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I know your a heavy proponent of scaling out and specifically with lots of contracts. But what do you suggest to do if you are only trading one contract maybe two. How would you suggest managing the trade with a 1 lot if your forced all in all out?
** To start with: Trading futures carries substantial risk and is not suitable for all investors. You may lose more than the value of your account. Past performance is not indicative of future results. **
In my opinion, trading a 1-lot is much tougher than trading multiple contracts. Through Stage 5 Trading and by watching traders trade, I noticed that traders do one of the following when their account is not big enough to manage multiple contracts:
There is a tremendous amount of fear and over-thinking while the market is moving
Trade a 1-lot with a very tight stop while using too much leverage for their account size
Trade without a risk limit for the day or defining risk per trade (after all...it is a do-or-die situation)
Overtrade and do so randomly
With the leverage used in futures, you are basically at the mercy of how well you study your particular market and setups. The hardest part for 1-lotters is accepting a wide enough risk in order to stop themselves from getting chopped up in trades.
We have devised a solution for this at Stage 5. I'm focusing a lot of attention on the M6E contract. We have worked out some reasonable pricing for it and it allows people to work out their plan live (there is always risk to trading). This gives many of our traders the opportunity to move from sim to a live environment that moves in lock-step with the 6E contract but is 1/10th the size before moving to a regular futures product. Hence, a trader can trade multiple contracts and can experiment without having a huge account or experiencing too much damage as a percentage of their account, in my opinion.
The contract has low daily volume but it is growing. It has been moving with the 6E contract, so I'm using 6E charts and would trade the M6E while I post in our chat room so others can get familiar with it.
Other than that, I would spend most of my time studying a good risk/reward balance on 1-lots and size the stop so that I have enough opportunities to actually practice trading but not to eat up too much of my account while I work out the details.
I hope that helps give you some clarity.
Risk Disclaimer: Trading Futures is not suitable for all investors. Past Performance is not indicative of future results.
If you have any questions about the products or services provided, please send me a Private Message or use the futures.io " Ask Me Anything" thread
You are not alone and there are potential remedies for this behavior. In trading, we are in the business of behavior modification whereas everything else we have been trained for is a matter of manipulating the external environment in order to get what we want. This presents a huge issue for folks who have a fickle commitment to trading or life-change in general.
Be patient. Control risk. Always be aware of your emotions. Master 1 or 2 tools instead of trying to master many or changing your approach over and over.
Best of luck!
Risk Disclaimer: Trading Futures is not suitable for all investors. Past Performance is not indicative of future results.
If you have any questions about the products or services provided, please send me a Private Message or use the futures.io " Ask Me Anything" thread
I might be mistaken but didnt you mention a while back that you use a formula to figure out what ES current fair value is(I am guessing its similar as ones used to figure out a stock-companies fair value???), then you apply this into your analyzes for that day trading? ie tomorrow ES fair value is 1575, so anything above that is a overpriced value/short under it- buy. If this is correct could you share this formula? I have seen formulas for figuring out monthly/quarterly ES fair value but not day to day
As always thx for your time and your response
Cheers R
How do you turn homework areas/"areas you want to do business" into actionable trades? I mean I understand I am watching for price to come to these levels but I don't understand how to turn that into a trade I want to take. I know its a bit vague and conceptual. But I want to take this from theory to practice, I understand how I believe I should select the levels/areas based on what I see and my homework. But I just don't know what to do with them once price gets there.
Do I just place a limit order there in anticipation of my hypothesis that the area will hold? Do I watch for some kind of price action / volume / delta? Usually I skip levels that are going against the current context, like fading levels above when we have a trending day up. But then I can't enter at all. I know this is probably a pretty deep question but any answer to shed some light would be very much appreciated.