I think this all adds up to the importance of keeping a trading journal. It gives you the benefit of putting hard numbers to the equation. And a journal will bring to light all the intangible factors such as a trader's personality and tolerance for risk.
From my own experience there were just too many times I took out my 1 lot at +5 only to see it run for 20 or 30. When I switched to 2 contracts I could still take out the 1st at +5, then move my stop anywhere from -5 or better to be in a free trade. You just can't beat a free trade that runs in your favor.
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Every backtest I run shows an optimal profit target and stop. Scaling out is simply selling at sub optimal points. I see scale outs, break evens and trails all making the equitity curver worse than using the optimal target and stop, at least most of the time, depending on percentage of profitable trades.
If you run 3 contracts and use 2 to break even early in the trade, then every time you get stopped before break even your down 3 contracts, and also your selling the 2 break evens at a level that is probably not profitable in the long term, so your sending the final car off to do all the work You could have been stopped out on 3 single contract trades for the same loss.
In my opinion your better off finding the optimal for target (for either draw down or profit factor or whatever) and then use that as you target and then when a trade is entered, leave the screens, don't hang around and be tempted to screw with the target and stop, a b/e late into the trade close to the target seems to work ok.
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That`s what the strategy must be after,especially for the small accounts.
Though a bit old,but quite nteresting readings by sefstrat,but then it sounds contradicting by saying more contracts == less risk.On the contrary,if you use more contracts,the strategy shouldn`t take off immediately.
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Interesting thread... Let me also point out that we have to guard ourselves against adjusting trades just because it lets us feel good. ie: Free trade, lowered my risk, break even +1, took some profit
I would argue that those four things do not give us an edge, they only help us trade better because it makes us feel good. An example is adjusting a trade to break even +1 most likely has actually decreased your edge and increased your risk... It feels great, believe me I know, but in almost all situations it is the wrong thing to do! You are trading based on what makes you feel good (safer) and not on what the market is actually doing (other traders).
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