[retinoid]

Say I have a 5,000 dollar account balance. I have a system that literally gives me a 90% chance of getting .5 pts (but only .5pts). I am seeking to get the bigger moves but the .5pts is to give me cushion. I use other highs for stops so they are roughly 1 point away. Does it make sense to trade 5 contracts, sell 3 of them when I get .5pts (for the cushion on the other 2 contracts) and keep the other 2 in for larger point moves? I have around a 10% chance of getting stopped out with a 1-1.5pt loss on ALL 5 contracts, a 90% chance of at least getting .5pts per contract.

I was thinking of just scalping, but then I would miss larger moves and I would be risking 1-1.5 pts for ever .5 point. That doesn't make a whole lot of sense because god forbid it is only an 80% success rate, that would wipe out like 2-3pts if I did it ten times and I would make a net of like 2 points in the day with 10 trades. It just seems bleh. That is why I am trying to keep contracts in longer (like 2 contracts) but still scalp to cushion the larger potential for loss with keeping contracts in longer.

Futures are much more complicated and tricky than stocks.

[jurotraderslab]

Did you backtest your system to know that it gives you 90% of 0.5pts winners vs 10% 1pt (or 1.5pt) losers? If yes, how many trades did your backtest (out of sample) include? A few hundred? If yes, then you can just as easily backtest partial exits. But if your current system is REALLY 90% successful it gives you an average 3.5 pts profit on 10 trades (per contract), which coupled with a high(er) frequency of trades would create a beautifully smooth equity curve. One experience I have with testing various exits, partial exits etc. is that unless you ADD a new edge (idea) to your existing system, its results won't improve significantly by just fiddling around with partial exits vs single entry exit etc. In any case, if you do have a system that does what you say, you are good to go and milk it as much as possible.

[crabbydog]

If you basic system is profitable stick with it to trade whle at the same time analyse whether leaving the contracts on the table add to or detract from the profit.

Myself I woudl stick with what works and makes profits.

[muskoka joe]

Juro said most of what I would tell you. All I can add is that with this or any system when you test different exits you are testing different systems. Each must stand on its own. I know you are not saying this, but I see all the time stupid things like trade 5 and exit 1 at $50 to cover costs. Well that $50 Profit Objective better stand on its own as a profitable system or its just a drag on performance. The vast majority of the time ideas like this, or the breakeven stop (perhaps worst of all), sound so intuitively correct but are dead wrong when you actually crunch the numbers.

I am glad to see you are not being hampered by thoughts that your RR "must" be something. Even though your RR is inverted to most systems it doesn't mean is will not work.

Lastly I would add the more time you are in the market with a position the more tax on mental capital. If it were me I'd keep paying myself and then wait for the next trade.

[mvc23]

I may have quite a bit to add to you scenario....been trading for 18 years and have been training traders for about half of that time. Private Message me to about this "system" that you speak of as a consistent 90% winner scenario at any level is almost unheard of. Is this your system or someone trying to sell you on it? Either way, contact me and I will be happy to assist you in any way that I can. We are all working together for the better good.....at least I am!

[bakrob99]

Originally Posted by retinoid »

Say I have a 5,000 dollar account balance. I have a system that literally gives me a 90% chance of getting .5 pts (but only .5pts). I am seeking to get the bigger moves but the .5pts is to give me cushion. I use other highs for stops so they are roughly 1 point away. Does it make sense to trade 5 contracts, sell 3 of them when I get .5pts (for the cushion on the other 2 contracts) and keep the other 2 in for larger point moves? I have around a 10% chance of getting stopped out with a 1-1.5pt loss on ALL 5 contracts, a 90% chance of at least getting .5pts per contract.

I was thinking of just scalping, but then I would miss larger moves and I would be risking 1-1.5 pts for ever .5 point. That doesn't make a whole lot of sense because god forbid it is only an 80% success rate, that would wipe out like 2-3pts if I did it ten times and I would make a net of like 2 points in the day with 10 trades. It just seems bleh. That is why I am trying to keep contracts in longer (like 2 contracts) but still scalp to cushion the larger potential for loss with keeping contracts in longer.

Futures are much more complicated and tricky than stocks.

As you described the system I do not think it makes sense.

1. Even IF (and it's a big IF) you have a 90% win rate, you can still get 2, 3 or more Stops in a row. IF you trade 5 contracts (ES) with a 6 tick stop then you're going to lose (for each losing trade) $375 +$25 commission plus slippage which could be 1 (or more) tick or $62.50. That is a $462 hit for just 1 stop loss or ALMOST 10% of your account.

Get 2 losers in a row and you will be mentally challenged to take the next trade.

Your position sizing is WAY off for any kind of reasonable risk.

Take your setup and get hit with a LOSING NEWS SPIKE and watch your account go down the drain.

I have scalped the ES for years and slowly I am changing my tactics to take fewer trades and let them run much longer. Add to a winner when another setup occurs while it's moving for you. Start SMALL... let them build

That's my opinion anyway.

[wow]

Originally Posted by retinoid »

Say I have a 5,000 dollar account balance. I have a system that literally gives me a 90% chance of getting .5 pts (but only .5pts). I am seeking to get the bigger moves but the .5pts is to give me cushion. I use other highs for stops so they are roughly 1 point away. Does it make sense to trade 5 contracts, sell 3 of them when I get .5pts (for the cushion on the other 2 contracts) and keep the other 2 in for larger point moves? I have around a 10% chance of getting stopped out with a 1-1.5pt loss on ALL 5 contracts, a 90% chance of at least getting .5pts per contract.

I was thinking of just scalping, but then I would miss larger moves and I would be risking 1-1.5 pts for ever .5 point. That doesn't make a whole lot of sense because god forbid it is only an 80% success rate, that would wipe out like 2-3pts if I did it ten times and I would make a net of like 2 points in the day with 10 trades. It just seems bleh. That is why I am trying to keep contracts in longer (like 2 contracts) but still scalp to cushion the larger potential for loss with keeping contracts in longer.

Futures are much more complicated and tricky than stocks.

Honestly, No. Risk versus Reward ratio way off. The correct minimum ratio should be 1:1 or 1:2 or greater. As Per your intention to take 3 for leverage on 2 remaining strategy, you need at least 1:1 RR ratio. I learn this from a retired Trader from my hometown a few years ago that RR ratio is the most common misunderstood trading rule by many.
I think you may find him in one of the mIR's othernet chat room during ES day trading session.

[muskoka joe]

RR is dependant on the type of system you are using and what you are trying to maximize. You can certainly have good workable systems that run less then 1:1 RR. These systems as a general rule will not maximize dollar profit, but will often provide best opportunity to keep drawdowns low, and provide high accuracy.

I base this on my hands on experience with testing systems. Very often what we feel is intuitively correct or is a market cliche does not hold up the scrutiny of empirical testing. RR paricularly can go either way especially when you are not optimizing for largest P/L.