Position Management Strategies

[sds]

Position Management plays an important in the successful trading.
Still, you visit any trading related forum, you get least information/discussion regarding this topic.
This forum is already helping me out in understanding market dynamics.

I think, its not a bad idea to learn about position management from experienced traders out here.

Please educate me with regard to position management.

[walterw]

sds : it depends if you trade 1 contract or multiple contracts, to start I would say its ideal to trade multicontracts, at least a minimum of 3 contracts so you can exit gradually your trade.... here at TL there are very diferent ways we trade in terms of RRR money managment, you want to hear all the bells and see what fits your style.... cheers Walter.

[TinGull]

I will attest to trading a single car vs multiple cars. Basically, my story is such. I started day trading after realizing I wasnt the kind of guy that liked holding a position overnight. When I started, I said...I will trade 1 car until I felt comfortable, then trade 2.

That was about 6 months ago. Then, one of the board members (actually a few) taught me about the wonderful thing that is trading with multi-contracts. Money Management starts to become amazingly wonderful, and if I had done this from the get go...then I'd have saved a LOT of cash on losing positions.

This is how I do it right now. After 5 YM points, I cut one car off and move my stop to breakeven - 5. Now I'm in a scratch trade at the worst. Then, my other I will take off at +10 if the market conditions warrant that, or I will take it off at +15. Many of my ultimate 10 point losses in the past would have been avoided had I used this strategy.

[brownsfan019]

sds - I trade multiple contracts, but simply to get the returns that I am looking for. With that being said, I used to do something like Tin illustrated for us here, but after a real hard look at arbitrary fixed profit levels, I am focusing my efforts on exiting based on 'what the market is telling you' vs. holding and hoping... I started a thread here in case you did not see it - http://www.traderslaboratory.com/for...dles-1480.html

I have found that having set profit levels out there is great when they are hit, but you really can 2nd guess yourself when they are almost hit. For example, I remember a trade that was last week or the week before on the YM. My profit target was at +20 based on the strategy being used at that time. It was a short and looked great! The move went exactly 19 points and not one more. My order was just sitting there - an MIT order actually. It just had to move one more point and I was out with a nice trade. Well, that one more point never happened... Talk about kicking yourself in the ass over that...

[sds]

	Quote:	brownsfan019
	sds - I trade multiple contracts, but simply to get the returns that I am looking for. With that being said, I used to do something like Tin illustrated for us here, but after a real hard look at arbitrary fixed profit levels, I am focusing my efforts on exiting based on 'what the market is telling you' vs. holding and hoping... I started a thread here in case you did not see it - http://www.traderslaboratory.com/for...dles-1480.html I have found that having set profit levels out there is great when they are hit, but you really can 2nd guess yourself when they are almost hit. For example, I remember a trade that was last week or the week before on the YM. My profit target was at +20 based on the strategy being used at that time. It was a short and looked great! The move went exactly 19 points and not one more. My order was just sitting there - an MIT order actually. It just had to move one more point and I was out with a nice trade. Well, that one more point never happened... Talk about kicking yourself in the ass over that...

I am following the thread " Wide Range Bodies or 'big' candles " started by you. (very nice thread, thanks.)

I have read nearly all the posts those you had posted. Based on that what I feel
is that you have an exit strategy that is perfect for you.

The idea behind this thread is not to find the best position management
strategy, but to know the different position management strategies that traders are
applying (preferably with the type of trading style).

based on the style of trading and personal comfort, a person can

- Exit all of the positions at once.
- Exit partly and then with trail stop.
- Go on adding up position by keeping risk the same.

Again the entire thing depends on the person and his comfort level.

In my case,

I do not fear of holding the position overnight. Because I am risking the money
which I am comfortable to loose (which does not affect me financially and
psychologically).

Based on this statement, initially I used to trade single contract. Then I
started trading multiple contracts.

Brownsfan019, Read your example of +20 target.

Based on my psychology:

e.g. I am long at certain contract.

My feeling is, after +19 if market is telling (giving a clearcut signal) that it will no
may not go on in my favour, then I will liquidate half the position and move the stop to breakeven.

If any signs/patterns do not suggest the downmove, but still not moving in the direction of my favour, I will move the stop to breakeven.

What I want to see is the balance of fear and greed.

sds.

[sds]

	Quote:	TinGull
	I will attest to trading a single car vs multiple cars. Basically, my story is such. I started day trading after realizing I wasnt the kind of guy that liked holding a position overnight. When I started, I said...I will trade 1 car until I felt comfortable, then trade 2. That was about 6 months ago. Then, one of the board members (actually a few) taught me about the wonderful thing that is trading with multi-contracts. Money Management starts to become amazingly wonderful, and if I had done this from the get go...then I'd have saved a LOT of cash on losing positions. This is how I do it right now. After 5 YM points, I cut one car off and move my stop to breakeven - 5. Now I'm in a scratch trade at the worst. Then, my other I will take off at +10 if the market conditions warrant that, or I will take it off at +15. Many of my ultimate 10 point losses in the past would have been avoided had I used this strategy.

Thanks TinGul,

If the position moves against you, do you exit out of it at once?
Cut the loses down and let the winners run. This is okay. But have you or anybody tried applying staggerred stop losses?

sds.

[TinGull]

	Quote:	sds
	Thanks TinGul, If the position moves against you, do you exit out of it at once? Cut the loses down and let the winners run. This is okay. But have you or anybody tried applying staggerred stop losses? sds.

Yes, I do. I have a 10 point protective stop on my trades. Timing does have to be pretty precise and all my trades are entered with limit orders.

[keymoo]

Tin, once you're comfortable with 2 cars, you might want to consider the hubert-style keep it or cut it loose method with your runner. Let's say you're long and you exit at +15 and then the market runs another 50 ticks in your favour - you're going to want to kick yourself. So, when you get to +10 or +15, you make a decision based on internals, price, etc. Keep it or cut it loose, then do the same at the next logical point such as a pivot level, fib level, or other support/resistance level. This will help you let your winners run. In trading to really grow your equity, you need to let your winners run a bit if the market is allowing it. Hubert's got a video on this somewhere in his archive.

[TinGull]

Nice, yes. Will definitely be doing that Thanks keymoo!

[notouch]

The problem with that keymoo is that wishful thinking often takes hold and you start cheerleading the market hoping that "just one more push" will get you an extra 50 points.

It all depends on your style of trading. Do you want 10 points twice a day or would you rather capture 100 points a couple of times a week? Whichever way you do it I think you need a target before you enter the trade because it's difficult to be objective and rational when you're in a trade.