The way I trade I start getting concerned if I can’t maintain at least a 70% win rate. At a 60% win rate it is hard to make money because I am going for small profits over and over.
Techniques for Day Trading the ES, NQ, YM, MES, MNQ, and MYM
- Thread starter volpri
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Oct 18, 2019 trades in MES. I ended the day with $172.50 profit in MES but because of some errors in judgement I could have ended BE. I want to highlight the mistakes. We learn from our mistakes or we are supposed to anyways.
I took three trades and made 4 mistakes. Bad day for me even though I ended up with 172.50 b4 comm.
Mistake 1 was the worst mistake. Those last 2 contracts should not have been added. This was getting too far out of the south side of the channel. A bigger TF chart will show what I mean. A better option would have BEEN to exit those 4 I already held long in trade #2 once the price got a couple points south of the channel. It would have been more profitable to exit those 4 longs with a loss then turn around and double up 8 contracts at one wack even if I did it at the close of that big bear bar that broke south out of the channel. With a bar like that I am pretty sure there will be at more at least another little push south before any reversal would start. Enough movement south to get back my loss on the prev 4 contracts plus make some money. Instead I added long 2 and then long 2 more. By the time it came back up into the channel I jumped out on all 8 ending up making money on my last 4 but losing on my first 4 contracts. It was kinda dumb to exit here as I had at the time of my exit 5 bull bars with one little bear bar sandwiched between them. Just a 2 fold mistake in judgment on my second trade. The pressure was there for more movement up towards the center of the channel.
My third mistake was not taking my profits on my third trade at the bottom of that larger bear bar when all 4 contracts would have been profitable. I even had 3 bars after that bear bar to get out with a profit and did not. The market is above the 20 ema not good to keep hanging onto this one. But I did and price started going back up. I was still confident to short because of the bear channel and felt price would go back down so I added 2 contracts then two more. This trade I was adding to a losing position above the channel. However, it was not as risky as trade #1 where I added to a losing position on the bottom side of the channel. Why not? Three reasons. On the 5 min chart price had been in a bear channel for 80 bars or so therefore the pressure was still down and any bullish reversal attempt would probably fail and the best the bulls would probably get is a sideways range above the channel. It was getting close to the close and unlikely the bulls would be successful in causing a major reversal. A larger TF will show why mistake 3 was not as grave as mistake #1
The fourth and last mistake was walking away from trade#3 holding 8 contracts short (but I went to tend to some work on the motorhome. I did leave the ordered bracketed with a SL and PT and I felt reasonably sure price would probably swing in my favor enough to give me a profit on at least most of my position. So I got out with a small loss on my first two contract entry in this trade while I was gone and made money on my other 6 contracts. The mistake was not being there as the profit could been much larger as we got a big bear bar shortly after my exit. However, this 4th mistake was the least of all my three other mistakes I made this day.
So...there is the lowdown on my mistakes. I was happy to end the day with 172.50 profit in spite of my mistakes in judgement.
I took three trades and made 4 mistakes. Bad day for me even though I ended up with 172.50 b4 comm.
Mistake 1 was the worst mistake. Those last 2 contracts should not have been added. This was getting too far out of the south side of the channel. A bigger TF chart will show what I mean. A better option would have BEEN to exit those 4 I already held long in trade #2 once the price got a couple points south of the channel. It would have been more profitable to exit those 4 longs with a loss then turn around and double up 8 contracts at one wack even if I did it at the close of that big bear bar that broke south out of the channel. With a bar like that I am pretty sure there will be at more at least another little push south before any reversal would start. Enough movement south to get back my loss on the prev 4 contracts plus make some money. Instead I added long 2 and then long 2 more. By the time it came back up into the channel I jumped out on all 8 ending up making money on my last 4 but losing on my first 4 contracts. It was kinda dumb to exit here as I had at the time of my exit 5 bull bars with one little bear bar sandwiched between them. Just a 2 fold mistake in judgment on my second trade. The pressure was there for more movement up towards the center of the channel.
My third mistake was not taking my profits on my third trade at the bottom of that larger bear bar when all 4 contracts would have been profitable. I even had 3 bars after that bear bar to get out with a profit and did not. The market is above the 20 ema not good to keep hanging onto this one. But I did and price started going back up. I was still confident to short because of the bear channel and felt price would go back down so I added 2 contracts then two more. This trade I was adding to a losing position above the channel. However, it was not as risky as trade #1 where I added to a losing position on the bottom side of the channel. Why not? Three reasons. On the 5 min chart price had been in a bear channel for 80 bars or so therefore the pressure was still down and any bullish reversal attempt would probably fail and the best the bulls would probably get is a sideways range above the channel. It was getting close to the close and unlikely the bulls would be successful in causing a major reversal. A larger TF will show why mistake 3 was not as grave as mistake #1
The fourth and last mistake was walking away from trade#3 holding 8 contracts short (but I went to tend to some work on the motorhome. I did leave the ordered bracketed with a SL and PT and I felt reasonably sure price would probably swing in my favor enough to give me a profit on at least most of my position. So I got out with a small loss on my first two contract entry in this trade while I was gone and made money on my other 6 contracts. The mistake was not being there as the profit could been much larger as we got a big bear bar shortly after my exit. However, this 4th mistake was the least of all my three other mistakes I made this day.
So...there is the lowdown on my mistakes. I was happy to end the day with 172.50 profit in spite of my mistakes in judgement.
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I want show why trade #1 was the biggest error in judgement as opposed to trade #3 when both of them were adding to losings positions. I will do this by showing 15, 30, 60 min chart. Remember, in previous posts in this thread I have advocated an occasional look at higher TF not to necessary trade off from them (As most my trades are taken on 5 min TF) but to give context as to where the PA on a 5 min chart is located at and taking place in a larger TF. So here goes:
Can someone look at these larger TF charts and tell me why trade#1 was riskier to take on those last 4 contracts than trade #3 was on it’s last 4 contracts.
I want to bring up something I don’t think I have touched on here in this thread. I prefer in bear channels shorting in the top third and going long for smaller scalps in the bottom third. Reverse this in bull channels. However, SINCE this channel is a bear channel the safer play usually is taking the short trades in the top third.
However, IF the channel is broad enough, like this one, I will sometimes just split the channel down the middle and will begin shorting in the middle to upper half of the channel and covering on any move towards the lower half. And if price gives me a good enough setup I will go long in the bottom half and exit towards the middle. Why? Because it is a bear channel. The long trade I don’t follow too far up towards the middle UNLESS there is some strong bullish pressure in the individual bars that convince me to follow the long even more towards the top of the channel. See that was precisely my mistake in Trade # 2. I did not follow the bullish pressure further on up and it went all the way to and through the top on the 5 min chart.
The trades on the three larger TF’s are the same exact trades taken on the 5 min TF.
So back to my question. Looking at the larger TF’s why was trade #2 riskier than trade #3? Both were adding to losing trades outside the channel on a 5 min chart.
Can someone look at these larger TF charts and tell me why trade#1 was riskier to take on those last 4 contracts than trade #3 was on it’s last 4 contracts.
I want to bring up something I don’t think I have touched on here in this thread. I prefer in bear channels shorting in the top third and going long for smaller scalps in the bottom third. Reverse this in bull channels. However, SINCE this channel is a bear channel the safer play usually is taking the short trades in the top third.
However, IF the channel is broad enough, like this one, I will sometimes just split the channel down the middle and will begin shorting in the middle to upper half of the channel and covering on any move towards the lower half. And if price gives me a good enough setup I will go long in the bottom half and exit towards the middle. Why? Because it is a bear channel. The long trade I don’t follow too far up towards the middle UNLESS there is some strong bullish pressure in the individual bars that convince me to follow the long even more towards the top of the channel. See that was precisely my mistake in Trade # 2. I did not follow the bullish pressure further on up and it went all the way to and through the top on the 5 min chart.
The trades on the three larger TF’s are the same exact trades taken on the 5 min TF.
So back to my question. Looking at the larger TF’s why was trade #2 riskier than trade #3? Both were adding to losing trades outside the channel on a 5 min chart.
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I want to correct a typo. On my post #263 in the 5 min chart above Trade#1 GOOD TRADE:
I typed bot 2 in the top third of the channel then added two then added two for a total of six contracts. That should read SOLD (or shorted) 2 then added 2 more then added two more ( to the losing position LOL) again for a total of six contracts sold. Sorry about that. Don't want to leave folks confused.
I typed bot 2 in the top third of the channel then added two then added two for a total of six contracts. That should read SOLD (or shorted) 2 then added 2 more then added two more ( to the losing position LOL) again for a total of six contracts sold. Sorry about that. Don't want to leave folks confused.
I think that you are able constantly making profits even you have to often add to losing trades are mainly because of two major factors: first you accumulate extensive experiences over your trading career to handle those adverse situations well, and secondly due to your huge pocket so that you can sustain huge draw down ( $13000 at one trade you showed ) but still managed to make a big profits ($~12000). You certainly have the talent to deal with those difficult situations.
However this strategy can be dangerous to novice with limited fund, as they would panic and exited when the added losing trades amount to big loss that they can not sustain or margin calls would shut them down in the middle of the trading.
It looks like you often like to counter trade the trends, as in your most recent day, in the trade #2, basically the market showed a strong down trend but you kept adding Long; while in the third trades, the market was clearly in a uptrend but you kept adding SHORT. Is this your favorite way of trading, or your system couldn't clearly indicate the trending for you? Many would find this kind of trading is stressful to say the least, and especially when you were in a hole of about $13000, even though you have made enough to sustain that kind of DD if it turned into a loss.
However this strategy can be dangerous to novice with limited fund, as they would panic and exited when the added losing trades amount to big loss that they can not sustain or margin calls would shut them down in the middle of the trading.
It looks like you often like to counter trade the trends, as in your most recent day, in the trade #2, basically the market showed a strong down trend but you kept adding Long; while in the third trades, the market was clearly in a uptrend but you kept adding SHORT. Is this your favorite way of trading, or your system couldn't clearly indicate the trending for you? Many would find this kind of trading is stressful to say the least, and especially when you were in a hole of about $13000, even though you have made enough to sustain that kind of DD if it turned into a loss.
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That is precisely why I don’t like showing big trading size and large profits and big drawdowns. It looks like an unlikely possibility for the small trader. But I threw that trade in just so folks can see the possible potential ( but no promise) using large size. The process is the same large or small size. I think I might just stick with the micros in this thread and trade them small.
If there is a trend I like to trade with the trend and employ tactics that facilitate that. I counter trade range and channel PATTERNS. I short at top while others are buying (as they are hoping for a successful BO). I go long at the bottom (while others are shorting hoping for a successful BO south). Study the market cycle I have mentioned in other posts. This will become clear.
Also I look at channels as tilted ranges. I use alot of the same tactics as used in a sideways range BUT I adapt them because in a bear or bull channel you have some prolonged pressure in one direction. In a straight sideways range the pressures are about 50/50 until there is a BO. For instance, in a bear channel the odds favor taking short trades in the proper location of the channel. In a bull channel the odds favor going long in a proper location of the channel.
Yes, I would think a novice needs to really get the concepts and ideas very clear in their mind, learn to read PA, identify the market cycle and the phase it is in, learn the setups within the phase..then practice all this over and over live with a sim. It has to become second nature. The old ways and habits established in ones trading will always try to pull one back. It takes at least (imo) 100 attempts trading in each market phase with EACH setup (and there are more than 1 setup in each phase) to achieve new habits and get them cemented in ones brain and even then a trader will still slip up. It is extremely hard to unlearn guritus. It does take time. There is no reason to play with real money. Learn the market cycle. Learn to identify the phase in the cycle. Learn ALL the setups in the phase. Then practice..practice..practice and then maybe ..maybe one could test the waters with some real money. But I don’t recommend trading with real money! Just let it be a game on a SIM!
But, if a trader chooses to do so (trade with real money) it is precisely at that moment the psychological mettle that trader had will kick in and that trader will learn if he or she is disciplined or not, and if he can follow the new habits established. Or if the old habits based upon erroneous concepts (imo) pull him back down the old muddy road again.
I readily admit how I trade is counter intuitive. And it takes a while to learn how to execute it.
But first a traders has to see and learn the concepts. That is what I am trying to do with this thread. Just present the concepts of how I trade and give some examples as a visual way of seeing the concepts in action.
I certainly don’t recommend any trader, novice or otherwise, to just jump in and start trading this way. I WANT TO BE CLEAR ABOUT THAT. Don’t do that! You will lose!
If the manner of trading that I am presenting appeals to a trader then that trader might want to learn the concepts well and study the charts I am annotating as I attempt to explain the concepts, feeble as it might be. Then practice practice practice perhaps on a SIM and if and when that trader decides to go live with a real account ( and I don't recommend that! So I will upright say it DO NOT GO LIVE WITH REAL MONEY USING THESE CONCEPTS I AM PRESENTING). That said, I guess each trader has to decide for himself or herself. I am not giving out trading advice. I am showing how I trade. What I present may improve ones trading or it could be their undoing. I am not saying do what I doing in no shape, form or fashion. I am saying this is how I do it. You might find it interesting. What you do with it is your business. I make no recommendation or promises of any sort in this thread or anything I write here on ET. You can lose money trading the way I am showing and without a doubt will indeed lose money. How much I have no way of knowing. I lose money (at times LOL). You may lose money ALL THE TIME trading this way. So be forewarned.
volpri
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I think you are showing an unique way of trading and as long as you are making money you are successful in your own way.
On the other hand, sstheo https://www.elitetrader.com/et/threads/micro-e-mini-madness-2-per-day.335221/ was showing a more conservative trading strategy with good risk management, that is probably more appropriate to traders with limited fund and hope to achieve long term consistency.
Either way, I think both of you and sstheo journals showed value in different aspects, and you offered more detailed explanations and comments. Just to be fair.
On the other hand, sstheo https://www.elitetrader.com/et/threads/micro-e-mini-madness-2-per-day.335221/ was showing a more conservative trading strategy with good risk management, that is probably more appropriate to traders with limited fund and hope to achieve long term consistency.
Either way, I think both of you and sstheo journals showed value in different aspects, and you offered more detailed explanations and comments. Just to be fair.
I thought Steve on that thread you just referenced did a fantastic job and I said so on his thread. Did he show traders exactly how he does it? Did he prove his trades as traders seem to want? Was it sufficient proof to convince?
See, I have not studied his thread in depth but I did follow it somewhat...loosely. The only disappointing thing was he didn’t keep going (for I believe 6 months is what he said he was gonna do or was it a year?) and turn 1000 into 10,000. But he gave an explanation as to why he stopped and I accepted that at face value.
Perhaps in the future I will open another account with just 1000 or 2000 dollars in it strictly for trading micro emini's and see what I can do with it live showing all the proofs that I can possibly show on the account. It is really an almost useless endeavor because who is to say that I am making or not making piles of money in one account and losing or winning like crazy in another account. In addition, it is not so easy to do the logistics...charts..snapshots...Dom Snapshots...report snapshots...sl placement...explanations...etc and at the same time analyze the market live while making trading decisions...etc. It is not an easy task and it is time consuming. Even with all this people still won’t believe it. If were to decide to do it it will have to be some time in the future after I am done with this thread and at least I could leave out the explanations, maybe.
Explanations take up alot of my time. I would want to do it with a small account say 1000 or 2000 and that account be dedicated for nothing but trading the micro’s in this manner I am showing and probablly just do 1 to 3 trades a day. The problem is if I trade it for an entire month then people will say that proves nothing. If I trade it for 5 years then they will say the economy was doing great ...try doing it when the economy is bad....there is no end to satisfying people. It is impossible to please everyone. One reason is I break most all the cherished rules fed to us by the guru’s. People cannot get their head around that. So they declare what I do as a hoax. In their worldview it is probably is a hoax. The only way to change w.v. Is to create cognitive dissonance. Even then people get really pissed off and call you all sorts of stuff. I have been in the training world since the 80’s ( I know..my hand annotated charts don’t look like it..) in other fields not related to trading. I am 64 years old and not sure it is worth the effort but I do enjoy giving hope and inspiring people so I guess that is why I do it.
Now will someone step forward and tell me why they, after looking at the 5 min..15..min..30 ...min 60.min.. charts think Trade #2 was less risky than Trade #3 on the charts above for oct 18 2019. Both were averaging down (adding to losers) outside the channel on the 5 min chart. Look at the bigger TF charts. Why was trade# 3 less risky than trade #4?
thanks
thanks