5% rule for TF Future

S2 - Steward - Resource Management capital management
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I’m cofusing about how to apply the 5% rule / 6 trades on Futures, exact, the TF future. I’ve been thinking about it, I don’t know if this could be efficient.

Example: Average of 20 ticks stop Loss each trade x 10$tick = 200 $ risk average per trade. 200$ x 6 trades = 1200$.
1200$ is 5% of 24.000 so I would need 24.000$ to trade 1 contract to follow the 6 rule? but of course, I would need to win or lose 120 ticks in one session, is that possible on TF or any Future?

I’m really confused give me a hand please :smiley:

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The lack of efficacy is actually the point. Following the apex method it is difficult to be down a net 6 trades on a single instrument. Therefore, allowing you to continue trading without losing your account quickly by following the 5%/6 rule.

Without capping risk based on account value it is very easy to wipe out an account on, especially on uncapped risk futures, contracts.

The first goal in trading is survival through risk management so you can be around long enough to keep trading and get it down.

Note having your risk capped say at $200 on a loosing trade does not mean your profit is capped at $200 on a winning trade. Ie Trade 1 makes 300 +300 Trade 2 looses 200 +100 Trade 3 looses 200 -100 Trade 4 makes 600 +500 Trade 5 looses 200 +300 Trade 5 makes 200 +500 Trade 6 makes 100 +600 Trade 7 makes 400 +1000 Trade 8 breakeven +1000 Trade 9 looses 200 +800 Trade 10 makes 300 + 1100 (under 5% goal by 100) Trade 11 looses 200 +900 Trade 12 makes 600 +1500 (now you are at/above your trading goal of 1200 and stop)

You stop trading so you don’t give back your profit goal of 1200 Note if for some reason you want to keep trading to increase your potential profits on the day THEN the lowest you allow your account to get down to is +1200 and stop at that point no matter what.

You can have days that are @ or more than +1200 but you should never have days that are ever more than -1200

Will you make +1200 everday, obviously not. But you also won’t lose 1200 everday. Many days will be less than the +1200 and not as low as the -1200

Add in the fact that you can add in on multiple contracts on a running day but waiting till either A the previous contract is breakeven or B till the previous contract is up 200 or C the previous contract is up 400 and you can easily make 10,20,30+ a tick without adding in risk.

If the issue is not having 25k to be able to follow this rule for directional trading with futures you can do one of the three following strategies:

A) hedge the future with nadex spreads to significantly reduce risk while also improving the possibility of profiting by using Nadex spreads to do a hedge. See http://apexinvesting.net/forum/ultimate-hedge-strategy-123/ultimate-hedge-video-604.html#.Uty3bCPnbqA

B) Just use the Nadex Spread using the ATM spread to mirror the market. (Small Cap 2000 spreads trade at 1/10th the size with a risk of only $1 per tick.

C) If outside the US use a small cap cfd to limit risk to $1.00 a tick.

D) If you dont want to hedge and arent willing to trade aprrads o trading a different instrument then choose a different instrument with a smaller tick value (ie mini oil for $5.00 a tic ora mini lot on forex at $1.00 a tick.

A benefit of choosing hedges is you lower the risk per trade. A benefit of doing just spreads, CFD’s, or a different instrument like fx allows you to better manage risk by by being able to do 1, 2 , 3, 7 etc to match your risk model %.

It is important to understand and be realistic about your risk based on your account size or you will over risk your account. Leading to emotional trading risking to much not taking that next trade which was big enough to cover muktiple losses and more. We’ve all been there the faster we are honest with ourselves about how much we can and should risk based on account size the faster we can move towards the goal of surviving long enough to potentially be full time traders. I can’t stress the reality factor here enough. If you have to risk to a high a % then do a different instrument or a hedge strategy.

Note this in application to trend trading various strategies allow more or less of a risk % depending on probability. And I don’t mean probability based on historical win %. If buying or selling something at the money even if you’ve won 80% of the time the hard reality is that this next trade has a 50/50 chance of being in the 80% win bucket or 20% loss bucket. Owning up to this helps to avoid some stupid mistakes that anyone who has traded has made. When I say higher % probability I mean a itm type option or binary trade or. A lower % meaning a otm type option or binary trade.

It is important to remember not to “fall in love with a instrument” that we let risk not take precedent and stuck to trading it with to large of a risk based on our account size.

You can risk literally just 5 or 10 bucks on us tech 100 silver copper etc. Not my favorite based in slow tick movement on spreads but if that is what account size calls for then go there.

Also something that has served me well is not getting stuck on the old dog can’t learn new tricks adage. Spreads may be totally foreign to you as they once where to me buy if they help me better manage my risk then I have to get over it and learn how to use them as stated earlier Rusk management comes first.

The 5% /6 rule is also just a model guideline you could change it of course. But if you increase the risk %that increase the probability of loosing your account faster or making more faster and as Murphys law has it it works we get lucky then lose it even faster after a “lucky” winning streak.

The most important aspect here is the psychology of risk management. How much could you lose on a trade and not be so damaged that you easily take the next one. If you risk to much you will let your losses grow and cut your losses short or you will get caught in the downward spiral of loss loss not trading missing win that made it all back and then some beating yourself up and taking the trade the take the next loss not take the next trade and it of course wins so on an so forth.

The whole point of the /6 part is to make it difficult to have to stop as you would have to be down a net 6 losses in a trading session. Decreasing this /6 only expedites you stopping trading faster and somehow that always seems to be right before all the money is made that you miss.

This does require you to often slow down some but also helps you to last a lot longer and not get so beat up fast and not get so psychologically messed up that you change your strategy every day week etc. Helping you to not sabotage yourself.

I know this is a lot and hope it makes sense if not let me know as it is paramount to your success.

Darrell

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Thanks for your reply, very helpfull

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I haven’t seen the TF give 6 good individual apex trades in a day yet. So, if you can’t get 6 in a day, would you consider that 6 trades to be as long as it takes to get 6 good apex trades, be that one, two, or three days?

I have taken 6 or more trades on TF in a day, but they were not all Apex elite trades, so they would not count, is that correct?

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All trades in the apex system would count. Scalps apex apex add ons mvp reversals, profit poppers, bmx reversals, momentum breakouts, apex reversals etc…

We don’t need 6 trades a day as one trade can run and you could be done on a single trade.

This is about risk management. Which is what is most important.

If you don’t have 6 trades then you would not ever be down the net 6 trades (5%) that’s not a bad thing.

Though with all setups in apex elite there are usually 6 or more trades in a day.

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“You can risk literally just 5 or 10 bucks on us tech 100 silver copper etc. Not my favorite based in slow tick movement on spreads but if that is what account size calls for then go there.”

What strategy can you implement to only risk 5 or 10 bucks a trade?

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Is a 5% gain a day realistic? At $7000 you can only risk $58 a Trade and you’re trying to make $350. That seems like a whole lot to be up for one day with that account size. Scalping the Nasdaq my previous trainer said it’s best to go for $100 a day with 1 contract and the scalp system risked $60-$65 dollars a trade. Trying to make $350 scalping would be a challenge on most days and require a lot of trades.

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US Tech 100 now ticks faster they have updated it to not tick in 1 but now .1 so its no longer in the slow moving spreads category.

You can try silver or copper they tick slower than the underlying markets. Risk little make little.

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I usually make way more than 5% a day. I can’t comment about your previous trainer or their success rate.

Making 350 scalping is not that hard. (That is a mere 3 or 4 elevator/slingshot/swing scalp trades) It comes down to position size and scalp size. Also i would not recommend you just scalp what a waste of all the trends and an expensive habit that will often be eaten up by fees.

You have never tried any of our systems so its going to be hard for you to make such a judgement call with such limited information. Here is the main system you see me place trades doing. https://forum.apexinvesting.com/t/izone-sharpshooter-set-up-and-rules/4415

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I’m really excited about the MVP Elite system. The entries are concise and there is no ambiguity on the entry’s targets and stops. I also like the fact that all of these trades are entered on a stop so if you have a stop limit with an offset your entry is defined. I’ve really pulled my hair out before on bounce trades with limit orders that never get filled. I’ve traded the NQ Futures for the past year and a half with no success, but I haven’t given up faith. I think I’ve made every mistake you could possibly make in the trading world. From not following stops to making emotional mistakes and blowing out accounts to over-analysing strategies (I know a scalping method and a swing trade method). I overcame all of those weaknesses and continued to use a modified scalping method and then I ran into trouble with overcrowding and overtrading. 1 Day I was at break even but had 100 fills and was down -190 bucks in commissions and I knew something was wrong. Now I feel like everything I’ve been through will be the catalyst to my success stepping forward with your apex elite system. After binge watching a ton of your videos and going through 9 of the 10 courses you have under the Active apex investing courses tab and completely learning binarys, spreads, non-directional trading your spread scanner all your indicators and watching and taking notes on your money management system (I’ve watched that video twice), I decided to go from futures to forex so I can trade Micro lots so I can start out with a $500 account and have risk management in place.

So, I’ve been going through forex 101 courses and learning how to place orders, just opened an FXCM account today.

Questions for you Darrell. Is there anything crucial I need to know about forex to be successful with the elite system?

What Pairs do you suggest I start out trading using the apex trend catching system and elite system?

Which pairs are the best to trade the elite system from 6pm-2am and from 3am-9am and 9 am-4pm

I’m trying to scrape some more money together so I can start 2016 the year that my company starts making profit month after month. I’ve put in $15,000 in training courses for stocks, options and futures and losses incurred over the past 4 years.

I’m only 25 and I’m not ever going to give up. I really appreciate what you are doing here and this website. I’ve been learning so much and I’m sure that I’ll start having success.

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Great info. I can not say that there is anything particular you need to know about Fx itself to trade the Elite System with FX As far as the izone Sharpshooter system, and starting with a $500 account, i would recommend that you use Izone SS and trade Nadex Spreads on NQ personally. But if your plan is to trade FX, that is great too. You should choose the FX pairs that you are most comfortable with and familiar with how they move etc 6PM- 2Pm the most movement witll usually be in AUd or JPY pairs since Australia and Japan are open 3Am-6AM will be mostly the EUR and GBP pairs since Europe is open 9AM- 4 PM most pairs are all moving since the Us is open. May want to look at EUR/ USD GBP/USD Obviously you have multiple pairs to choose from and want to check out margins and spreads on each pair as well

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I just went through the Elite MVP system training and wrapping my head around all the basics of that system. What is the izone sharpshooter system like? Would you recommend doing spreads on the trend catcher system? I like spreads a lot better than binary’s right now b/c it’s not all or nothing. I’m trying to trade within the 5%/6 Risk management, but I’d basically have to do microlots on forex maybe up to 4 microlots and then I don’t know if it would really be that worth it. I’d rather start sooner than have to wait to save up more money and I can get $500 quick, so my main concern is what should I trade to fit my small account size. I’ll probably be risking 3-6 percent a trade if I trade spreads or mini lots, maybe it’s a risk I’ll have to take in the beginning.

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I recommend spreads over binaries any day of the week.

For small accounts you can do Spreads, CFDs or Forex

Here is the izone sharpshooter course: https://forum.apexinvesting.com/t/izone-sharpshooter-set-up-and-rules/4415

This is the favorite course of most of our students. It takes a little to get through but its really is insanely simple.

Swings Slingshots from TC are awesome as well

And Elite MVP is good but does have a bit more style in it.

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What do you mean the Elite MVP has more style to it? I just want something very simple that’s why I like the Apex Trend catching strategy. I just want to do the apex trend catcher entry and the scale in trend catcher entry and the MVP reversal maybe the BMX. Not profit popper or momentum scalps, I spent a long time doing scalp trades and haven’t had any success because my system was too ambiguous taught by a trainer who taught the system but used his own filter that made it work for him but had varying results with his students.

I don’t like 30-40 trades a day and multiple entries. I like the MVP Trend catcher b/c mistake ratio’s are dramatically down b/c it’s a longer trade and the its a lot fewer entries. I like iron condors and strangles b/c I can take 20 minutes to place the trade and double check everything no mistake ratios its clean and clear cut. I don’t like trades that happen in 5 minutes and I missed out cause it happened too quick and now my probability ratio is destroyed. I’m trying to create a business plan that includes trading forex pairs from 6-11 looking at aud/jpy and other pairs that have news events that increase the volume and doing the apex mvp on those and doing news strangles on pairs at night and iron condors.

Sure its might not make as much as trading during the european session or usd session but it fits my schedule and its very straight forward. That’s what I need. A core simple, straight forward system eliminating overtrading, overcrowding, mistake ratios from the market being too quick and the possibility of not getting into the trade b/c your limit order didnt get filled with a good risk to reward. That’s why I like trend catching systems from what I can see right now.

Slower system means fewer mistakes, less emotions, more time to think about the trade, entering on a stop means you don’t have to worry about limit order fills on bounce trades that your system showed profit but the bid/ask never filled it cause you didn’t place the order soon enough. This is all the problems I’ve had and how I’m trying to correct it.

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I wish there was historical data on spreads so I could backtest iron condors and straddles on news events…

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Perhaps you did not look at the link i sent. It has nothing to do with 5 min contracts does mit have 40 trades a day and is very rigid on rules its basically what you said you want. I designed the systems. I recommended IZSS based in what you said you want. May be worth checking into as i know them insode and out and know what your looking for based on yoir post. Just trying to help.

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We are working on that. We have terabytes of data. Just have ro make the user interface. One step at a time.