Am I ready to go live?

[Mtrader]

4 net points / day / contract

That's quite ambitious for somebody who never traded the ES in real time.
Might be a bit unrealistic.
When you watch the charts it looks easy to make them, but in real time it is completely different. Don't misjudge on that.
It took me a long time before I made 1 point net/day. After that it went more quickly. The first point is the hardest to make.

 

[promagma]

Unless you are using some lame sim (that gives you fills on limit orders if price touched), then good job.

 

[eganon69]

With aspirations of being a professional day trader of ES, I started paper trading May 18 this year. I think I’ve been doing well enough to begin live trading (starting with $25k). My living expenses are already covered.

I’ve been using Barry Taylor’s “Better Indicators” and no other “system” to make my entries and exits. Here are my results so far:

31 trading days as of last Friday, June 30th.

356 trades, 205 gainers, 151 losers - 1.36 gainers to losers ratio, average 11.48 trades per day

Profits net commissions $10,108 to date, losses $7,277.30, net profit $2,830.70, profit:loss ratio 1.39

“Expectancy” (not sure if I’m using the correct formula, although I’ve seen different formulas in the various sources I’ve studied). I used $200 for R (4 point stop loss).

(% gainers .5758 X $10,108 ÷ no. gainers 205 ÷ $200) – (% losers .4242 X $7,277.30 ÷ 151 ÷ $200) = .040

Or $7.95/trade = .040 X $200

My maximum drawdown has been $1,337. My most losers in a row were 7 trades.

I projected my results using one contract per $8,000 equity (rounded down). Four point stop loss being 2.5% of $8,000 of equity and considered that risk reasonable with the results so far. The projection showed compounding rich results within two~three years.

I will be working to reduce my number of trades while trying to win better than $7.95/trade.

How do you think I’m doing? Am I ready to start trading real money?

I suspect you will fail but you have a small chance of being successful.

First, as others have said real trading is NOT the same as sim.
Second your calculation of Profit:Loss Ratio is wrong. It is NOT calculated as (Total Profit)/(Total Losses). It is Calculated as (AVERAGE Profit)/(AVERAGE Loss).

$10108/205 = $49 = Avg Profit
$7277.30/151 = $47 = Avg Loss

P:L Ratio is 1.02

Expectancy has to be POSITIVE which yours is:

Expectancy = (Probability of WINNING × AVERAGE $WIN) - (Probability LOSING × AVERAGE $LOSS)

(0.58 * $49) - (0.42 * $47) = 28.42 - 19.74 = $8.68

$8.68 Expectancy per trade is > 0 which is positive but not stellar.

You need your P:L ratio to be much better in my opinion.

 

[volpri]

You will never know until you put real money on the line. A good system is only as good as the person that executes it. Execution with money on the line is far different from execution on a sim. A sim is good and useful for learning and testing a system but it won't make you any money and can even be detrimental to your financial health as it can (without you knowing or being even being aware of it) actually establish destructive habits.

You will be your biggest obstacle. The psychological aspects of trading are far more important than any system. When you put real money on the line then your true psychological colors will suddenly leap to the surface. This aspect of trading is what will make or break you. Developing skills to transcend all the psychological obstacles is WAY more important than a good system that measures well mathematically. This is precisely why most traders fail. They focus on a good system...good indicators..etc...ad nauseum...without any psychological (cognitive and emotional) preparation for what they are about to undertake. Ask yourself why does my wife want me to sim more?

You might consider going live but on an instrument that won't wipe your account out so brutally and fast as the ES can. You might consider the E micro Euro Fx contract that has $1.25 per tick. Downside is not much liquidity. But at least you can test how you will do when money is on the line. You can see what your hangups and obstacles will be that you will have to overcome before jumping into something that can spin you out of control like a termite in a yo yo. You get 7 losses in a row of real money in the ES and it becomes real easy to slip off the cliff into revenge trading wildly trying to make yourself and your account whole and well again. SIM trading simply cannot produce these cognitive and emotional battles.

BTY screaming...begging...hitting the desk..smashing the keyboard...throwing beer bottles at the monitor are techniques that do not work!

You gotta develop proper skills and learn to enjoy operating in uncertainty, embracing the challenge that will get throwed at you, nigh every day.

Good luck.

The picture is NOT the way to beat the machines.

 

[Oysteryx]

LOL @

BTY screaming...begging...hitting the desk..smashing the keyboard...throwing beer bottles at the moniter are techniques that do not work!View attachment 175164

Applying a scalping method (4 ES points risk is scalping) requires liquid instruments with tight bid-ask spreads. Micros are not good for scalping. The best futures contract for practicing live with less risk per trade would be the Osaka Nikkei 225 mini; it is as liquid as ES, it has tight spreads, its about 1/5 the size, and commissions are about 1/5 as well (unlike most other smaller contracts that rip the trader off with commissions on a relative basis). Just need to get subscribed to the Osaka exchange. Forex spot would be another great alternative (e.g. USDJPY), although the Nikkei's price action is more comparable to ES.

 

[punisher]

Applying a scalping method (4 ES points risk is scalping)

I don't know where you get that from but true ES scalping is for ticks (1-2 ticks) profit (nor risk). Is or "was", as nowadays you'd probably need to distinguish between what algos vs humans can do. It might be that for humans scalping ES nowadays could be as much as 1pt target. It goes without saying that scalping ES should be avoided.

If you risk 4pt in ES, then what kind of target are you looking for? 6-8pts? How's that scalping when it's often about half of the day's range?

 

[Oysteryx]

I don't know where you get that from but true ES scalping is for ticks (1-2 ticks) profit (nor risk). Is or "was", as nowadays you'd probably need to distinguish between what algos vs humans can do. It might be that for humans scalping ES nowadays could be as much as 1pt target. It goes without saying that scalping ES should be avoided.

If you risk 4pt in ES, then what kind of target are you looking for? 6-8pts? How's that scalping when it's often about half of the day's range?

Scalping is subjective. I was just trying to save words by defining 4pts as scalping. This is where I was trying to get to:

ES 5min ATR(14) @10am EST on Jun/30 = 1.75 = $87.5 / contract
6E 5min ATR(14) @10am EST on Jun/30 = 0.0005 = $62.5 / contract
m6E 5min ATR(14) @10am EST on Jun/30 = 0.0005 = $6.25 / contract

Hence, if adjusting position size by volatility, using ATR of Jun/30 as vol measure, then 1 ES is equivalent to 14 m6E.

ES has 1 tick spreads = $12.5 spreads.
m6E has 1-3 tick spreads = $1.25 / $3.75 spreads. Say $2.5 on average.
Then $2.5 * 14 = $35 equivalent spreads.

4 ES points = $200

$12.5/$200 = 6.25% bid/ask spread
$35/$200 = 17.5% bid/ask spread

Bottom line: trading FX micros is too expensive when trading for $200.

 

[punisher]

it's apples/oranges. CME microFX is for learning mostly. Who would trade 14 m6E? They would trade 1-2 6E and pay commissions accordingly.

I don't study ATRs but quick look at your calculations makes me wonder why would you decide to do ATR(14) based on 5min and some arbitrary time of the day and particular date?

Ask yourself this question: why many brokerages offer DT margins for ES that are around half or less that of currencies like 6E? The notional is about the same.

regarding my previous comment, my simple point was that 4pt ES is not scalping.

 

[Oysteryx]

it's apples/oranges. CME microFX is for learning mostly. Who would trade 14 m6E? They would trade 1-2 6E and pay commissions accordingly.

I don't study ATRs but quick look at your calculations makes me wonder why would you decide to do ATR(14) based on 5min and some arbitrary time of the day and particular date?

Ask yourself this question: why many brokerages offer DT margins for ES that are around half or less that of currencies like 6E? The notional is about the same.

regarding my previous comment, my simple point was that 4pt ES is not scalping.

You missed the point. The analysis was about making different contracts comparable for trading purposes using relative volatility, so as to illustrate that the larger bid-ask spread of FX micro contracts render its usage useless for testing a method that seeks to risk $200 per trade. (i.e. this is a way to make an apple and an orange comparable)

I just picked something specific so anyone can go and look at it. At 10am EST both ES and EURUSD are very active. ATR(14) applied to 5min periodicity is a random volatiltiy measure. Would have reached similar conclusions using another measure. Its just one way of many to make ES comparable to a micro Euro.

So many keep on repeating oh try FX micros, great for getting started, but no, FX micros may be great for learning but are under no circumstances great for testing, unless trading larger time frames with larger risk where the larger bid-ask spread gets washed away. Whoever needs to test with smaller risk would do well in not testing with FX micros, but rather with forex spot or Nikkei mini.

Either way this is likely quite out of topic, traders usually get attached to instruments, and if ES is the instrument of choice, do not migrate from ES to whatever.

 

[Jdesey]

I agree basically with what is being said. I have traded ES since 2012. I am in process of analyzing my strategy for trading NQ and believe I will probably end up back on NQ soon. I traded NQ before ES back in 2011. It has been advised many times on this website that there are better instruments than ES. ES used to be easier to trade. The influx of HFT, ALGO, professional money managers has tightened up the ES. It is just difficult and frustrating. I keep very good records. For ES my stop outs and break even trades have escalated over time.

Here's some real data from my trading. for ES I used to be able to nail 4 or 5 points profit on my trades , risking 2 points for my stop. Now that is 3 points profit for 2 points risk. That's a 3:2 ratio, not so great.

For NQ and I imagine other traded assets, I am risking 5 points, to get 12.5, sometimes I even get 15. way better ratio 12.5;5 (2 1/2 times) or even a 3:1... way better risk to reward

I believe OP's stats are very tight. barely a 1:1 ratio. that is probably not gonna work after slipage and commissions

just my $.02