Techniques for Day Trading the ES, NQ, YM, MES, MNQ, and MYM

[volpri]

What we truly have as traders is “this very moment.” The reality of our trading experience is ALWAYS right here, right now. We expend a lot of mental energy thinking about the past, planning for the future, minimizing risks. But the past is but a memory. It’s reality is past, over with. It is but a thought that shows up in the present. The future is anticipation of a reality. It too is but a thought that presses upon the present. Both the past and the future are but thoughts. That is all. That is their only existence. At the moment. What we truly have is THIS very moment.

We tend to think incessantly on past trades and dream of future trades and this thinking interrupts our ability to see the uniqueness of the present trade. We transpose our fears and our hopes onto the present trade and when it doesn’t conform to our expectations we become discouraged or disappointed. Connect with the present and find fulfillment there because the future never arrives. All we have is the present. We worry about the past and we worry about the future. “Thinking” is what the mind was designed to do and that it will do. The incessant constant chatter of the mind cannot be stopped. You cannot turn it off like a water faucet. Thoughts and emotions are like clouds that float across a blue sky. Just as quickly as the appear they are gone. We cannot stop them. They are part of our humanity. All we can do is observe them and realize they will fade away and disappear from that bright blue sky but others will quickly replace them. Thus we need structure for our trading and we have to train ourselves to work the process. The thoughts and emotions will never stop, nor are we able to control them. We can see them. We can feel them. We cannot abolish them. Nor can we control them. Not really. We may think we are but we aren’t. So, all we can do is acknowledge them, recognize that they exist, then focus on the present and work the process. Work the structure.

 

[volpri]

All traders have doubts. Even the most successful traders. So, what do you do when doubts pops up? Things like:

1) Am I ever going to learn to trade?
2) I am hesitating again. Should I take this trade or not?
3) Why does it seem like I am unable to get on the right side of the market?
4) I’m just not cut out for this.
5) I’ll never be a good trader.

Understand it is normal for doubts and even self-criticism to appear. So, what do we do when these thoughts pop into our consciousness?

1) Accept them. Allow them, don’t try to suppress them BUT DO NOT BELIEVE THEM. Not for a second.

2) Realize that they are nothing more than thoughts. Remember our minds generate thousands of thoughts every day. Many, if not most are not even connected to reality. They are just thoughts! They are just thoughts that float across the screen of your mind. They will pass. They may be tied to some real concrete behavior, or they may not. But, regardless, they are just words and thoughts and they have no right to form your future. But, they will if you let them.

3) Stay focused on the present. The present trade has nothing to do with yesterday’s trade or the trade taken 15 minutes ago. By heeding your thoughts and doubts you will lose focus on the price action that is in front of you at this very moment. Even if the last 4 trades, in a row, were all losers that does not mean this fifth trade will be a loser.

4) Don’t struggle with them or try to suppress them just acknowledge their presence and accept them but don’t accept them as being true. Even if there is a measure of truth to them that does not mean it will always be that way. LEARN TO DOUBT YOUR DOUBTS.

5) Believe in yourself. Focus on the trading task at hand this very moment. Do what matters most for this trade and for you as a trader. Work the process. Don’t accept your emotions and thoughts as the measure of value for you as a trader. Accept them for what they are: feelings and thoughts. Period.

6) You heard it said usually by gurus “stay humble”. Look, the market doesn’t know, or care if you are humble, or not. So be a little arrogant if it boosts your self confidence. Be your best cheerleader!

 

[birdman]

All traders have doubts. LEARN TO DOUBT YOUR DOUBTS. Be your best cheerleader!

Thank you Volpri.

 

[Overnight]

It all goes out the window when real money is on the line.

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"Of course, it will be hindsight charts but the concepts apply to trading live. It is my opinion that concepts can be best studied from static charts. I can’t really show anything from non-existent charts. All I can say is study the charts and practice the concepts maybe on a SIM first.

I won’t get into showing or proving that trades are actually taken and producing statements...and such other account proofs. None of that is necessary to teach the concepts. Such proofs only prove my mettle as a trader and usually one thing leads to another and often not everyone can be satisfied and the thread heads down the road of arguing about proofs. And I often come across as arrogant or bragging instead of meek and humble and that seems to bother traders....

When trades are shown on a chart that I post and were taken by me live as price action unfolds, either on a SIM, or one of my real money account, I may, or may not, indicate which to be the case. Some trades will be done on a Live SIM and some will be done with real money. I will not divulge which. SIM is necessary because I will purposely do wrong things on some days to cause losses. Traders often (at least in my personal case learn more from failures than from successes.) I am not going to use real money and lose it purpose just to teach a concept. I think you can understand that. However, if I use an old static chart from my computer to illustrate a point then I will try to state so, if I remember. Not that it should really matter."

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Your journal is going well, and your disclaimers have covered you to a T.

There's one question I do not think you have answered. How much money would be required in a real money account for you to accomplish what you have done, through a broker like IB?

I mean, including the performance bonds? My guess is hundreds of thousands of dollars in the case of the e-minis. Averaging down into hundreds of lots even in the e-micros just to get to BE would require a substantial amount of money.

I'm all for your technique, but let us be realistic about the feasibility of it all.

 

[volpri]

It all goes out the window when real money is on the line.

------------------

"Of course, it will be hindsight charts but the concepts apply to trading live. It is my opinion that concepts can be best studied from static charts. I can’t really show anything from non-existent charts. All I can say is study the charts and practice the concepts maybe on a SIM first.

I won’t get into showing or proving that trades are actually taken and producing statements...and such other account proofs. None of that is necessary to teach the concepts. Such proofs only prove my mettle as a trader and usually one thing leads to another and often not everyone can be satisfied and the thread heads down the road of arguing about proofs. And I often come across as arrogant or bragging instead of meek and humble and that seems to bother traders....

When trades are shown on a chart that I post and were taken by me live as price action unfolds, either on a SIM, or one of my real money account, I may, or may not, indicate which to be the case. Some trades will be done on a Live SIM and some will be done with real money. I will not divulge which. SIM is necessary because I will purposely do wrong things on some days to cause losses. Traders often (at least in my personal case learn more from failures than from successes.) I am not going to use real money and lose it purpose just to teach a concept. I think you can understand that. However, if I use an old static chart from my computer to illustrate a point then I will try to state so, if I remember. Not that it should really matter."

-------

Your journal is going well, and your disclaimers have covered you to a T.

There's one question I do not think you have answered. How much money would be required in a real money account for you to accomplish what you have done, through a broker like IB?

I mean, including the performance bonds? My guess is hundreds of thousands of dollars in the case of the e-minis. Averaging down into hundreds of lots even in the e-micros just to get to BE would require a substantial amount of money.

I'm all for your technique, but let us be realistic about the feasibility of it all.

Overnight, of course the psychology in magnitude, but not nature, changes when one is trading real money. That IS THE psychological problem of trading, which by the way is, more often than not, overlooked. My last two posts were a feeble attempt to touch lightly upon some of the psychology of trading. The psychology is the same on (SIM or real money) but it is magnified dramatically in real money trading, but the process need not change. The tactic need not change. For the process to stay the same (Whether on SIM or real money) a trader has to train his mind to continually refocus ...his mind...on carrying out the process of the trade and not the myriad of thoughts generated by the mind that can cause one to lose focus. Execution is of prime importance or the mind will take me all over San Diego to get me to Las Vegas so as to be inducted into the losers hall of fame. Trading is of very high performance. That entails mental training.

Who said anything about averaging down into hundreds of lots? Have you not been reading the journal? I am trading very small. One, two, three, maybe 5 lots, on occasion. And very few trades have been in the eminis. Most are in the micros. And most in MES.

Look, trading anything over 10 lots in the micro ...well it is cheaper to trade ES. Cheaper to trade 1 ES than 10 micros.

But the micros are favorable for a small trader who is trading with a small SIM account. Favorable up to a point, if using certain techniques like I do.

I don’t, never have, and never will average down hundreds of lots on one trade to get back to BE. Any of my “give up” and exit points would be hit way before I am averaged down hundreds of lots in any micro.

Look if the averaging down troubles you then just read the journal for straight scalps using the TE. Like today I took a few trades. None were averaging down. Just straight scalps. One for over 30 points. It was what I call a multiple swing MTR scalp.

Whether straight scalping or averaging down scalping, psychology will always come into play. We, as traders, sooner or later, have to come to grips with the psychological aspect of trading.

Warning to all: you can lose money averaging down. You can lose money straight scalping. You can lose money swing trading over several days you can lose money investing over months and years, you can lose money buying a used car, even a new car. As concerns trading, trade any technique I discuss in this thread and in this forum only on a SIM and then you will only have to worry about depleting your SIM account funds! I am just showing how I trade. And how I view things from a psychological standpoint. That is all. If it is useful for helping any trader on a SIM then great. If not, then please, I ask said trader to ignore the thread and the techniques therein discussed.

 

[trader1974]

Volpri, can I ask you a question?
Is volume good for anything?
A one hour chart volume may indicate that they have purchased.
Then then, in the next hour, a larger volume may emerge that overrides the previous one and the price may fall again.
Better to just look at the price trend?

 

[trader1974]

In other words: Many times the volume is a good indicator of what the price will do next, in effect it gives us some clues. However this is false because as I say sometimes a volume equal to or greater than the previous one cancels the idea we had. This can happen in all time frames. So the volume sometimes points the way but other times it doesn't. Better to follow the price? Better to keep track of the volume?

 

[volpri]

Volpri, can I ask you a question?
Is volume good for anything?
A one hour chart volume may indicate that they have purchased.
Then then, in the next hour, a larger volume may emerge that overrides the previous one and the price may fall again.
Better to just look at the price trend?

I generally pay no attention to volume, especially for entries. When I see big range bear bars one after the other I know there is volume. Same with bull bars. I don’t have to look at volume to know this. If an extra large range bar shows up after a multi bar move I will sometimes take a peek at volume just to see if that bar is a likely exhaustion move, made on exhaustive volume.

You can have very little range in terms of price movement over multiple bars but still have large volume. SPBL and SPBR trends are examples of this. Both are very strong trends but usually not steep trends. This is because, there are, at all times, bearish and bullish institutions trading. HFT firms generate a very large part of the daily volume in indexes. Other institutions generate a chunk of it too. We traders generate about 5%. They are not after our money. They are after each others money. GS is trying to take money from J.P. We are bubble gum money to them. They are not concerned with running your SL’s. It is not like it was in the 70’s and 80’s in that sense.

Volume is a metric of $ going into the buy and sell side. But see you can have big bulls and big bears offsetting each other. Sooner or later one side wins. But I can only make money when one side wins and I join that side. Price movement will show me which side is winning. Volume will sometimes help me decide if an extended move is getting exhausted.

I want as few things as possible to look at, for decision making, when trading. Volume just adds another component. I am more concerned with larger context, immediate context, and the individual bars in price movement than volume.

Just look at some of todays price action in MES. You can see the volume. But you don't need to "see" it to know it is generally there. An institution is not generally going to cause a successful BO of a range on low volume. Or an extended steep bear trend on low volume. If a BO was successful (and you have to read some of my previous posts to know what I mean by a successful BO) you "know" there was volume involved to be able override the pressures of the institutions on or taking the other side.

Which institutions were winning on this chart? Doesn't price alone show that? Would you need to see volume bars to detect who is wining in this chart? Bear bar after bear bar. Bigger bear bars than bull bars. Bear bars in series. Small minor PB's ..price staying well below 20 EMA, below 50 SMA, below 240 SMA, gaps. I don't have to look at volume to tell who in in control of this market.

 

[trader1974]

Thanks Volpri

 

[volpri]

If a trader doesn't like the idea of averaging down the he can just make fewer trades and go for bigger moves. Like today 6-25-2020 MES on a reversal right after the open. I only took two trades. One 3 point short straight scalp. Then a 21.5 point long trade that lasted a few hours. I will show them on both the 24 hour chart (first chart) and the RTH's chart. The thing to understand is that SL has to be big so a trader has to trade small size to reduce risk. Tight stop losses will generally lose in situations like today.

Look at the 24 hour chart. Once I made my entry then the PB started. Then around 10:10 I could do a MM (see purple lines) from the bottom of the original move up starting around bar 8:50 to the midpoint of the PB then extrapolated up. That would be the smaller MM. I also drew another MM that measured the move up from 8:50 to 9:25 then extrapolated up. That is the (orange lines).

I set my SL below the low of bar 8:50. I had to go to town so I left it all and when I got price had hit my PT and executed. Then price went up even some more.

Here is the RTH's chart:
The 3 point short scalp was just a short scalp betting the price would drop a little more after that third bar, after the open. The big bear bar. The reversal area I have highlight in green. We got 6 bull bars and two bear bars in that reversal. Gaps in the bull bars (see def of gaps in previous posts). The two bear bars in the green highlighted area are only implied PB's. By implied I mean they are really only true PB's on a smaller TF. Bottom line is that means they are minor PB's. So, price on the reversal goes up through all three MA's ( 20 EMA, 50 SMA, and the 240 SMA). So, this all indicates some bullish institutions are driving this and the bearish institutions are losing. See price opens GAP down and bears try to keep pushing it down but they FAIL and bulls reverse price. Bears try again twice and fail in the highlighted move up. The bulls are controlling this. They not only pushed through all three MA's but they also closed the opening GAP. They are stronger than the bears. By bar 9:25 there is about 65% chance that this will have at least another leg up maybe more. But remember the TE. You rarely get all three variables in your favor. Risk, Reward, Probability. Since this is a strong reversal I am looking for multiple legs up and likely a MM up. So I have good probability (65%), big reward (MM in multiple legs) but there is no way I can have small risk here also. That would be the perfect trade and it is very rare to get a perfect trade from the markets. So, I have to have a big stop loss. This is where most traders go wrong. They think because it was a strong move up that they can set a tight SL. But what they don't realize is that at bar 9:25 price will likely do one of two things. It will head on up for a measure move giving big reward or the bears will push back strong trying to make the reversal fail. Since it is a smaller bull bar and a tail on top chances are we will see a PB here. And they will probably push hard. In addition, some bulls will take profits from that reversal up. So between the bears trying to make the reversal fail and the bulls taking profits we can get deep PB's. So, price could continue up after bar 9:25 or we could see a PB, and if strong enough, the bears may actually stop the move up and manage to push price into a trading range. They did manage to push back with a two legged deep PB that started in bar 9:30 and bar 10:35. They even managed to push back down through all three MA's before the trend resumed back up.

That is why you have to have big SL in a situations like this. (high prob, big reward, but comes with big risk). Therefore, a trader has to trade small size to keep risk manageable in terms of $$. Then you just let it run.

No averaging down. And capturing 24.5 points in two trades.

The key here is detecting the strength of the reversal and placing the SL in the correct place. Bears are gonna push back hard. From the open they were trying to push price south. Two attempts in the green highlighted area failed. They are not gonna give up that easy. So I can expect a probable deeper PB as they make another effort. Once the move resume in my favor I can trail the SL up, but didn't in this case, as I had to go to town. So I just left it.

Even if the bears managed to stop the reversal and are able to create a trading range, by me having a large SL I am giving myself a chance to still make a profit on any push back up thru the top of the range. Or even add to my position in the bottom of the range and exit on any move towards the top of the range.