So I'm not the only one. The majority of his posts read like Mad Libs, but I sense there is some insight if you can decode.
Is trading harder under current volatility or normal market conditions?
- Thread starter Amatrue
- Start date
So I'm not the only one. The majority of his posts read like Mad Libs, but I sense there is some insight if you can decode.
I run an automated trading system, and it's up 48% year to date. The price and order flow patterns that it trades under normal volatility are still there in super high volatility. What changed is that the risk is higher, and the reward is higher. This can be controlled by position size.
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I run an automated trading system, and it's up 48% year to date. The price and order flow patterns that it trades under normal volatility are still there in super high volatility. What changed is that the risk is higher, and the reward is higher. This can be controlled by position size.
This is 100% accurate. Not much has changed besides larger charts are more active, because larger players are active.. hence just wider swings and the fact that momentum has switched from strong - accumulation to weaker - distribution. Same overall patterns are in tact though for both long and short.
The volatility these days has been amazing. I hope it never goes away.
Best trading ever.
Volatility is due to sentiment, and not lack of liquidity (as with Crypto), which makes it easier to 'trust' the market and run larger position sizes.
Price levels are being respected, fake-out liquidity grabs are minimal (and were non-existent during the first few weeks), if anything the market is working better now than I've ever seen it.
Volatility is due to sentiment, and not lack of liquidity (as with Crypto), which makes it easier to 'trust' the market and run larger position sizes.
Price levels are being respected, fake-out liquidity grabs are minimal (and were non-existent during the first few weeks), if anything the market is working better now than I've ever seen it.
In order to understand that - detailed statistics is necessary. Did you make one home run? Or did you make 1000s of trades? Even still - one month can be a lucky run.
As for this market, it's still the same market as ever, but also dramatically different. There's certainly things that you will get away with in this market that you won't in a slower market. There's more second chances.
If you make a few bad trades in this market, you can easily spring back and end the day well in green assuming you didn't take a bad hit on your first losses. For some markets, this may be true most of the time, but not really on the ES where you normally may have 1-3 major moves on a day.
There's also a lot more momentum than you normally see + huge counter moves. In practice this means that it's easier to scalp and there's huge swings to exploit for those who want to hold for longer, but you'd need pretty huge stops to ride those swings.
For me, I'd say this market have been harder since I was a bit slow to adapt. That is, I scaled down too slow and traded with too tight stops using close to normal size. This caused one large losing day for me. I have since recovered, but since larger stops makes for smaller size, my returns are so far fairly similar. I hope to change that by slowly starting to scale up again and taking more signals next week.
As a final comment, I feel some days have been quite easy being very directional, while there have been some very whippy days or parts of a day that have been very tough. You can be right on direction, but have the market immediately go 20 points against you on entry and only to reverse back on you. Not easy to be entering in such conditions.
You could answer that via backtesting your trade method between 2008 - 2010 for a comparison in trade performance because those were high volatility trading conditions too although for different reasons...
2008 - 2010 global financial crisis whereas 2020 global health crisis.
If your backtest results show similar like trade performance...you can then decide to backtest your trade performance in normal trading conditions when volatility has reverted back to its mean in any given trading year of normal and low volatility.
Yet, you'll need to use data from the Emini ES futures for your backtesting instead of micro Emini MES futures considering there were no micro Emini futures between 2008 - 2010.
Thus, best to answer your own questions via your own trade method (more merit) considering everybody else is using a different trade strategy (less merit).
I wouldn't be surprise if you're results line up with nonlinear5 analysis of volatility and his comment about the importance of position size is dead on about controlling risk / reward.
Remember this, high volatility always reverts back to it mean. Thus, be prepare (ready to adapt) when that occurs.
wrbtrader
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I would do a backtest but I don't think I have a solid trading plan as I trade price action and pattern setups that I feel right.