contract combo - # to scalp & # to run - profit target vs risk - Psychology and Money Management | futures io social day trading
futures io futures trading


contract combo - # to scalp & # to run - profit target vs risk
Updated: Views / Replies:1,296 / 3
Created: by optiontraderz Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

contract combo - # to scalp & # to run - profit target vs risk

  #1 (permalink)
Elite Member
Salt Lake City, Utah
 
Futures Experience: Beginner
Platform: NinjaTrader
Favorite Futures: oil
 
Posts: 14 since Jun 2013
Thanks: 6 given, 16 received

contract combo - # to scalp & # to run - profit target vs risk

I am trying to determine what is the best combination for how many contracts to scalp vs. runners and the profit target vs the risk. For example, looking at having 3 contracts on ES (emini S&P) with 2 scalping out 1.00 point profit target and 1 runner (that moves to Breakeven+1 once the scalp is filled) and using a default 2.00 stop. Will often tighten up the stop to 2 ticks above/below the last swing. If I get a 2.00 stop, then I have to have 3 successful scalp trades (if the runner gets stopped out at BE+1) to make up for 1 loss. Wondering what combinations other traders use for better math odds.

Reply With Quote
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,352 given, 83,233 received



optiontraderz View Post
I am trying to determine what is the best combination for how many contracts to scalp vs. runners and the profit target vs the risk. For example, looking at having 3 contracts on ES (emini S&P) with 2 scalping out 1.00 point profit target and 1 runner (that moves to Breakeven+1 once the scalp is filled) and using a default 2.00 stop. Will often tighten up the stop to 2 ticks above/below the last swing. If I get a 2.00 stop, then I have to have 3 successful scalp trades (if the runner gets stopped out at BE+1) to make up for 1 loss. Wondering what combinations other traders use for better math odds.

Most everyone will tell you that all-in, all-out is mathematically superior. Scaling in or scaling out is an advanced trade, and is generally only done on larger time frames (not scalping) and also largely for psychological reasons more than mathematical ones.

One thing I can say is you should almost 100% certainly stop moving your stop to breakeven. A lot of traders do this to "minimize risk", but what they are left with is a trade that went in their favor but they exited for no reason other than a psychological one.

Move stops solely on the basis of price action. I would also place targets solely on the basis of price structure (to the left).

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
The following 6 users say Thank You to Big Mike for this post:
 
  #4 (permalink)
Elite Member
Florida
 
Futures Experience: Advanced
Platform: NinjaTrader 8
Favorite Futures: YM, ES, NQ, CL, ZB
 
trendwaves's Avatar
 
Posts: 742 since Dec 2012
Thanks: 2,822 given, 2,433 received

I was just having this conversation with a fellow trader yesterday so I thought I would chime in with my 2 cents worth ...

First, in Mikes excellent response he summarized what I was trying to convince my friend to consider as well.

The problem with a 'feel good' breakeven stop is that it changes the math underlying your trade strategy. As Mike succinctly points out, stripping away the risk that quickly is an instant stress relief, but it has nothing to do with any market signal. In fact the initial indication from the market is your trade entry decision is being confirmed positively, which should give you an incentive to stay with the trade, give the trade time to run.

Mathematically here is the hidden problem: Your initial risk is 24 ticks (8 ticks * 3 contracts), when you take one contract off at + 4 ticks of profit, at that moment, without moving your stop you have cut your open risk in half to 12 ticks ( 2 remaining cars * 8 ticks - 4 ticks profit on the 1 closed contract). No major problem so far. The problem is when you pull the stop to breakeven + 1 tick, giving your new trade only 3 ticks of wiggle room to continue on to a larger profit target. Changing strategy from an 8 tick stop to a 3 tick stop in the middle of the trade 'blows up' the win probability on the open 2 contracts. Meaning it's a lot more likely the 3 tick stop will be taken than an 8 tick stop. So what you end up inadvertently doing is shifting the 8 ticks of risk on those 2 contracts into the next losing trade. You get 4 ticks of profit on 1 car, 2 ticks of $0 on 2 cars, then take the full 8 ticks of stop loss on all 3 cars on the next losing trade, net you end up with -20 ticks on 2 trades.

Now if you were to instead maintain the initial 8 ticks of risk per contract by moving your stop only 4 ticks, (maintaining the 8 ticks from the 4 tick profit target that was just filled), your open risk at that moment would be cut 83% to 4 ticks total ($50) ( 4 ticks * 2 cars - 4 ticks profit on 1 closed). This technique, maintains your initial stop distance of 8 ticks and only risks a total of $50 on the open position. You will have stripped away 80% of your initial risk and maintained a constant win probability throughout the trade. This gives the trade the breathing space (8 ticks .vs. 3 ticks) it will need to run to larger profit targets with a much lower probability of the stop being hit prematurely.

Compare these two stop management strategies across 100 trades and you will see a significant effect on all of your trade profitability metrics.

Reply With Quote

Reply



futures io > > > contract combo - # to scalp & # to run - profit target vs risk

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Profit Target with X_trader ReaM Trading Technologies 5 May 6th, 2014 11:07 AM
how much profit will i have from this scalp after factoring in slippage? shots fired Emini Index Futures Trading 3 July 9th, 2013 08:23 AM
tracking each contract's profit target and stop loss sunsun MultiCharts 1 May 6th, 2013 09:10 AM
Profit target strategy DarkPoolTrading Traders Hideout 2 February 9th, 2013 01:40 AM
where should profit target be placed? anniebee321 Beginners and Introductions 9 June 7th, 2010 08:38 AM


All times are GMT -4. The time now is 08:58 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-14 in 0.12 seconds with 25 queries on phoenix via your IP 54.221.73.186