I trade two sessions (CST): from 1:30 until around 5:00, then 7:00 to about 10:30. Of course, it all depends upon when I wake up in the middle of the night, how long my nap is, etc. The overnight session is very active since the Euro market opens at 2 AM. This is where the best long term trades come in. Plus, very little news to mess up your plans. So it works well with my trading strategy. I have less luck in the 2nd session.
Also, I like to set a daily goal of 10% of my account. So a trader with a $3,000 account size is looking for roughly 30 pips a day. Not that traders should limit themselves, but having a goal changes the mental approach. Also, trading at least 2 contracts allows you to grab a few pips early, put them in the bank and leaves a runner for those nice moves. Once the account size doubles, add another contract but don't change the strategy.
So a person with a 30 pip goal trading two contracts might want to let the first contract go at +5, +10, or whatever the market allows. As the trade develops the trader can manipulate the stop accordingly. But just putting those pips in the bank early changes your mental approach as you've taken a positive step towards reaching your goal.
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Not into the home runs. My strategy has developed into one where I will pull 1.5-3 points out of the market per day. Two days ago I had a 2.5 point trade and today was a 1.5 point trade. Buy-n-hold today, at my in, would have netted me thus far a 7.75 point gain. But that strategy, I feel, is gambling. I follow my indicators, follow my rules, and profit results. For this, to be making points on a daily basis, is my goal. Small win's with the occasional homer.
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Platform: NinjaTrader (It's a love/hate relationship)
Favorite Futures: CL, TF, 6E
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I trade to make money, not to make spectacular trades. Once that is accomplished, I'm done for the day.
Experience tells me this is best for me. Everyone is different. It all depends on your statistical performance. With today's software, it is easy to analyze your historical performance. Not only are there odds in the market, but there are also odds for traders. Every trader should know the point, in terms of profit, time and trades, at which their statistical performance declines. Quit at the peak.
It's been said a thousand times here and I'll repeat it. Keep a journal. On every trade, record how you felt before during and after the trade. If you are a scalper with dozens of trades, then pick some other basis. maybe every hour. I prefer to jot this down every time I am up or down a certain amount of money.
Look for patterns in your trading. Most traders spend all their time looking for patterns in the market, but are oblivious to the patterns within themselves. Incorporate the statisitcal results of these internal patterns into your trading plan.
"Psychologically, it's better to have a modest target and achieve it every day than an aggressive target and fall behind. You'll start taking larger risks to try and catch up instead of focusing on consistent performance day-after-day." - Barry Taylor
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Reasons for daily goal that I can think of:
1. Lifestyle - Trading for lifestyle, not purely for money. You want to trade 1 hour then go play golf.
2. Psychological - Understanding that personally, when you start winning, psychologically, you develop a "I'm unbeatable" syndrome, and start being careless in your trading.
3. Fear - Just because you are afraid to loose the profits you have made.
4. Mathematical - You have a conservative yearly income goal, and that set daily goal will achieve it.
Scalp vs. Capture long trends
- Huge trends are less frequent, so most traders who trade them make their weekly profits, with 1 or 2 trades
during the week, and all the other trades are small losers. You are out of luck if you were taking a bathroom break when that trending setup occurred, then you just get 'pissed' off... literally otherwise you get in market chasing mode.
- If you are a good scalper, you can trade a huge trend by jumping in and out of it several times with and against the trend, and make as much as, or more then the trend trader who sat through the heat of all the pullbacks.
- As a scalper you get more trading opportunities, and can trade more market environments, you can trade ranges, as well as trends.
- It is statistically easier to predict that the market is going to move 10 ticks, then to predict it will move 210 ticks
- If you are not trading fixed risk, you will probably loose money. If you're trading 3 contracts on one trade, and 25 on the next trade because you 'think' or 'feel' it will be a big move, in the long run, you will probably loose money. Very few traders have this market instinct, and it is generally not very teachable, I would not advise this style of trading to new traders. If you try to do it without that inherent ability, you are gambling, not trading.
- Be careful of any trader who uses the word 'feel' in describing their method or setups. That word is used because they cannot quantify, or verbalize their setup, so don't try to trade it. It will make them gobs of money, it will send you to the poor house. Maybe at some you might develop your own feel. Otherwise, you can put that trader in a tub of ice, Identify the part of his brain that gives him that 'feel' and shave off a slice with a cheese a grater.
Personally, 'feeling' has nothing to do with my trading, I don't have that special instinct, so I dug my trench in the mechanical trading camp.
- If you feel 'good' after you make a 10 tick trade, and feel 'awesome' after making a 40 tick trade, you still need to work on your psychology, it will prove to be your demise. You need to get to the point where a trade, is a trade, is a trade.
- If you are trading less the 1:1 reward/risk, you better have have a crystal ball, because you will need a ultra high win ratio to be profitable
- If you don't have a specific exit strategy, you are going to be one frustrated trader, every time you realize your discretionary exit captured only 1/10th of the move. Better go look for that cheese grater.
- If you are able to notice a decline in your trading account in one day's worth of trading, then you are either under capitalized, or you are taking way too much risk in your methodology. Look into R-Multiples money management for instance, among other available approaches.
- If your trading plan has 17 different setups, you will probably not make it, you need to have very few setups, but know them better then you know that soft little curve on your wife's lower back that feels like... oh sorry, I kinda drifted off there , but you get the idea.
Last edited by monpere; January 16th, 2011 at 04:41 PM.
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since the beginning of this year i dont take profit anymore, i let the market take profit for me as i trail my stop.
reason that i`m doing this is that i always want to do the perfect entry, and that doesn't happen that easy, so if i have it i have to milk the cow until it`s empty.
Taking profit with a target it's like a salesmen that is offering a discount after the consumer said he wanted to buy it.
"Want what the market wants" if the market wants to give you a nice run, let it go.