Thanks for this, Austin. As tidy a summation as I've seen. And, by the way, thanks for coiledmarkets.com. While I don't trade your system, I did benefit hugely from the time spent studying your materials and time spent in your chat room. In short, I'm profitable, in no small part, thanks to you. For those of you about to shout "shill" let me state, for the record, that I have no connection to coiledmarkets.com, and that Austin has no clue as to my identity.
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Got my butt handed to me today on ES live
- Thread starter mropp
- Start date
Thanks for this, Austin. As tidy a summation as I've seen. And, by the way, thanks for coiledmarkets.com. While I don't trade your system, I did benefit hugely from the time spent studying your materials and time spent in your chat room. In short, I'm profitable, in no small part, thanks to you. For those of you about to shout "shill" let me state, for the record, that I have no connection to coiledmarkets.com, and that Austin has no clue as to my identity.
mrpopp, If you post a chart of your trades, you will probably get some good feedback on their merit of lack of.
AustinP,
I think you hit the perfect summary here. Patients and self control with the ability to identify the current environment is the goal of any short term futures trader.
When I lose money day trading it is due to revenge trading, stubbornness and trading the worse times of the trade day. I have 10 years experience of trading many different product and ran a operation for 3 years so I have been exposed to many styles and many products. Futures trading is the most lucrative space out there.
Index futures trading is the most scalable market place and not as hard as others make it. It comes down to you against yourself.
I have also learned some good stuff from you when you where doing the Options new Letter in the internet bubble days and have made that move with you to futures after that market dried up. Keep up the good work.
I think you hit the perfect summary here. Patients and self control with the ability to identify the current environment is the goal of any short term futures trader.
When I lose money day trading it is due to revenge trading, stubbornness and trading the worse times of the trade day. I have 10 years experience of trading many different product and ran a operation for 3 years so I have been exposed to many styles and many products. Futures trading is the most lucrative space out there.
Index futures trading is the most scalable market place and not as hard as others make it. It comes down to you against yourself.
I have also learned some good stuff from you when you where doing the Options new Letter in the internet bubble days and have made that move with you to futures after that market dried up. Keep up the good work.
also, assuming that you did lose money on ES this day...
that says roughly ZERO about your methodology
assume you did 4 trades today.
and those trade setups have a positive expectancy
the laws of averages still mean you can have many days etc. where you lose money even with the right setups
you need to judge your trading by how well you followed your rules, execu ted according to plan, etc.
a daily total says next to nothing about how well you traded
you could do everything right (within your framework), and lose or win money in that small a sample group
that says roughly ZERO about your methodology
assume you did 4 trades today.
and those trade setups have a positive expectancy
the laws of averages still mean you can have many days etc. where you lose money even with the right setups
you need to judge your trading by how well you followed your rules, execu ted according to plan, etc.
a daily total says next to nothing about how well you traded
you could do everything right (within your framework), and lose or win money in that small a sample group
this is the best advice in this thread, imho;
be patient and reduce dramatically your trading frequency to just one or two/three trades a day. then enter the market on the most reliable and potentially most rewarding setups...yet only those you know like the back of your hand and often leading to reoccurring development: simple yet powerful TA patterns like double bottoms or recovery off the lows [Vbottom] following a disproportionately steep decline/imbalance generate the best opportunities. most days spoo happens to print a double bottom... wait for it and then get long: a successful trade off that is enough to make your day.
when you get consistent with that one/two trades you might then increase frequency.
be patient and reduce dramatically your trading frequency to just one or two/three trades a day. then enter the market on the most reliable and potentially most rewarding setups...yet only those you know like the back of your hand and often leading to reoccurring development: simple yet powerful TA patterns like double bottoms or recovery off the lows [Vbottom] following a disproportionately steep decline/imbalance generate the best opportunities. most days spoo happens to print a double bottom... wait for it and then get long: a successful trade off that is enough to make your day.
when you get consistent with that one/two trades you might then increase frequency.
Quote from GaryN:
Austin
If you had a small account and wanted to take only the best setup on a 5 minute ES chart which one would you vote for? I am leaning toward the double top as I have found this to be an extremely reliable trade providing certain conditions are met. The main problem I have with this trade is when to exit.
Quote from WinSum:
That particular strategy will not be transferrable to trading ES. ES does a lot of backfilling. Looking just for HH/HL or LH/LL on ES will not prove to be as reliable as you were accustomed to with your 5 stocks.
ES is traded by some of the most skilled traders because it is so liquid. There is a fair amount of gamesmanship involved.
I definitely cannot comment on a comparison between ES and his 5 stocks because I don't know them but ES is trendy enough to be traded the old fashion way, via price action. Not only can it be done but I know several traders that do it on a daily basis, myself included. The fact that a lot of people trade it does not make an instrument any harder it's just more liquid and that in my book is a big plus not a disadvantage.
If you were referring to the ER2, which is btw and excellent breakout instrument and the best e-mini by far as far as bang for the buck goes, then I could see how a pure highs and lows technique becoming a bit more difficult but that's as far as I'm willing to go, still very tradeable, just harder to tame.
The so called "manipulation" some speak of is simply an illusion or an excuse for trader's failure.
A chart is a chart, that's your playfield, price action is your weapon, the execution is up to the trader. In the end, it's up to you and not up to the "big boys" or the skilled traders if you are going to succeed or not. It's only you.
As far a suggestion for the OP pick 3-4 patterns with high probability and good risk vs reward. Study them carefully, master them if you can, then trade them with the utmost discipline and confidence.
Some that come to mind......
- Double Tops
- Double Bottoms
- Rectangular Formations
- Symmetric Triangles with the trend
- Failed head and shoulders
- Triple Tops
- Triple Bottoms
- Breakouts out of consolidation
- Bull flags with the trend
- Bear flags with the trend
Hope it helps.
Anek
Quote from whitster:
also, assuming that you did lose money on ES this day...
that says roughly ZERO about your methodology
assume you did 4 trades today.
and those trade setups have a positive expectancy
the laws of averages still mean you can have many days etc. where you lose money even with the right setups
you need to judge your trading by how well you followed your rules, execu ted according to plan, etc.
a daily total says next to nothing about how well you traded
you could do everything right (within your framework), and lose or win money in that small a sample group
Well put. Knowledge of statistics is essential in this business and will provide perspective during the inevitable losing streaks.
Quote from austinp:
<i>
By far the biggest mistake I see emini traders making right now is over-trading. There are only four - six good swings per day, all day. That does not permit 20 - 40 trades turned with a positive outcome. If we know there are only a few potential profit moves per day AND we hit one or two, what's wrong with shutting down early?
austinp,
I respect your comment and advice. But I disagree with your comment on overtrading.
20-40 trades a day with positive outcome is not only permitted, but also very doable. It really depends on the trading method and the time frame. At current market conditions, there will be more than 30 swings with at least 2-3 points moves at ES per day at lower time frame (e.g., 55 tick chart). Plus, there are a lot of range-bound trading opportunities (1-2 point).
A skilled trader with the right method can definitely operate 20-40 trades a day with positive outcome with so many trading opportunities offered at ES.
The following thread is a good thread on scalping:
http://www.elitetrader.com/vb/showthread.php?s=&thread=82193
<i>"A skilled trader with the right method can definitely operate 20-40 trades a day with positive outcome with so many trading opportunities offered at ES."</i>
That is very true. A skilled trader by definition can identify oneself. At the end of the day, 20-40 trades will result in some type of small loss or bigger relative gain.
For the other traders, 20-40 trades usually results in modest to huge loss and large execution costs heaped on top of that.
Skilled traders can break down a chart to recognize or "see" 1pt - 3pt profit swings clearly. The majority of emini traders cannot recognize those opportunities, all they see is $$ flying around and they want some. The chase=pursuit instinct kicks in, discipline to their respective approach is summarily kicked out and by 4:15pm the account is churned to pieces.
When the dust settles, everything looks clear in hindsight. The only view which matters is what we can recognize and act upon during real time. The bigger swings must be mastered before anyone can dial down to precision trading from there.
**
One of the most reliable, high-odds pattern setups for ES is previous session high/low tested the next morning. Especially good if it were a double top or bottom the prior day. When those levels are tested next morning, it usually marks a swing high or low of considerable distance, sometimes hi or lo for the given day.
Another high-odds pattern is gap open move and hit of either R1 or S1 value. When that happens and price action holds the given level, it commonly reverses to seek out the opposite level.
In other words, Monday sees a gap-down open that falls to S1. Price action eventually lifts off there and heads higher. There is a greater than 50% probability it will hit R1 sometime that day. Playing the long side in this scenario from one level to the other has a positive expectancy.
It cannot be coded as a system, because too many variables can happen at the first value hit. But... when the times come where price action holds either R1 or S1 and heads the other way, expect that opposite value to be sought. More often than not, you will be on the correct side of market action while the habitual faders feed your account.
That is very true. A skilled trader by definition can identify oneself. At the end of the day, 20-40 trades will result in some type of small loss or bigger relative gain.
For the other traders, 20-40 trades usually results in modest to huge loss and large execution costs heaped on top of that.
Skilled traders can break down a chart to recognize or "see" 1pt - 3pt profit swings clearly. The majority of emini traders cannot recognize those opportunities, all they see is $$ flying around and they want some. The chase=pursuit instinct kicks in, discipline to their respective approach is summarily kicked out and by 4:15pm the account is churned to pieces.
When the dust settles, everything looks clear in hindsight. The only view which matters is what we can recognize and act upon during real time. The bigger swings must be mastered before anyone can dial down to precision trading from there.
**
One of the most reliable, high-odds pattern setups for ES is previous session high/low tested the next morning. Especially good if it were a double top or bottom the prior day. When those levels are tested next morning, it usually marks a swing high or low of considerable distance, sometimes hi or lo for the given day.
Another high-odds pattern is gap open move and hit of either R1 or S1 value. When that happens and price action holds the given level, it commonly reverses to seek out the opposite level.
In other words, Monday sees a gap-down open that falls to S1. Price action eventually lifts off there and heads higher. There is a greater than 50% probability it will hit R1 sometime that day. Playing the long side in this scenario from one level to the other has a positive expectancy.
It cannot be coded as a system, because too many variables can happen at the first value hit. But... when the times come where price action holds either R1 or S1 and heads the other way, expect that opposite value to be sought. More often than not, you will be on the correct side of market action while the habitual faders feed your account.