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Trading e-minis with $1k starting capital
- Thread starter IndexScalper
- Start date
When driving, one should heed the warnings of experienced passengers. But knowing about the cliff won't help a young driver unless he also learns about the steering wheel.
As scalp quite a bit and I have enjoyed reading this thread and I am learning from it and I would like to share some of my experiences, but first, the following from IndexScalper rings so true to me:
"Couple of problems that come to mind - pressing harder when nothing is working, eventually leading to digging a big hole or revenge trading after a sudden, unexpected loss. Another issue involves a following scenario: After being up a decent amount on the day with lunch time doldrums approaching, I decide to "round off" my p/l to the next even number (i.e. 960 to 1000). Let's say instead of the intended 40 bucks I lose 30. Now instead of me saying OK, I'll take the 930 and come back after lunch or close the shop and come back tomorrow, I need to get back at least to where I was before (i.e. the original 960). I start looking for setups instead of waiting for the setups to come to me. The end result is usually most or all gains wiped out or worse - ending the day with a loss."
While I no longer get entangled in revenge trading the inability to quit sometimes is definitely an issue with me.
I imagine IndexScalper has more then 1K at his disposal but the subject of taking a small account and making it big should interest people anyway because one of the best ways not to give market gains back and to retain a sense of aliveness in trading is to regularly draw one's account down to a point where one is stressed, paying attention instead of being complacent.
Some of the posters just can't believe that IndexScalper makes 20-50 transactions on the day.
Well, in VST trading the most successful traders adapt to a frequency that fits their mercurial nature but adapts to be in tune with the market. So this is his frequency. In addition, the number of opportunities is dictated by market action and in some days one may make 3x more trades then on an average day.
Another distinction of VST is that the difficulty is inverse proportion to trending. On choppy days scalpers thrive and on trend days they get beaten unless they sense the new character in the market.
Of course paying lower commission would help, I am only familiar with IB where with the unbundled plan one can get <$4 rt.
Making less then 1 tick per lot traded. I do. I trade defensively but frequently and it adds up. Sure, it would be nicer if I could pull 7-8 points out with one trade a day in ES but I can't and knowing that in any series of 20-50 scalping trades (which is my daily average) I'll be in the green a good amount gives me great sense of security.
The following is a capsule description of my method, for those that are not that familiar what some VST traders do, and how it is done.
As far as the setup, I use 15 second bar chart with moving averages, MACD, OBV and volume for the contract traded and 1 min chart each with similar set of indicators for the YM, ES and NQ. and have TICK and AD above the 15 sec chart. I have longer time frame charts too that I glance at couple of times a day. Basically I have a construct of the market and certain expectations (that change by the minute) of it to move from point A to B within support and resistance represented by levels, trend lines and volatility bands. It's like a changing road map. It is amazing how much of the day's action falls into this and what others see it as noise it is actually microscopic order. Liquid markets are truly fractal.
Very often there is enough infighting inside the continuation patterns and at the end of swings that a VST trader can pull a lot of good trades off.
Initiating two types of trades, each getting in with resting orders expecting the market coming to me. One is looking for a move to continue the other is seeing a swing end. Very rarely I sense such power behind a move that I go with the flow once it is started, most of the time I am liquidating as other traders are getting in.
After getting in I place a 5 tick target and have unsent orders for every tick 5 point under and over the entry (trade YM, multiple lots). Very often my target is hit within a second or so and if not I keep putting in the order one tick closer and closer. If there is no action I try to get out for one tick or break even. If the market blasts through my entry immediately rather then coming in my favor after triggering I try to get it back immediately. Sometimes I pull the liquidation order because I see the surge of volume in all index futures and it seems that I should let it ride. These instances make up for the larger than few point losses that I take occasionally. I do not use stops, get out with a market order if I need to. I only have a very wide emergency stop that I do not expect to be filled on.
This results in a lot of trades and a lot of commissions. Make money most days, mainly due to the high win/loss ratio. My success is limited by my occasional inability to quit while I am ahead a good amount. I am working on that.
They may be several things about what I do that seems crazy to other people but it actually works for me.
Why do I trade the YM and not the ES? Many won't believe this but because it is thinner it favors the scalper. Another crazy thing: less typing, I do not have to deal with fractions. Why I don't use close stops? Because over time it has been to my benefit not to.
IndexScalper is not dreaming, he has seen it done and he is on the way of developing his effective personal style.
IndexScalper, wishing you continuing success.
GC
(qualification: I also have investments and option spread trades on and scalping is but one part of a bigger picture)
"Couple of problems that come to mind - pressing harder when nothing is working, eventually leading to digging a big hole or revenge trading after a sudden, unexpected loss. Another issue involves a following scenario: After being up a decent amount on the day with lunch time doldrums approaching, I decide to "round off" my p/l to the next even number (i.e. 960 to 1000). Let's say instead of the intended 40 bucks I lose 30. Now instead of me saying OK, I'll take the 930 and come back after lunch or close the shop and come back tomorrow, I need to get back at least to where I was before (i.e. the original 960). I start looking for setups instead of waiting for the setups to come to me. The end result is usually most or all gains wiped out or worse - ending the day with a loss."
While I no longer get entangled in revenge trading the inability to quit sometimes is definitely an issue with me.
I imagine IndexScalper has more then 1K at his disposal but the subject of taking a small account and making it big should interest people anyway because one of the best ways not to give market gains back and to retain a sense of aliveness in trading is to regularly draw one's account down to a point where one is stressed, paying attention instead of being complacent.
Some of the posters just can't believe that IndexScalper makes 20-50 transactions on the day.
Well, in VST trading the most successful traders adapt to a frequency that fits their mercurial nature but adapts to be in tune with the market. So this is his frequency. In addition, the number of opportunities is dictated by market action and in some days one may make 3x more trades then on an average day.
Another distinction of VST is that the difficulty is inverse proportion to trending. On choppy days scalpers thrive and on trend days they get beaten unless they sense the new character in the market.
Of course paying lower commission would help, I am only familiar with IB where with the unbundled plan one can get <$4 rt.
Making less then 1 tick per lot traded. I do. I trade defensively but frequently and it adds up. Sure, it would be nicer if I could pull 7-8 points out with one trade a day in ES but I can't and knowing that in any series of 20-50 scalping trades (which is my daily average) I'll be in the green a good amount gives me great sense of security.
The following is a capsule description of my method, for those that are not that familiar what some VST traders do, and how it is done.
As far as the setup, I use 15 second bar chart with moving averages, MACD, OBV and volume for the contract traded and 1 min chart each with similar set of indicators for the YM, ES and NQ. and have TICK and AD above the 15 sec chart. I have longer time frame charts too that I glance at couple of times a day. Basically I have a construct of the market and certain expectations (that change by the minute) of it to move from point A to B within support and resistance represented by levels, trend lines and volatility bands. It's like a changing road map. It is amazing how much of the day's action falls into this and what others see it as noise it is actually microscopic order. Liquid markets are truly fractal.
Very often there is enough infighting inside the continuation patterns and at the end of swings that a VST trader can pull a lot of good trades off.
Initiating two types of trades, each getting in with resting orders expecting the market coming to me. One is looking for a move to continue the other is seeing a swing end. Very rarely I sense such power behind a move that I go with the flow once it is started, most of the time I am liquidating as other traders are getting in.
After getting in I place a 5 tick target and have unsent orders for every tick 5 point under and over the entry (trade YM, multiple lots). Very often my target is hit within a second or so and if not I keep putting in the order one tick closer and closer. If there is no action I try to get out for one tick or break even. If the market blasts through my entry immediately rather then coming in my favor after triggering I try to get it back immediately. Sometimes I pull the liquidation order because I see the surge of volume in all index futures and it seems that I should let it ride. These instances make up for the larger than few point losses that I take occasionally. I do not use stops, get out with a market order if I need to. I only have a very wide emergency stop that I do not expect to be filled on.
This results in a lot of trades and a lot of commissions. Make money most days, mainly due to the high win/loss ratio. My success is limited by my occasional inability to quit while I am ahead a good amount. I am working on that.
They may be several things about what I do that seems crazy to other people but it actually works for me.
Why do I trade the YM and not the ES? Many won't believe this but because it is thinner it favors the scalper. Another crazy thing: less typing, I do not have to deal with fractions. Why I don't use close stops? Because over time it has been to my benefit not to.
IndexScalper is not dreaming, he has seen it done and he is on the way of developing his effective personal style.
IndexScalper, wishing you continuing success.
GC
(qualification: I also have investments and option spread trades on and scalping is but one part of a bigger picture)
Quote from MandelbrotSet:
Dude, that's the whole premise of the Journal.
He's trading a flawed strategy, trading the wrong product, and churning his account.
I am just trying to be nice to him Jimmy, since nothing is seems to be working.
Incidentally, I see a strategy as all encumbering with nothing hanging off the edges, like over trading or churning.
As far as I am concerned it all interlocks together to become the strategy.
Also, I am fascinated at what is being offered on this thread. Occasionally a thread captures my interest and this one clearly drops firmly into that bucket.
You can easily spot the Posters who actually have a workable strategy, they are the ones in a minority.
As for the rest, they could give J K Rowling a good run in terms of imagination.
But that is trading for you.
Less than 15% of the players account for 80%+ of the daily volume and so at anyone time a retail trader is both on and off the side of a big player.
This consideration is not a bad place to begin when building a consistently positive scalping strategy.
However, if the plot involves becoming a terrific paper tiger, keenly following the candles after they have been and gone and then giving ETers the benefit of hindsight, I would say that the strategy is based on a dream.
Wishful thinking as it were, hoping like hell that the tooth fairy will deliver the goods without the need to leave the bed,
regards
f9
I trade YM
and since January - (in my opinion) -- setting $100 stops would kill you on YM as well --- simply too much volatility
so the 100 figure was just an example
and since January - (in my opinion) -- setting $100 stops would kill you on YM as well --- simply too much volatility
so the 100 figure was just an example
Quote from fearless9:
You do not understand the ES mgabriel.
Who in their right mind would scalp the ES with a eight tic stop.
regards
f9
Quote from mgabriel01:
I trade YM
and since January - (in my opinion) -- setting $100 stops would kill you on YM as well --- simply too much volatility
so the 100 figure was just an example
mgabrief.
You misunderstand me.
I have a stop figure of 3 tics in mind, after all we are not discussing position trading on this thread.
In fact, what the heart of this thread is, and how far posters can stray, remains the fascination.
If you do not care for volatility then seemly get rid if it.
Volatility at one frame is trend on another.
regards
f9
I think it is entirely possible in current conditions to have 3 more days like this in the next 5
I know because it has happened to me recently
But Im not trading on a $1K account
I know because it has happened to me recently
But Im not trading on a $1K account
Quote from IndexScalper:
Bad day. Everything went wrong as soon as the market opened. ER2 was totally out of whack the first 5 min, enough for me to get whipsawed a couple of times and blow my max daily stop loss. To make matters worse, I didn't stop trading right away and the end result is as follows:
Product traded: ER2
Contracts: 13
Opening balance: 1,460
Closing balance: 1,113
Net P/L: -346
Discipline: 2
Feel free to comment, expecting well deserved criticism...
This may just be a matter of personal style --- but making so many trades in a day seems to me making it much more difficult to go back and analyze what you did each day - to see if your strategy is really correct
at this volume of trading - what means does the guy use to even convince himself his entries/exits/stops are not false readings?
at this volume of trading - what means does the guy use to even convince himself his entries/exits/stops are not false readings?
Quote from MandelbrotSet:
Those aren't the number of contracts he's trading at one shot, those are the number of turns he's taking on one contract.
Good post
Ive only been in the game about 6 months -- but I see the sense in this ---and have come to the conclusion that 'watching the damn price action' - consistently and long enough to understand the behaviour of the market in any timeframe --- beats the heck out of any system
it don't happen overnight
Ive only been in the game about 6 months -- but I see the sense in this ---and have come to the conclusion that 'watching the damn price action' - consistently and long enough to understand the behaviour of the market in any timeframe --- beats the heck out of any system
it don't happen overnight
Quote from fearless9:
I have been trading in one form or another for twelve years ... started with Fx, and onto indexed futures and finally only ES.
There are three distinct periods.
First seven years were typical of a traders startup .. make some, lose some and eventually crawl onto the right side of the ledger.
My results were beginning to show good consistency.
Next three years, the penny was buzzing around my head there had to be a better method.
All the time my strategy was becoming more refined and my numbers were improving.
Two years ago, the penny finally dropped.
I discarded everything except for the screen images of the ES price burnt deep into my slow-to-learn head.
When I say "burnt" I mean burnt from thousands of hours of watching the price.
I went back to the tic and reformated a very very simple strategy ... heavens, even I can follow it.
Now when the ES turns, my little old limit is sitting right there waiting patiently for it.
For the most part, I am pulling tics from the noise. I like the the noise, I feel as safe as one can feel trading ES.
When the price drops , I am all over it.
I love the drops, they are fast and relatively secure.
When price is climbing I am very nervous because this is where the black swans nest and lay their eggs.
Quite the reverse of most postings here on ET I am sure.
However, when you prepare or review your list of all the things that can go wrong, you will notice that it is asymmetrical.
Fear outweighs greed always.
And so I ratchet up my account each day as best I can.
Anyway, I pass this on to those who are interested for what it is worth.
regards
f9
Taking a different approach on any given day should break at least one rule I would think
Quote from IndexScalper:
Today I decided to try a different approach. Normally I would continue to trade after the open but instead I took my money ran. My net P/L to commission ratio is one of the best ever. This was all done using my scalping setups (no lucky home runs). Started trading 7:10 am and done by 8:45 am (EST). Here are today's results:
Products traded: ES, ER2
Contracts: 11
Opening balance: 1284
Closing balance: 1569
Net P/L: 285
Discipline: 5