I was reading Hondo's stuff on More Contracts = More Control = Less Risk Exposure and I was playing around with the numbers. Everyone talks about this but I was hoping maybe someone could dumb it down a little here.
I am trading the 6E and I enter with 3 contracts, one of which targets +10 and the other two are sent as runners from somewhere in break-even land. The idea in my mind is have double the position on runners because that is where the money is made...right?
I realize that I am really oversimplifying here but for the sake of argument... If 6E is trending 20% of the time that's 4 days out of 20 in every month. So...because I am so awesome I average $300 on the 16 non-trending days and $1200 on the 4 trending days. Thats 4800 + 4800 = 9600 a month on average or $480 a day.. Thus, all I need to do is hit the $480 daily goal and quit. One way I can do this is enter with 3 contracts, target one contract at +10 and then send the other two contracts to target another 5 ticks after that, giving me $500 a day if my math is right.
Doing it this way seems so much easier than hanging out and taking 750 one day, then 200 the next day, then 500 another day, then 100 the day after that because I am always positioning myself to send the runners and take as much or as little as the market will give. As long as I follow my rules I take what I can get... It seems for emotional well-being and improved quality of life that setting a daily goal and quitting is best. We have all heard this.
You are welcome to state your case for the Daily Goal as well. I would like to hear a better argument for hitting the home run 20% of the time. Is the Black Swan worth all the effort in the end?
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I don't trade news and right now my time schedule is 5:20 to 7 PST.
I have a 10 tick stop... Don't have hard numbers here... But I usually don't hit my stop at all and almost always hit my first target. I usually hold my stop below breakeven until the a bar after my target is hit. Even then I don't always move it to Breakeven for a bit because the price retraces back to breakeven for me a lot. So one of my favorite things to do is move it to breakeven manually when it's more like +17 or so and then when its about +20 I move my stop to +10. I will usually hold my stop at +10 for the duration of the move because the runner doesn't carry on a lot further for me and a +10 stop doesn't seem to get hit after that.
I might take 2 trades in the morning, usually only take one if it's profitable. If I get out for a quick loss of say -5 ticks I will attempt a re-entry pretty quickly after that. Any more trades than that begin to get too much for me. I would stay in the market if the Black Swan idea makes sense though. It seems you almost have to overtrade to ride these trades.
P.S. Kirk... I look to enter trades around the half hour mark per Jeff. So 5:30 am, 6 am, and 6:30. If Barron's Econ Calender news falls on those time slots I don't take the trade. Like right now it's 6:55 and I didn't take a trade this morning because I didn't like the P.A. so I won't try to take anything else.
Last edited by Dragon; January 5th, 2010 at 09:56 AM.
Reason: Forgot a key point.
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If memory service me right LBR somewhere stated that ES pro traders making main money during week just on 1-2 trades, all others are just maneuvers, I've heard that a lot in other sources as well,
whereas that traders waiting 1-2 big trades per week, other making their bread and butter on those trades which that big traders loose.
Also it's not secret correct and full info about author of "Black Swan" and how he is down, recently I got in the same list turtles, who, while awaiting trend could make a lot of trades loosing on them, but one day...they get winner which covers all losers and bring huge profit...
I also heard like some old traders work - trading is business, come to office, looked on market, did your profit, closed all, gone home, again and again, just doing business, not dreaming about huge profits to buy 100 ft yachts from 1 trade.
I also heard story of one old trader who traded through "unknown" quantity of recessions, he told : for us it was just business, we hadn't so much greed, we don't dreamed about millions, we just did our business - traded.
Do not to offend anybody.
A lot of traders suffer a lot calculating their loses from unrealized profits above their profit targets, but never tried to calculate their loses which come while awaiting for that profit above target, missing profit target.
A lot of times I've heard : know your market, it seems the main here is to know "market range" or by other others "each market profit size for certain timeframes"
I'm trying to determine that, which can help to position profit expectations and trading correctly and if anyone also interested in that will be glad to hear.
P.s. Dragon thank you a lot for that good thread as it's quite important in trading : to know what you are doing and what you are expecting.
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Are you using tick charts for the 6E, and if so, what is your favorite chart? Lately, I'm finding that longer term charts take out alot of the guesswork of which way a trade will be heading. Also, do you use Fibonacci numbers for you chart sizing, and if so, which?