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Managing the trade is sometimes harder than entering the trade. Managing entails not only having a stop, but also determining profit-taking levels.
In today's emini SP, 1 min. chart, the trading strategy was to buy an XTL continuation. For more info on this strategy go to this thread which was started by Tom Joseph: Using XTL to trade the emini ( 1 2 ).
Here is a management technique that allows you to go risk free once a 1 to 1 in Reward /Risk is reached:
1. Determine your Stop. The previous pivot low was used in this case. The difference between your entry and stop is the Risk. I bought 5 at 1016.75. My stop was at 1015.75. My Risk is 1.00.
2. Using the Fibonacci Extension Tool, first click on the Stop, then on the entry, stretch the lines to the right, and set the final click again at the entry price.
3. Click your right mouse button on one of the Fib. lines and edit the lines to show 1.0, 2.0, and 3.0. These levels now represent Reward levels in respect to the risk.
4. Take some contracts off at 1 to 1 and adjust the stop on the remainder to the entry price or to half of risk. I sold 3 at 1017.75, which is where my 1 to 1 was. I adjusted my stop on the remaining 2 to 1016.75. If you were to go half of risk, the stop would be placed at 1016.25. In either case, I am now "risk free" in this trade! This means, I do not worry about anything. I am stress free.
5. We now move to the next step: I took 1 contract off a 2 to 1 which was at a price of 1018.75. I canceled/confirmed my stop for 2 at 1016.75 and placed a stop on the remaining contract again at 1016.75.
6. When I reached 3 to 1 at 1019.75, I closed out the final contract and canceled/confirmed my stop.
7. That's it! Let's do the math here: $400 profit versus initial risk of $250, which is 1.6 to 1 in reward/risk. We can be profitable with 50% winners.
This is an actual trade. If I took off 2 contracts instead of 3 at 1 to 1, and waited to take off 2 contracts at 2 to 1, my reward/risk improves. My point with this technique is that you can get "risk free" fairly quick and still participate if the market continues in the direction of the trade. Yes, we have commissions to consider. You can do your Fib. projections for Reward based on your stop including commission.
You can vary a few things depending on if you are 40% winner or a 70% winner.
Andy Bushak
eSignal
In today's emini SP, 1 min. chart, the trading strategy was to buy an XTL continuation. For more info on this strategy go to this thread which was started by Tom Joseph: Using XTL to trade the emini ( 1 2 ).
Here is a management technique that allows you to go risk free once a 1 to 1 in Reward /Risk is reached:
1. Determine your Stop. The previous pivot low was used in this case. The difference between your entry and stop is the Risk. I bought 5 at 1016.75. My stop was at 1015.75. My Risk is 1.00.
2. Using the Fibonacci Extension Tool, first click on the Stop, then on the entry, stretch the lines to the right, and set the final click again at the entry price.
3. Click your right mouse button on one of the Fib. lines and edit the lines to show 1.0, 2.0, and 3.0. These levels now represent Reward levels in respect to the risk.
4. Take some contracts off at 1 to 1 and adjust the stop on the remainder to the entry price or to half of risk. I sold 3 at 1017.75, which is where my 1 to 1 was. I adjusted my stop on the remaining 2 to 1016.75. If you were to go half of risk, the stop would be placed at 1016.25. In either case, I am now "risk free" in this trade! This means, I do not worry about anything. I am stress free.
5. We now move to the next step: I took 1 contract off a 2 to 1 which was at a price of 1018.75. I canceled/confirmed my stop for 2 at 1016.75 and placed a stop on the remaining contract again at 1016.75.
6. When I reached 3 to 1 at 1019.75, I closed out the final contract and canceled/confirmed my stop.
7. That's it! Let's do the math here: $400 profit versus initial risk of $250, which is 1.6 to 1 in reward/risk. We can be profitable with 50% winners.
This is an actual trade. If I took off 2 contracts instead of 3 at 1 to 1, and waited to take off 2 contracts at 2 to 1, my reward/risk improves. My point with this technique is that you can get "risk free" fairly quick and still participate if the market continues in the direction of the trade. Yes, we have commissions to consider. You can do your Fib. projections for Reward based on your stop including commission.
You can vary a few things depending on if you are 40% winner or a 70% winner.
Andy Bushak
eSignal
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