Some tips in Trading the ES successfully

[jurmajesty]

Mark, I must say I am married to the TF. It is the best risk/reward ...most orderly...easily the bigger dollars...gives the true "home runs". This is after 10 years of eminis trading with no success...5 years for the smart ones, 10 for the geniuses. I guess I am a genius...would rather be just smart....

You are very correct for most traders. I do like all the eminis at one time or another, just the TF is the higher payoff year in and year out...higher payoff but a dangerous little cookie for the one who tries the tight stop/low risk trading. Low risk can be good on the TF but not for the feint of heart, nor the novice. 1 point $100 makes it alluring but like the deadly mamba. One bite might be not the dream come true trade.

 

[wrbtrader]

Quote from Neenisti:

How does price action differ between charts and symbols? Doesn't price move the same on all charts?

The issue isn't the movement of price action itself. The issue involves several variables like price action, type of trade method and the overall market condition.

It's very easy to see my point. Pull up charts of the Emini ES futures, Treasury ZB futures, Forex EurUsd currency and Gold GC futures.

For one day only (today), backtest your trade method on the above trading instruments. You will see a different number of trade signals, trade signals occurring different times of the day and different profit/loss results all via the "exact same trade method" used by the "same trader".

Simply, you will have different trade results depending upon what you trade while using the exact same trade method. Therefore, it's possible to be a profitable trader on one particular trade instrument and be a losing trader on another trade instrument while using the exact same trade method.

Therefore, if your goal is to maximize your profits, it's possible that you may have to trade something you really don't want to trade or isn't at the top of your list of favorite trading instruments. Thus, the trade method results should determine what you should trade and not the trader if the goal is to maximize your profit potential or minimize your loss potential.

Further, now throw in the cost of trading like different commission fees, different exchange fees et cetera from one trading instrument to another trade instrument...it does have an impact on your bottom line trading results.

Mark

 

[Neenisti]

Quote from wrbtrader:

The issue isn't the movement of price action itself. The issue involves several variables like price action, type of trade method and the overall market condition.

It's very easy to see my point. Pull up charts of the Emini ES futures, Treasury ZB futures, Forex EurUsd currency and Gold GC futures.

For one day only (today), backtest your trade method on the above trading instruments. You will see a different number of trade signals, trade signals occurring different times of the day and different profit/loss results all via the "exact same trade method" used by the "same trader".

Simply, you will have different trade results depending upon what you trade while using the exact same trade method. Therefore, it's possible to be a profitable trader on one particular trade instrument and be a losing trader on another trade instrument while using the exact same trade method.

Therefore, if your goal is to maximize your profits, it's possible that you may have to trade something you really don't want to trade or isn't at the top of your list of favorite trading instruments. Thus, the trade method results should determine what you should trade and not the trader if the goal is to maximize your profit potential or minimize your loss potential.

Further, now throw in the cost of trading like different commission fees, different exchange fees et cetera from one trading instrument to another trade instrument...it does have an impact on your bottom line trading results.

Mark

I use the same method on all of my charts. I understand that individual trade set ups will occur at different times on different charts based on the price movement of that chart but the same patterns I see on Crude appear on Gold, appear on the Russell, appear on the Euro futures, appear on Palladium, appear on Sugar, etc. I treat price action like electricity. It works & looks the same to me as if it is coming from Chicago, New York, Green Bay, LA or Miami. Electricity is electricity. Price movement is price movement, to me. That was the purpose of my question, what you saw different than I see.

I understand exchange fee differences but my commissions are the same across all futures I trade.

 

[EsKiller]

Lets start with something very basic. Up trending days. I think its important to use both an RTH chart and a 24 hour ES chart. Many newbs will have a tough time trading an up trending day.

Lets look at a random chart from an ADU day (all day up)

The first think you need is to have some moving averages up. I prefer exponential moving averages, but it doesnt matter really. These will help in determining trend. Some like to use them in determining when they enter, but I don't. The ONLY use a MA has for me is determining trend so that I have an idea how the algo's are going to trade. Once there's a trend, many market setting algo's are programmed to trade with it.


Whats a good clue That we'll have an uptrending day ? Use your 24 hour chart (i prefer 15 min bars) and pay attention to the pre-market trend. When its trending up from around the start of the Japanese open til US open, its good enough to see we'll see some strength off the open.

A technique I uses sometimes is to buy weakness of the open during these days. When you see the market fall in the first 5 mins of the trading day after the market has been trending up, almost always its a good buying opportunity. But I digress....


There's many ways to try and buy these uptrending days. There's usually only a few per month, so IMO its important to try and catch most of the move via scaling out of the trade.


I'll post more later on entering and exiting during these days.....

Attached is a chart from Febuary 1st

 

[wrbtrader]

Quote from Neenisti:

I use the same method on all of my charts. I understand that individual trade set ups will occur at different times on different charts based on the price movement of that chart but the same patterns I see on Crude appear on Gold, appear on the Russell, appear on the Euro futures, appear on Palladium, appear on Sugar, etc. I treat price action like electricity. It works & looks the same to me as if it is coming from Chicago, New York, Green Bay, LA or Miami. Electricity is electricity. Price movement is price movement, to me. That was the purpose of my question, what you saw different than I see.

I understand exchange fee differences but my commissions are the same across all futures I trade.

Yes, I understand a trade method will see the "same trade signal" regardless to the chart (symbol). However, that's not what I'm discussing.

Regardless, it's a very simple test that most will not do.

Take the trade instruments you mention above and backtest your trade method. Compare the results to determine which one made the most profits today or less losses today. You will see that your backtest results did not show the exact same profits or losses in Oil, TF, Euro, Palladium, Sugar or anything else.

Simply, one of those above trading instrument will out perform the others base on profit/loss while you used the exact same trade method.

Now do the same backtest going back months or years. Next, compare it to the results of what your currently trading. That's how you'll know if your trading the right trading instrument if your goal is to maximize your profits and minimize your losses.

Therefore, if you discover you will be more profitable trading something else, you have a very important decision to make if you're currently trading something different that you favor (as in married) for whatever reasons.

Mark

 

[Neenisti]

Quote from wrbtrader:

Yes, I understand a trade method will see the "same trade signal" regardless to the chart (symbol). However, that's not what I'm discussing.

Regardless, it's a very simple test that most will not do.

Take the trade instruments you mention above and backtest your trade method. Compare the results to determine which one made the most profits today or less losses today. You will see that your backtest results did not show the exact same profits or losses in Oil, TF, Euro, Palladium, Sugar or anything else.

Simply, one of those above trading instrument will out perform the others base on profit/loss while you used the exact same trade method.

Now do the same backtest going back months or years. Next, compare it to the results of what your currently trading. That's how you'll know if your trading the right trading instrument if your goal is to maximize your profits and minimize your losses.

Therefore, if you discover you will be more profitable trading something else, you have a very important decision to make if you're currently trading something different that you favor (as in married) for whatever reasons.

Mark

I understood your previous post.
All of my charts are profitable. Some are just more profitable than others. I trade a basket of the top 20 most profitable of the many hundred I monitor. All of my charts are "right". The 20 I trade are just "more right" than the other few hundred I monitor. The basket changes from month to month to month based on profitability not patterns.
I'm Hugh Hefner of the twenty charts I trade that is how married I am to them.
But I'll replace them on a dime as well.

 

[wrbtrader]

Quote from Neenisti:

I understood your previous post.
All of my charts are profitable. Some are just more profitable than others. I trade a basket of the top 20 most profitable of the many hundred I monitor. All of my charts are "right". The 20 I trade are just "more right" than the other few hundred I monitor. The basket changes from month to month to month based on profitability not patterns.
I'm Hugh Hefner of the twenty charts I trade that is how married I am to them.
But I'll replace them on a dime as well.

I've always been a big fan of being diversified because volatility changes and when it does...if someone had tunnel vision on one trading instrument when volatility changes for the worst...

They will need to find a new trading instrument to minimize drawdowns and then go through an adjustment period as they learn a new price action.

In contrast, if someone is diversified, they can more easily move from one gal to the next gal.

Mark

 

[Neenisti]

Quote from wrbtrader:

In contrast, if someone is diversified, they can more easily move from one gal to the next gal.

Mark

You got that right. I'm all up for "Diversification"!

(.) (.)

 

[EsKiller]

All Day Up day Part 2:

Lets go into a little more detail in regards to the pre-market trend in determining whether the day will be an ADU day.

How it trends is important. The most powerful pre-market trends that turn into ADU days are when the peaks and troughs are relatively tight and it hugs the MA (I use the 20 for this). The reason this is so powerful is because it prevents the algo's from switching to mean reversion mode.

When you have a trend day that starts to push well away from the MA pre-market....i like to say it standard deviations its way away from the MA, the algo's start to switch gears from trend trading to mean reversion. You'll see mean reversion trading occuring when the pushes up fail, and/or the pullbacks aren't clean. Basically the uptrends price pattern doesn't look as clean and bullish.

You need a different strategy for trading the mean reversion uptrend which I'll discuss at a later time.


I want you to look at my Feb 1st chart that I posted and look at this chart right here. See the difference ? See how the Feb 1st chart is clearing starting in a pre-market trend up while hugging the MA and not straying too far away from it ?

Now look at this chart I posted below. Soon as the market opens mean reversion takes place.

Ok. Next i'll discuss some ways to trade ADU days.

 

[abattia]

Quote from EsKiller:

... I want you to look at my Feb 1st chart that I posted and look at this chart right here. See the difference ? ...

No, I'm not clear!

Which aspect of the difference are you labelling as significant?

- In the non-ADU case, I see candles that start below the blue MA line until about 4h00 CET (are these times CET?), but from 04h00 to 08h30, they stay close to (and just above) the blue MA line.

- In the ADU case, the candles don't cross below the blue line, but I have difficulty seeing how the "closeness" of the candles to the blue MA line is any different from the non-ADU case. Is it the cross over that's the significant difference (in which case I see that), or the extent to which candles hug the blue MA line (in which case I don't)?

Thanks.