Smacking the ER2

Quote from jessop:

- 10 pts ($1k for 1c) on ER2,
- 80 pts ($400 for 1c) on YM,
- 18pts ($360 for 1) on NQ
- 9 pts ($450 for 1c) on the ES.
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These numbers are misleading unless you include factors such as tick size, tick value, and margin requirements. For example, one could argue that trading 2 YM contracts (about same risk) would provide more flexibility for scaling in and out than 1 ER2 contract. What really matters is:

1. leverage - but not much difference between contracts, and rarely an issue for small trader (i.e., their risk limit as % of account size is way below their max contracts based on margin requirements)

2. edge - is there something special about the trading edge provided by a particular contract (i.e., knowing when to buy or sell) - but, given the way all the index contracts track one another, it is unlikely that any one of them is truly easier to trade than any other

3. tick size - if you trade in very short time frames, this may make a difference (with YM and ER2 being better), but for many traders this difference is in the realm of "noise" and hardly worth considering

What's surprising is not that more traders haven't moved to ER2, but that so many of them are so easily confused about the above issues. :)

(BTW, the particular range values quoted above are not even typical of these indexes, where, for example, the typical YM:ER2 point ratio in recent weeks has been over 12:1)
 
Well my concentration was better today and I sat through the whole session without letting myself get distracted.

However, there was a definitive negative tinge to my mood today that caused me to hesitate more than is acceptable.

I didn’t have a signal for the 5pt opening move, but that didn’t really frustrate me which is good.

S0.5(S) - well it’s the signal on the top of my research list (the one from Friday).
Entry was from the start of the 15:05 candle and it ran for 3pts. At least my discipline held and I didn’t enter the trade. I need to complete some outstanding backtesting on this one - but I must get this added to my trading plan very soon.

Non-Signal – my current Achilles heel is entering a trade mid print – here was another example, which also had a touch of boredom trade about it too. Entered at 15:36 (673.4) and got stopped out at 672.3.

S1 (L) – failed to take trade– entry should have been at the start of the 16:05 candle – waited for the end of the 16:00 candle and then did nothing

S2 (L) – failed to take trade – entry should have been at the start of the 18:00 candle

S3 (S) – entry 673.2 (19:03) a little late – it should have been from the start of the 19:00 candle. I exited at 672.5 after I looked at the QM chart and saw the price falling back. There was another 0.8pts to come before my actual exit signal – disappointing.

S4 (S) – failed to take trade – entry should have been at the start of the 20:15 candle – waited for the end of the 20:00 candle and then did nothing

S5 (S) – entry 672.9 (20:45) I exited at 672.5 after a certain indicator failed to break down as expected, and then gave me an exit signal.

Entries – two good ones – one non-signal
Exits – one ok one – one non-signal exit - one stop out
Points today +0.0pts (not including comms)

Onwards and upwards……….
 

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Jessop, read thread and can empathise with you in your quest to Master the Russell. It is an excellent instrument. No place for amatuers as I have learned the hard way. Get it right and trading is very profitable, get it wrong and it gets under your skin. A magnificent obsession where the hard work is duely rewarded!!
 
Donwah,

That's good to know.

I know I will never master the beast, but just understanding its mood swings is probably enough to make a reasonable return.

Cheers
 
Hi

Interesting post. I am very much the same. I trade the Russell intraday everyday and are largely self-taught.

I trade a minimum of 8 contracts - for tight risk management. And i agree the hardest part is to let your trades run for full profit potential.

I have a clear and strong method and definitive trading plan. The Russell is by far the best index to play currently - but it is very quick and one of the most costly - especially if you misread a trade.

I trade with several others, some of whom trade substantial size.

Be interested to keep in touch with you - perhaps to swap notes and stuff


Kevin
 
imo - Great read with good lessons on the mchanics of trading.

Quote from thenewguy:

Hey Jessop, I came across this when reading a thread in the "trading" section today, and thought maybe if you haven't seen it, you'd enjoy it. It relates directly to your situation, imho.

It was taken from here: http://www.originalturtles.org/system.htm

-The New Guy
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TNG,

Thanks again for the link ……an interesting read indeed.

What was a surprise to me was:
1) The simplicity of their entry criteria
2) The losses they must have racked up in the process of finding those large trending winners (i.e. a low win/loss ratio compensated for by a massive reward/risk ratio)

The section that was not surprising, but did get me thinking about how I am doing following my rules
1) The turtles who failed were the rule non-followers – either not taking entry or exit signals

I have never managed to take all my signals in any session in the last 4 months (my average is around 20-25%). For those trades that I do take I close them using my documented exit signal about 50% of the time.

Therefore, in cold statistical terms, I fully follow my trading rules for 10-12% of my signals. This is a huge inhibitor on my expectancy. I really need to up my game significantly on this core statistic..

Just as a matter of interest, I’m assuming you guys are up at the 80-100% end of the spectrum in terms of entry & exit signals followed?

Cheers J
 
why do you miss some of your trades?

fear?

what off?

fear of being wrong?

of losing money?

or

were you looking at something else - distracted?

didn't like the look of the trade (confidence/ fear again?)

not quick enough with your orders?

hesitated and didnt/dont take the second time through your price?


whatever....you tell us......
 
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