By analysing past trades I found out that the main detriment to my performance is "large-loss" days I have every few weeks. Typically, I aim come out with profit or flat on the day. However, Through occasional lapse in discipline I may allow more than a couple or loosing trades in a row and these are difficult to recover from. What I found out is on most "winning" days I run only a small loss. So, I want to set a smaller daily maximum loss. If I ever hit it, I will assume things aren't working for me and stop trading for the day. Do you use a firm daily stop-loss in your trading? If yes, how does it compare to average daily profit?
Thanks for quick reply! This is something I am taking into account to. For me the prupose of such a stop is largely to protect against me making a mistake. From "system" prospective, it is still very interesting what number (if any) in the poll works for others.
Another way to look at it is how profitable a system should be compared to maximum loss in order to be worth trading...
Mine has nothing to do with monetary loss, it has to do with past three years of signals. I know what the greatest amount of losing trades in a row I have had, know the "mean" average of losing trades in a row are. When I hit the end of the "mean" average - I increase size, if I do this a few times without recovering, then I think about stopping for an hour. It really comes down to cycling, either I am not cycling with the market meaning I don't feel good enough to trade or my methods are not in tune with markets. You really have to know your methods well enough to be able to say you need to stop.
Thanks for the insight! How do you find you are not cycling in tune with the market? Do you have any rules to help you with that?
For me it's just a symmetrical function of the instrument's volatility - CL with 30% vol or ZN with 12% vol. Bigger stops, bigger profit targets, and vice-versa.