Brilliant discretionary trading today. In addition, the updates during the day helped me to set stops and targets for another system. I hope lots of people took advantage of the free subscription. This is not a recommendation.
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Yes, I Agree. BI had nice trading today.
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Thank you @KarlA and @JeyC for the kind words.
For those wondering how the trade was managed today and how I operate here’s a run down.
-Entered short 1 contract ES @ 2637.75 at 10:57
-As the trade worked, I adjusted the stop on the first contract and added a second contract
-The second contract was added @ 2631
-At this point with both contracts combined, the total risk was $775 total
-Stops were set at that time at 2641.50 and 2642.50
-A memo went out to investors informing them of those stop prices and the total risk on both contracts
-I had 1 contract set to come off at 2623.50
-With one contract left the stop moved to 2628.75 and continued to move down until we got trail stopped out
-Here are the stops levels for every time it was adjusted
-2616.50, and finally 2602
The 2602 is where we got trail stopped out. A memo was sent out to investors informing them of important levels @ 12:34pm New York time and mentioned 2586.25 as an important major level. Another memo at 2:10 was sent out and mentioned this same level. Some charts were also sent out to visualize.
If this important 2586.25 level was taken out to the downside, the stop would have moved again to lock in even more profit.
We entered the trade around 11:00am and the first contract came off around 12:30. It took an hour and a half to completely remove all the risk out of the trade. At that point, we were guaranteed a profit even if we got stopped out. Our “worst” case was a locked in profit. That’s a great position when the worst thing that could happen is making a profit even if we got stopped out.
The memo from 12:34 also mentioned other important levels for other markets even though we were not in those trades.
I wanted to give a rundown as this should help clarify any questions on how I manage trades and operate. The max loss was $775 and we made $2028. In R multiples, we made 2.6 R. This is the amount made relative to the risk or leverage used. Here’s why I use this R multiple metric. If I made that much and another trader made the exact same amount, did we both do good? If I told you that I risked $775 to make that and the other trader risked $4000 to make that same amount, you can see how that metric comes in handy. It highlights how you arrived at your profit and if you took appropriate risk or too much risk to arrive there. Clearly without stops you can’t measure this metric as you are essentially taking unlimited risk.
Again I get a lot of questions on this so hopefully this helps those with questions. I have another post with a free coupon for Payoff Matrix and Backward Induction that will expire this weekend. If you’re interested, this will afford you one month free of any charge. $0.00 to one or both strategies but it does expire Sunday night at midnight so please be aware of that.
You can also get more information about risk management at the payoffmatrix com website.
I don’t normally go into this much detail in the forums on how I manage the trades but some have questions and they read the forums so this may help those. The two trades earlier this week with 2 contracts were also managed this way. I introduced this concept to the investors of starting with our smallest size and taking the smallest risk when we get stopped out. When it does work, we want to take advantage of a move by adding contracts but also moving stops so we’re really taking advantage of the move with the same or less risk. What we don’t want is to add more contracts and have double the risk and get stopped out on everything. That’s why I move the stop before adding on and scale out to lock in profits and trail the stop.
Have a good weekend.
Good day
Closed trades equity curve for all of the single contract ( 2 contract recently) ES trades in the two systems:
Hello @JITF
Payoff Matrix has not taken any of the recent 2 contract trades. There’s only 3 of those trades and all took place in Backward Induction. Not sure what criteria you are using for the chart posted. Can you clarify? What trades or what date range you used.
Thank you.
Good day
My guess is it’s all trades starting from 3/01 going forward for Payoff Matrix and total trades for Backward Induction from inception?
Payoff Matrix would be down $2905 in that period and Backward Induction up $7114. I’m assuming the right side is equity but that doesn’t align as it shows a combined equity of a little over $2000. I’m also guessing the bottom is number of trades?
The reason it’s confusing is the combined single trade equity is $4209. That’s why I am asking about criteria used for the chart.
Thanks again
Good day
These are all ES/NQ trades from both of your systems after 2/20. I assume that the rules for these trades are the same, you started backward induction, got good results and expanded them to payoff matrix, but with less success. Am I right?
PS 4/6 trade was not available yesterday. Now equity is up to approx 4,300$.
Hello @JITF
The rules are not the same for Payoff Matrix and Backward Induction but the updated equity sounds accurate. Although the rules are different, I may get the same signal in both strategies (two different rules firing off the same long ES signal for example). Since I have investors in both, I take the first signal that comes in and would not take the other strategy signal to avoid being in the same exact trade in both strategies. No point in getting stopped out twice if that were to happen.
For example, if I got a long ES signal in Backward Induction I would take that. If I was still in the same position and got a long ES signal for Payoff Matrix, I would not take that. If the the long ES signal came in for Payoff Matrix first, I would take the trade in Payoff Matrix and avoid taking the same exact trade in Backward Induction.
Another example is if I got a long signal in CL for Payoff Matrix and a long signal in ES for Backward Induction, I would take both trades at the same time. I just try to avoid the same symbol. Reason is to avoid having the same investors get stopped out twice if we were to get stopped out.
Two completely different strategies and different signals.
Good day
