Still waiting for IB funds to hit my bank account. Now I just wanted to say that … Position sizing is going to depend on the setup. It’s very convenient to normalize risk across trades, By that I mean … to risk 1% for every single setup. If the market is volatile, Entry to stop will be wider If the market is less volatile, Entry to stop will be tighter. 2 or 4 pts stop are the same, 2Pts x 2MES is 1% and 4pts x 1MES is 1% The reward is correlated with the risk, The reward to risk ratio should be about similar. I prefer to think in terms of percents rather than points. Because it’s maybe the same asset, But conditions wildly differ from time to time. The goal isn’t to accumulate points, But to accumulate percents on a consistent basis. As there are easy dollar vs hard pennies environment. Enough talking ^^ Data wise I’m going to subscribe for Continuum (M)ES level 1 data. It’s 4$ per month.
I was referencing the RTH session from 09:30 - 16:00. No overnight holds. Every day there's usually 2 or 3 major swings with trend days being the exception (one swing from low to high or vice versa). If you look at the last trading day of 2022, there were two major swings on the day: - 32,50 points down from the Open + 40,75 points up starting at 13:30 going all the way to the Close For a total of 73,25 points. Personally, I think you'd struggle to reach your goal of 10X risking only 1 % of your account per trade. It kind of goes without saying that to 10x your account you need to take some risk OR you have a massive edge where you're bringing home a TON of points daily. In this volatility I'd say 5-10 points is an adequate stop depending a bit on where you execute of course. So, no use in capping it at 1 % and using a far too small stop which will guarantee to stop you out. Generally, the opening period requires a larger stop than later in the day. Which is also one reason you might want to skip it. Of course, the idea of 10X may not be the best way to approach it, so maybe you'd want to rethink it. Maybe doubling your account is a better initial goal. One thing you may consider is the concept of adding to a winning trade as the market moves in your favour, i.e., buy one at 10 and buy another at 15. You average is now 12.5 and you can put a stop at B/E or 13.0 for 0.5 points of profit. That way, you're only risking unrealized profits. Usually, this means you'll stop out a bit for scratches or small profits, but once in a while you'll catch a nice momentum move on maximum size. However, since you're only adding to winners you will always take your full stops on minimum size. Most people seem to prefer to average down on their losers which effectively means that you'll take your losses on maximum size. At least it's bound to happen once in a blue moon and will usually hurt quite a bit.
Why do people's goals are often unrealistic? Why not starting with more down to earth goal, something like 5-10% per month? If reach, then trying for 15-20% per month, and so on. Aiming to be the best of the universe is ok, as long as you set smaller goals along the way. When he started sprinting, Usain Bolt first goal wasn't to run the 100m in 9.58 sec. He had more realistic objectives before getting to that point. Even better, how about starting day trading and not losing a penny after 1 year (if reach, you'd be better than 95% of traders)? But I agree, this is not a sexy and attractive goal. How about doing 900% per year with a small account (When most traders are struggling to be profitable)? Sorry to be sarcastic about your thread. I'm not trying to convince anybody that I know everything, just trying to help. I wish you best of luck anyway, and I may be looking back at this thread from time to time just to see how things are going.
Great thinking in this post. The mindset and approach of winner! Those who win big are not exercising the "no more than 2% per trade" hogwash you see on trading forums and twitter. 2% risk per trade is great if you're a gambling addict with no edge as it will have the virtue of keeping you at the gaming table longer until you blow out. And if your burn rate is sufficiently small, you'll be able to replenish lost capital from other income or earnings, and thereby feed your addiction indefinitely. I'll bet there are thousands of registered ET account owners who've been burning and churning what should have been their retirement savings, family vacations, and children's college educations for 10 or 20 years or more. But hey, they practice sound risk management by limiting their play to the penny slots. The real big swinging day traders, the very few who actually exist, are not dicking around with notions of "no more than 2% per trade" in their heads. 5% to 10% is more like it. Swing traders who win outsized returns are likewise risking 5 to 8% of most positions. The difference with swing traders is that they have overnight risk. As a result, most will not put all of their capital behind one instrument. Minervini, for example, will divide his capital by four positions. William O'Neil is well known to advocate 5% to max 8% risk per trade. Day traders such as Tom Hougaard will focus all fire power on one or two instruments at a time, and close their positions by the end of the session. Qullamaggie will tell you he didn't grow his $9K to $80,000,000 in 10 years by risking 2% er trade. Even these days where too gives unfortunate lip service to the "2% per trade" mantra if you follow his actual trades, he's not dicking around at 2% lol. If you have a method that has an edge, then use that edge to calculate your Kelly figure. Trade up to Kelly. Trade at least half Kelly. Again, your real focus right now should not be the money. Your focus should be can you trade even 10 consecutive days following your rules without any failure whatsoever? Everything in this post only matters after you prove to yourself you are capable of trusting your system, abiding your rules, and trading without hesitation or emotional instability. If you can't do that, don't waste your time on Kelly. Stick with 2% risk per trade and have a blast dropping dimes into the penny slots. I started typing the above yesterday and didn't finish. I 100% agree with you. Anyone who makes big $$$ agrees with you. I don't know where this silly "2% max risk per trade" came from but I'm going to bet he was a vendor and someone paid $999 for the course to find out. @Sekiyo read Pitbull by Marty Schwartz. His story is a great account of what type of risk it really takes to hit the numbers that make this game worth it. I'd suspect that you've been reading my book given how much your posts are in line with my thinking. However, given that I've never written a book, I'll assume you came up with this stuff the same why I did. The hard way. Also, you spelled "favor" wrong. Pro tip: Think in terms of "dollars per point." Two MES = $10/point One ES = $50/point 40 ES = $2000/point I believe you need to change your thinking. You are stuck in the mainstream. How many mainstream day traders turn $2K into anything other than $0K? Not many.
Now calculate 1 out of 5 days you have a 3.5 point loss and 1 day out of 5 you are break even. Seems like a realistic bar to set for starting out. Hopefully you are somewhere in between this and the 100% consistency scenario. What happens is that exponential growth curve is delayed because you are only making that goal 40% of the time. So one year become 2.5 years. So as LF points out the modest return is great, but consistency is the key. I.e. Make less more consistently, is better than more profit that occurs moderately inconsistently. Or put another way, for day trading, net positive each and every day is critical. It adds up even without compounding. Consider that consistency at any level of profit is really your first goal for starting out. Just don't risk the account trying to get there. Best of luck!
Thanks for speaking the truth and sharing with readers very interesting points. However it seems like you believe 1% exposure is too small. I disagree. It doesn’t mean anything in itself. Because we can be exposed 1% to every tick, point or a handful of points. Qullamaggie was risking more than 1% when he began its journey but as per his saying, when he managed to 10X his account around 2020, he was definitely not risking more than 1%. He just had a roaring market and really nice Rewards to risk … 1% for every 5 points is potentially a 14% swing in the PnL knowing the average daily range has been 70 points on the ES (70/5 = 14 x 1%). Not sure how being exposed to a 14% swing isn’t being heavily exposed to the market. Maybe I am missing something, Even if I won’t capture the total range. To accumulate 5 points per day is delusional, I would tend to agree with that statement. A lesson I’ve learned is to find tight setups. The tighter the setup, The more contract can be bought. CME intraday margin for MES is 1060$ Which represents around 0.5% per MES point. If I can realistically risk that much, I’ll be the first being happy about it. Maybe I can find a 2 points stop, In this case I’ll be exposed 0.5% per point. Thank you for sharing guys, It’s a pleasure to read you. System, plan, rules first. Then, Dumb enough to execute. Who ever tried to implement Stan Weinstein on the 1min ? He now uses the 200sma on the daily (1min) And 40sma on the weekly (5min). Now these guys are going to hold for weeks, And there are 390 1min candles RTH, Which is 78 weeks (5min). This might sounds crazy, But that’s the way I see intraday … 78 weeks compressed into 6.5 hours. Food for thoughts only …
Thank you very much. I believe futures are less risky, Simply because there is less to think about. No liquidity risk; No overnight risk; No Buyouts, Sector, Industry risk; No option greeks …
How are you going to manage the 9 crosses of the MA in the 5 red circles? We cannot see how big these moves are but probably far more than 5 points ES/MES. So each time a stop out? I think your plan is too simplistic and not in touch with reality. Same problem at te start of the chart between 21:00 to 03:00 on your chart.
Stan doesn’t trade the moving average. But even if you take the trades, Looks like you breakeven, Or lose a little. The MA is flattening. It’s a stage 3. In this case you don’t trade at all. You wait for a breakdown into stage 4 Which it actually did. Or a continuation breakout into stage 2. I have my swings highs and lows, I don’t take crossover trades around MA. It works well in trending market, But it gets chopped up in flat market. I know … I know …