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

[Relentless]

Ugh. I can tell even on ignore from the responses that the "Australian Hold and Pray" is still strong in this thread.

I imagine that is his approach though because mastering the intraday is a bit above his pay grade so to speak.

Probably all talk anyway.

Doesnt matter. This style works as proven time and time again by Volpri.

 

[themickey]

Ugh. I can tell even on ignore from the responses that the "Australian Hold and Pray" is still strong in this thread.

Hahaha, lmao, has me on ignore (apparently) but still knows what I'm posting, can't resist peeking, can't resist replying, you are funny!

"Australian Hold and Pray"

There's a huge amount of international successful long term traders, certainly isn't an Australian phenomenen.

 

[NumberZ]

There's a huge amount of international successful long term traders, certainly isn't an Australian phenomenen.

I think one person can be both. Long term and day trader. I'm trying to be.

Time will tell!

I love hard yakka, and that is what it takes, right Mickey??!!

 

[SimpleMeLike]

Drawdowns come. Scalping, day trading, swing trading, and investing. Just ask Buffet about his Dexter shoe trade. Or Victor Niederhoffer who lost it all two times I believe. Or if you could ask Livermore who went broke 4 times I think it was. Investing, nor algo trading, nor scalping, are immune to drawdowns. Neither are large accounts or small accounts. I understand about 1/2 of hedge funds fail. But to try and answer your question:

If I suffer 3 or 4 trade losses in a row (which is rare for me) I will go directly to sim trading. Why? For some reason I am not in sync with the markets or PA. IT could be my mental or emotional state at the moment. Why throw good money after bad? If I can't get it straightened out on a SIM I likely will do worse with real money. I believe a scalper has to maintain a high win rate. He also has to take his losses when his premise for taking the scalp is no longer valid.

In particular if I make a losing trade my mental goal is to recuperate that loss, and some, over the next two trades. The way I do this is by selecting a new trade, then doubling up or tripling up my position size, and then going in the market direction that first handed me the loss. If, I think, there is movement in that direction, that yet to come. If not, then I will wait for another trade in either direction. That basically means if I am right, then in 1/3 to 1/2 of the movement distance (that caused the loss for me) I will be back at BE and likely more. This is not for myself revenge trading, rather it is a process that I follow to get back my loss. Some would call it revenge trading but it is not an emotional decision for me, but a logical decision based upon a calculation. That being that I will likely get the movement I need to get me back into profit or at least at BE. If I get whipsawed out on my doubled up position I will resort back to SIM again.

Then I will give it another shot doubled or tripled up. If it works I will likely repeat it again. That will usually get me back. If on the second try I get whipsawed again I will likely quit for the day and go do something else. My brain just is not working correctly. I am making wrong judgements.

I had a case today. It may make the concepts clearer. I was ahead with profit bagged. We got a little sideways movement on the 5m MES chart. I decided to short about the middle of it. First red triangle on the left. Then I added more (second red triangle above it) Then I added a third time (red triangle on the next bar. Guess what? Price kept going up. We now had 3 consecutive bull bars. On the 4th bar I decided I am wrong so I dumped the entire position (first green triangle left to right). It kept going up so on the next bar I decided I needed to double up and get back my loss. That would be the second green triangle from left to right. I exit that double up position on the next bar (red triangle). Then I went long again just above that exit (doubled up again) and then exited that second doubled up position on that upper red triangle on the next bar and final bar that shows exits and entries. Finally, on that same last bar as price dropped some I went long again but at my original size I had when lost, some bars back. I then exited that same size on the same bar at the lower red triangle on the last bar on my chart that has entries and exits.

In essence, to get back my loss and back into profit, I double up my losing position size TWICE and took a third trade at the same losing position size. So, three winners in a row and by the time the dust settled I not only got back my loss but made a handsome profit. All this over six 5m bars.

That is how I get back losses. It is not easy to do psychologically but I look at it as a process with executions that will get me back from what a lapse in judgement cost me, or just what the market just simply threw at me. I cannot focus on the money. I have to focus on the process and execution.

That gets me out of the scenario you describe of needing to get 8 wins to get out of the hole.

I have explained this process before in my journal. You may want to review.

BTY even after my loss I was still holding a profit from my earlier trades on the day, when I started the recuperating trades.

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Good Morning Volpri,

I appreciate your response and well written. I will use some of your approaches next time the drawdown comes. Thank you.

I was thinking Scalpers with high win rater Never have losing days. But I think its hard to avoid a losing day.

 

[volpri]

You are jesting me right? I occasionally have days “nothing” goes right. I cannot seem to flow with the market. Can’t read it well. For whatever reason. Maybe because being a diabetic I sometimes get brain fog and a bit confused. Or I didn’t sleep well. Or I am distracted with other things on my mind. At any rate when it happens, if I cannot get it fixed and get back in the flow on a SIM I find it to be better, at least for me, to just stop trading for that session and go do something else. I am a discretionary trader and that means I have to make judgements by reading price PA, calculations, and decisions, then execute.

Try this on a SIM:

Use the traders equation as taught by Brooks and make a trade IN ES or MES.

If the market moves against you average down an equal amount of contracts at two points of adverse movement. That will move your BE close to where price is trading. If it continues against you 3 or 4 points FROM the new BE then add a second time an equal amount. Again BE will move closer to PA of the moment. Then hold and see what happens.

Set your SL:
For a long trade: At major Higher Low. A MHL is a rally off a low (and that low being higher than a previous low) that is strong enough of rally to make a new high (not necessarily the high of the session).

For a short trade: At major Lower High. A MLH is a decline of a high (and that high being lower than a previous high) that is strong enough of a decline to make a new low. (but not necessarily a new low of the entire session)

If I am doing the trade in a TR I may opt to set the SL outside the range limits even if larger it is a larger SL than what a MHL or MLH would give me.

Usually, in trending movements there will be several of these MLH’s AND MHL’s to choose from. You can choose the one closest to your entry or one further away as the point to place your SL. I usually chose the one that in my mind invalidates the premise of me taking the trade in the first place.

If price keeps moving against you and hits your SL then that is when you want to look at doubling or tripling up to get back your loss, and doing so in less movement that caused the loss in the first place. Sometimes I will take my loss before my hard SL is hit if the dynamics are hopping.

Once out with a loss, then in that vicinity of invalidation, is where I want to reverse direction…double up …or triple up …in the market flow direction. Sometimes I may have to wait for a new setup if price stalls.

R:R is IMO a useless calculation if probability is not factored in. IMO it is one of the most over rated MEASUREMENTS ever imposed upon the trading world and is pounded over and over by many pundits. What IMO is way more important is: will price likely hit your profit target before it would hit your SL?

You might be pleasantly surprised to see that when the dust settles you will often have at least a 1:1 and sometimes 3:1 or even 8:1 R:R Sometimes I get a 10:1 actual R:R after the trade is over with. Actual risk is what the market actually goes against you plus 1 tick before it hands you your profit. I will move PT if dynamics of the moment indicate to do so.

 

[volpri]

Averaging down helps me maintain a high win rate, which I believe is necessary for me to be a successful scalper.

Doubling and tripling up helps me get back a loss quickly without trying to fight the rest of the session to get it back.

I know these two things are not “approved” as legit techniques by the pundits of trading but it is what I have hammered out that works for me.

If I have any loss, whether from an averaged down trade or a straight scalp, I try to get it back in the next 2 or 3 trades. Since there are usually 20 to 40 (if trading the much mocked 5m TF) fairly good trading opportunities presented in the average session I usually have enough time to get it back unless the loss occurs in the last 5 or 10 minutes of the session.

Use of the traders equation factors in probability (probability that is based on experience just from seeing something so many times) to get a positive traders equation is pretty important to get a good entry before placing the trade.

 

[volpri]

I know the pundits will say on averaging down that I am throwing good money after bad but I “see” it differently. I see it as:

1) building a position at better prices.

2) an opportunity to avoid a loss (but certainly NOT just avoiding a loss being the only reason as that can be a losing proposition).

3) giving me a higher win rate (who wants a lower one? …I know how the argument goes for lower win rates) but as a scalper I will take a higher win rate ANY DAY. ( could be because I detest losing ….always have….in any thing….and am psychologically fragile..who knows?) I just know I had rather win than lose.

4) as raising the probability that I will end up making a profit on the trade because BE and profit is closer in distance to the immediate PA. I know the arguments…just take the loss and enter again…to hell with that ….I don’t want to bleed to death by a thousand paper cuts… If there was a good reason to take the trade in the first place then there is a good reason to add to it at better prices on a little adverse movement.

Doubling or tripling up is a no..no…in the pundit world of ivory tower thrones and back seat drivers. It is deemed as foolish and throwing even MORE good money after bad. Don’t do it they may say.

But I see it differently:

1) as going with the market flow. If institutions control the market direction, and they do, (unless you believe in that random BS and brownian crap) then to make money I have to be willing to change my opinion about market direction and go with the flow.

2) getting back my loss in LESS movement.

3) a new opportunity for profit.

4) as a separate trade (albeit loaded) from the previous losing trade. “History is past…the future is a mystery….but in the present I can make a difference.”

5) it is throwing MORE good money after a BETTER opportunity.

 

[volpri]

Livermore said his big money was made by his sitting tight and not thinking. I may not have his exact quote correct (have to look in my Livermore story book…you know which one…), but the ideas he expressed are in my statement above…at least I think they are…

What he fails to mention is his big losses were caused by the same phenomena. LOL. He was one of a kind. Talented and greatly respected, looked up to by many many traders, even today, decades later. He did do some great things and deserves respect…But he was human too.

SITTING TIGHT AND NOT THINKING CAN CAUSE ONE TO LOSE BIG AS WELL AS GAIN BIG.

I don’t mean to take away from his stupendous and almost unbelievable accomplishments but I am just driving home a point or two here.

Just ask the 50% of hedge funds about “ sitting” that fail. And the mutual funds that have blown to smithereens an investors life savings. The most successful HFT’s don’t “sit” for long. And they “think” a lot. Usually, with a roomful of highly educated thinkers. Some of their thoughts are good, others aren’t, but at least they are “thinking”.

Sitting tight only applies when in the “flow” but thinking should apply at all times or one will sit tight in huge losses. A scalper MUST have a point in any trade where his premise is deemed invalid and he just needs to get out and reverse and go with the market flow. But, until that point of invalidity ie reached or likely to be reached, scaling in, aka averaging down ….ROFLMAO, can be a reasoned approach IMO.

 

[ondafringe]

You are jesting me right? I occasionally have days “nothing” goes right. I cannot seem to flow with the market. Can’t read it well. For whatever reason. Maybe because being a diabetic I sometimes get brain fog and a bit confused.

If you are Type 2 and you are now eating reasonably healthy, two things may help: A high quality probiotic (15 billion organisms), but especially Berberine (500mg x 3, 15 minutes before each meal).

I was insulin resistant and well on my way to becoming Type 2. Started Berberine about four months ago, along with dietary changes, and it saved the day. I no longer have blood sugar issues. Check with your doc first to make sure it won't interfere with your other meds.

 

[volpri]

Where do i buy berberine?