Hey fellas.
Ive been strictly going for 8 ticks on all trades for quite a while now. Ive been having a mental debate on whether I should drop it down to 6 ticks. My losers are almost entirely just flat-out bad entries like traps or congestion which wouldn't be successful trades even by accident. They'll go for 1-2 ticks then flush down the toilet. However, lately, there's been a few times where 6 ticks would have worked. Its difficult to calculate whether 6 ticks would help or hurt.
My goal is to scalp out without having to do extra trade selection filtering, making sure ive got "extra" room if that makes sense.
Is there a method that you guys follow to quantify your profit targets? The other day the ATR was 16-20 ticks vs the usual (lately) 8-12 ticks. I dont want to stay out on highly volatile days, but I also dont think its a good idea to risk 5 points to gain 1.5 points.
Is there a quantifiable method we can employ to adjust our profit targets according to the ATR?
Eric, do you and Marco always go for 4-6 ticks even on volatile days?
I am slowly improving and I think im doing ok for only being at this for 7 months. This particular month would be 100% accuracy so far if I was going for 6 ticks, but if I would have caught a loser on a volatile day it would sting.
Also, Eric, FYI your course has very much improved my trading. Im still working through it but it has definitely helped.
Profit Targets
Profit Targets
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Re: Profit Targets
Volatility is tracking by the ATR variable. Essentially it provides feedback on how much on average the last 21 bars move. This can be used as a good relative gauge (not including him impacting news events).
* In today's markets 6 ticks is the minimum (if ATR approx 2.5 or less which has happened on rare occasion the last 2 weeks then use 4 ticks). It is a sign of indecision or a tight trading range. Pre 2020 4 ticks was used based on market movement volatility.
* 6 ticks vs 8 ticks. If the ATR 4++, it is signaling higher volatility. Is this temporary or the market is moving larger distances? This can mean 2 things. 1) You may be entering into an environment that is much more volatile than your usual skills have been training. Not every day has to be trained. 2) You may need larger target 8 ticks or in the future years greater.
As you have noticed, much of trading is removing the errors. Keep up the good work!
Hopefully helpful and good trades to you!
* In today's markets 6 ticks is the minimum (if ATR approx 2.5 or less which has happened on rare occasion the last 2 weeks then use 4 ticks). It is a sign of indecision or a tight trading range. Pre 2020 4 ticks was used based on market movement volatility.
* 6 ticks vs 8 ticks. If the ATR 4++, it is signaling higher volatility. Is this temporary or the market is moving larger distances? This can mean 2 things. 1) You may be entering into an environment that is much more volatile than your usual skills have been training. Not every day has to be trained. 2) You may need larger target 8 ticks or in the future years greater.
As you have noticed, much of trading is removing the errors. Keep up the good work!
Hopefully helpful and good trades to you!
Re: Profit Targets
Thanks Eric,
To recap, can I reasonably implement these following simple rules? (Given that the ATR is not just a volatile "moment" in a trading day, but the overall volatility of the day as a whole, at the time of entry)
2.5 or less = 4 Ticks
2.5 - 4 = 6 Ticks
4++ = 8 Ticks
And on higher volatility days (4++) lower position size while increasing the profit target. Ex- 4 tick days trade 2 contracts, 8 tick days trade 1 contract. Reasonable?
Another question if you dont mind:
I ive spent alot of time watching macks youtube vids. *IF* a trader was good at entering on Mack-Marked trades, I have noticed that they almost always go for a minimum of 2X the ATR. There would be more losers doing this, but profit factor would rise significantly. Can you explain the reasoning behind scalping like we do VS trying to get more out of every trade? Is the reasoning essentially to try and extract at least some money from the market, even if we might have been wrong to enter in that spot in the first place? (Being right, even if we are wrong)
Thanks again
To recap, can I reasonably implement these following simple rules? (Given that the ATR is not just a volatile "moment" in a trading day, but the overall volatility of the day as a whole, at the time of entry)
2.5 or less = 4 Ticks
2.5 - 4 = 6 Ticks
4++ = 8 Ticks
And on higher volatility days (4++) lower position size while increasing the profit target. Ex- 4 tick days trade 2 contracts, 8 tick days trade 1 contract. Reasonable?
Another question if you dont mind:
I ive spent alot of time watching macks youtube vids. *IF* a trader was good at entering on Mack-Marked trades, I have noticed that they almost always go for a minimum of 2X the ATR. There would be more losers doing this, but profit factor would rise significantly. Can you explain the reasoning behind scalping like we do VS trying to get more out of every trade? Is the reasoning essentially to try and extract at least some money from the market, even if we might have been wrong to enter in that spot in the first place? (Being right, even if we are wrong)
Thanks again
Re: Profit Targets
Targets make sense. However, remember with very larger bars what it may be saying is that the volatility is so great that it may be better to not trade. Directionality bias vs high volatility - there is a difference. One of the reasons why one doesn't trade the news. There is a relationship between bar size and the % success execution. Let's say average bar size is 4. Well, 1/2 of that is 2. Using a target of 2, you need to judge 75%+ probability situations well to maintain profitability (which is what is trained in the lectures). It is the relationship of the 3 variables (probability being the hidden one which is trained through experience).
With respect to targets, and Mack selections, the prime issue is that individuals are making poor choices for their trading opportunities. They are "enticed to move too soon". The lectures refine vision to the very high probability situations, and so the agreement against what Mack trades, as a subset, becomes very high, very quickly.
Essentially, it almost creates a mechanical system for evaluation. This is important in developing skill, fluency, and competency.
The last portion though relates to the market itself and personality. You will find that 80% of the time, the market is in a trading range. . . . This is critical. It means that most candidate selections will not move very significantly unless a trend is created. So, a portion is taken as a scalp, and opportunity for much more exists as a runner. On trend days, you'll want to "run as far as possible".
Hopefully helpful and good trades to you!
With respect to targets, and Mack selections, the prime issue is that individuals are making poor choices for their trading opportunities. They are "enticed to move too soon". The lectures refine vision to the very high probability situations, and so the agreement against what Mack trades, as a subset, becomes very high, very quickly.
Essentially, it almost creates a mechanical system for evaluation. This is important in developing skill, fluency, and competency.The last portion though relates to the market itself and personality. You will find that 80% of the time, the market is in a trading range. . . . This is critical. It means that most candidate selections will not move very significantly unless a trend is created. So, a portion is taken as a scalp, and opportunity for much more exists as a runner. On trend days, you'll want to "run as far as possible".
Hopefully helpful and good trades to you!
Re: Profit Targets
Thanks Eric, very helpful.