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Should I lower contract size for a wider stop loss?


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Should I lower contract size for a wider stop loss?

  #1 (permalink)
Faste
Baltimore, MD
 
Posts: 5 since Apr 2021
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Ive been practicing scalping on ninja trader for a couple of months now and one of the biggest issues I've had is my stop getting hit extremely early and then the market moving in the direction that I had expected/planned for it to.

Ive seen some things about people making their stop loss, 1:3 or 1:4 and I'm assuming they are basing it off of their profit factor.

Would it be a good idea, to lower contract size and instead widen my stop loss for a margin of error at my entries?

Side note:
Only have been trading for about 5 months now any and all information is welcomed. Also my first post here.

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  #2 (permalink)
 
xplorer's Avatar
 xplorer 
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Faste View Post
Ive been practicing scalping on ninja trader for a couple of months now and one of the biggest issues I've had is my stop getting hit extremely early and then the market moving in the direction that I had expected/planned for it to.

Ive seen some things about people making their stop loss, 1:3 or 1:4 and I'm assuming they are basing it off of their profit factor.

Would it be a good idea, to lower contract size and instead widen my stop loss for a margin of error at my entries?

Side note:
Only have been trading for about 5 months now any and all information is welcomed. Also my first post here.

Hi, welcome Faste.


I assume that by 'practicing scalping' you mean SIM trading, is this the case?


Also, are you familiar with the terms MAE and MFE?

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  #3 (permalink)
Faste
Baltimore, MD
 
Posts: 5 since Apr 2021
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Yeah Ive been practicing paper trades on NinjaTrader with scalping, and I am actually not familiar with those terms, first time hearing of them.

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  #4 (permalink)
 
xplorer's Avatar
 xplorer 
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Faste View Post
Yeah Ive been practicing paper trades on NinjaTrader with scalping, and I am actually not familiar with those terms, first time hearing of them.

OK no worries.

Firstly, if you are replying to someone and want to make sure they get notified, either quote their prior post or name them like so --> @xplorer <-- that way they will get a notification.

About MAE


Quoting 
The Maximum Adverse Excursion, commonly abbreviated MAE, is a term used to measure how much a trade moves against you from the entry point, usually expressed in ticks. For example, if your entry price on a long position trade in Crude Oil is 76.00, and while you were in this trade the market moved against you to a low price of 75.75, this represents a MAE of 25 ticks (76.00 - 75.75).


Do you record your trades? For example, if I were to ask "how many trades have you taken since you started", would you have a record?

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  #5 (permalink)
Faste
Baltimore, MD
 
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xplorer View Post
OK no worries.

Firstly, if you are replying to someone and want to make sure they get notified, either quote their prior post or name them like so --> @xplorer <-- that way they will get a notification.

About MAE




Do you record your trades? For example, if I were to ask "how many trades have you taken since you started", would you have a record?

I have my live trading record for my actual account but I reset my sim accounts funds to match my live trading account and unknowingly reset all of my sim trading performance on NinjaTrader .

I have made 205 total live trades however, I have noticed that Ninjatrader counts an extra # of trades for different exits on multiple contract trades.

I also have a very scuffed google sheets document of all my live trades.

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  #6 (permalink)
 
xplorer's Avatar
 xplorer 
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Faste View Post
I have my live trading record for my actual account but I reset my sim accounts funds to match my live trading account and unknowingly reset all of my sim trading performance on NinjaTrader .

I have made 205 total live trades however, I have noticed that Ninjatrader counts an extra # of trades for different exits on multiple contract trades.

I also have a very scuffed google sheets document of all my live trades.

So the MAE suggestion was about getting familiar with what it is: how far a trade goes against you before turning the other way and (ideally) hitting your target.

MAE tracks that, on average. NinjaTrader has this as metric, so over a number of trades it can give you this as reference point.

For example, if your average MAE is 20 ticks that means that on average your trades go 20 ticks against you before turning around - that indicates that your entry point can improve.

On the other hand, if your MAE is 5 tick chances are you have a optimized trade entry, but from your OP this does not sound likely.

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  #7 (permalink)
Faste
Baltimore, MD
 
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xplorer View Post
So the MAE suggestion was about getting familiar with what it is: how far a trade goes against you before turning the other way and (ideally) hitting your target.

MAE tracks that, on average. NinjaTrader has this as metric, so over a number of trades it can give you this as reference point.

For example, if your average MAE is 20 ticks that means that on average your trades go 20 ticks against you before turning around - that indicates that your entry point can improve.

On the other hand, if your MAE is 5 tick chances are you have a optimized trade entry, but from your OP this does not sound likely.


So from my live trades from the first of the year till now, I have a 6 tick Avg. MAE and a 5 tick Avg. MFE.

I do use a scalping strategy and for a period in time my stop loss was 6-8 ticks so that would make sense as an average.

So I want to aim on increasing MFE and decreasing MAE, and I'm assuming the best way to work on this is just working on my entries?

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  #8 (permalink)
 
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 xplorer 
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Faste View Post
So from my live trades from the first of the year till now, I have a 6 tick Avg. MAE and a 5 tick Avg. MFE.

I do use a scalping strategy and for a period in time my stop loss was 6-8 ticks so that would make sense as an average.

So I want to aim on increasing MFE and decreasing MAE, and I'm assuming the best way to work on this is just working on my entries?

Yes, in general working on your entry is meant to be improving decreasing your MAE, but an MAE of 6 is not bad.

What market are you trading?

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  #9 (permalink)
Faste
Baltimore, MD
 
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xplorer View Post
Yes, in general working on your entry is meant to be improving decreasing your MAE, but an MAE of 6 is not bad.

What market are you trading?

Currently have been focusing strictly on the MES. Have a smaller account size currently at 2000 as I'm writing this post.

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  #10 (permalink)
 
xplorer's Avatar
 xplorer 
London UK
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Faste View Post
Currently have been focusing strictly on the MES. Have a smaller account size currently at 2000 as I'm writing this post.

I don't trade MES/ES but generally they have a higher liquidity than CL which is what I'm most familiar with.


There's plenty of threads about ES/MES here, and there's also tons of material about scalping.


I'd suggest to use the search engine at the top right corner of the screen and look for the keywords you're after to refine your ideas.


Good luck.

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