I have been trading the /ES for six months now. I have had some success, and some set backs. Considering most people fail at trading, and I have not blown up my account yet I consider this a good thing. I have been breaking even up until the new year. After the new year, the light bulb went off, and I started having some success. I have a small account and only trade 1-2 contracts at a time. My question is, when to get out? My understanding is volatility has a lot to do with this. So my rule of thumb is if the VIX is in the 10-13 point range I look for a 1-2 handle scalp. If its 15+ I look for 3-5 handles. I read this somewhere. It has worked ok. I also compare the VIX to the previous days range. I look at some of the moves, see how they did, then compare it to todays VIX pricing , and try to come up with an "expected move" or range. The problem I am having is, say I get a 2 point win. Great! Then soon as I'm patting myself on the back, it takes off to the moon, and I miss a big part of the move. Like today, I got in at 2054.50 looking for a Fib pullback to either the 50% or the 61% mark. I got out at the 2056.50. The move started going the other way pretty fast. There was my 2 points. Then a few minutes later, it took off to the 2061.00. This happens to me on 90% of my winners. Its not that I have delusions of getting in at the bottom and out at the top. But when I'm correct about a move, I'd like to capture more than 39% of it (my average right now). Thank you.
If you feel like you're missing parts of a move that you could be taking, use a stop or limit order for your exit, and just bump it up as the price ranges upwards. You might not get out at the very top, but you will catch more of the move. That is my best advice. I have not done much live trading, and not with contracts at all, but it has helped me mitigate some of my own psychology when trading.
EDIT: I should add, what I do, is I set the order for my actual target. Then if it looks like it may move beyond it, and I am happy taking the profit I already have going, I move my exit order from above the current price, to somewhere below it that doesn't put me too far back if it gets hit. And then as the price continues to go my way, I keep moving the order accordingly to lock in more profit. Hope that makes sense. Didn't feel like I was clear enough.
1st loss is usually your best loss and if the market doesn't move instantly in your favor, you're in the wrong trade or early....
so assuming you're in a good trade, take some profit (don't be greedy) and let 1 run and get used to holding a trade until there is a climax point (buyers/sellers are desperate) and jump out....NOT when it retraces against you
if you're not in a good trade get out and don't let yourself overtrade...
Why don't you try this logic filter and trade management system if you're trading two lots:
Lot 1 - Take Profit at your scalp or short term target
Lot 2 - Set a swing trade target and take profit at the full swing trading target. Put your stop loss at maybe -1 from your first scalp target.
Also, maybe you should ask yourself, would you reverse the trade. If the other side of the trade is so compelling, then at a minimum you should get out of the market. But if you don't see a reason to flip and change direct direction, maybe you should stick with your trade.
Imagine riding the EURUSD down from 1.25 to 1.05 instead of constantly trying to trade both sides of the market. Who made more money. The bear who rode down 2000 pips or the day trader who kept trying to take both sides of the trade the last 2 months?
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Have you looked at how far price retraced on the moves you missed out on? For example, if you exited prior to a retracement occurring, and then the market retraced after you exited and continued shooting up, how far does it tend to retrace? I wager there are many moves that don't retrace passed 50% of the wave up that you are looking at. In cases like this, I would consider having 2 contracts, one you take out at your usual mark and the other you trail based on retracements. Give a couple ticks leeway, but if you backtest this (by looking at chart replays) you may find strong moves tend not to retrace more than say, 50%, of any part of itself.
The other option is altering your strategy such that you are allowed to re-enter with a tight stop so you don't miss a move up. I have learned to do this extremely well and will not give out my strategy just yet as it is novel and I went through a ton of effort to develop it. But there are times where I have my stoploss at 61.8% because the market reliably misses 61.8% before a strong move up in crude oil (and other markets too based on observations). There are other sequences crude follows, but I find this one to be true often. Market will retrace deeply (i.e. 61.8% or 75%) after a strong move, but usually not before. I have not formally backtested and therefore have no statistics to offer, so take that into consideration. Just offering ideas.
Last edited by reasondeep; March 29th, 2015 at 01:32 AM.
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