The Evolution of an E-mini Trader

Easyrider & Huios,

The best setups are the easy ones like breakouts from support/resistance, double bottoms/tops, triangles, conjestion, equal ranges and retracements to a level. It all comes back to keeping it simple.

These setups are in the emini everyday, its just a matter of watching and then acting on the stronger ones where more than one setup comes together. As I have said before the entry is the easy bit, its the exit that is the hard part.

And Huios, I personally believe if you want to make good money from decent runs you have to get away from a 1min chart. The 5min chart shows the setups better and cuts out alot of whipsaws.

Another thing Huios, you will probably become very good at this if you keep up the practise of tight stops. Don't listen to anyone trying to tell you to give the market room to move. Thats a good way to lose your bank.

Keep the stops tight. If you take a trade you must think it will work straight away otherwise you would not take it, you'd wait till later. Therefore if your stop gets hit you should not have taken the trade in the first place.

Always take small losses, you can get back in later. You can't get back in with no bank. I use no more than a 1pt stop loss (4ticks).

Good trading
 
Always take small losses, you can get back in later. You can't get back in with no bank. I use no more than a 1pt stop loss (4ticks).

I think it's a matter of preference, 1 point in ES seems too small for me but If it works for somebody that's OK.
It's inevitable,though, smaller losses will get you stopped out more often. More important IMO is not to switch strategies (rules) every couple of trades.
 
I'm also an advocate of tight stops. The best trades are the ones that show a profit right away. Here's a thought i picked up at the website of Linda Raschke. She proposes to use a trialing stop of half your profit. I apply this when I'm up 4-10 points on the NQ, above 10 points I tighten my stop to 2,5 points, as consistent moves bigger than 15 points are pretty rare these days
 
Yesterday, I was re-reading vultures post (for the nth time) that he posted in another thread, and that I posted here. I knew there was something that was in there for me, but I could not find it. Then, all of a sudden it hit me like a 2x4 between the eyes....

I'll post later tonight, got to get ready for our meeting at 1:00.

Been real busy since Fri afternoon. This is where I took my wife for our date. Very cool. Our worship pastor (rythym guitar player for Bonnie Raitt for 10 years, a Muscle Shoals, Alabama boy) was playing along with some of his "blues" friends. http://www.sixstringcafe.com/

Thank you all who posted within the last 24 hours. Most of it is confirmation my revelation yesterday.

Be back in a few hours...

:D <--- H
 
OK, here we go.

Originally posted by vulture
I also trade two separate time frames, although I feel that this is a difficult endeavor...For the most part, I try to separate the days in which I am going to enter a different mindset...If I am planning on entering a swing trade for a minimum profit target of 7-10 handles, I really need to be careful with the manner in which I start scalping...From my experience, swing trading and scalping require two entirely opposite mindsets and if you confuse the two it wreaks havoc on even the most well developed trading plans...
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My big realization was I was combining two different mindsets into one plan, and not even knowing that I was doing it. I wanted the large gains (5-10 pts) of a swing trade, with the risk of a scalper (less than a point). It just doesn’t fit together.

This whole thing about exits now seems to make sense. I was not getting my exits because I would flip flop between scalp and swing… while in the trade… being double minded.

I’d enter a trade and the market would go in my direction, and I would want the big move (swing), as soon as it started to give back a little, I would jump out (scalp). I’d enter the market and it would go against me, I’d let it go (swing) and then it would get too painful (scalp) and I’d jump out, usually pretty close to the high/low tick. Then the market would come roaring back in my original direction. Ohhhh, if I would have just held on a little longer… which reinforced the double mindedness of my trading.


vulture
I will try to explain in more detail...To scalp, you basically have to partial out of trades extremely quickly and your reflexes have to be sharp...You do not have the luxury of time because a scalp is basically just trying to extract the minimal amount of profit with the minimal amount of risk exposure...To swing trade, you have to have patience, plain and simple...And not only that you have to increase your pain threshold since your profit/risk objectives are magnified...
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One of my premises was that scalping and intraday swing trading was the same thing, you just held the swing longer. That is not true. The "pain threshold" of a swinger was something I did not fully understand. I had an idea, coming from a position (multi day) trading background, but not when it came to intraday trading.

Why can't you have a 10 point run, and only risk .5 point???? You can, but it is a rare occurance.
 
vulture
So, in essence, you are expanding your risk tolerance to allow yourself some wiggle room and to reduce or dampen the effect that the market noise will have on this aspect of the plan...The real problem occurs when your mind is somewhere in between...Like entering a swing trade with a minimum 7 or 10 pt profit objective and instantly finding yourself 3-4 handles ahead and covering...Or on the flipside, entering a scalp and finding yourself 3-4 pts in the hole and letting it run against you...
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This is exactly what I was doing, flipping back and forth between the two.

vulture
I say all of this because I honestly believe that I have never found any of the conventional techniques work for trading the indices.....
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OK, this brings up some questions. I’m not sure what you mean by conventional techniques?

I realize that the ES is a contrarian market, by this I mean that moves are fades with regularity. I learned this the hard way the first two weeks of trading it. What I was doing in the commodities, was not working, and had to adapt.

Vulture, would you please shed some light on this? What exactly do you mean?

vulture
I respect some of Lundy;s posts because I feel that what he writes is much closer to the truth...The conviction is what wins in certain time frames...The quickness and agility is what wins in other time frames...Each time frame has a specific skill set that needs to be learned, but not compromised...When one time frame is compromised with the other that is when the errors mount...
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I agree. Now that I know the difference, it makes complete sense.

vulture
So, essentially, what I am saying is that for me I have to know exactly which mindset I am going to be trading in for a specific period of time...When I break this rule I damage my plan...When I take profits too soon in my swing account, I leave big money on the table, money I will need to absorb the movement against when trading on a larger time frame...If and when I do not trade tight in the scalper time frame I am damaging my ability to come back from a series of what should be near scratch trades...
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Exactly!!!!!

So, in conclusion…

I was trading with the understanding that I could use a scalp mentality (when it came to stops) with a swing trade, and a swing mentality (when it came to gains) with a scalp trade, and vice versa.

The kicker was I did not even know I was mixing aspects of scalp trading with aspects of swing trading into one big morass.

And you just can’t do that.

Separate the two.
 
yes, good analysis...I think this happens to alot of people trading the mini's...Like I mentioned in that post, it happened to me somewhat frequently, especially as I began to trade both accounts with two separate time frames...

Like I also said before, the biggest risk in trading the indicies, IMO, is being stuck between time frames...Once you get into that gray area, you are filled with hesitation, apprehension and overall fear because you are not quite sure what the heck you are doing with the trade...It is much easier to just adapt one time frame and stick with it and make sure you know which one it is...

And you are right that once in awhile you get the trade that immediately goes your way for a good chunk, like 4-5 handles without ever going against you...but truth is, to even find entries like that you are pretty much fading some short term momentum or fading one time frame against another, because you are catching the peaks and valleys...and to get into those types of trades you really have to be aggressive...

The good thing about trading on a slightly larger time frame is that you are able to kind of filter the noise a bit and detach yourself from it...You can even be pro-active with it...I will often scale into trades and add to the first entry even when it is running against me, because I am trying to enter inside a specific zone of support/resistance...When you are glued to the scalper time frame, you are basically putting enormous pressure on each and every entry because you are trying to predict within 2-3 ticks each peak and valley...With the number of buy/sell programs running the markets nowadays, the "blips" on the micro time frame are becoming more volatile, and imo a bit less predictable...

Just my opinion...Others will disagree...There are plenty of "pure" scalpers out there doing well, but the discipline is very different
 
Originally posted by Dizzyspell
... I don't follow how knowing the total travel range helps. Can you enlighten me please?
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Vulture answered this pretty well.
 
Sorry, I missed the question in your post with my previous response...When I say "conventional techniques" I am basically just speaking about the "consensus"...By consensus, I would say that the majority will use breakout systems intra-day or some very popular moving average and time frame to trigger trades...

I say this because it all "looks good" and seems logical...The problem is that many times you are entering the market as it is running away from you, you are exiting or stopping out as it is running against you...The negative slippage, especially on the shortest time frames, combined with commissions and emotional factors all add up...And, even more importantly, is it tradeable...I mean anyone can run a system test and come up with some decent numbers, but most of these "systems" are simply untradeable...They seem to smooth out all of those price shocks, employment reports, stop runs, etc, etc...Then they also leave alot on the table as well...Actually, this is more of a rant than sound analysis so I will shut up now...But I have been around these chat rooms, spent time in some of the "pay per" trading rooms in my earlier days, so I have a good feel for what the conventional techniques are...

This is probably still a bit vague, so maybe I should just call "conventional" everything that is written in books about what "should" work, but once you are in real time, it all comes up pitifully short...And many of the techniques or trade management concepts that "should not" work often do work...
 
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