How do you determine the number of contracts when opening a trade? -Based on the probability of success? -Based on the time of day? -Based on that you have lost and need to increase the size to recover? -If it is in your favor, add? for example 3 then 2 then 1? -If it goes against you, open 1, then 2, then 3? Knowing at all times with how many contracts I am going to operate is an art because the market is constantly changing. The situation you find yourself in (whether you win or lose) also influences the psychology. I usually start small and if I'm unlucky I sometimes double or triple the positions. There are many possible combinations. Which one do you like? What approach has worked best for you?
Enter trade with say standard size of 3 micros. If confidence is low (eg the market has been rather choopy / erratic), or if the trade is considered as higher risk (eg if you have missed a signal), enter with just 1 micro. These statements ' I usually start small and if I'm unlucky I sometimes double or triple the positions. ' ' Based on that you have lost and need to increase the size to recover? ' sound strange / dangerous.
Yes, I know it's a bit strange, it helps me have more winning days, the problem is that when I lose, then I lose big because I'm looking at other ways to do it It is like roulette. If you bet 1 on white, if it does not come 2 on white, if it does not come 4 on white then almost always win but this ends badly in the end. Roulette has a 50/50 chance of winning or losing but in trading as the chances can be 60/40, 70/30, 40/60 then it is more complicated. I think it is better to base the number of contracts on a probability factor. It is complex. I like your approach. 3 micros allows you to partially close the position. If it goes well, you can let a winner run. Thanks Maxinger
Right. There is absolutely no way to predict how far the market will move. so the first micro, you target reward risk ratio of say 2:1. The third micro, you hold the position for many many hours. Sometimes, the market is not kind to us and all 3 micros suffer losses. Just make sure you have a stop trading limit per day (eg max loss of $200 per day). Once this limit is hit, no more trading for that day.
%% Plenty of ways to make money in market; but adding on contracts because of a loss + need to increase size /recovery is the best way to lose + lose big=====================================================Mainly because account equity trends also. IF that worked/then get rich quick would work+ we would all be billionaires. I like to cut back when losing-usually it means the med or long term trend has changed. Good question1974/2009.
These are the inputs you need: Big point value = e.g for ES $50 % equity at risk - what % of your equity you want to risk; let's say 1% ($1,000) i.e. you're trading a 100k account your entry point - stop point = let's say this is 10 ES points (entry 3300, stop 3290) your $ volatility for 1 contract = 10 * 50 = $500 You can therefore trade 2 contracts (1000/500)