Bit of a rethorical question this. As i've gone live, the inevitable event of a stopout still scares me.
It should wear, i know ;-)
Thing is, i can't decide if i should trade 1 or 2 cars. It's all a matter of moneymanagement of course.
I've tried working it out in a spreadsheet.
Minimum profit is where the stop is put and profit is made when price never makes next target.
Trailing stop moves up to 8,16, 24 every 8 ticks price moves up.
So with 1 car, if price hits +16, TS is moved to +8, if i then get stopped out profit is 8 ticks....
Right now i do 1 car, 8tick stoploss, move the stop to B/E meaning +1. Taking the commission of 4,40 per car into account, i don't see much improvement in risk/reward when going to 2 cars.
Comments anyone?
Hey Willem, the reason for doing 2 contracts is mainly to give you peace of mind.
As i still struggle from time to time with my fear and gread i need some sort of buffer that can act as a emotional pillow when trading.
The risk reward will remain 1/1 when 2 conttracts, imagine this:
Getting first target at nq witch is 6 ticks, is pretty easy ,and the chance of getting it is veryyy veryy high, if you buy at a level of support or resistacne, there is always a bounce, even if price continues against you , the first bounce usualy gives you the first target. The chance of getting stopped out with 2 contracts is scary, but the ideas with the scale out is that its emotionaly better for me and new traders in my oipinion.
My goal is never to make any money with the first contracts, that was never the intention, the goal is to risk the markets money in a way, not your own money.
When first target is hit(High change of that) then you can relax and the fear will dissaper and you will not be inclined to cover to fast ,and you can even let it run much higher then you would normal do.
If i was 100% sure that price is bounce and go in a certen direction, i would never cover 1 at a marginal place, but in trading there is no 100% sure thing, you need to minizime your risk as fast as possible.That is your first goal, not to make loads of cash on that trade. And if you think about it, when first target is hit, your risk is ZERO, and you are risking the markets money. But if account size is a issue, then risking 2 contracts is not a good idea. But then again you will never be flexible with your trades,moving your stop to breakeven +1 will give you trade very little chance of working, as price always have a trendecy of testing your buy area before rocketing, and your get stopped, and see the trade go to the moon, that is very frustrating.
But you can always try to trail it, if first target is then move stop to breakeven -4 then move the stop to entry level when price gets some distance from your entry.
Your flexebility also increase when you do 4 contracts.
Risk is tottal then 40 ticks, 10ticks pr contracts.
Sell 2 at +6 ticks(+12)
Sell 1 at +12 ticks
sell 1 at +16
This way you can scale out at market moves, and you are grabbing profits as market moves in your direction.
The biggest problem is FEAR of stopouts, you just need to realize that is a part of the game of trading, look at it as business expense. There will be looses, you will never have 100% winners all the time. This is something that will take time to get over, belive me i am still struggling with it. But i find something that help, you should be pretty sure and convinced that the place you are taking the trade is a valid place, that will make you more sure in your conviction about taking that trade, and you will not be fearfull.
WHen there is alot of FEAR when in a trade, then it means that you are putting on a trade on place where you dont ahve a clue about or you are not convinced about the trade to begin with.
I suggest everyone before trading, to sit down and think about all these fellings and just in your own mind tell yourself taht you will be controlled and not trade out of fear or gread. When you have a loosing trade, take a step away from the screen, analzise the trade and then tell yourself why that trade dident work.This will help you find the weakneses in your trading. ANd you will come out stronger from it.
Only with time and controll of your mind can these evil emotions dissaper and you will then start taking trades based on method and not based on fear and gread.
Enough rant from me, talk you all tomorow.
WIth kind regards
Bashir Naimy
