ES Journal Archive (2006 - 2008)

[Mins]

Quote from LondonUSTrader:

Tight stops in the ES are usually the quickest route to death from a 1000 cuts...

I tend to use fairly wide stops, but I think that is necessary to give the market room to breathe.

I don't agree with this at all especially not for day trading markets like the ES.

A 2 point stop unless volatility is extremely high is more than adequate to be placed outside minor noise.
My day trading is usually based on smaller time frame (swing trades in separate account with wider stops). Typically on any given day i average about 5-6 trades per day ES. Therefore, if i had kept wide stops this would most likely average 2 trades per day.
I have tried wide stops in the past and statistically it did not improve my profitability whatsoever, bear in mind i am talking strictly about day trading with average holding time about 15 mins for most trades.

A wide stop not only kept me in bad trades hoping it will turn around but also meant my hands were tied when a new play presented itself.

With my system i need only a batting average of 40% wins to be profitable day in day out. I have no need for wide stops because they often force day traders to become relaxed and lead to bad entries with the hope wide stop will bail you out.

If you feel day trading has way too much noise then you are trading the wrong market. Even on quiet days the ES has many profitable opportunities which require only 2 pt stops, i think a lot of traders don't understand the smaller time frame nature of the ES and then post that small stops will destroy you.
If i am wrong with my trade then my stop will prove my point, if the play is still valid then re-entry is always an option. No need to waste potential opportunities in the hope you are going to be proven right.

This is my opinion on small stops, obviously every day trader has their own methodology and therefore there is no right or wrong answer. Keep in mind, my method of trading requires extreme discipline to stop revenge trading and impulse trades.

Good trading to all

 

[fearless9]

Quote from Mins:

I don't agree with this at all especially not for day trading markets like the ES.

A 2 point stop unless volatility is extremely high is more than adequate to be placed outside minor noise. .........................

Mins

Are you trading breakouts or fades.

regards
f9

 

[Mins]

Quote from fearless9:

Mins

Are you trading breakouts or fades.

regards
f9

I don't have a specific strategy for trading breakouts and i am no longer a top or bottom picker.

I follow the trend and my aim is to simply catch points of the 1-2 strong trends that present themselves on any given day. I am simply a price action trader.

However, what the trend is to some may be different from others.

 

[fearless9]

Quote from Mins:

I don't have a specific strategy for trading breakouts and i am no longer a top or bottom picker.

I follow the trend and my aim is to simply catch points of the 1-2 strong trends that present themselves on any given day. I am simply a price action trader.

However, what the trend is to some may be different from others.

Mins,

fair enough.

regards
f9

 

[Mins]

Quote from fearless9:

Mins,

fair enough.

regards
f9

I would like to add that my analysis of price action has taken me a long time to acquire and i am still learning each and every day.

Markets by their very nature hardly ever produce identical results and i guess you always have to be one step in front of you opponents.

One thing that helps me understand price action is watching charts and also replaying data. At the end of each day i replay the data (with each bar loading every 5 seconds) and then decide where i was wrong or how well i followed my plan.

I tick replay previous months, weeks data nearly each and every day. This way i trade the past and place my entries and stops as i would do in real-time. I then tally points at the end of each replayed day and see where i am going wrong or where i am not following the plan. I can also statistically note which one of my plays is most profitable so i can increase size on that particular play. Please keep in mind i have some auto strategies but my discretionary trading cannot be programmed as of now so cannot be back-tested with accuracy unless i replay countless hours of charts.

I advise any newbies to immerse themselves into the market and replay days and days of previous data to get a feel of how price moves.

Before the start of every day i usually go through at least 10 days worth of replayed data (2 second bar loading for 1min chart) to mentally prepare myself for the day ahead. Also, when volatility conditions change in the market and the wave cycle changes i go back and replay previous months or years data which closely resembles the cycle phase we are in.

This is my method if preparation.

 

[JSSPMK]

Quote from ammo:

i'm pretty sure b1s2 mentioned on another thread that he is in real estate and can't always be available to adjust positions

that sounds more as an excuse, rather than en explanation

 

[JSSPMK]

i am flat over here

 

[fearless9]

Quote from Mins:

I would like to add that my analysis of price action has taken me a long time to acquire and i am still learning each and every day. ..............................

Please keep in mind i have some auto strategies but my discretionary trading cannot be programmed as of now so cannot be back-tested with accuracy unless i replay countless hours of charts.

This is my method if preparation.

Reads well Mins.
How many auto strategies do you have.

regards
f9

 

[volente_00]

Quote from JSSPMK:

I still say that it doesn't matter how wide or how tight an average stop is, it's what YOU can do with it.

Vertigo was spot on with his suggestion that one can post a hard stop of -500 points, but that's not what Buy1Sell2 would like to see in this journal. The whole issue is not to do with how small or big a stop is, but with hard vs soft stops. I recall a trade posted by Buy1Sell2 when his stop was about 10 points & it was a fixed stop, because he was unwilling to look at what's happening with p/a at that level he got stopped out only to observe price do a complete turnaround within a point of his hard stop. I am not talking about coulda woulda shoulda scenario, just about his unwilliness to look at what was happening at that specific moment in time, to re-evaluate.

When we say my stop is -2 points surely there has to be consideration for p/a behavior, what if another pattern presents itself which would only strengthen your initial decision to enter into a trade, why not adjust instead of stopping out?

That's what makes this paper trader journal bs. If you really do trade ES live with a soft stop, you will lose your a$$ as the programs blow right through your mental stop as you sit their like a deer in the headlights with glazed over eyes. The name of the game is discipline. If you aren't at a level where you can stick to a stop which represents you were wrong then you will never make it in this game. That is the number one reason so many fail. Their ego can not handle losing small so the loss just grows and grows as they let day trades turn into swing trades and even average losers to try to make the psychological pain of losing go away when all could have been prevented by just being disciplined and sticking to a HARD STOP and bowing out with a small loss and having a clear mind to enter the next high probability setup.

 

[JSSPMK]

Quote from volente_00:

That's what makes this paper trader journal bs. If you really do trade ES live with a soft stop, you will lose your a$$ as the programs blow right through your mental stop as you sit their like a deer in the headlights with glazed over eyes. The name of the game is discipline. If you aren't at a level where you can stick to a stop which represents you were wrong then you will never make it in this game. That is the number one reason so many fail. Their ego can not handle losing small so the loss just grows and grows as they let day trades turn into swing trades and even average losers to try to make the psychological pain of losing go away when all could have been prevented by just being disciplined and sticking to a HARD STOP and bowing out with a small loss and having a clear mind to enter the next high probability setup.

What's the difference between a soft stop which ranges from -1 to say -3 and you using a hard stop of -3 and having the same daily performance of -9? Of course hypothetical example.

I think you're missing the point Vol