Please help a struggling Index trader

S

Smeagol1996

Quick background:

I've been day trading the ER2, YM & ES for a little over a year. Started with ~30k, currently down to 10k. I've had my weeks, even months but overall the bottom line is hurting.

The core of my trading process is a combination of candlestick triggers, 20, 50, & 200 EMA's, volume, pivots, ADX/DMI & sentiment (mostly TICK). Almost all trades are from a 5-min chart, entries often timed with a 1-min TICK chart. Using TICK extremes, key price points and candle patterns I often fade the YM with well timed entries. I also use ADX/DMI to confirm strong trends, and enter on TICK or price retracements.

Reviewing each trading session consistently reveals very well timed trade entries and absolutely terrible exits. I always use an immediate hard stop with the following approximate ranges depending on volatility:
ER2: 2.5 - 3pts
YM: 15 - 40pts

Here are a few hideous examples from todays session:

10:07am YM LONG @ 11415
10:09am CLOSED @ 11408 (-35)

10:19am ER2 LONG @ 728.60
10:20am CLOSED @ 728.50 (-10)

10:46am ES SHORT @ 1278
10:48am CLOSED @ 1278.25 (-12)

3:20pm ER2 SHORT @ 730.30 (-80)
3:25pm CLOSED @ 731.10

If you look at the end of day chart it is mind boggling that I can time entries this good and still manage to lose when each one of these trades worked about as 'perfectly' as you could expect.

I have not lost more than a 3pt ER2 hard stop in a long time. I am not overly concerned with the potential loss of my stop distance on any given trade but yet seem to always fall prey to 'candle hypnosis'. I take losses much too quickly and profits much too soon. Clearly it is self-sabotage and quite frustrating with so many trades that should be substantial winners.

Currently reading 'Trading in the Zone' by Douglas. I have several affirmations that pop up by alert many times a day. Somehow I must learn to completely let go of a position after taking the trade.

All suggestions or experiences welcome. Thank you for any help.
 
First, stop trading live and go to sim before you blow out the rest of your account.

Second, trade one market. I love ER but YM is a probably best untl you gain experience

Three, backtest like a a mad man. Then forward test in Sim.

Four, once you have a trade move in your favor so many tics(determined by testing) move your stop to BE. If you like your entries why let a good trade turn into a losing trade.

Five, use exit targets but make sure your targets allow for a good run. I make sure my targets are at least double my stops.

Trading is not easy. Takes alot of discipline and you must be a good statistician to survive much less thrive.
 
trade only 1 lots until your win rate is above 70%,that will keep you out of a lot of trades,go for the percentage,not the money or the trade,you have to learn how to trade,it,s very important that you learn when not to trade,that will be the beneficial result of this excercise
 
IMHO, you sound like you are trading scared. I know it becasue I have done it from time to time over the past year (I started trading index futs in July 07). It is nearly impossible to make money when you keep losing over and over because your confidence is lost, and as soon as something in the near term goes against you, you second guess yourself, get out of the trade, only to typically watch it go back in your direction, whereby you miss out on recovering the loss and also turning a profit.

So take a break. Not a day - at least a couple weeks, maybe a month or so. Do something you can excel at - run, lift weights, read books, eat hot dogs, who cares! Work on building your self confidence back up. Then when you come back to the market your head is back on straight.

I assume you have another job, and if so, that's great. Immerse yourself in it. If you don't, I would try to find one. Note I am not saying give up on trading, but if you're down that much and are trying to make a living with your assets, it will be nearly impossible for you to stick to your set ups, whatever because in reality you just cannot afford to lose. Again, I have been there, done that. Its no fun, you miss out on tons of opportunties while you are literally kicking yourself everyday.

The lack of confidence to stick with a winning trading because you cannot really afford to lose sets off a nasty cycle. So, if you can, make a living some other way for a while. It will clear your head. Then come back, test your strategies, and I would say use longer term time frames. Work on trading the SPY, IWM, QQQQ and other index etfs. The leverage isn't the same, but conceptually you can still work on your ideas, make a buck if you're good and sleep at night because your not levered to the gills.

And drop the ER2. Watching the RUT is great imo. I trade a lot of options on the IWM. But the ER2 is for those with lots of experience and larger wallets than I have. Its a volatile little mofo and it can really shake you out.

Clear you head, get your confidence back up, then work on strategies for a while, on paper. Once you start getting more confident, trade the YM, 1 at a time. This is a tough market, so its not surprising you can get whipped out, but it sounds like your problems have been persisting for a while, so you probably need a fresh start.

Best of luck.
 
For one thing your stops are to tight!!! and that means you may be scared b/c of the slow death of your account. "scared $ is lost $.
 
Besides advice already given such as using less leverage to trade with until you are very consistent you need to have a less complicated system that's more consistent with your stops until you are able to consistently tell when it should be larger or smaller a stop. pick a number say 20 points over the pivot entry and stick with it. I found ES easiest to start with since i was more familiar with s&p price points but moved to ym since it has a smaller spread 5 dollars a tick vs 12.5 for es and 10 for er, er is fine if you trade one er vs 2 ym but it is more volatile so don't trade until you are successful with 2 ym contracts.
 
Also, you only lost 137 bucks plus fees/commish. if that is a bad day you may be in the wrong game. ill give you 25k if my bad day is only a loss of 137. you have to be prepared to lose alot more than that in order to be successful at this profession
 
You are making the most common mistake a losing trader makes -- you are relying on timing the market and not using money management. Your losses are teenee, tiney losses. Your entries are very, very close to mine today and I made money on all those trades. I don't ever put my entire line on the market at one time. If the trade goes against me and the rationale for getting in the trade in the first place still exists I add to the trade. The funniest thing is, most people call me an idiot for doing this. Imagine, I add to a losing trade, win more than 90% of the time because of it and I'm an idiot. Learn how to manage your money/account and you may laugh your idiot ass off all the way to the bank like I do. <u>You can't rely on just timing and expect to win.</u>
 
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