Absolutely this has been my downfall more than once sad to say.
$2,000 to $200,000 in 2020 at 2.00% per day.
- Thread starter sstheo
- Start date
Absolutely this has been my downfall more than once sad to say.
Steve what do you like about ES that made you decide to focus exclusively on that?
Thanks, and thanks for your concern. Your post is actually timely, as it is decision time on my stops now that I am trading the MES instead of MNQ and MYM.
True, I have a low number of losing days, and true I want to end green as a primary goal. But because of my high 80% win rate, I don't get anxious when I am down, and I don't "average down" repeatedly, which is my understanding of the definition of Martingale. I just know that if I keep swinging, eventually I will win the ballgame. Well, I know that some days I won't. But I plan on winning the series...
Fortunately (or unfortunately) because my account started growing well just before this very volatile virus period, I had not yet started to scale up before I chose not to (despite votes to contrary)--because of crazy moves . So I haven't even been tempted to average down. I just take my licks and move on! The recently increased margin requirements confirmed my choice to stay with singles or doubles.
One of my best friends uses Martingale and is quite successful. In his case he does 2 > 4 > 8 micro contracts. But he does well overall because he is highly disciplined in his stop just below (or above) the final entry of 4. But for most people, I think Martingale is associated primarily with huge risks and severe blowouts. I will stay away.
So what do I do when I am down? Keep swinging, like I said. And do it with as little emotion as possible. If that doesn't work, I will just either walk away OR I will just stop at -4%. -4% is my max loss for the day. That give me 25 days before I am dead. So right now, with ~$6k in the account, my max loss is about $240.
"Walking away" is synonymous with "I can't figure this market out, and I am done for the day before I lose even more." It is admitting failure for the day, but just for that day. It is preserving capital and a sign of great wisdom - and sometimes I surprise myself, LOL.
What is my per-trade loss? It keeps changing with the times. Always, I will try to "just get out" if the market starts to go against me, but I always want to have an emergency stop. I started this journal with $20 on the MNQ and MYM (40 ticks). And then I got up to 60 ticks and 100 ticks with the increased volatility. But now that I am on the MES, it is time to reevaluate.
One poster suggested a % of the ATR. I really like this. So I just plotted the daily ATR and the 3 day average. Friday was 100 points, but the 3 day average was 169 points. Check this ES chart out. We got all the way up to 270 ES points on the daily and 247 on the 3 day average! WOW....
I think this ATR stops idea is brilliant, and I just added some columns to my daily scorecard to make me analyze this:
I think that I will try 5% of the 3-day ATR as my max per-trade stop loss. 5% of 169 points (676 ticks) says that Monday's maximum per trade emergency stop will be 34 ticks on the MES. This is $43 per contract. As the volatility drops (hopefully) this number will go way down too.
Back in 2013 I made a post on MQL5 about how to set stops. Here it is. https://www.mql5.com/en/forum/11736 I do like the ATR stops idea the best for my max stop (see #1 and #2) but #7 is my favorite.
"Getting out immediately" means that I will try to get out at 10 ticks or less, and to do this, I must keep my finger on the close button. But if I turn my head at the wrong time, or we have more brown-outs like we did TWICE this week in Salt Lake City, it may blow right through that, and I need the emergency stop set for sure.
So what is it? 5% of the daily ATR. Monday it will be 34 ticks.
And again, my daily max loss is 4% of my account balance.
I have been extremely happy with the NQ and YM for many years. (Now micros: MNQ and MYM.) I liked trading the NQ and YM because I could trade the stronger one long and the weaker one short. And even though the full dollar move for the day was similar, I liked them because they had finer gradations than the ES for scalping. $5 vs $12.5 gets me in and out faster.
However...
Several people again recently suggested the ES/MES. And the recent volatility increased the spread on the MNQ and MYM to a point where the MES has a smaller spread dollar-wise. The greater popularity of this micro contract vs the other two has decreased the spread to almost normal 1 to 2 ticks. The others are still 5 to 7 ticks. This was the first reason I switched.
The second thing is that with one instrument, I now have 1/2 the number of charts! LOL. This is good for my processor and good for my tiny brain.
Don't change a thing. The volatility (ranging action) for these past two weeks have been at the most extreme in anyone's memory, 2008 crash be damned. THIS crash is historical. Play it like you have been and don't change a thing. This way you will be better prepared when the VIX finally drops below 50.
I do like your switching to the MES, it can ride these bumps without as much spread gaps as the other two.
Hi, can you talk more about your edge and what determines your entry? And why is it you use a line graph?
You mention previously about 2/3 of your trades are limit orders and that you used to trade FX, did you trade FX using the same mean reversion scalping type system? And were they FX futures and not cash market/cfd so you could place limit shorts in the offer queue for example?
I came across a very successful futures scalp trader who fades trends, sells highs etc back in 2008 that really inspired me to get into daytrading, he used just a 1 min chart and the DOM. He placed a lot more trades though, up to 100 or more, keeping a tight stop. It didn't seem like that style could be emulated in a cash/cfd environment though. What are your thoughts?
What do you think of the DOM and T&S 'tapereading' now, completely useless in this day and age compared to when you first started? I've been out of the game for a few years, sorry if this question is weird.
Cheers anyway. Goodluck to you sir.
You mention previously about 2/3 of your trades are limit orders and that you used to trade FX, did you trade FX using the same mean reversion scalping type system? And were they FX futures and not cash market/cfd so you could place limit shorts in the offer queue for example?
I came across a very successful futures scalp trader who fades trends, sells highs etc back in 2008 that really inspired me to get into daytrading, he used just a 1 min chart and the DOM. He placed a lot more trades though, up to 100 or more, keeping a tight stop. It didn't seem like that style could be emulated in a cash/cfd environment though. What are your thoughts?
What do you think of the DOM and T&S 'tapereading' now, completely useless in this day and age compared to when you first started? I've been out of the game for a few years, sorry if this question is weird.
Cheers anyway. Goodluck to you sir.
https://www.elitetrader.com/et/thre...st-right-here-baby.335635/page-6#post-4947119
IF you're evaluating exit strats above's a presentation cued to the spot that deals with one that's easy to apply to ten or twenty of your past trades and eyeball how it might apply.
https://stephenbigalow.com/pdfs/MajorSignals.pdf
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https://www.elitetrader.com/et/thre...t-right-here-baby.335635/page-10#post-5014580
10 Ways For Traders to Take Profit
10 Ways For Traders to Take Profit
"My Edge"
by sstheo
In 13+ years trading, I have learned a few things.
(1) Since the failure rate is 90%+ in trading, I assume that most traders are wrong and it has served me well. What do the 10% do? I am not exactly sure. But what I do works for me. I do lots of scalps in (a) ranges and at (b) ends of trends, and I also have done a lot of (c) counter-trend trades. Most people look for home-runs, but I just want base hits. I feel very comfortable scalping any kind of market. I am still working on (d) getting in a trend and trying to stay in it. But if I never succeed, that is okay. I am a momentum scalper and hope to be until they pry my arthritic decrepit withered fingers of the keyboard and mouse 50 years from now.
(2) I have been trading against Support and Resistance levels from the beginning, and using the NYSE tick since that time. I use horizontal S & R, and have used the 50 sma for many many years as dynamic S & R. If you watch both of these (and other MA's) long enough, they will become your friends.
(3) Most recently, I have been using Cumulative Delta and the internals of NYSE Tick, Advance/Decline, Up/Dn Vol, and a plot of the FAANG stocks. This is just to see how things look under the dash in the market. I often FADE the internals if I think they are overdone. But more often than not, when all signs point "up" the market is gonna go up.
(4) My actual entry can be found in previous posts, but my fast chart is an HA candle chart with a 50 sma and a stop and reverse indicator:
But my warning is this-- the market is ranging 70% of the time. And it is not as simple as the two green arrows above pointing to price rising above the SMA and above the Stop & Reverse. Notice the red arrow failed spectacularly. Why? Not sure. Perhaps there was some support below? It's not so cut and dry!
(5) I look at multiple time frames to a bias and generally trade in the direction of that bias. I look at the daily time frame and then on down. I like range bars more than minute bars, because they remove the time element.
(6) STOPS. I usually don't wait for stops to take me out but often get out immediately when I think the trade is going against me. This keep my average loser small.
(7) High win rate and small targets. This is a part of my edge for sure. Scalping allows me to get a lot of little profits. The added benefit is that by trading 15 to 20 times per day, I have thousands of entries locked in my head. The more practice, the better I get. Much of trading is about the "feel" of the market.
(8) Psychology is part of my edge. The micros have allowed me to RELAX while trading. I am not FEARFUL of any adverse move. I recommend them 100%.
There are more things, but I think this gives a fair representation of what I am doing.
I use a line graph when I want to see MORE of the chart. With bar graphs, I can't see as much info at one time. And the line graph allows me to plot another line graph simultaneously (this is the cumulative delta).
FX seems to get into much bigger trends, but yes, mean reversion was my primary trading mode. I have traded FX futures, but they are much too slow. Spot Forex is so much better. I rarely got in on limit orders on spot fx. I would just enter at market and immediately set the stop and profit targets. Trading FX has helped me in futures by helping me focus on consistency in stops and targets.
100 trades a day is a lot, but I have gotten close before. In this current market it would be easy, but when things return to normal, I would advise against that many trades. Clearly the profit would be small. As long as the losses are managed correctly, I think this should work.
I don't use the DOM or tape-reading. But I know someone who is 3x as profitable as I am who uses them. The numbers are moving too fast for me. I need something simple and colorful.