money management Archives • Futures Day Trading Strategies

Posts Tagged Under: money management

Does Pyramiding positions work? You rarely hear this money management perspective

 

Pyramiding is a commonly used money management technique and even popular trading literature promotes this way of managing positions as a low-risk money management technique. In our opinion, this is far from the truth and even though it sounds good in theory, traders who pyramid their positions quickly run into problems and we will see why.

 

What is pyramiding?

Let’s start at the beginning and take a look at what pyramiding is. Pyramiding means that you add to an existing position once price moves in your favor. A trader would then start with a small initial position and as the trade unfolds add to his winners and slowly build a larger position.

This sounds reasonable if you don’t look at the psychology of traders and connect it to the most common problems that exist in trading. Then, it becomes obvious quickly that pyramiding often makes things worse as we will see shortly.

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The Pros and Cons of Dynamic Position Sizing

 

Money management and position sizing is an area that does not usually receive a lot of attention. Traders generally prefer to look for new indicators or try different entry methods and neglect other areas of their trading. It takes most traders months, and sometimes even years, before they turn towards money management and advanced position sizing techniques.

 

Day Trading Exit Strategies

 

However, for a well-rounded and advanced trading approach, having a thought-out position sizing strategy is very important. Flexible position sizing is used by some of the most successful traders; even in the book series of the Market Wizards, some traders utilize this approach.

 

What is dynamic position sizing?

Flexible, or dynamic, position sizing describes an approach where the trader adjusts his position size based on the quality of the trade and based on his historic

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Scaling in, Money Management and Position Sizing-Deciding on the Number of Contracts

 

Today we want to address a trading mistake we see way too often – the “wrong” choice for the amount of contracts, which can lead to a number of trading problems. Most traders are not even aware that what they are doing is influencing their trading performance in a negative way.

After reading this article, you will see how the contract size influences your trading decisions in ways you haven’t considered before.

 

Why trading with 3 contracts is easier than using just one

Before we get started, we need to make a point. It is not so much about the exact amount of 3 contracts, but the general idea behind trading with multiple contracts vs. just 1*. Many retail traders, especially when starting out, are scared of losing money and then just buy or sell 1 contract to enter a position without knowing about the implications.

Although those traders believe that their choice is

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How boring is your trading? Why professional trading should be boring

 

You often read that trading should not be exciting and that professional trading has to be somewhat “boring”. But what does exciting or boring in the context of trading really mean and how can you adopt a trading route that is more “boring”?  In this article, we show you the 4 different stages and types of trading, how excitement influences trading decisions and what a professional (boring) trading routine should look like.

Profitable Trading is BoringThe new trader – unconscious excitement

New traders don’t understand what trading is all about and how to approach the market in an efficient way – and it’s totally normal to start out this way. The new trader believes that trading is an activity where he can increase his net worth just by making a few investments; he

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6 elements of professional risk and money management

 

Risk and money management is an underrated trading element because, it seems at first glance, that looking for yet another entry methodology will be more beneficial for a trader. Nevertheless, many professional traders do not necessarily see themselves as traders, but at as risk managers.

“At the end of the day, the most important thing is how good you are at risk control.” – Paul Tudor Jones

The 6 following elements can help traders not only make better trading decisions, but also improve their outlook on trading in general and adopt a professional risk and money management approach.

 

Money Management

All graphs and performance figures are for illustration only. There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.  The use of stop-loss may

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