rathcoole_exile
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two ticks ?
you mean 50 cents ? Yes, way too tight, the spread will eat that every time
try two points, 2 dollars
but the secret is to be prepared to re-enter
and if your entry signal still holds, re-enter and re-enter until you're proven correct
or proven definitively wrong
you mean 50 cents ? Yes, way too tight, the spread will eat that every time
try two points, 2 dollars
but the secret is to be prepared to re-enter
and if your entry signal still holds, re-enter and re-enter until you're proven correct
or proven definitively wrong
Phantom666
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Two ticks is VERY tight, but it all depends on how you trade - there is no right answer.
You do need to be very aware that you will get washed A LOT, but that doesn't mean it can't work as occasionally you will also get some monster wins.
Personally it wouldn't suit me, but each to his own.
wildshoetwt
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I generally make my stop about 1 dollar, but keep a close eye on any of my trades....
I don't really ever let myself eat that much loss...It's just that for emergency purposes
but then again, I trade pretty short time frames...
I don't really ever let myself eat that much loss...It's just that for emergency purposes
but then again, I trade pretty short time frames...
TASK
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The value of one tick in the S and P 500 e -mini is $12.50
/ES trades in fourths, 4 ticks equal $50.00
DionysusToast
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Silly question - but when? If it's at 9:31 EST, you will get slaughtered with a tight stop. If it's at 8pm EST, perhaps not.
For me, 6 ticks is the minumum I use. That's for a short term trade. I'll trade anywhere from 1am EST to 12pm EST. That doesn't mean I am active all that time, just I will take a peek from time to time in the daytime in my Time Zone and I will jump in if I see something I like.
My advice is to open up a 40 tick chart and put an indicator on it that shows the size of the swings. This is not for trading of necessarily, just to give you a sanity check on your stops.
Here is a chart at 9:42 - 9:48 yesterday. The numbers on there are the numbers of ticks in that swing. This is Just 6 minutes of action. Imagine the level of accuracy you need on this market to trade with a 2 tick stop.
Remember that if you enter with market orders you give up 1 tick on the entry, so what you effectively have is a 1 tick stop. Obviously this is not the case with a limit order.
For me, 6 ticks is the minumum I use. That's for a short term trade. I'll trade anywhere from 1am EST to 12pm EST. That doesn't mean I am active all that time, just I will take a peek from time to time in the daytime in my Time Zone and I will jump in if I see something I like.
My advice is to open up a 40 tick chart and put an indicator on it that shows the size of the swings. This is not for trading of necessarily, just to give you a sanity check on your stops.
Here is a chart at 9:42 - 9:48 yesterday. The numbers on there are the numbers of ticks in that swing. This is Just 6 minutes of action. Imagine the level of accuracy you need on this market to trade with a 2 tick stop.
Remember that if you enter with market orders you give up 1 tick on the entry, so what you effectively have is a 1 tick stop. Obviously this is not the case with a limit order.
The volatility of the EMini is about what, 4-5 points in an average bar variation in 5 minutes at peak times.
you do anything less than 4-5 points, you will get stopped out if you trade with 5 minute charts or basically 5-10-20 minutes.
I know a lot of traders trades resistance support levels (i.e. going long at support level, short on resistance and put a tight stop above it) - that's fine but keep in mind that they can see your stop orders. More often then not, i always see the pricing penetrate at least 1 point above the support/resistance level before bouncing back. You wlll get stopped out with 2 ticks. In other words, the people who pay the exchanges, firms, etc. can see your stop orders and they will take it out if it's to their advantage. (i.e. if you're 2 ticks aboev the resistance level, and they see a lot of stop orders, they will buy and then sell it to you at your stop 🙂 It happens all the time. That's why you see the candles close below the resistance/above support but the range of trades goes 2-3 ticks above/below it.
you do anything less than 4-5 points, you will get stopped out if you trade with 5 minute charts or basically 5-10-20 minutes.
I know a lot of traders trades resistance support levels (i.e. going long at support level, short on resistance and put a tight stop above it) - that's fine but keep in mind that they can see your stop orders. More often then not, i always see the pricing penetrate at least 1 point above the support/resistance level before bouncing back. You wlll get stopped out with 2 ticks. In other words, the people who pay the exchanges, firms, etc. can see your stop orders and they will take it out if it's to their advantage. (i.e. if you're 2 ticks aboev the resistance level, and they see a lot of stop orders, they will buy and then sell it to you at your stop 🙂 It happens all the time. That's why you see the candles close below the resistance/above support but the range of trades goes 2-3 ticks above/below it.
DionysusToast
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Paganini - people can't see your stop orders, that's a myth. They can see your limit orders though.
To take advantage of the stops of the average retail trader, you don't need to see them. It's just obvious where they will be.
See any trading book for more details.
To take advantage of the stops of the average retail trader, you don't need to see them. It's just obvious where they will be.
See any trading book for more details.
rathcoole_exile
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thank you for the lesson, I have been trading ES for > 8 years.
what I was asking the OP was his meaning of tick as some newer traders get confused between tick and point.
on the ES a single tick is 25c worth of price movement, while a point is 4 ticks, $1
so when people say they had a 2 tick stop, the question was whether he truly meant 50cents in price movement or actually meant $2 in price movement /
I was not addressing the issue of what each tick or point represents to his P&L
thankyou.
