From Micros to Millions: 2% per day

[tiddlywinks]

Well that's a bit strange of a statement. Example: "I am scaling back because my son is having his birthday tomorrow". "I am scaling back because the price of crude oil is going up (or down)", "I am scaling back because an analyst is calling for steep drop in the market", etc., etc.
The only real valid reasons for scaling back:
1) Your equity curve is declining and you are in a drawdown
2) Volatility has increased in the markets you are trading
3) You are physically (or mentally) ill due to trading large size

Back in the day sitting on an OTC trading desk, also servicing a client book, we had a parable of sorts...

During the first quarter, clients won't commit fresh money because... taxes will be due soon.
During the second quarter because... planning and saving for summer vacation.
During the third quarter because... kids drain the bank as they are sent off to school.
During the fourth quarter because... the Holidays are coming.


Remember, these days of incredible trading opportunities are not the norm. Figure out how to make them work for you.

 

[syswizard]

Remember, these days of incredible trading opportunities are not the norm. Figure out how to make them work for you.

You are absolutely right on this. Moreover, with the larger ranges and higher volatility, you can make good money without the large size. When we get range bound and the profit potential is low, that's when you need to scale up to meet profit goals. I can remember 9 months or so ago trading 4 NQ's. Not now.

 

[tiddlywinks]

When we get range bound and the profit potential is low, that's when you need to scale up to meet profit goals.

That makes sense, but then I don't have "profit goals". The best anyone can do is to extract what the market offers. Nothing more, nothing less. Profit goal not necessary.

I took steps over the summer to work with increased volatility. Keeping this short, I use a "fixed" account size... I upped that amount. Simultaneously, I increased "normal" trade size. If, for whatever reason I reduce size for a given trade, it is my previous "normal", with no psycho reaction!

Volatility, or whatever market conditions works for me...That's the goal! Until it isn't/doesn't.

 

[sstheo]

"My Edge"
Part 3

8) Entering on a pullback
9) Break of Two
10) Volume Profile: Value Area and Point of Control​

8) Enter on a pullback. This is not just about entering long on dips in an uptrend or entering short on pops in a downtrend. This is about EVERY ENTRY. First of all, I rarely chase a trade. I love the words of hedge fund legend Teeka Tiwari "Let the trade come to you."

If it is moving like lightning, I don't have FOMO (fear of missing out) but know "there will always be another trade." In fact, I might just get the reversal of the very trade I just missed out on.

This is the MES after the RTH close today. But it might as well be any chart. Look at all the small reversals:

The point is there is lots of movement both ways. Obviously UP was the better direction in the last 3 hours, but look at all the DOWN as well... Whether you think the market is going up or down, wait for a pullback and use a limit order most of the time, and you will be pleasantly surprised.

One problem I have with limit orders is they often don't get filled, and I miss the move completely. I am still toying with the idea of entering 1 position market at the signal, and attempting to add a second at my normal pullback of 2 to 4 ticks. This way, at least there is some gain. (The first big waterfall above would have been a 1 contract trade in this scenareio because there was no retracement).


9) Break of Two. What in the heck? This is my own verbiage, but I am sure multiple traders use this method, because I see evidence of it over and over again. Whether you use a Stop and Reverse indicator or ZigZag or just track LH & LL's or HH & HL's, it doesn't much matter. The point is that Support and Resistance is real, but the SECOND level above or below the price has proven to be the key on my charts.

This is the exact strategy that kept me from going long too soon this morning in the big waterfall down day (click chart to zoom in).

Hopefully you got some good short trades on a big down day like today. But when is it okay to go long again? Notice the first cyan hash mark at A. It cleared the first R line, but the second one held. And the market made new lows yet again. Until #2 line was broken, it was still not time to go long.

Notice the second set of numbers at B. Price broke the first number, and then it broke the second. The prices were off to the races to the upside. But it might have just as easily reversed yet one more time. Once it clears resistance #2, it is generally okay to try a long.

Watch this idea, and you will be surprised how often it takes one additional support or resistance line to hold or reverse prices.

10) Volume Profile: Value Area and Point of Control. This is a "bigger view" concept that helps me stay on the right side of the market and examine probable targets in the market.

The Volume Profile levels are Yesterday's High, Yesterday's Low, Yesterday's Point of Control POC, Value Area High (VAH), and the Value Area Low (VAL). Along with volume profile levels, I include the following levels Open, Close, Overnight High (ONH) Overnight Low (ONL).

Most are self explanatory, but here are POC, VAH, & VAL:

POC is the price at which the highest volume of trades occurred. This level can be interpreted to be the most agreed-upon price of the day. It is significant because it can be considered the true value of the asset that day. As such, it often acts as a magnet the following day.

VAH is above the POC. In a normal statistical distribution curve of the volume of the day, it is the first standard deviation line.

VAL is below the POC. It is the first standard deviation line below the POC.

The vertical histogram represents the volume transacted at each price. This is the 30 min chart of the Extended Trading Hours (ETH) of the last 24 hours.

Tomorrow, these three levels may come into play again. And I will be prepared for a reversal OR a continuation through each level.

All of the levels mentioned, plus the floor traders pivots S3, S2, S1, PP, R1, R2, R3 are helpful to know probable levels of interest.

I rarely us Fibonacci levels, but I will also put them on sometimes if there is a strong move.


SUMMARY of "My Edge." I have shared 10 ideas. Individually, each is a powerful tool that helps me personally succeed as a trader. All together, my edge is strong. But I always have to work on Interpretation and Execution. I have a long way to go as a trader, but these are the best 10 things I have found. I hope one or two may be helpful to you too.

 

[Overnight]

Wait a bit more for the situation to normalize. We are in SNAFU mode here. Just give it a couple more weeks until the election is finalized. The uncle is the market, and the kid is us!

 

[sstheo]

That makes sense, but then I don't have "profit goals". The best anyone can do is to extract what the market offers. Nothing more, nothing less. Profit goal not necessary.

I took steps over the summer to work with increased volatility. Keeping this short, I use a "fixed" account size... I upped that amount. Simultaneously, I increased "normal" trade size. If, for whatever reason I reduce size for a given trade, it is my previous "normal", with no psycho reaction!

Volatility, or whatever market conditions works for me...That's the goal! Until it isn't/doesn't.

I think we are actually on the same page. I am trying to take ALL that is given me each day in the two hours I have set aside for trading. This can be seen in the number of ES points I am getting each day, which averages over 20 currently. If I can get 40 points I will take it. My best two days we 67 and 41 ES points (combined total from 4 instruments). This just happens to translate into a percentage of my balance based on the number of contracts traded. Because of my other job I have determined that it is okay to stop early if necessary if I get to 3%.

 

[tiddlywinks]

Wait a bit more for the situation to normalize. We are in SNAFU mode here. Just give it a couple more weeks until the election is finalized. The uncle is the market, and the kid is us!

What "situation"? What does "normalize" mean? How is normalized different? Compared to what? The election might not be "finalized" until December. A "couple more weeks" is just not actionable. Please, tell us... when will it be safe to take a trade, and which direction that trade will be.

 

[QTrader20]

"My Edge"
Part 3

8) Entering on a pullback
9) Break of Two
10) Volume Profile: Value Area and Point of Control​

8) Enter on a pullback. This is not just about entering long on dips in an uptrend or entering short on pops in a downtrend. This is about EVERY ENTRY. First of all, I rarely chase a trade. I love the words of hedge fund legend Teeka Tiwari "Let the trade come to you."

If it is moving like lightning, I don't have FOMO (fear of missing out) but know "there will always be another trade." In fact, I might just get the reversal of the very trade I just missed out on.

This is the MES after the RTH close today. But it might as well be any chart. Look at all the small reversals:

View attachment 242670

The point is there is lots of movement both ways. Obviously UP was the better direction in the last 3 hours, but look at all the DOWN as well... Whether you think the market is going up or down, wait for a pullback and use a limit order most of the time, and you will be pleasantly surprised.

One problem I have with limit orders is they often don't get filled, and I miss the move completely. I am still toying with the idea of entering 1 position market at the signal, and attempting to add a second at my normal pullback of 2 to 4 ticks. This way, at least there is some gain. (The first big waterfall above would have been a 1 contract trade in this scenareio because there was no retracement).


9) Break of Two. What in the heck? This is my own verbiage, but I am sure multiple traders use this method, because I see evidence of it over and over again. Whether you use a Stop and Reverse indicator or ZigZag or just track LH & LL's or HH & HL's, it doesn't much matter. The point is that Support and Resistance is real, but the SECOND level above or below the price has proven to be the key on my charts.

This is the exact strategy that kept me from going long too soon this morning in the big waterfall down day (click chart to zoom in).

Hopefully you got some good short trades on a big down day like today. But when is it okay to go long again? Notice the first cyan hash mark at A. It cleared the first R line, but the second one held. And the market made new lows yet again. Until #2 line was broken, it was still not time to go long.

Notice the second set of numbers at B. Price broke the first number, and then it broke the second. The prices were off to the races to the upside. But it might have just as easily reversed yet one more time. Once it clears resistance #2, it is generally okay to try a long.

Watch this idea, and you will be surprised how often it takes one additional support or resistance line to hold or reverse prices.

View attachment 242672


10) Volume Profile: Value Area and Point of Control. This is a "bigger view" concept that helps me stay on the right side of the market and examine probable targets in the market.

The Volume Profile levels are Yesterday's High, Yesterday's Low, Yesterday's Point of Control POC, Value Area High (VAH), and the Value Area Low (VAL). Along with volume profile levels, I include the following levels Open, Close, Overnight High (ONH) Overnight Low (ONL).

Most are self explanatory, but here are POC, VAH, & VAL:

POC is the price at which the highest volume of trades occurred. This level can be interpreted to be the most agreed-upon price of the day. It is significant because it can be considered the true value of the asset that day. As such, it often acts as a magnet the following day.

VAH is above the POC. In a normal statistical distribution curve of the volume of the day, it is the first standard deviation line.

VAL is below the POC. It is the first standard deviation line below the POC.

The vertical histogram represents the volume transacted at each price. This is the 30 min chart of the Extended Trading Hours (ETH) of the last 24 hours.

View attachment 242677

Tomorrow, these three levels may come into play again. And I will be prepared for a reversal OR a continuation through each level.

All of the levels mentioned, plus the floor traders pivots S3, S2, S1, PP, R1, R2, R3 are helpful to know probable levels of interest.

I rarely us Fibonacci levels, but I will also put them on sometimes if there is a strong move.


SUMMARY of "My Edge." I have shared 10 ideas. Individually, each is a powerful tool that helps me personally succeed as a trader. All together, my edge is strong. But I always have to work on Interpretation and Execution. I have a long way to go as a trader, but these are the best 10 things I have found. I hope one or two may be helpful to you too.

It's quite interesting to observe your ways of scalping which is completely different than mine which took us over a decade to build our trading mechanisms. It seems to me that yours relies more on overall market sentiments to help you see a big picture before taking a trade. Mine is just like a machine without any biased feeling and any speculation. I've done at least hundred to thousand of trades for the last few years on mine to ensure its rate of survival is high without blowing my account. So far, it's doing great in any market condition and I'm quite satisfied with it because it's racking up profits day in, day out.

I'm looking forward to share with you mine someday once I milk enough profits out of it.

 

[sstheo]

Yesterday (+80 net) should have been a big winner for me to the downside, but instead I kept seeing a "rip your face off rally" forming, which really never came. But I did get some longs off the bottom. Clearly I still have some hang-ups, and I need to try much harder to just go with "what I see". "What IS." Not what I want to have happen.

 

[scalpi]

all is fine !

I like it a lot that you do not get paniced when you do not exactly reach the goal.
Go on your way !