage(s) regardless of # of contracts... :) All should be seen as relative...
I would stick with the stop and target percentages that work for you.
Sure you can experiment for more profit, but there is no general formula for stops and targets. Much depends on volatilities (HV, IV), volume etc. And I doubt it has anything to do with the # of contracts.

Btw, are you saying you make 100% per trade? What is your monthly performance?
More...

Thank you marsman,

I will trade all in and all out. Its too much confusion trailing stops and I want to be in and out.

I trade paper money for now with one contract until I make $5000, then I will go live with $5000, and go from there.

No, I don't make 100% ROI every trade, I take losses like everyone else. But I want take if I don't see the potential of earning ROI of 100% (sometimes +50%). That's just how I think for my strategy.
 
SimpleMeLike said:
I am asking

1. When would you recommend a trader move from 1 contract to 2 contracts?

Thanks
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Why wouldn't the strategy work for more contracts (2,3,5,10) if it works for 1 contract ?
Now if you were talking HUNDREDS of contracts, that would be a different story.
 
Handle123 said:
You had use word Option, so I understood it as a hedge, thank you for clearing that up.
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Actually I thought about hedging with NQ my bets on ES.
Could possibly find a little something btw this two.
Don't know if I should or not. Will see.
The correlation ain't perfect ...
But quite good though.
 
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