Correct Position Sizing....

Hi Everybody,

Yesterday we had a brilliant example of why the use of correct Position Sizing is so vital to long term success. Using the Standard setups we had 4 trades on the 3min YM, 3 were loses and one 1 winner. On the surface this looks bad, UNTILL you look at the profits and losses when using correct Position Sizing. 3 -1R losses equals -3R down, BUT (and this is the important point), the one profit was +4.1R (ignoring slippage and commission). So this one profit wiped out the three (-1R) losses and put you into profit overall.

This is the main concept that most losing amateurs don’t seem to grasp, that you can have more losing trades than winners and still make money overall. Successful trading is about keeping your losses small and having big profits it is not simply about having a high % of winners. In the “real-world, having a high % of winners is actually very hard to do. Therefore it is far easier controlling your losses, as in this example. In fact if you read the Market Wizards Books, many of the world’s best traders only have about 40% winning trades. Most losing amateurs never seem to fully understand this point.

However, I understand that we all like to be “right”, so let’s take a look at the 15min trend on the Advanced Blog and see if these losses could have been avoided....

Thanks, Steve

A good day for the Standard Traders

Hi Everybody,

Isn’t the Cyclical Nature of Trading amazing ! After a few harder days for the Standard Traders among you, the 3min YM then gave us this lovely TS3 buy set-up. This was a completely standard setup, with the TS3 buy falling in line with a Blue STF. The YM then rallied to the first profit target, where a nice +5R Profit (ignoring slippage and commission) was banked as the STF was weak.

A perfect and completely standard setup and trade management..........

Thanks, Steve

15min trend

Hi Everybody,

For the Standard Traders among you, it was a hard day on the US indices. Yes hard days do happen, this is just part of the Natural Cyclical Nature of Trading. But, was there a way to avoid some of these losses ?

Yes, but it did mean using the 15min Charts for trend (rather than the STF), so this did require a slightly higher level of experience over and above the basic standard trade management guidelines. This is why I spend so much time on this Blog, trying to educate you all to become better traders, because I know that to get the most from trading takes experience and hard work. But (as we will see on the Advanced Blog), this hard work is defiantly worth it .....

Thanks, Steve

Russell in on the action later

Also, for those of you who follow the Russell Index, we had a nice TS3 sell later in the day that made a nice +2.2R Profit (ignoring slippage and commission) as well.

So a bit like the day before, on the surface a hard day, but with Patience and Discipline you should have some out OK

Lastly, if you would like to see how amazing MTPredictor really is, please take a look at the Advanced Blog for a trade I was following myself yesterday for a massive +10R !!

Thanks, Steve

Mind the Gap... Part 2

But notice the difference on the 3min YM. Here the TS3 sell was “within a whisker” of filling the gap. And on the YM, the short trade was not stopped out, and went on to reach the DP support zone for a nice +4.3R Profit (ignoring slippage and commission).

Please note, I am not saying that this always will work, but most experience traders will always be aware of “Gaps” and how the markets likes to fill them..........

Thanks, Steve

Mind the Gap...

Hi Everybody,

Yesterday was a hard day, but there was one trade that I would like to look at in a bit more detail. And that was the TS3 sell at 10:54 on the ES and YM.

But first, let’s look at the Gap Down on the open. As the more experienced traders among you will know, gaps will normally “get filled”. So taking a trade where the market is trying to “fill the gap” as we had on the ES yesterday should always be vieww3de with caution. So this was the first sell on the 3min ES yesterday and was just the second one as well.

But this leads me nicely onto how markets do unfold differently. On the ES the 10:54 sell had “not quite” filed the gap, so let’s look at the YM in the next post.

Thanks, Steve

Patience, Patience, and more Patience

It was not only the ES that had a good trade yesterday, the YM got into the act as well. But, as with the ES, the TS3 sell on the 3min YM only arrived very late in the day.

As you can see, this TS3 sell caught the fall in the last hour of trading, for a nice +2.7R Profit (ignoring slippage and commission). Add this to the Profits from the ES and yesterday turned out to be a good day, even if you did have to wait a long time, the Profits were there...........

Thanks, Steve