position sizing Archives • Futures Day Trading Strategies

Posts Tagged Under: position sizing

Follow this 7 Step Process to Effectively End Your Trading Day

 

trading day

How do you end your trading day?Do you just close your trading platform and then move on to other things in your life? The following seven 7 tips can potentially help you create a better trading routine and develop the discipline to be prepared for the next trading session.

Step 1: Keep an end-of-day trading checklist

Look back at all your trades and analyze how you approached them. It is important to avoid hindsight bias here and focus on objective criteria like trade entry, breaking vs. following rules,  FOMO vs. proper execution and so on. Keep this exercise as short as possible without overwhelming yourself. We recommend taking screenshots. Collecting screenshots of your trades over time can often be an excellent introduction to

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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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A better way to scale into and out of positions

 

Scaling into and out of positions is a common practice traders use to increase their chances for success when taking multiple entries and exits on their trades. However, there are a few things traders typically overlook when it comes to scaling into and out of trades.

Usually, traders don’t follow a rule-based or thought out position sizing and risk management strategy. This unfortunately often leads to wrong interpretations of trade management opportunities and false risk management decisions.

 

Bad practice I – scaling out of trades

Most traders will probably have done this before: partially closing a trade where price has moved into your favor to realize some of the profits and also to take off some risk. Whereas this is a good decision when it’s backed by price analysis, most traders cut their profits too early. The fear of giving back unrealized profits dominates the thinking of many traders and they will

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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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The 7 deadly sins of Stop-loss and Profit Taking placement

 

Many traders spend the majority of their time perfecting their entry-picking skills without realizing that choosing an entry is just one aspect of a good method. Setting Stop-Loss and Profit Taking orders are equally, and sometimes even more important, than knowing how to enter a trade. The following 7 points will help you understand why a professional and thought out Stop-Loss and Profit Taking strategy can make a huge difference in your trading and how it can potentially improve your current approach.

  1. Choose your stop before your choose your Profit Taking

Most traders set their stops and targets in the complete opposite way of how it should be done.

First, you should define the stop loss level and identify a price level where your trade idea is proven wrong. Do not pick a stop loss level based on the profit potential and the reward to risk ratio you want to achieve.

After you

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