Micro E-mini Madness (2% per day)

[ElectricSavant]

Discretionary scalpers,

You battle with commission cost and computer models (Program trading, HFT's and such) to compete against where speed trumps all..

Es

 

[sstheo]

There should be a mechanism implemented into your trading system to cut losses as soon as it gets triggered. Some traders said they would cut their losses once it hits 4 points or 3%. The problem with using points or percentage to cut losses is you can't mostly tell which day is volatile or not. In volatile period like last August, it was so easily to hit 4 points of losses before market continues its direction as anticipated by your trading system.

By the way，I'll take a few days break if I make three consecutive losing trades to examine what goes wrong with that particular set of strategies.

I agree with the problem of changing daily range (volatility). I have thought about adjustments to my stop based on daily ATR (i.e. "My stop will be 20% of the previous session's daily ATR"), and I may still do it, but I really want to keep it simple. I have tended to over-complicate things. But now . . .

It is time to play my song!

This is not an argument against change at all, but I need to do the best I can with what I have learned and then gently tweak it as I go along.

I know you are not suggesting I unstring my bow again, but I wanted to post this great quote from Mr. Iagore because I get the feeling that many who may read this are so busy super-analyzing and back-testing that they never just jump in and start taking the trades they need to in real time so that they can engage the proper training circuits in their noggins.

Maybe they are afraid of losing and want to stack everything in their favor. This is laudable, but laughable because the market is made up of emotional human beings and one news report or tariff tweet and then you have to start all over again!

So I propose a solution to the dilemma: Trade the Micros! Traders who find themselves overly deep in analysis should try this experiment-- Trade only one Micro MES, MNQ, or MYM for 10 trading days. JUST TRADE. This new micro tool in your tool box is very powerful. Why? Because it resets the risk portion of your brain to the realm of reasonableness. When the fear of loss is small, your decision making ability improves dramatically.

 

[sstheo]

How did you arrive at your inverted risk to reward ratio of 2:1? Do you do this in the MNQ?

This stat is from my previous trading with NQ and YM. But it is probably wrong now. In my scalping, my average loss (including scratches) is about $100 and my average wins is about $50. Hence 2:1 risk:reward.

On the Micros, I am allowing myself two big adjustments because of the increased fees and spread (which is sometimes 4+ ticks in fast markets) and also because the current volatility is NUTS:

1. My stop is 40 ticks or $20 per contract on MNQ or MYM. This allows more wiggle room in prices.
2. I am holding longer. I just went back through all my trades of the past 4 days. Here are my 4 biggest wins: $16.00, $15.50, $16.50, $26.50.

The bigger wins are a major breakthrough for me. The average of those 4 trades is $18.63. This is significant for me because I tend to take profits way to soon. So in this regard I think the new micros are helping me hold. When we trade, we all have internal thermostats for risk and reward. I am in the process of resetting my thermostat. With just the regular E-minis I have been "trading scared" for so long that anything over a profit of $100 had to be instantly taken because "I just know it is about to reverse and erase all my gains."

But look! $16 micro is equivalent to $160 full. $26.50 micro is like $265 full. I was willing to hold longer.

My live trade sample size is still way too small (just 4 days) to give you any meaningful data right now, but it looks like I am getting closer to the 1:1 risk to reward level I mentioned previously as my next goal.

 

[sstheo]

why would you wait for a stop to be hit..same as..why would you wait for a profit target to be hit..this implies you are just wishing and hoping!!

I will not say you should do this or do that..as what you do is up for yourself to decide based on your experiences..but I will say it does not make sense if you are not reacting to what is happening in front of your eyes

as for red and green..or red and blue as I prefer..blue/red on the 1 min is blue/red on all other timeframes at one particular point in TIME!!!

I agree with you (with a minor adjustment). As I stated previously, if I feel the market is changing, I will "get out immediately." This is how I trade on the E-minis. But on the micros the spread and the fees mean certain destruction for scalpers. So I am taking a more relaxed approach.

I came in 13th out of 1,400 on the CME micro challenge by doing exactly this: "reacting to what is happening in front of [my] eyes."

So I am on board with this idea of not waiting for stop or target to get filled. Let's look at my data so far-- I pulled up all my losses. I only have 4 of them in 4 days, and they are all -$20. So far then, I have indeed let them get hit. You got me there.

But I have no fixed target. I already posted my 4 biggest wins which averaged $18.63, but my 4 smallest wins are $1.50, $2.50, $4.00, and $6.50 (average of $3.63) I got out of each of these because indeed - I felt the market was turning.

During my 2 hour trading window, I am taking fewer trades because I am waiting for more probable setups. I am trading on a larger time frame than normal for me (up to this point). The currently volatility is so huge, I am giving more wiggle room on the down side and shooting for bigger targets on the upside. But "trading what I see" must take priority over all the stops and targets.

 

[sstheo]

Hi sstheo,Is AMP futures offering Multicharts and Market Delta platforms free,and are traders allowed usage of both platforms same time without extra charge?

It appears so. But I don't know if you can have them open at the same time. There may be some issue with registration in that case.

 

[ElectricSavant]

sstheo,

You have excellent trading intuition and skills according to your accomplishments. How do you know if you were right about how you felt that the market was turning? Is your intuition based upon your ability to grab a profit or to take what the market will give you?

Sometimes I learn a lot from my private journal by observing what happens AFTER the trade. This Journal might also help with that, thus for me personally I am thinking of starting my own Public Journal here in ET.

ES

But I have no fixed target. I already posted my 4 biggest wins which averaged $18.63, but my 4 smallest wins are $1.50, $2.50, $4.00, and $6.50 (average of $3.63) I got out of each of these because indeed - I felt the market was turning.

 

[sstheo]

This journal reminds me of my own problems in trading? The ability to focus is where I need to improve. Hopefully by watching sstheo trade I can see the techniques he uses to focus and not implore too many systems. Discretionary trading and explaining it in a journal can come off to be contradictive at times and you just got to be there to understand the decisions that are made to enter and to exit.

Getting down to trading and sticking to business is the boring side of trading. Face it trading is just button-pushing and following your system.. and it is boring. Expensive automation coding can alleviate this.

Es

ES, I appreciate your comments and interest. Glad you find my comments worthwhile. Indeed I am trying to simplify. And indeed trading and explaining discretionary trading can seem contradictory.

I am primarily a scalper who is trying hard to pick up the ability to stay in trades longer. Most traders are trend followers who get chopped up in the ranges because they don't know how to scalp. So I think I am the inverse of most traders. I think they need to learn to scalp better, but I definitely need to learn to hold on for bigger profits in the trends.

Scalping the full NQ and YM is anything but boring for me. Scalping requires RAZOR sharpness and focus. While the trend followers are waiting and waiting and waiting, I am often clicking the close button and am done for the day. Yes they might get $500 on one big trade on the ES, but I might have gotten $300 on 10 trades on the NQ and been done 2 hours before them.

"Extensive automation coding" is a great way to go. And with the new micros, I may get back into this. I previously was big into this, but with my small account, it was impossible to trade the ES, NQ, or YM. The drawdowns on an automated system seem to come the second I click the ON button!!! I have done this many many times. It is like I am cursed, LOL.

So while I am trying to perfect my new Micro trading techniques, I am also thinking about how I can get back into automation safely with the new 1/10th size contracts.

 

[ElectricSavant]

SS,

Some traders say that the longer that you are in a trade the greater the exposure to risk...simply churning microtrends vs. the bigger picture is great to debate and ponder. I remain open-minded and looking forward to reading this Journal.

peace out

ES

ES, I appreciate your comments and interest. Glad you find my comments worthwhile. Indeed I am trying to simplify. And indeed trading and explaining discretionary trading can seem contradictory.

I am primarily a scalper who is trying hard to pick up the ability to stay in trades longer. Most traders are trend followers who get chopped up in the ranges because they don't know how to scalp. So I think I am the inverse of most traders. I think they need to learn to scalp better, but I definitely need to learn to hold on for bigger profits in the trends.

Scalping the full NQ and YM is anything but boring for me. Scalping requires RAZOR sharpness and focus. While the trend followers are waiting and waiting and waiting, I am often clicking the close button and am done for the day. Yes they might get $500 on one big trade on the ES, but I might have gotten $300 on 10 trades on the NQ and been done 2 hours before them.

"Extensive automation coding" is a great way to go. And with the new micros, I may get back into this. I previously was big into this, but with my small account, it was impossible to trade the ES, NQ, or YM. The drawdowns on an automated system seem to come the second I click the ON button!!! I have done this many many times. It is like I am cursed, LOL.

So while I am trying to perfect my new Micro trading techniques, I am also thinking about how I can get back into automation safely with the new 1/10th size contracts.

 

[ElectricSavant]

no, "EXPENSIVE"...hehe I am not a coder. plus you got to reveal your edge to the coder!

ES, I appreciate your comments and interest. Glad you find my comments worthwhile. Indeed I am trying to simplify. And indeed trading and explaining discretionary trading can seem contradictory.

I am primarily a scalper who is trying hard to pick up the ability to stay in trades longer. Most traders are trend followers who get chopped up in the ranges because they don't know how to scalp. So I think I am the inverse of most traders. I think they need to learn to scalp better, but I definitely need to learn to hold on for bigger profits in the trends.

Scalping the full NQ and YM is anything but boring for me. Scalping requires RAZOR sharpness and focus. While the trend followers are waiting and waiting and waiting, I am often clicking the close button and am done for the day. Yes they might get $500 on one big trade on the ES, but I might have gotten $300 on 10 trades on the NQ and been done 2 hours before them.

"Extensive automation coding" is a great way to go. And with the new micros, I may get back into this. I previously was big into this, but with my small account, it was impossible to trade the ES, NQ, or YM. The drawdowns on an automated system seem to come the second I click the ON button!!! I have done this many many times. It is like I am cursed, LOL.

So while I am trying to perfect my new Micro trading techniques, I am also thinking about how I can get back into automation safely with the new 1/10th size contracts.

 

[sstheo]

Could not agree more but surprised that you are not attacked for attacking these great businesses!

I just read a great article by one of the owners of Maverick Trading here in Utah. https://mavericktrading.com/what-is-proprietary-trading/

I see lots of similarities between prop firms of old and "Funding Companies" of today. The same problem of "combine mills" happened in the 1990's with prop shops. At that time, the shops were making most of their money from COMMISSIONS. They paid the traders up to 99% of their winnings! The SEC didn't like this and the shops scrambled to get in line with the new regs, ultimately settling around 70% of winnings to the trader. So obviously the trader training had to improve.

Most traders in these combines fail. Resets are so common that TST just offered a special on a Pack of Resets. Think about this....

TradingSchools.org called TST a "hamster wheel" and "the ultimate gimmick" and says traders "get caught up in a ridiculous cycle of (usually) perpetual failure."

Notice this page from one of his posts (not linked because of an image that is way too "manly" for this forum!)

All this being said, I am not against these companies at all. They have a place for the trader who knows what he or she is doing. But in my opinion, the new trader who doesn't have thousands of hours of screen time has no business sampling the combine drug.

I will talk more about these companies later.

I am currently in a LeeLoo trial!

But I still maintain that the way the funding companies are set up, all new traders should STAY AWAY from them in the early stages of their trading careers, but should instead focus on the micros.