ES Journal - 2012

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Quote from tortoise:

I used to trade "tight." My two point stops used to clobber me. Not any more. Not since I started parking my stops 10 points away from my entries. Not that I ever, EVER let them go that far. Now I know within a point or two whether I'm wrong, and then I'm out. (Every once is a while, it's more, but that's rare).

You want to know what's changed my e-mini trading life? Trading vertical credit spreads on the NDX. Seriously.

WTF? I'll tell you, from one self-identified impatient person to another...

Trading NDX vertical spreads is a little like piloting an 18-wheeler through a kindergarten playground. So doing this forced me to establish a method to identify tradeable biases. It also forced me to become patient as hell while I sat in the trade, often for days, to allow the bias to play out. In the meantime--and here was the blessed training wheels aspect of it all--I had positive theta working for me, offering a for-the-most-part false comfort that even if I was "wrong," I had time in my favor. (Like I said, for the most part, that's a canard, but we do what we gotta do.)

Anyway, this has taken me about -- ohhhh, about four years -- but now I'm at the point where my NDX spread trades are consistently profitable.

Fast forward to ES. Markets really are fractal, with a few caveats, so I'm took this approach that I've used on an interday/interweek basis with NDX and applied it, intraday, to the ES. Here's what happens: I identify the probable bias, wait for the trigger, then enter.

Yesterday, you saw that approach at work in the long I took e.o.d. I never, ever, EVER would have been able to take that trade even three months ago. Now, that was a clean entry, (maybe 2 ticks adverse movement) but it was s-l-o-w. Torture for someone like me.

This morning, I took short with a poor entry, but the bias was not invalidated while I was in it, so I took 4 pts heat for 4 pts profit. Not one for posterity, I know. But, with my old approach, I would have been minus 2 points on the trade, period.

Today, I've been in a long since about 11:00 a.m. If I think too much about it, monkeys will start crawling up the inside of my skull. Otherwise, I'm pretty chill.

I say all this without a scintilla of braggadoccio. (The amount of time I've spent on this is nothing to brag about.) I just offer a perspective, one self-indentified impatient person to another.

Find a way to trade "loose," and your stops will no longer be your enemy.
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I trade with tight stops on the regular so it can be done successfully. You just gotta manage the trade and bail when the odds of success start to get away from you....

Edit: you also have to correctly pick your spot to enter.
 
Quote from HurricaneUS:

I trade with tight stops on the regular so it can be done successfully. You just gotta manage the trade and bail when the odds of success start to get away from you....

Edit: you also have to correctly pick your spot to enter.
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Thanks Hurricane -- unfortunately I didn't do either of these things well--correct spot to enter, nor bail when the odds went against me
 
Quote from HurricaneUS:

I trade with tight stops on the regular so it can be done successfully. You just gotta manage the trade and bail when the odds of success start to get away from you....

Edit: you also have to correctly pick your spot to enter.
More...


I did not mean to say that it couldn't be done successfully. In fact, I believe I said my stops--mental stops based on the market condition--tend to be quite tight, especially in proportion to the potential reward.

But for some people--myself included--tight mechanical stops are death. They invite us to focus on the thing that we shouldn't be focusing on--how much am I making, how much am I losing--instead of the thing, I would argue, that should command our attention: Namely, am I on the right side of the market?
 
Quote from tortoise:

I did not mean to say that it couldn't be done successfully. In fact, I believe I said my stops--mental stops based on the market condition--tend to be quite tight, especially in proportion to the potential reward.

But for some people--myself included--tight mechanical stops are death. They invite us to focus on the thing that we shouldn't be focusing on--how much am I making, how much am I losing--instead of the thing, I would argue, that should command our attention: Namely, am I on the right side of the market?
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Agree..


What helped me some time ago was the Phantom of the Pits:

http://www.webtrading.com/phantom/preface.htm

Unfortunately, it took some years to find a way to make it work. You will find that much of what he says is true.
 
Quote from tortoise:


But for some people--myself included--tight mechanical stops are death. They invite us to focus on the thing that we shouldn't be focusing on--how much am I making, how much am I losing--instead of the thing, I would argue, that should command our attention: Namely, am I on the right side of the market?
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Makes sense ...

A question with regard to your 94 short -- was your premise not invalidated when the market went beyond your entry 4 points? What about that made you say "okay, I will stick with this?"
 
Quote from JoshDance:

I plan on reading this soon Hurricane. What in particular do you find most interest about the book, or rather, most helpful?
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...that the vast majority of traders "play the probability side of trading" - ie., this setup had a 60% plus win rate in the past...and much to their surprise it never works out the same in the future with real capital on the line. Phantom states that the probability side is for losing traders. I didn't believe him at first. I had to lose quite a bit of money to come to understand what he meant. It really comes down to the art of trade management according to Phantom. I would also throw in trade selection.
 
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