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Trade Management
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Trade Management

  #1 (permalink)
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hollywood
 
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Trade Management

While slightly theoretical, I'm working on 2 things in my trading right now specifically (as we all love to)

1. minimize losses

2. maximise gains


...sounds good right? Well my thoughts are to try a foreword testing experiment and I am open to all thoughts or suggestions.

I'm thinking of trading 1 contract and either managing it 1 of 2 ways.

1. manage off 1min time frame with tight stop at extreme of 1min bar. take profits at $80 to $100 area. once 1st 1min bar is closed move stop to breakeven or extreme of new bar.

2. manage off 1min time frame with tight stop using 1min bar but taking profits at $300 to $400 area.

Which would you chose? My thoughts are if I take small profits and keep small stop then I'm minimizing losers and if I trade in 2unit size per trade, i would be comfortable taking 1/2 off the table. If I instead let profits run, then I know I'll be stopped out more often without a profit, but I am learning to 'maximize winners'
which would be my 2nd contract set.

The goal for me is to become less a scalper and more or an intraday swing trader, holding most of day if possible...but I still want to be 'paid' to trade.

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  #3 (permalink)
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You're on the right track


Hello lsubeano,

This topic of Trade Management / Money Management is seldom explored by traders. Traders ignore it at their peril.

Can I ask you if you have programming capability? The reason I ask is, this kind of thing can be programmed and tested with little work if you know ninjascript, NinjaTrader's progamming language.

Ninja also has pre built trade management tools. I know BigMike is a big fan of them. See his post here: https://futures.io/psychology-money-management/269-big-mike-s-simple-money-management-rules.html

Also see the pictured example of the following post too. I don't know if that is a picture of Ninja, but it is an example of a pre-built money management tool. Since you are already on Ninja, BigMike's post should be helpful to you since he is also a big fan of Ninja and uses Ninja's ATM Strategy.

Other than that, here are some thoughts:

Use your entry signal to explore a variety of money management techniques. Don't get lost in months of testing, but do look at more than one technique. As you said, the goal is to squeeze the maximum profit out of your trades as possible (I look at MFE and average MFE). Conversely, see how much you can tighten your risk management or stops without weeding-out crucial winners (I study MAE and average MAE of winners VS the same for losers).

In order to achieve this, you will likely have to look at more time frames and money management techniques than 1 minute and one money management technique. The good news is, it is well worth the effort! An excellent set of money management rules can allow a system to work with multiple products across multiple time frames. You may need to make minimal adjustments due to time frames (You won't have a 3% move profit target on a one minute chart of the ES, but you might use 3% on the daily chart).

If you search money management or trade management you will find over two dozen posts that will give you additional ideas and methods for you to test. Good luck!

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  #4 (permalink)
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Consider Trailing Stops


lsubeano View Post
The goal for me is to become less a scalper and more or an intraday swing trader, holding most of day if possible...but I still want to be 'paid' to trade.

This may appear obvious, but I will say it just in case. 1 minute charts are full of noise and volatility. If you are going to be on a 1 minute chart and you want to hold all day, you might try using some wide trailing methods with simultaneous profit targets that match your average MFE. Look into more than just a conventional trailing stop. There are other trailing methods out there too. One that comes to mind that might work for you is a very wide Parabolic SAR Trailing Stop. I don't know if it would work for your system. It could just as easily cause you to lose money. But it is one to look at among many others out there.

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  #5 (permalink)
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Kalispell montana
 
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lsubeano View Post
While slightly theoretical, I'm working on 2 things in my trading right now specifically (as we all love to)

1. minimize losses

2. maximise gains


...sounds good right? Well my thoughts are to try a foreword testing experiment and I am open to all thoughts or suggestions.

I'm thinking of trading 1 contract and either managing it 1 of 2 ways.

1. manage off 1min time frame with tight stop at extreme of 1min bar. take profits at $80 to $100 area. once 1st 1min bar is closed move stop to breakeven or extreme of new bar.

2. manage off 1min time frame with tight stop using 1min bar but taking profits at $300 to $400 area.

Which would you chose? My thoughts are if I take small profits and keep small stop then I'm minimizing losers and if I trade in 2unit size per trade, i would be comfortable taking 1/2 off the table. If I instead let profits run, then I know I'll be stopped out more often without a profit, but I am learning to 'maximize winners'
which would be my 2nd contract set.

The goal for me is to become less a scalper and more or an intraday swing trader, holding most of day if possible...but I still want to be 'paid' to trade.

Curious, what does your back testing show?

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  #6 (permalink)
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HectorPriamedes View Post
This may appear obvious, but I will say it just in case. 1 minute charts are full of noise and volatility. If you are going to be on a 1 minute chart and you want to hold all day, you might try using some wide trailing methods with simultaneous profit targets that match your average MFE. Look into more than just a conventional trailing stop. There are other trailing methods out there too. One that comes to mind that might work for you is a very wide Parabolic SAR Trailing Stop. I don't know if it would work for your system. It could just as easily cause you to lose money. But it is one to look at among many others out there.



Thanks for the thoughts hector....still experimenting, and not the biggest "back tester"...I think it's getting over the hurdle of changing from a hold for a few minutes time frame back to hold for a few hours. I tried it last year but couldn't manage my trades very well...so i went back to how I normally trade....trying to challenge myself.

sure if I can take 1 or 2 points out the emini, then all I need is to trade 100 contracts right? lol
I think I'd rather reduce my risk and trade for 3 to 4 points and then let a position ride most of an average ATR...that way I'm trying to trade a low or high of the day.

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  #7 (permalink)
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sledmt View Post
Curious, what does your back testing show?




I can see it on the chart. there are several Emini swings for 4 points daily....30 to 60 tick swing in CL....but challenging my self to see 2 points or 20 tics now turn against me and challenge a breakeven stop, +1 stop or - something stop, what do I do then...
managing the trade is always an art, an dI'm really trying to take it to the next level.....

it's be nice to trade 1 contract and make5 points a day in ES or 80tics in CL

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  #8 (permalink)
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lsubeano View Post
I think I'd rather reduce my risk and trade for 3 to 4 points and then let a position ride most of an average ATR...that way I'm trying to trade a low or high of the day.

How are you planning to reduce your risk?

It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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  #9 (permalink)
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deaddog View Post
How are you planning to reduce your risk?

It's mostly for black swan types of events...

if I'm profitable and average $40 per contract but trade 20 contracts then $800 sounds good right...slim margin but good.....but say I average $200 per contract and trade 5....

If there's major news or mini flash crash...I'd rather be holding 5 than 20 for my own risk tolerance.

I know there's the argument "just trade more contracts" if you're profitable...but more size is more risk.

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  #10 (permalink)
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Do I understand you right, you are going to change your system so that you have a greater R:R? Can you do that and still maintain the same win rate?

Or are you going to keep the same R:R and reduce position size and increase the target and stop size? Keep in mind that by doing this you are increasing risk by being in the market longer.

It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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