undercapitalization or just a loser?

The DAX is a beast of a futures contract if you are just starting out because it moves so bloody fast. I have a friend that lost 20 points in less than 30 seconds in the DAX a few months ago. The price just disappeared off his DOME screen in J-Trader before he could put a stop in. And I personally have lost as much as 12 points in less than 5 seconds even when I had a stop just 3 points below the current price. ESTX50 is a much better contact to learn on. Start with one ESTX50 lot. When you become proficient trading one lot, step up to two ESTX50 lots. When you become comfortable trading two ESTX50 lots, then increase to 3 lots. IMO only until you can trade 3 ESTX50 contacts at a time are you ready for one DAX contract.

I now profitably trade the DAX contact, but it took a long time to learn how to trade it properly. About 4 months to be exact. Prior to that, I had about 9 months of experience trading ES, one year experience trading SPY and QQQ and 6 years of trading individual equities. Yet with all that experience, DAX still humbled me for about 4 months. My general methodology is to enter in the direction of the trend and I use a 3 point initial stop. I will target generally 9 to 12 points, but I will exit early if the trade appears to be slowing down in momentum. So a lot of my trades are for 0.5 to 9.0 point gains. Also, I will sometimes exit at a small loss even before my 3 point stop hits. The turning point for me in trading the DAX was when it stopped bothering me when I started the trading session with -200 to -300 showing in my P/L display. I just fight back and grind my way to a positive P/L. You have to not be affected by the result of your last trade. This is true of trading anything, but is amplified in the DAX.

Best of luck
JOE
 
Thank you Flow_77 for bringing this up. I took my production systems and ran them against the DAX data I have (from 1998 - present) to see how it should be daytraded. It looks pretty clear that volatility breakouts work great on this market. My prod volatilty breakout system only had one losing month back in 1998. The average losing trade was 17-27 pts.Winning trades were 29-60 pts.

Here's the year by year summary for your info. Start working on a volatility breakout system!!:D :D :D
 

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Quote from flow_77:



@dpanic and taodr
I have pulled my hair out ;-)
How much volatility/draw down do you think is normal?
Perhaps I am a bit naive, but I was told futures are the fairest instruments and the DAX ist the "cheapest" available.

You both and acrary said the DAX tends to trend very much - then it should be possible to get this trend. If I cannot do it, it`s just bad work, no excuses.
When do you know that you are wrong on a trade?
More...

Personally I start to get a bit jumpy when my overall drawdown reaches about 20%. Like most of the advice you're getting here when I started trading eurex I began with estx50, worked that up to about 6 lot and then went to 2 lot DAX and then worked up from there as I became profitable, that said I go thru periods where I'm trading good and then from out of nowhere it seems like I loose control and it takes some self accessement to get back on track. For me trade managment works much better with multiple contracts, I think with 1 lot it's alot tuffer and brings on some mental issues when you exit and then it continues for another 30 points. With multiple lots you can stay in the game, take your partial on the primary lot keeping a conservative stop on the 2nd with the intentions to stay in for the huges moves which do occur. It probably took me about 3-4 months to get profitable with DAX. Overtrading was an issue as was exiting too early, I'd takes 4-6 pt. stops on 2 or 3 positions and then finally get one that would hold but by then I was fearful of additional loss so I jumped at the 1st decent profit that was offered only to exit 1/3 way into the move. Also with DAX as someone mentioned you'll have those plays where you have a 3 point stop and you'll get filled for an 8 point loss, that's just the added risk of trading dax, sometimes you'll also get those kind of fills in your direction but those surprises that go against you can really cause you mental anquish if you're undercapitalized.

The way I got myself back undercontrol when I was overtrading and taking profits too early out of fear of getting stopped out was to tell myself my objective for the day was to take a single position, knowing I had one shot I got very selective because it had to be good. Going into the position I'd acknowledge my risk and accept it as gone the minute I took the trade. From there I let ninjatrader manage the position at least until the stop was in the green, at that point I'd take over and manually adjust the stop as I saw fit. This stopped me from taking 1 min counter trend setups and other marginal stuff that was causing me pain. Gradually over time I got pretty good at picking trades, now I take from 1-3 trades per day, generally 2 is about average.
 
Quote from flow_77:

At the moment I trade 3-4 rt per day - at the beginning I did an average of 20-30 roundturns per day... do you think I have to cut this down any more?

if my fees were 0,-/rt I would exactly be flat. Trading something smaller is a good idea - but then the transaction costs will be 3x as high for a smaller volume (DAX trading). I thought, that if I have to lose, it should be my fault, not the bank`s gain. Do you think I should do it neverthless?
More...

Let's forget about these 20 rt per day at the beginning. My previous figure for dax slippage 0.5 point was too low, you're likely to get 1 dax point slippage per each round trip. Including commissions that will be 30 eur /rt. 3-4 trades per day * 60 days in 3 months = 6,300 eur. This is exactly the amount you've lost. But then you say that without commissions you'll be flat. It was definitely overtrading.

Yes, dax has the best volatility / commissions ratio. Try to make less trades and see whether it will improve your results. If you'll become successful swingtrading dax after only 3 month learning curve - congratulations! If you'll start losing again quit the dax before it will wipe out your account. Like joe said, start again with 1 estx, then - if profitable with 1 - increase size to 2 estx. If you'll be back above your initial capital 25k and you'll feel comfortable with your trading - you can trade 1 dax instead of 3 estx.
 
@hector
this sounds really good - I had a look on the Eurex website.
BUt if I got it right this contract is extremely illiquid.
Eurex statistics on Future on DAX EX (EXSF)
When I traded options / small cap stocks, this really was a problem for me because I had to catch very big movements to be profitable against the market-maker.
Are futures a different kind of game? Thank you for your tip!

@Joe
2 days ago I worked the whole day for a profit I lost yesterday in a few minutes. ;-(
Perhaps the problem is I use 10 point stops and targets ranging from 20-25 points. I am still not good enough to find entries which will work without moving against me at least 3-4 points.
But I am happy there is somebody out there who now makes consistently money after having had a .... "learning time" :-)
Thank you for your description of your decision-making... how many trades do you have per day?


@acrary
Wow! I would be happy to have this kind of results! Can you provide me with some more information about your strategy, please? This really would be great!


@goforwand
hmm, I am not a subscriber of the website... is there only this article you would recommend or the whole website?

@dpanic
Getting jumpy because of drawdowns of 20% or more.... nice said. For me it is like having lost a important part of my body!
Until now it was a matter of "Get what you can out of the market" and I would never stop when having lost or won a certain amount of money. Only when I did not see any possibilities. I think I should try your way of goal-setting.
How do you find your entry/exit points now ... and: what/who is ninjatrader?

@nomoreoptions
:-) Without sound too pathetically: For me it is not a game. It is a task.


@ all
Thank you all - I am very happy that you take so much time just to help me. I think you are right, I have to switch to something smaller... I will try the Eurostoxx50 futures and change my trading style to a less aggressive and more elaborated/matured manner (with your help it should be possible ;-) )
The next days I will have a lot of fun with my execution statements and my PC....


Once again: Thank you!
 
@DT-waw
Thank you ... that is the way I do it now - 3-4 rt per day. You told me that you would try to trade the DX for some more time... how long? - that means what additonal loss you be willing to accept?
Is the stoxx very different in its "character" from the DAX or just... slower?
 
Given the fact that you've already lost 7k, you shouldn't accept more substantial losses. In swing trading you'll have to use higher stop-losses. Hmmm it will be difficult to recover from losses trading dax. Trade estx. It is just less volatile than dax. Spread is almost always 1 point, dax spread oscillates from 0.5 to 1.5. Don't look at 5-min chart... I would advise 30-min. In the last few months estxx is horrible even for swing traders. Tight range 2400-2600 since June. So beware of overtrading even in swing trading. Expect volatility to improve in the coming months.
 
@DT-waw
What stops would you use in swing-trading the DAX or ESTX?
And why would you use 30min charts?
At the moment I use 15 sec. tick-by-tick charts in because I did want to have all the info available. I often held positions for only 2-10 minutes.
Thank you that you come to the aid of me!

best regards,

flow
 
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