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Here is a chart of a possible trade. I did not take this trade and at the same time of trying to avoid cherry picking a perfect example, I also wanted to show and example that would explain the concept. I forgot to draw in the possible stop, but it could be just below the HL on the 16tic below entry or just at or just below the pivot if entering sooner.
The 4 to 6 tics I think is an acceptable profit target. I'm not sure if i'm understanding your comment. If 4 tics is not an acceptable profit target then it wouldn't be worth even trading. The idea is to have say 3 contracts and with a stop just below or above the previous low or high. The stop could be 1-2 points. If I hit my first target of 4 tics moving the stop to BE-2tics seems reasonable. Could go to BE or BE +1. Or, if second target is hit then move the stop to BE. From what I have learned, and I will say maybe the most valuable thing I learned from TTM is reduce risk. The fast we can get the stop to BE, of course with out getting stopped out too soon the better. In the attached example the trade played out in a positive way. The last third can be exited on some criteria or, manage it anyway you want moving the stop to preserve profit. I don't know the best way.
The Sanuk Group on Google talks about this method and many or most of the traders in that group trade with price action in this manner. They may use volume bars or minute charts, but many of them speak of this method. I am just presenting here, but it really hit home with me. Anyway, I've gone on long enough. Feel free to comment. One last thing. I do like to use the Volume Delta OSC that someone created on TL. It shows divergences very nicely and can give a heads up to a turn. Also, the way price action was explained to me is that its the buyers and sellers going at it and one of them will take control which in depicted in price. This makes sense to me.
David |
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My point was 1 pt (or 4 ticks) is acceptable, but moving to breakeven after such a small push forward is too close, and from my experience trading ES (and I tried scalping it and failed miserably at it) in the past, there will tendencies to hit breakeven alot. But others seem to do ok, go for it.
What I am saying is let the market dictate where the stop level is and not choosing to breakeven you determine; the area you choose to by a fixed amount will have a likelihood of get hit is high. If this is the case and you're scalping, you'll be paying lots of commissions and little profits. Just my opinion and experience.