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Money management Ideas?


While I'm watching the "paint dry" on this S&P market I thought I'd find out what most of you do regarding Money Management under the conditions I describe.
Lets suppose the following and we'll also say this is all hypothetical so there are no "issues":

1)You are short from 1444.50 with eight contracts and you initially risked 2 points. Total risk is 16 points initially.

2)You take 4 off at 1442.50 and move your stop to breakeven on the remaining 4 which we will call "Runners". For those who don't know this term, I use it because I am planning on having these remaining contracts "run" to further targets.

3)You take 2 more off at 1440.50 ( which was twice your initial per conract risk ). Ok at this point you have made back all of your initial risk. Would most now put their stops at 42.50 on the last two contracts?

4)I will admit there are probably better ways to manage the first 6 contracts and I'm open to ideas but lets "talk" for a minute about the ramianing two contracts. Would most trail their stops so you are always risking the same amount of equity to your target? In other words if I am 2 points away from my target would you place your stop 2 points back? When I get to within one point of my target would you keep your stop one point away to keep the risk to reward even or would you make it even tighter?

I've actually struggled with this for quite some time as it seems to be a big trade off between giving the market some "wiggle" room and keeping a decent risk to reward. Perhaps it would be better to just take all of them off when there is a two point target and not have to think about "runners" but for me it is sometimes a bit painful to watch the market go in my favor and not have enough contracts "working" to get to bigger targets.

Hope this is understandable.

Bruce
Here is an idea. Instead of using fixed size stops why not try and calculate the typical pullback as seen today and yesterday or perhaps on recent days. This way you will know what to expect from a pullback and what to expect from a change in direction.
That's certianly an option Elite. This is really just an example on Money Management. So if we look at todays S&P action the market would have given us an 8 point profit and then we would have been stopped out as further targets weren't reached. If we took the approach that since we went "all in" at one time then we should exit all at the same time then we could have pulled 16 points out if we are using a 1 for 1 risk to reward...better, but this still has some "bugs" in it too I guess. I think my real question actually pertains to the runner contracts. I get stopped out a lot on those in general. Seems so hard to catch a trend unless you keep the stops fairly wide and then it throws off the risk to reward. I was once in a chatroom and I "watched" someone give back 15 points in profit all because they where holding out for one more point. So arriving at a decent blance is the goal.

Bruce
quote:
Originally posted by elite trader

Here is an idea. Instead of using fixed size stops why not try and calculate the typical pullback as seen today and yesterday or perhaps on recent days. This way you will know what to expect from a pullback and what to expect from a change in direction.

I was also talking about the runners. There must be a dynamic number where the pullbacks come to when a trend is moving. So if you can calculate that then you know when to get out and when to stay in. So sometimes the stop for the runners will be wider if the pullbacks are currently wider and sometimes it will be tighter.
I follow you on this Elite..thanks for clarifying..some use moving averages, some use 2.5 off a low or a high, some I guess use the average true range and a host of others. Then comes the issue of time frame to measure pullbacks etc but I "hear" you on the concept...Thanks

Bruce
quote:
Originally posted by elite trader

I was also talking about the runners. There must be a dynamic number where the pullbacks come to when a trend is moving. So if you can calculate that then you know when to get out and when to stay in. So sometimes the stop for the runners will be wider if the pullbacks are currently wider and sometimes it will be tighter.

ATR would be a clever idea.
I would move my stop to 42.50 on the runners. I also toiled with this dilema until one day someone told me never to have my trailing stop more that 2 pts away. I have never been sorry for following that advice.
I contend that when the range widens out as it does in cycles that a 3 point stop would be a better and more profitable stop. That is why I think that Bruce's idea about using ATR is a very good one. The question about the timeframe to run the ATR across is a good one though. It would need to be a 5, 10, or 15 minute chart I think. But I think that we would have to get that tested by the experts.
I agree with this area too even though I often overide the logical stop area much to my dismay. Today was a good example of poor trade management for me. Of course if the trade went my way on the balance then it would have reinforced my poor stop placement so it gives me the "green light" to make the same mistake next time...
quote:
Originally posted by myptofvu

I would move my stop to 42.50 on the runners. I also toiled with this dilema until one day someone told me never to have my trailing stop more that 2 pts away. I have never been sorry for following that advice.

BruceM: Best to learn to trade consistently using paper or simm if you have doubts about money management. You're putting the cart before the horse which is common among newbies/amateurs. That's why they blow out their accounts quickly.

You're obviously not ready to trade with cash yet if you don't have a sound money management system in place.

T Rex
Still no answers from you on any questions..so you are a joke....I'm just looking for ideas...It is those who think they have the trading game all fiqured out and don't try to improve that end up failing....like you...and then need to become vendors.....Thanks for the great contribution to this thread T-Rex.....perhaps some day when you understand Runners and actually trade you can have a decent reply....Do you ever have anything constructive to say? So much negativity....What a shame!

Bruce
quote:
Originally posted by T Rex

BruceM: Best to learn to trade consistently using paper or simm if you have doubts about money management. You're putting the cart before the horse which is common among newbies/amateurs. That's why they blow out their accounts quickly.

You're obviously not ready to trade with cash yet if you don't have a sound money management system in place.

T Rex

Very Intersting TraderBrian.

I'm trying not to set any stops, but determine the mkt direction for the week...5-7 trading days....at sell at at the high or close to the high and buy close to the low...and wait for it to hit the weekly pivot.

This week both ES and ER opened to close to weekly pivot. I like to see a variance of 8-12 pts...the more the better....as the weekly pivot will be hit.