I'm looking for ideas on how to manage my positions for my trading plan for the mini Nasdaq (/MNQ).
My trading strategy yields the following results:
1/3 of all trades are big winners (50-100 points). 1/3 of all trades are small winners (20-50 points). 1/3 of all trades are losers (hit the stop loss at 10 points).
My stop loss of 10 points equates to $20 per contract. I'm considering taking up to 3 contracts per trade ($60 risk), although I'd be more comfortable with a $20 risk (1 contract). My account size is $2,000. However, I'm afraid I won't be able to maximize profit on big winners with only one contract, whereas if I traded 2 or 3 contracts, I could take profit on the first and second contracts and let the 3rd contract ride to capture the bigger moves which are relatively frequent.
If I only take 1 contract, I'd have to set my target at a distance far enough from entry to make good profit but close enough that I'm not forfeiting potential profits on smaller winners. A target at 2R or 3R would be consistent but would miss out on the really big winners but would hit more frequently than a larger target. Any advice on how to go about calculating this to make the most of the results my strategy yields?
If I take 2 contracts, I can take profit at perhaps 1R or 2R (10 or 20 points), and then let it ride with a 2nd higher target. Any advice on how to calculate this to make the most of the results my strategy yields?
If I take 3 contracts, I can take profit at two targets, perhaps 1R/2R and 3R/4R, and let the 3rd contract ride out for the 50+ point winners.
Sometimes a trade reaches +1R-3R, then reverses to just above the stop loss, then continues for an even bigger move. Because of this, I'm weary of moving my stop loss up to breakeven or higher after taking partial profits.
I would love to hear ideas from more experienced traders on how you personally might go about managing a position in this scenario. How would you manage your positions if you were me?
Here's a visual example of the strategy. Entry is at the appearance of an up or down arrow.
My trading strategy yields the following results:
1/3 of all trades are big winners (50-100 points). 1/3 of all trades are small winners (20-50 points). 1/3 of all trades are losers (hit the stop loss at 10 points).
My stop loss of 10 points equates to $20 per contract. I'm considering taking up to 3 contracts per trade ($60 risk), although I'd be more comfortable with a $20 risk (1 contract). My account size is $2,000. However, I'm afraid I won't be able to maximize profit on big winners with only one contract, whereas if I traded 2 or 3 contracts, I could take profit on the first and second contracts and let the 3rd contract ride to capture the bigger moves which are relatively frequent.
If I only take 1 contract, I'd have to set my target at a distance far enough from entry to make good profit but close enough that I'm not forfeiting potential profits on smaller winners. A target at 2R or 3R would be consistent but would miss out on the really big winners but would hit more frequently than a larger target. Any advice on how to go about calculating this to make the most of the results my strategy yields?
If I take 2 contracts, I can take profit at perhaps 1R or 2R (10 or 20 points), and then let it ride with a 2nd higher target. Any advice on how to calculate this to make the most of the results my strategy yields?
If I take 3 contracts, I can take profit at two targets, perhaps 1R/2R and 3R/4R, and let the 3rd contract ride out for the 50+ point winners.
Sometimes a trade reaches +1R-3R, then reverses to just above the stop loss, then continues for an even bigger move. Because of this, I'm weary of moving my stop loss up to breakeven or higher after taking partial profits.
I would love to hear ideas from more experienced traders on how you personally might go about managing a position in this scenario. How would you manage your positions if you were me?
Here's a visual example of the strategy. Entry is at the appearance of an up or down arrow.
