|August 28th, 2012, 03:26 PM||#1 (permalink)|
New York City, NY/USA
Futures Experience: Intermediate
Favorite Futures: 6E, ZN, CL
Posts: 121 since Dec 2010
Thanks: 3 given, 74 received
I am looking to start a thread on managing a trade and exploring the math involved with varying different variables that we can control.
which would you prefer:
1. to put on your full position and then scale out, or
2. to put on your minimum position and build it as trade develops.
Assuming a target of 10 ticks,
you could play 10 lot, and take one contract off each tick or
you can play 1 contract, and add 1 contract each tick.
numerically they produce the same gain, however, and this is what I want the focus to be...the risk is entirely different.
option 1 mitigates risk as you move in your favor BUT your initial stop outs are your largest loss.
option 2 increases risk as you move in your favor BUT your initial stop out is your smallest loss.