The Evolution of an E-mini Trader

Huios,
From my current experience it is very hard to be purely discretionary when trading ES or NQ, unless you are just scalping for very quick in and out trades.

But for daytrades(or multiday) trades that last longer than 5minutes, the only success I have is when using a semi-systematic approach. Not pure mechanical because I can use discretion on if I want to take the trade and discretion while in the trade. But, the computer(Tradestation for me), gives the signals, stops, etc. This doesn't mean I can't use my discretion on exits and stops if market action dictates. The most important thing is this keeps you on the right side of the market, even if you aren't in these trades.

You really need an underlying System/Strategy/Rules that are underneath because the psychological aspects plus the enormous amout of information available will get in your way.

So, I recommend a hybrid of discretionary with underlying rules that give you specific prices for entries, exits and stops.
 
I just read a major portion of this entire thread for the first time this evening and have enjoyed reading most of the posts.

Some of this post may relate to posts that occurred several days or weeks ago.

IMHO you are doing nothing other than trying to picks tops or bottoms, which is a net losing game plan.

The best trades come when the crowd is found wrong. I belive that this occurs most frequently when the psychology of the market changes. If in the past (meaning intraday in this case) the market has not traded say above 970 (meaning resistance), alot of traders will look to sell when the market trades near 970 again hoping that the 970 mark will provide a top.

The best trades come when the market trades above the 970 (you do realize that 970 is just a figure that I have made up) even when selling at resistance is taking place. If the market trades above the 970 mark, then the traders expectations of where the market should be priced is all of a sudden wrong and now they are forced to buy into the move, which of course is like adding fuel to the fire.

Basically I only trade new highs or new lows for the day, nothing in between unless it is a MAJOR reverse pattern completion. The best trades come for me when the market moves several bars and several points in my favor before it initial pull back or small correction.

I have found that if I take a trade to a new low or new high intraday that if the price action starts to consolidate or correct after one or two 1 min bars after the breakout, then it is usually a trade that will hit my initial stop loss before correcting and moving in my favor. So, if a trade is not doing what I expect it to do, which is to move in my favor immediately, then I will sell at Break even on price and take the B/A Spread as my loss. rarely are my losses ever larger than .25 points larger than the B/A Spread.

As I have said, the trades that work best for me move in my expected direction NOW and don't stop for a while. Lots of time if the market is choppy, you can still get 1.5-2.0 points before stopping out, or if the market is trending and really move a great deal after the breakout you can pull down 4-6 points before stopping out.

These trade entries are more discretionary, but the signals are clear, not educated guesses such as selling into resistance as an entry point. (this can be Ok as a profit taking point). Basically, what you are asking the market to do is to stop moving in that direction just because you entered a position. Why not let the market consolidate, then trade when the market decides which direction to move out of that consolidation? This is best suited as I have mentioned when those breaks from consolidations are to new highs or new lows for the day, especially if the correspond to breaks of 10,15,30 & 60 min consolidations. :)

Anyway, I would never attempt to knock you style, everyone has to have one, but think that your entry points and exits could be improved and more clearly defined before worrying about increasing positions etc... Trade with one lot and refine your technique first until you are really knocking them dead, day in and day out, then increase your position size. IMHO there is now reason that when playing Major breakdowns or breakouts intraday that one can't pull out a min of 7-10 points a day when then SP range is 20 points and 10-15 points or more when the SP range is 30 points. This is accomplished by as stated above with a trailing of one point, till you have 5 points in the bag, then tightening up the follow the lows of the prior 1 min bar.

Works for me. Hope this helps. Just continue to be persistent!!!:p
 
Originally posted by m_c_a98
Huios,
You really need an underlying System/Strategy/Rules that are underneath because the psychological aspects plus the enormous amout of information available will get in your way.

So, I recommend a hybrid of discretionary with underlying rules that give you specific prices for entries, exits and stops.
More...

m c a98 made my point better than I did. My reference to Flawless execution wasn't the best way to put it. Using your own terminology about consistency is what's at issue here. How can you be consistent if you haven't settled on an approach? How can you know expectancy of that approach if it isn't used consistently? What do the figures you've calculated tell you if the trades were a mix of different approaches or an inconsistent use of your rule set?

Thus far you've indicated what you're doing has a negative expectancy (possibly - depending on which set of trades you include or exclude for various reasons). Knowing that, what changes to your approach do you plan to make? How many times will you trade your new set of rules CONSISTENTLY before recalculating your expectancy?

Consistency has everything to do with a defined set of rules concerning setups, entries, and exits depending on how many contracts (units) you plan to trade and the time frames you plan to trade them in.

You're operating in an environment that has no limits or boundaries. You must set your own and abide by them or be lost.

Hence the challenge: Can you define a set of rules that forward test out to have a positive expectancy and further can you then have confidence to consistently trade by them to make money in the long run? Isn't that what all us traders are trying to do?

:confused:
 
Originally posted by Sean Juan
...Anyway, I would never attempt to knock you style, everyone has to have one, but think that your entry points and exits could be improved and more clearly defined before worrying about increasing positions etc... Trade with one lot and refine your technique first until you are really knocking them dead, day in and day out, then increase your position size. IMHO there is now reason that when playing Major breakdowns or breakouts intraday that one can't pull out a min of 7-10 points a day when then SP range is 20 points and 10-15 points or more when the SP range is 30 points. This is accomplished by as stated above with a trailing of one point, till you have 5 points in the bag, then tightening up the follow the lows of the prior 1 min bar.

Works for me. Hope this helps. Just continue to be persistent!!!:p
More...

Hi Sean Juan,

How many points did you get today or yesterday?

If possible...can you post the entry/exit times of those trades.

Why do I ask? I think it could help Huios out a lot when traders talk about their strategies via posting their most current results.

Posting via annotated charts are even better.

NihabaAshi
 
Sean Juan,

I f your method works for you great, breakout trading is a part of my arsenal but I do not take every breakout. Is it the emini SP you are trading because as you will know it is prone to false breakouts and quite often these are the best trades.

How big is your initial stop loss? I am abit like Huios in that I sell into strength and buy into weakness in otherwords trade with the trend. I would much rather buy a retracement especially in this market because it works so well.

I have been burnt too many times to take breakouts to new highs and lows but on the other side I have made lots trading the false breakout. I would rather trade the double top then wait for the breakout. Just my opinions and real life trading experience.
 
Thank you for your posts.

No, I am not pure discresionary trader. I have a set of rules and setups that I am supposed to follow. I spent Monday, rewriting my plan. It was still my "Commodity Trading Plan" and not my "ES Trading Plan". That I think will help in the future.

I have not been following my rules. Period. My head STILL swings back and forth from the scalper to the swinger mentallity. I believe it is settleing down some.

Today, I am reviewing some of my stats as to why I chose my specific entries, and will post that a little later. In fact, I am going to post my trading plan for the constructive criticism of this board.

One of the problems I am having is I am seeing that my GET software does not do what I want it to do. I am really thinking of just going with the eSignal charting, but don't want to go thru the process of learning new software, again. The GET EOD worked with the commodities, because I was also using Metastock which made up some of the differences. Cleaned up my office Mon. also, and found my eSignal book. Guess I don't have any excuses now.

AGAIN, THANKS TO ALL WHO CONTRIBUTE ON THIS THREAD. EVERY POST IS READ AND THOUGHT ABOUT. I HOPE PEOPLE ARE GETTING AS MUCH OUT OF IT AS I DO.

Here is a snapshot of my expectancy spreadsheet. The column on the far right is all the trades I made in June, sorted losers to winners. Those were captured on the "Trades" worksheet (tabs on bottom). Both tables tell a different story. The one on the left tells how many of which R value trades were made, and the net gain/loss of each. The one of the right tells the probability (% of the time) I will get those trades if I stick to the haphazard way I have been trading, and the expectation of each trade. The system expectancy, on the bottom, is given in several forms.

Ooops, can't post a file in the edit mode.

Huios
 
Originally posted by Huios
. In fact, I am going to post my trading plan for the constructive criticism of this board.
More...


here is a "trading plan" i once found on a site of linda raschke, just got this "copy" no link, sorry.
 

Attachments

Here are two pages of my trading plan.

The first page/post is my Trades page. It describes the concepts I use when trading. There are five of them. They are very basic, and well known. These concepts are backed up by my own combing thru old charts and seeing how the market works. This is the here and now, pertaining to the bear market of the last few weeks I've been trading.

The second page/post is my Stops/Exits page. I try to employ two kinds of stops. Protective stops and profit taking exits.
 
5 minute chart used for setups, 1 minute chart for triggers.

*********************************

FIVE TYPES OF TRADES – BASED ON 5 MINUTE CHART

1. GAP FILL

Setup:

Gap opening relative to yesterday’s close (day session).
Moving to fill gap prior to opening
S/R line providing s/r for trade
Calculate stop (R) Keep tight stop.
Calculate target (close of gap)
Figure R-value of trade

Trigger:

Strong move closing the gap

2. MORNING RANGE BOUNCE/BREAKOUT

Setup:

Morning range established. Short term high and low set.
Look for S/R lines to support move.
Market retraces to high/low of range and bounces back.
Stop just outside of range
Calculate target (first s/r line outside of range)
Figure R-value of trade

Trigger:

First bounce bar is trigger bar.
Enter trade over/under high/low of trigger bar

3. FADE HIGH/LOW OF THE MORNING

Setup:

ES consistently makes high/low of the day within first hour, almost always by noon.
Market faltering at possible H/L of first hour, or on retest of H/L of first hour.
Indicators present: s/r lines, ma’s, different time frames
Target: s/r lines below/above the market high/low

Trigger:

Break from the high/low of the morning

4. FADE DOUBLE TOPS/BOTTOMS

Setup:

Rounded formation, good DT/DB
Indicators present: s/r lines, ma’s, different time frames
Target: s/r lines below/above DT/DB, new LOD/HOD

Trigger:

First LH/HL from top/bottom

5. TREND RETRACEMENT

Setup:

Established trend in place. HH/HL or LH/LL .
Look for retracement within trend.
Calculate target (first s/r above/below recent H/L)

Trigger:

Enter on the other side of the retracement as trend resumes.
 
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