I set my stop pretty wide. I consider them emergency exits only, in case I have a stroke, or lose an internet connection. I always enter, and exit manually based on the relation between the price, the 3 main moving averages, and the bollinger bands. This relation allows me to see when a move is running out of steam, and on some occasions about to correct. Those occasions allow me a quick, in/out contrarian trade.
I have a small amount of money in my account, so i am very, very nervous about actual being in the market if I am not watching.
I like to pick my markets with the weekly, and daily charts, and time my entries with the 30 minute, the 10, and pull the trigger off of the 3 minute.
I have found the 1 minute to be too fast, and it causes me too many false exits. I like the 3 minute because it's a bit slower, and seems to show me more reliable set ups. although, my setups appear in all time frames, and it pretty much means the same thing.
If I had a 100K account, I might place trades off of the 30 minute, and walk away untill the daily chart, or 8 hour chart gave me an sign the move was exhausting itself. Then again, it's been my experience that the markets really only make one good move during the day, and then just meander around in that range the rest of the time anyway, so maybe I wouldn't.
My method is based around reliably taking little slices so I can be confident about putting big money down and winning most of the time.
This morning, I made a great trade in Cattle
11/7/11 10:32 SELL 1 @LEZ1 124.05 11/7 10:37 123.93 n/a +$48.00 minus commissions and fees leaves $32.00
My goal is to build 50K in operating capital,so I can live off of trading. That will allow me to trade that much each trade. I require 3 times that for cushion so I need a way to come up with 150K to go full time.
Maintenance on Cattle is 1k I think, so that 50K would have let me trade 50 contracts. With one trade I would make $1600.00.
When I add up all my trades for the last month (I do this every month), and average the wins and losses, I come up with an average trade of + $84.00 Some months it's a bit more, some it's a bit less. On occasion, I blunder into some really big moves. It has been over $100.00 a few times in the last 8-9 months.
$84 does not seem like much, but that's like really 10 trades in a month, so it's really $840.00 a month on average. Again, that does not seem like much, but it's a reliable performance record. I can do that month, after month, after month. Once I have my magic 50K, if I just trade 10 contracts at a time, that is a decent living (which is my goal).
My biggest problem is definitely mental. If I can keep myself from trying to catch the second pass of the range, I think I can boost those numbers a bit. I almost never loose on the main move of the day..it when I go back and try to catch the second, or third pas that I mess it all up.
I can catch that second or third pass like 40, maybe 50% of the time. If I could just learn to walk away from it after my first win., I am certain I could get my win loss ration over 80%wins. It seems like every time I get it higher though, I lose a few and it gets knocked down to like 75%, and I have to trade on egg shells to get it back up before the month is out.
Having a good method is just the half of it. The mental aspect is the other 90%