The Evolution of an E-mini Trader

[Huios]

Paper traded again today. Only one trade in the am for a point loss. Was trying some stuff out on the down trend this afternoon, and didn't want to trade, just watch how price moved.

Lost my cable connection for about an hour early afternoon. And IB was disconnecting this morning whenever a bulliten came flashing.

 

[Futuresnut]

Scaling is an interesting subject. One that includes a host of issues that at first glance aren't obvious. Let's say you have the 3 unit case as in the Ross example. You exit one unit early to cover that trades costs per se. Then you target a higher likely profit exit. Then you let the third unit ride to go for the gold when the ride is long.

The logic works on "purdy" trades - those that are picture perfect. But what about all the ones that aren't so pretty? Aren't there usually more of those than the classic beauties?

Break out the units separately and test each unit as a separate system. Unit one by itself. Unit two by itself. Then Unit three by itself. Look at how each behaves profit-wise and then combine the results. Aren't they each a different r/r and w/l situation? Won't the different performances just pull each other toward an average? The more profitable component will lift the poorer component but the poor component will pull down the better one?

Isn't it rather complex to back and forward test just the conditions for 1 unit situations (unit all in and out together)? Now you have the additional permutations of varying stops for multiple units? You'll drive yourself nuts just trying to tweak and squeeze the extra $'s out of the mix!

On a very short term scalping basis I don't see how scaling is viable because of the extra noise level.

On a larger time frame it may be viable if you want a less volatile yet more averaged performance.

 

[DblArrow]

Originally posted by Futuresnut
Scaling is an interesting subject. One that includes a host of issues that at first glance aren't obvious. Let's say you have the 3 unit case as in the Ross example. You exit one unit early to cover that trades costs per se. Then you target a higher likely profit exit. Then you let the third unit ride to go for the gold when the ride is long.

The logic works on "purdy" trades - those that are picture perfect. But what about all the ones that aren't so pretty? Aren't there usually more of those than the classic beauties?

Break out the units separately and test each unit as a separate system. Unit one by itself. Unit two by itself. Then Unit three by itself. Look at how each behaves profit-wise and then combine the results. Aren't they each a different r/r and w/l situation? Won't the different performances just pull each other toward an average? The more profitable component will lift the poorer component but the poor component will pull down the better one?

Isn't it rather complex to back and forward test just the conditions for 1 unit situations (unit all in and out together)? Now you have the additional permutations of varying stops for multiple units? You'll drive yourself nuts just trying to tweak and squeeze the extra $'s out of the mix!

On a very short term scalping basis I don't see how scaling is viable because of the extra noise level.

On a larger time frame it may be viable if you want a less volatile yet more averaged performance.

Very good information. This is a very interesting way to look at it, and based on this will do some serious testing. I try to avoid the scalp, but like to make sure "I get some".

Thanks, and Make 'em pretty, Chris

 

[qwiktrade]

Originally posted by macal425
Qwiktrade

Do you keep a hard stop or do you tighten it as a trade goes in your favor, eg bring stop to b/e at 1R or trail a stop.

I use a similar R:R strategy but my R:R is 2:1. I normally bring my stop to b/e at 1R. For a while I thought that I was giving up some profit by bringing the stop to b/e and missing the opportunity for the full 2R but after some testing I found that only 10% of my trades would have hit 2R before hitting my original stop without a b/e stop.

generally speaking, i set my stop at 4 pts from entry and then when the market moves 5 pts or more in my direction i move the stop to breakeven.. if i get stopped at even and the market turns and goes 10pts as i expected, it doesnt bother me.. im not trading the market, im trading my strategy.. my strategy didnt offer me 10 pts in that instance.. imo its not necessary to participate in every single move.. i prefer to protect myself from the emotional effect of seeing a profit turn to a loss.. thats worth more to me than the few trades that might make it if i hold on and hope.. my goal is to protect my emotions from things that set off unproductive states of mind, protect my capital by always using and keeping stops, and protect my strategy from the temptation to tweek it into dysfunctional gibberish..

tom_p, thanks man =)

Huois,

what is it exactly that you are trying to accomplish? do you have a #pts goal?

DblArrow.. if scaling is working for you, then dont change.. its not really a question of scaling, its a question of expectancy.. Van Tharp covers this topic very well in his book "Trade your way to financial freedom"..

NihabaAshi.. some excellent points.. sometimes in chat rooms posters will mention trades they make that go in their favor immediately and not mention the ones they enter that immediately go south.. ive been in private chats with people who mention to me trades they are in but that they dont post to the main room.. sometimes when they take a stop on a trade they posted in the room, they wont mention the next one unless its a winner.. its just human nature i suppose.. the best thing if you see someone who is posting alot of gains is to start talking to them privately.. youll find out quickly if they are the real deal..

-qwik

 

[hardcash]

Originally posted by Futuresnut
Scaling is an interesting subject.

i agree

but what is about scaling in or "pyramiding". i have seen some calculation on this and it looked pretty good. it seems that you can screw up your RR, but seems to work only on longer moves in your direction.

goog luck

 

[Jolly Jack]

Huois, Heroic thread, well done and good luck.....you deserve it!

While reading about all the lunatics like myself who trade the mini on 1 min time frames dozens of times each day, it occurred to me that if we all got together in a trading room and a referee randomly instructed us to buy or sell every 15 minutes then we'd probably all make more money.
My reasoning is that the "agony" of entering the trade would disappear and we would be able to concentrate on managing the position and if you are going to trade with tight stops you are putting yourself at the mercy of the noise and your entry might as well be random.
I think I'll try it this afternoon!

 

[lojze]

Originally posted by Huios
Paper traded again today. Only one trade in the am for a point loss. Was trying some stuff out on the down trend this afternoon, and didn't want to trade, just watch how price moved.

Lost my cable connection for about an hour early afternoon. And IB was disconnecting this morning whenever a bulliten came flashing.

But charts were beautiful from 2.15 pm on, weren't they?

Your opinion?


Lojze

 

[Huios]

qwiktrade
what is it exactly that you are trying to accomplish? do you have a #pts goal?

What I want to accomplish is to make the most amount of money, with the least amount of expenses, taking the least amount of risk. And I think I can accomplish all of this by first becoming the trader that know deep in my soul, I can be. The process of becoming that trader, is exactly what I want to accomplish. Not quite what you were expecting, but it is what came out.

As to exits, I want the sure thing, and I want to let them run to the moon. So, I'm thinking of taking some off the table, but leaving the majority to run. My exits are not based on gaining a particular number of points, but on where s/r lies on the charts, be they trend lines, ma's, pivots, or the s/r lines you see on the charts I post every night. Is that really the thing that will get me to my goal the quickest, I don't know. Sounds good, but been playing this game long enough that whatever sounds good, usually ain't.

Be safe on the road, and watch out for those incosiderate folk that drive around on only 4 wheels.

 

[Futuresnut]

Originally posted by Huios


And I think I can accomplish all of this by first becoming the trader that know deep in my soul, I can be. The process of becoming that trader, is exactly what I want to accomplish.

Huios,
Once you get the mechanics laid out to your satisfaction and you believe in your heart and soul it is a viable trading plan that will over the long run create consistent profits, then only one thing stands in the way of you being the trader you wish to be and I know you know the answer.

It's the same with all of us; we need only look in the mirror.

Based on what I've learned from Mark Douglas' "Trading in the Zone", there's two aspects to consistent success. First there's the belief in a particular approach - which should have an edge per se. Then there's the mind-set of the trader.

Since trading is a pattern recognition numbers game it boils down to having a viable approach (and there are many) and being able to use it consistently in the face of the unknown on each and every trade outcome. The paradox is that the consistent application of a viable trading plan can generate money even when the outcome of each individual trade is unknown. The hard part is executing each trade not knowing how it will turn out. The successful trader accepts the risk each and every time without regrets afterwards. Even if mistakes are made (and they will be made!) the trader learns from them and moves on to the next trade accepting the risk all over again. This embracing of risk each and every time can be brutal to the mind that hasn't truly accepted the fact of "risk".

The mind acts (consciously or subconsciously) to protect us from pain and the threat of pain generates fear. If each trade presents an opportunity for us to inflict pain on ourselves by not wanting to take the loss then we set ourselves up to have fear cloud our judgement. As MD says, "The best traders aren't afraid." Unless the approach just isn't viable, the trader that can accept the risk on each and every opportunity that presents itself should find themselves in a profitable situation long-term.

Step 1. Do what you need to do to determine the long-term viability of an approach so you can have confidence in it's profitability.

Step 2. Do what you need to do to trust yourself to consistently stick to what you've got in step 1 without any doubt, fear, or regret.

When you're trying to "become" the trader that indicates inner struggle (growth) - and that's good!; when you "are" the trader - you're there.

 

[Huios]

It is 12:30 and I am going to be gone this afternoon and all day tomorrow. I am attending the Raleigh Promise Keepers event. http://www.promisekeepers.org/ . The Entertainment and Sports Arena is sold out. 20,500 men gathered for the soul purpose of becoming better men, husbands, fathers, and believers in Christ, and learning to keep the seven promises of a promise keeper:



1. A Promise Keeper is committed to honoring Jesus Christ through worship, prayer and obedience to God's Word in the power of the Holy Spirit.

2. A Promise Keeper is committed to pursuing vital relationships with a few other men, understanding that he needs brothers to help him keep his promises.

3. A Promise Keeper is committed to practicing spiritual, moral, ethical, and sexual purity.

4. A Promise Keeper is committed to building strong marriages and families through love, protection and biblical values.

5. A Promise Keeper is committed to supporting the mission of his church by honoring and praying for his pastor, and by actively giving his time and resources.

6. A Promise Keeper is committed to reaching beyond any racial and denominational barriers to demonstrate the power of biblical unity.

7. A Promise Keeper is committed to influencing his world, being obedient to the Great Commandment (see Mark 12:30-31) and the Great Commission (see Matthew 28:19-20 ).

Then on Sunday, we are having out second Traders meeting in Morrisville, NC. Anyone living in the Raleigh/Durham area is invited. Directions are here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=6011&perpage=6&pagenumber=1

I'll post later this weekend.

Have a great weekend.