Take for example YM (DJ mini futures), on the 1 min candlestick the ATR spikes to 6.8 and has been in 4-5 pts range lately. So what does that mean. You enter a trade say 1 contract and odds are you would make say 5 pts or loose 5 the next minute. If its trade good you would be making 2 ATR the next minute or get stopped out at 2*ATR stop loss. Now if you traded 10 contracts that stop loss would cost you $1000.
Now a tight stop loss in this market would almost always get called, so in a high vol market stop losses are say 4*ATR thats putting 2K at risk every 2 minutes assuming 10 contracts. While we tend to look at the positive side, trading discipline requires that we look at the worst case more often.
So why this example? In this environment you should lower your trade size and increase your stop limit.
Next is, try to enter trades where you are more confident about getting it right. Scalping will lead to ruin unless its an automated system. Thats my 2cents .. trade on!
