Please help a struggling Index trader
- Thread starter Smeagol1996
- Start date
Yeah, I didn't even mention options because even a lot of guys that trade the futures don't trade options, and not options on the ES but on etfs or stocks. Like other posters have said, you do seem to have pretty good setups, so like I mentioned before, i think your issue is with your confidence and the fact that you really cannot afford (or dont feel like you can afford) to lose any more $, thus to ease the pain you will get out of a position when it goes against you but BEFORE it hits your stop, then watch it do exactly what you thoght it was going to.
Honestly a lot of what you say also reminds me of how I trade. i am attempting to work on a little more short term intra day scalping but I have much better results looking for intraday or short term swings over a day or two. So if you are comfortable with options, then I say go with it. I trade options all the time, probably 40% o what I trade are options, most of it futures. But options are excellent precisely for the reason you say, you set your max loss at the beginning and typically you aren't levered to the gills, which you pretty much are trading the futures on a 10k account. No offense but you're controlling 55k or so worth of value on a 10k asset base. Obviously the stops are always good to keep you from getting wiped out but it's still 5 to 1 leverage or so, even on an intraday basis, and that can create some havok in the mind.
With options, you get some leverage, set your loss, and if you are trading SPY DIA IWM or QQQQs you've got some pretty serious liquidity, so small fries like us have no issue. The only thing I would add (and something I have been learning more over the past year, and it's truly helped) is to get out of the options when you need to. I.E. you know in your case you're only risking 500 (as long as you're not selling any naked puts or calls) but when you get a move that goes against you long enough that you know you are wrong, just get out, don't wait to see if you can get back to break even or make a profit. Especially in an environment where vol is priced in as much as it is and the time decay is what it is. So if it goes in your favor soon, then great. If more than a day or so, I have been getting out, usually. 6 months or so ago, I would set my trade and know I was risking a finite sum (with an option) and would ride it all the way down, HOPING it might come back. Incredibly counterproductive I have learned the hard way.
So trade the options on the indexes if you are into that and it works for you. Much easier to stay in and not get shaken out. And you can make some decent coin if you're right. You can always go back to futures once you are successful, if you EVEN want to.
Anyway, my two cents. Been there (not too long ago) and got the t-shirt.
Honestly a lot of what you say also reminds me of how I trade. i am attempting to work on a little more short term intra day scalping but I have much better results looking for intraday or short term swings over a day or two. So if you are comfortable with options, then I say go with it. I trade options all the time, probably 40% o what I trade are options, most of it futures. But options are excellent precisely for the reason you say, you set your max loss at the beginning and typically you aren't levered to the gills, which you pretty much are trading the futures on a 10k account. No offense but you're controlling 55k or so worth of value on a 10k asset base. Obviously the stops are always good to keep you from getting wiped out but it's still 5 to 1 leverage or so, even on an intraday basis, and that can create some havok in the mind.
With options, you get some leverage, set your loss, and if you are trading SPY DIA IWM or QQQQs you've got some pretty serious liquidity, so small fries like us have no issue. The only thing I would add (and something I have been learning more over the past year, and it's truly helped) is to get out of the options when you need to. I.E. you know in your case you're only risking 500 (as long as you're not selling any naked puts or calls) but when you get a move that goes against you long enough that you know you are wrong, just get out, don't wait to see if you can get back to break even or make a profit. Especially in an environment where vol is priced in as much as it is and the time decay is what it is. So if it goes in your favor soon, then great. If more than a day or so, I have been getting out, usually. 6 months or so ago, I would set my trade and know I was risking a finite sum (with an option) and would ride it all the way down, HOPING it might come back. Incredibly counterproductive I have learned the hard way.
So trade the options on the indexes if you are into that and it works for you. Much easier to stay in and not get shaken out. And you can make some decent coin if you're right. You can always go back to futures once you are successful, if you EVEN want to.
Anyway, my two cents. Been there (not too long ago) and got the t-shirt.
Careful there chief, I know you like averaging down and this is not it
Profit would be the ideal one replying to your question but for clarification purposes I would point out that there is a huge difference between adding when you are wrong and adding to a losing position.
The key element is defining max risk at all times but like I said, this is Profit's world so will let him take over.
Anek
OK Mr Struggling Index Trader:
I ain't a great index trader but lemme let you into a little secret...
Stop trying to be right and you will start making money...
In the futures game, trying to be right all the time is not the way to go...
Another thing, that someone has already mentioned... timing is not important... focus on money management...
I ain't a great index trader but lemme let you into a little secret...
Stop trying to be right and you will start making money...
In the futures game, trying to be right all the time is not the way to go...
Another thing, that someone has already mentioned... timing is not important... focus on money management...
Trading is really all about money management, as these guys have already mentioned.
When you realize this truth, you will knock yourself in the head for not getting it before, it is so simple it is almost stupid.
P.S. It's a weird little conumdrum. The fact that so many fail is not due to the fact that they can't trade ... it's that they are looking in the wrong direction (playing the game of being an expert on entries and exits).
Don't get me wrong ... entries and exits are important, they just aren't that important ... one more thing, your EGO is your worst enemy in this opponentless game.
I would know.
Quote from Anekdoten:
Careful there chief, I know you like averaging down and this is not it
Profit would be the ideal one replying to your question but for clarification purposes I would point out that there is a huge difference between adding when you are wrong and adding to a losing position.
The key element is defining max risk at all times but like I said, this is Profit's world so will let him take over.
Anek
I am pleasantly surprised that you remember my "strategy". I am proud to report that since my initial forray into trading ES, I have steadily improved my "game", not perfected, but I have gotten better.
Yes you are right: " there is a huge difference between adding when you are wrong and adding to a losing position." Too bad, by the time a trader realizes which one it is,most of the time it is too late to avert a catastrophe.
You should not be trading at all. The obvious is ignored by many amateurs - namely, do not trade unless you know exactly what you are doing; this means having in place an accurate methodology.
A 5 minute chart is more or less useless; it is far too vague to use for accurate day trading. Remember the the aim is to be lifting a chain or series of profits from what the market daily offers (eg ES, YM, CL).