Why folks lose money daytrading ES

[syswizard]

Quote from gmst:

precisely, we both agree here! Its just unfortunate that it took me more than 5 months of losing to recognize this simple thing

Yes, what you have witnessed is the essence of "market efficiency". Other contracts are likely to execute your limit order faster, but will likely put you at greater risk of losing....as it will move away from the current price much faster than ES.
Good discussion on the basics of electronic trading.

 

[austinp]

Quote from ChkitOut:

your best bet as a newb or even seasoned with ES is risk 2 pts and go for 4. set your OCO order and walk away, come back in a couple hours.

Even if you have no idea what constitutes an edge, this simple practice should keep you somewhere near break even.

100% correct... and everyone who ever thinks they can make the risk -3pts to make +1pt concept work over time, loses everything over time.

 

[gmst]

Quote from austinp:

100% correct... and everyone who ever thinks they can make the risk -3pts to make +1pt concept work over time, loses everything over time.

People might read over this comment and move on to next topic/thread and forget about it. That will be a big mistake!!! It is an extremely important comment and it can't be said enough number of times.

When I was losing money, I used to think the same way, lets go long for a target of 1-2 points after a big 5-7 points drop, and since it can fall a bit more before it comes back (ES being mean-reverting), I will give it a stop of 4 points. Eventually the low will be reached and it will come back. I was so wrong. My PnL proved it for me.

Recommendation 6): Newbies, NEVER TRADE with inverse R:R situation. Although inverse R:R methodologies do exist and do work, but for struggling traders, aiming for 2x or 3x return for 1 unit of risk is much much much much better.

 

[ocean5]

Quote from austinp:

100% correct... and everyone who ever thinks they can make the risk -3pts to make +1pt concept work over time, loses everything over time.

why even set -3 points stop at all?just take 1-2 points without any stops.

 

[ChkitOut]

Quote from ocean5:

why even set -3 points stop at all?just take 1-2 points without any stops.

ahh, the no stop strategy, brings me back some years ago. I had a run of about 2 months with like a 98% win rate using the no stop strategy. Had the ferrari on order, then had to cancel..

 

[ocean5]

Quote from ChkitOut:

ahh, the no stop strategy, brings me back some years ago. I had a run of about 2 months with like a 98% win rate using the no stop strategy. Had the ferrari on order, then had to cancel..

which months it were,exactly,and in wich month you then lost your Ferrari?that is the question.

 

[Mercor]

Quote from ChkitOut:

ahh, the no stop strategy, brings me back some years ago. I had a run of about 2 months with like a 98% win rate using the no stop strategy. Had the ferrari on order, then had to cancel..

So your complaint here is that it takes to long for Ferrari to deliver.

 

[smilingsynic]

Impatient overtrading is another cause. In trying to catch every move, and bleed every tick out of the market, it is easy to end up still down.

Looking for only the trades that can lead to 5 or more points while risking two points seems to work best for me in the ES.

They are there. Almost every day.

 

[easymon1]

Quote from dafeeder:

One good thing about the big banks, when they lose their ass, they can just get bailed out by the US Govt.

Privatize the wins, socialize the losses. It's a good thing.

 

[gmst]

I don't have any more thoughts to add to this thread as of now. Thanks to everyone who has contributed.

I would like to ask the readers to rate this thread as I think information in this thread is quite valuable for "struggling" ES traders, but for improvement they will need to put in "lots" of hard work to absorb and incorporate different points in this thread into their ES trading. Thanks and Good Luck all!