Trade Aptitude
The worst situation to be in trading Futures or options is having one contract. You have little flexibility with your exiting decision.
Fortunately, with many micro contracts in Futures to select from even smaller account holders can trade multiples. This gives you the flexibility to “scale out” of the trade one contract (or more) at a time.
Ultimately, your size is a function of your acceptable risk. How much you’re willing to lose when you stop out will determine your size. Trading micro contracts, if you’re willing to lose $120 on a trade and the per-contract risk is $30, then your size is obviously 4 contracts.
The challenge you have with day trading is market noise. The bigger picture trend may look smoother than the trading timeframe chart. Sometimes that "noise" will stop you out prematurely. One way to mitigate this is to set an initial high probability profit target as your first exit. Call it a “risk management profit target.” It gives you a little win, reduces your risk substantially and leaves you with more contracts to make a better return on if price continues in your direction.
Instead of deciding when to exit while in a potentially emotional state, it’s better to select those exits in advance. Chart features, supply/demand levels, technical indicators and more are all viable ideas where price may stall or turn against you. Take a few minutes before your entry gets filled and visualize where you’ll exit and place those orders. You can always adjust for changing market conditions but starting with a decision and “known” reward/risk is important.
Our Futures team day-trades multiple strategies with edge in a live online environment. Selecting proper exits is done prior to entry. Join our team, learn the strategies, and trade live with us daily for 30 days. Money back if you’re not blown away! Learn more here.
To your trading success,
Mike Siewruk
PS: For more ideas on exits, check out the latest video on our YouTube channel. You can also subscribe and get alerted to new lessons. Enjoy!