averaging 1-2 points per day on the ES is possible provided you're able to cope with DD's of 100 points or so. trading is not about finding a secret formula that might turn out to be a cash cow, but rather, understanding how to deal with draw downs. in this world, your long term expectancy will always revert to zero. your goal is to end slightly above that, so you can average whatever points your goal is in the long run. the difference between ending up in the positive side of the expectancy equation is strongly attached to how you deal with your DD's, and, more importantly, how severe they are in percentage terms.
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1-2 ES points a day
- Thread starter esnewbie
- Start date
Thanks for all your feedback.
Regarding 100 pt DD...I am not following why I would take on that type of risk to make a mere 1-2 points. It would seem if I enter near a high probability area ( say near S1 or S2 pivot) I should be able to keep my stops tight ( 1/2 the ATR).. disagree?
BTW, I'm looking to scalp so I would reset everyday. How can I lose 100 Pts in 1 day's position?
Regarding 100 pt DD...I am not following why I would take on that type of risk to make a mere 1-2 points. It would seem if I enter near a high probability area ( say near S1 or S2 pivot) I should be able to keep my stops tight ( 1/2 the ATR).. disagree?
BTW, I'm looking to scalp so I would reset everyday. How can I lose 100 Pts in 1 day's position?
the 100 point DD is the max DD that your account could suffer, and it is an estimation off the top of my head.
it all depends on your long term win % and win/loss ratio. like i said, in the long run, all systems expectancy revert to zero. this means you'll have to sustain extreme (positive and negative) returns for extended periods of time. one of these periods could sum up to 100 points DD. it only takes your profit factor to fall bellow your average during that time, which will lead to losses to add from the peak to valley.
professionals usually use monte carlo simulation to perform a statistical analysis of what will be the probable DDmax for certain trading system with a proven track record. you'll then get a confidence level and could size your bankroll adequately to cope with the that probable DDmax, as suggested by the sim.
perhaps you might be thinking all this is not necessary because, you'll just scalp the ES and the daily outcome is solely dependent on whether you made your 2 points or not, but believe me, you're wrong. you'll sooner or later realize that, even if your max DD per day is just 2 points, you can end the year with 100 points DD, as your trading system won't perform equally at all times.
the fantasy of setting up a trading system that is able to secure whatever points is in any contract without significant DD's, is one of the premises of so many failed traders.
it all depends on your long term win % and win/loss ratio. like i said, in the long run, all systems expectancy revert to zero. this means you'll have to sustain extreme (positive and negative) returns for extended periods of time. one of these periods could sum up to 100 points DD. it only takes your profit factor to fall bellow your average during that time, which will lead to losses to add from the peak to valley.
professionals usually use monte carlo simulation to perform a statistical analysis of what will be the probable DDmax for certain trading system with a proven track record. you'll then get a confidence level and could size your bankroll adequately to cope with the that probable DDmax, as suggested by the sim.
perhaps you might be thinking all this is not necessary because, you'll just scalp the ES and the daily outcome is solely dependent on whether you made your 2 points or not, but believe me, you're wrong. you'll sooner or later realize that, even if your max DD per day is just 2 points, you can end the year with 100 points DD, as your trading system won't perform equally at all times.
the fantasy of setting up a trading system that is able to secure whatever points is in any contract without significant DD's, is one of the premises of so many failed traders.
Goodmorning,Quote from esnewbie:
Thanks for all your feedback.
Regarding 100 pt DD...I am not following why I would take on that type of risk to make a mere 1-2 points. It would seem if I enter near a high probability area ( say near S1 or S2 pivot) I should be able to keep my stops tight ( 1/2 the ATR).. disagree?
BTW, I'm looking to scalp so I would reset everyday. How can I lose 100 Pts in 1 day's position?
You are going to need to elevate your thinking for you to have any chance of producing net positive streaming days.
You must set your mind so that each and every day offers multiple trading opportunities, be it an inside;outside;range;etc etc day.
Quite frankly ... who cares.
Each day the ES will rush headlong (momentum) from congestion to congestion, where the longs and shorts will do battle.
Who cares, whether these bands are called S1, opening range, yesterdays high/low, etc etc ....who cares, because in your mind you have normalised these events so that each day produces similar opportunities.
The problem is always the same.
Can the attackers break through, or will the defenders prove to be too strong and push them back usually
either to the last congestion or sufficiently back so that the attackers can regroup.
Fib retracements, I believe they are called.
All the time these two groups are dancing on landmines called 'limit stops' and these need to be cleared first.
Esnewbie ....If you enter on the correct tic and the battle goes your way, the collapse of the limit stops and the big push from your team will carry you for several tics... this is your profit, so bank it.
If the landmines plus the efforts of the other team are proving too strong, you will be usually provided with a 3 tic range in which to bail out.
On average the sum of your bailouts should hover around zero ... this is what you would call your loses.
As to 100 point DD .... I cannot comment as I do not view the game according to mechanical mathematics.
This seems to me to be an 'abstract' view of real life.
As you correctly state 'each day is a reset'
Goodluck and never be discouraged.
Fearless
Nice description. This is pretty much what I am trying to do. As to entry I watch the dom and tick chart on Buttontrader and try to enter just as the bid/ask appears to be getting taken out. Any info on your entry technique would be appreciated.
Nice description. This is pretty much what I am trying to do. As to entry I watch the dom and tick chart on Buttontrader and try to enter just as the bid/ask appears to be getting taken out. Any info on your entry technique would be appreciated.
Quote from woundedknee:
Fearless
Nice description. This is pretty much what I am trying to do. As to entry I watch the dom and tick chart on Buttontrader and try to enter just as the bid/ask appears to be getting taken out. Any info on your entry technique would be appreciated.
Be careful of the DOM.
Orders can be pulled when the big boys suddenly want asymmetry as a precursor to a move.
And previously loaded orders can be pulled at the last moment because the entry conditions are not being meet.
Either way, IMO the DOM is less than reliable when you are chasing a level-to-level move.
The entries are obvious really.
The trick lies in the exits.
Good luck. Hard work has it's own rewards.
Esnewbie ....If you enter on the correct tic and the battle goes your way, the collapse of the limit stops and the big push from your team will carry you for several tics... this is your profit, so bank it.
[/B]
Curious how you enter on the "correct tic" without watching dom? Im afraid it isnt that obvious to me.
Quote from woundedknee:
Curious how you enter on the "correct tic" without watching dom? Im afraid it isnt that obvious to me.
I watch the T&S >99.
I watch for speed and lag.
Essentually, I am watching the 'Watchers'
I dont know any better way of describing this process simply because this is where you cross the median of art and science.
Ok were on the same page after all. Buttontrader has last trade built into the dom and this is what I am watching, the size and speed of trades going off at bid an ask.
Quote from woundedknee:
Ok were on the same page after all. Buttontrader has last trade built into the dom and this is what I am watching, the size and speed of trades going off at bid an ask.
I really do not know how to explain trading the ES because it is relatively straight forward.
The price moves from ledge to ledge where a 3+ tic battle takes place.
Clearly some ledges are more important than others and this is easily seen.
If you enter on the correct tic, you have a cushion of 1 or 2 or more tics depending on how the battle is going.
You are not going to succeed in every battle so you need several trades per day in order to accumulate your net daily tic target.
Bear in mind that every tic lost must be made up in the same session. You do not allow yourself the luxury of saying 'never mind, tomorrow is another day'
Each day is complete.
Therefore, if in doubt, exit for BE or a tic or two either way. There are plenty more ledges in a session and if you win 75%+ of your battles, you will make your daily net tic target.
If you reduce the day to this process of lurching from ledge to ledge then all trades are the same. There is no need for hyper analysis and/or name labeling.
It all starts with a pledge to yourself
'no losing days'
If you cannot accept this statement then you are stuffed and thereby consign yourself to following the path of win / loss, drawdowns etc etc that the collective geniuses of Trading prescribe.
Always keep in mind that your Broker is your friend. You have mutual respect and trust.