The ah-ha moment for me was truly understanding expectancy. Now I take 2 trades per day -ES. Opening and afternoon push, period.
2 point stop, 4 point target with 55% win ratio.
No indicators, single time frame, single signal that works for me.
Works out to 44 trades per month, 24 winners for 97 points, 20 losers for 40 points. Net 37 points, 4.5 points on commissions paid-net, net 32.5 points. 3 ticks expectancy per trade- winners or losers.
Good luck to all.
The following 2 users say Thank You to Maineiac for this post:
Most of the time the correlations are gone when there was some kind of news, and thats what i`m also following.
Multiple markets give me more feel for the way it moves, if the correlations are off then my feeling is not good and so i don't trade.
I had the same ah-ha moment, when I got the gumption to change my trading plan to go from a 1:1 reward/risk ratio to 3:1. My struggling, barely break even methodology turned profitable overnight. With a 1:1 ratio, I was always timid and fearful of every trade, so I would skip trades out of fear, and if the skipped trade was a winner, I would get really frustrated and go into revenge mode. So, I decided to dump the discretion, go purely mechanical, and take every signal once I observed that a 3:1 reward/risk ratio would result in about the same win/loss ratio as the 1:1 reward/risk.
I trade the YM with a 4 tick stop, and 12 tick target period, all in all out, I don't care what the market does, every trade gives me 12 ticks, or takes 4 ticks. Now, knowing that my system is a bit less then 50% accurate with 1:1 ratio, with the same accuracy at a 3:1 ratio, I now rely solely on the math, and take every signal without fear or hesitation, because I know that my scalping system which generates about 20 trades/day, I would need to have 16 losers out of 20 (which has never happened) to have a losing day. So, in the end, I think fear is only an issue for discretionary traders. If you are mechanical, and trust the expectancy of your system, you should be able to let go of your fear, and pull the trigger without a 2nd thought.
The following 10 users say Thank You to monpere for this post:
I have a small account, so I need to trade cheaply, hence I chose the YM, and trade 1 contract. I generally reach my daily goal by noon, and then switch to sim. Because of my personality, I have to be a scalper, I can't sit in a trade for even 15 minutes or I get jittery. I am most comfortable pulling the trigger a lot, but be in trades for a very short time. My average trades last less then 90 seconds. That is just perfect for who I am. I am thinking of moving to the CL, I think my average trade time will probably be even less, but I need to study the CL some more before I put the big boy pants on
I tried out the CL today with my YM strategy. Started trading 8:00am EST, reached my daily goal with 4 winners by 9:08am !!! Looks promising! Have to try this beast out some more and see. I know the market has a way to lure you in, just to then grab you and spank you . Gonna trade it the rest of the day in Sim.