Those making a killing- what are you doing risk mgmt-wise (that i'm not!)...

gangof4,

Try this:

..."The HeartBeat Trading System allows you to make a profession out of day-trading the S&P big car, ES e-mini or ER2 Russell 2000 index futures. To do so it requires an open mind, good attitude, discipline, dedication, perseverance and a desire to learn.

The HeartBeat indicators are applied to the charts and will identify for you when to place your buy and sell orders. As not all days and periods during a day are good for trading in, you must have patience and discipline to wait for the market to return to normal. The HeartBeat Trading System provides you with all the indicators required to identify average, good and excellent trading periods that will keep you out of the market when trading is not at its best and get you into the market when good to do so.

Indicators can be applied to charts in various time frames including tick, minute, daily and weekly charts. You can choose the trading period and style that suits your character and trading personality...."


http://www.heartbeattrading.com/


I hope this helps.

Tom
 
I find that whenver I use limit orders in ER2 I'm generally on the wrong side of the trade. Market allows me to control entry/exit even when my profit or stop hasn't been hit. Just my experience.
Also had a look at the ES today and must say I like what I see. Seems like it's a lot more consistent because of the liquidity, so if levels get taken out against you, you know your wrong.
 
I just took the week off since I would rather wait for something that I feel more confident trading. Knowing when to stand on the sidelines is just as important as knowing when to jump onto the field. Now that I have gotten a glimpse of the insanity of this volatility, perhaps I will jump onto the field the next time around.
 
First, cut back your leverage. When my size is too big for the market's volatility, I make unforced errors. When I cut back my leverage in times of turbulence or abnormal price behavior, I can ride out the intraday noise and occasional heat. Keep in mind, a number of these black box "market maker" types of systems were turned off 2 weeks ago when one of the largest firms engaged in this game took a hit. So, you are going to have less liquidity on the bids and offers then what you are used to, and thus more "overshoot" on the mini swings up and down. Use wider stops, be sure you are aware of the technicals on a higher time frame, or limit market exposure by making scalps only, exiting for small targets quickly after entry to play in the market noise. PLACE RESTING bids or offers to EXIT ahead of time if you are scalping!
 
I have lost over $6000 trading the ER2 in the last two weeks. I would not recommend it to beginners. Watch out for the posters who claim they trade it everyday successfully because they are lying.
 
It's like this.

We had giant tidal waves roll in the last 3 weeks.

For those surfers who have been around for a while, traded through 1998-9, 2000-2002, they are on their boards and having a time of their lives. All those times spent wading in the freezing water, all those times they got dunked and came back for more - the countless lessons burnt into their brain have prepared them for this.

Beginners get on their boards ..... and find themselves in a washing machine. The water is pounding their face into the sand and their boards are getting cut in two.

To salvage their ego, they shake their heads and cry out loud, "Anyone who can surf this is insane/lying!".

A few of them will quietly say "man, I suck, I just wasn't prepared. What did I do wrong and how do I correct it?"

And go back into the water to try, try again.

Guess which beginner is going to be surfing the next tidal wave?
 
Quote from Cutten:

In 2000-2003 I worked with a young guy who had devised a mechanical system that worked well during normal market conditions. His paper trading results were good, so he started trading it for real during the beginning of one of the major selloffs in 2002. I warned him that the volatility during selloffs in this period had not been seen since the 87 crash, 1973-74, and before that the Great Depression, and therefore his backtesting (based on 1990-2000) wouldn't mean too much. I said he was very likely to find his stops too close and get killed by the chop, so he should trade much smaller than normal and be prepared to adjust.

Being an arrogant SOB, like most people, he didn't listen, and turned a 90k account into about 5k, which he then liquidated literally within hours of the bottom in Autumn 2002. I kid you not.

What's the lesson? Systems based on one kind of market behaviour often work terribly during periods of different market behaviour. My advice to you is to stop trading your system entirely until the current correction has clearly passed. If you can't do that, trade on 1/3 or 1/4 normal size. Also, try starting from scratch to design a system that does well in volatile corrections.
More...

Reading this reminds me of what I have been wondering about these last few days of furious market and I post the question here for those with industry knowledge to shed some light on.

Are trading bots making money these days?

So much has been said about them, you know these machines used by the big fat cat hudgies and big traders in thick market like ES, those that pick your stops (fact or myth) and game the market just because they can act a split of a milisecond faster than human figures. Are they making money?

My guess is not and probably they were all pulled offline to make way for emotional trading beasts. But what do I know.
 
Quote from Colaeus:

First, cut back your leverage. When my size is too big for the market's volatility, I make unforced errors. When I cut back my leverage in times of turbulence or abnormal price behavior, I can ride out the intraday noise and occasional heat. Keep in mind, a number of these black box "market maker" types of systems were turned off 2 weeks ago when one of the largest firms engaged in this game took a hit. So, you are going to have less liquidity on the bids and offers then what you are used to, and thus more "overshoot" on the mini swings up and down. Use wider stops, be sure you are aware of the technicals on a higher time frame, or limit market exposure by making scalps only, exiting for small targets quickly after entry to play in the market noise. PLACE RESTING bids or offers to EXIT ahead of time if you are scalping!
More...

Oops, Colaeus already answered the question I asked above....
 
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