I’m a bit confused if the same risk management applies to the binaries MVP TTPC as it does with the Apex Elite trading spreads. Or I may not have the general risk management understood at all.
Am I correct here?:
Say $15 min profit on a buy-in at $85, or a sell-in at $15.
I exit early as to not stay in till expiration and get out at either say, $4 or $96.
That’s an $11 profit (either trade).
My risk on either a buy or sell trade is $85.
Now to reduce the risk say, I just use the ticket on the scanner and set a stop-loss at the strike as a consistent rule. (loss ~ $50 exit)
A) Wouldn’t my loss on either the buy trade or the sell trade be: $85-$50=~$35 loss? Isn’t that like more than a 2:1 risk/reward?
B) If I did 6 trades on one instrument, wouldn’t I have to win 5 out of 6 trades every day (83%) just to stay barely profitable (~$20)?
C) Is my story problem correct here? and
D) If so, should I be using a different risk management model?
If what I have as above, is correct and this is what I’ve been following, it’s no wonder my account has been struggling.
I’m a bit confused if the same risk management applies to the binaries MVP TTPC as it does with the Apex Elite trading spreads. Or I may not have the general risk management understood at all.
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Elite is a totally different system its a trend trading system for catching large moves. This is trend or time premium collection so not the same thing for risk models etc… trying to combine the 2 risk models would not beneficial treat them differently.
This is the minimum ideally you are closer to $20 Minimum profit
If you are taking the minimum profit… it will be difficult to take a profit as you are also going for a minimum profit of $15 which you wont get if existing early… this would be optional
This would be your maximum risk - If you bought at the maximum price at 85 and sold at the minimum price of 15 this would be correct.
Depending on if current hour next hour time to expiration distance of strike to market can increase this so there is less risk
Also waiting on a pull back using expected range etc… can also increase the premium received decreasing the max risk.
If you wanted to do the moderate risk only strategy (which I don’t recommend as I state multiple scenarios in which you should ALWAYS convert to conservative trailing with the offset line - then yes doing this would decrease the max risk. Trailing it with the offset line would decrease it further. Ecspcially if you see the predictor arrows go flat or a reversal MVP or confluence flipping etc…
This is accurate your loss would be a 2:1 risk reward
Whats important to remember is in most cases when you are trading ITM binaries/options etc… you are increasing your probability which increases your risk and decreases your profit (its how probability and profitability work)
By sticking with the ITM your probability is higher think of the price itself as a proability of expiring ITM
So if i buy at 85 then over 100 trades 85 should expire ITM
i will make 15*85 1275
and lose 85x15 -1275
Giving me a net 0 profit less fees (there is no bid/ask spread if holding to expiration) as you will have max profit or loss
This is assuming just randomely buying at 85 versus using trend confirmation (ie mvp) without using stops (lowering risk but will cause a few more losses as well) and without taking profits (will lower profits but also decrease losses)
5 wins at 15 = $90
1 loss at 35
Net = 55 (less fees)
However if you did 11 profit taking off at 4 from max
5 wins at 11 55
1 loss at 35
net = 20 (less fees)
note all of the above = just doing 1 contract - if doing 10 that would be 200 profit if doing 100 that would be 2k profit (and fees get smaller as you get above 10 since they are capped at 10 contracts per order (ie 20 contracts in 1 order has same amount of fees as 10 contracts in 1 order)
Also the above would be assuming just making 15 (or 11)
Also the above assumes you don’t tighten your trailing stop using the either beginning or at least when confluence/mvp reversal etc… show to do so (i have trades where i lose $1.00 a contract by following this etc… so that adds up a lot by reducing risk by trailing)
See above
looking at minimum profit as a standard its a minimum not the standard average
can wait on pullbacks (will miss some winners - will still catch loosers but will get larger profits on winners)
taking profits when doing the minimum (not sure if you should bother as you are throwing out 30% of your profits)
not trailing stops which will decrease loss on losers (both sides of the story will cause some winners to be losses (but smaller) and some profits to be smaller)
important to use the filters i teach on MVP being (any questions on these ask in the MVP TTPC forum under Questions - Forum - System - MVP Trend Trading Premium Collection)
1)predictor is trending (arrows moving in direction of signal - not flat)
2) volatile/offset line must be in direction of trade
3) price must not be touching the volatile trend line when signal is given (if waiting on pull back profit much higher and risk much lower)
4) use caution when nearing max of expected range for hour or next hour
[quote=yellowpiproad]
D) If so, should I be using a different risk management model?
If what I have as above, is correct and this is what I’ve been following, it’s no wonder my account has been struggling.
Thanks Darrell.[/quote]
Yes risk model is off as shown above on entry minmium being the standard, taking profits giving up 30% when doing the minimum, not trailing stops at all to reduce risk, (not ever using based on the above pullbacks or considering actual/expected range) and not sure if you are filtering trades as laid out on the TTPC MVP thread as I don’t have a list of your trades with charts being posted by you in the trading pit room as they are happening to offer live real time help. But as you know list away i will be happy to help. Also consistency on all trades taken on a specific instrument that gave signals and where fillable (versus hopping from one to the next), what hour was chosen, and trading at a consistently time to measure hour by hour trade stats over time ie all 7 pm, 8pm or 11 am 12 pm, 1 pm etc… trades againt other trades taken at that time. We have many traders posting trades with more than a 80% win ratio using the strategy. But until i know more information and see it in real time flowing threw me and other traders can’t help you refine strike selection, expiraiton selection, filtering out trades, and acceptable profit price/risk/trailing stop execution.
Though even with the above done as you laid out with that ratio of 83% it can easily add up ecspecially when size comes into account.
For example see this thread where the traders profits are much lower than ideal per trade as laid out above, but note his risk management is also on track lowering his risk. Net average profit across all trades is low but the profits due add up. The trader is not a 1 contract trader all the time… I display how small consistent profits do add up. (consistent average profit is the key (meaning between wins and losses combined after fees do you have a consistent net profit - if so then its merely a matter of size not profit on a single contract or how much profit per trade). Though the profits can be further maximized using some of the things discussed above.
