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Australian SPI 200 Futures market dynamics

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Trading Experience: Intermediate
Platform: Bookmap and Jigsaw DOM
Broker/Data: Stage 5 Trading
Favorite Futures: ZN
lax99's Avatar
Posts: 433 since Jun 2015
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Harveys View Post
The problem is having done hundreds of trades I get stopped out most times.The trend just changes as soon as I enter.Not just the SPI,but all markets that I have traded over several years.Why?

There are a couple of things that I wanted to touch on quickly, especially because I'm sure that many traders run into this mental aspect at various points throughout their career.

1) Are your stats correct? 80% is a very high occurrence of a stop out. I know I've had losing streaks before and it sure as hell seems like I can't even get one winning trade in ten. It might be that the streak of losses seems larger than it truly is.

I don't know if you're familiar with FT71, but he has a well known experiment in which he has new traders flip a coin, and then enter (on SIM) long/short based on the coin toss. As it turns out, the win rate on a random trade is 25-30%. I've had this happen in my own trading in the past; it feels like nothing you do is going right, so you start taking different trades to "feel out" the market and see if you can get something to stick.

The one thing that has gotten unstuck, in this example, is the trader's methodology. Instead of being diligent in planning and executing and then accepting that losing streaks can happen, the trader starts scrambling around to throw trades on the board to get a winner. The sheer randomness in his/her execution and strategy and even stop placement ends up creating a low win rate around 30%.

If you can, look over your stats and see if your stop out percent is actually 80%. 80% makes me think that there's something fundamentally wrong with the strategy, while 70% makes me think it is more of a psychological issue. Collect some market statistics too. Keep a file of the number of instances that the market creates a setup that you would act on. Keep track of the amount of winners and losers that result. Knowing your market and your statistics can be a huge psychological boost to refer to during a drawdown.

2) The lines "The trend changes just as soon as I enter" and "Why?", seem to ask "Why me?". I can tell you with certainty that the market doesn't care. The market doesn't care if you're mean reverting or trading the opening or high frequency scalping or flipping a coin or any thousands of different strategies. There are no butterfly effects caused by one trader (unless you're trading that slippery bastard CL ).

If you put on a trade in the near future and it gets stopped out, ask yourself "Why was the market more willing to trade at my stop price than at my target price?" After all, a market simply exists for participants to discover price and value, and exchange contracts once value is determined. Keep a journal of your answers to this question, too. This might help you hammer out this losing streak.

And above all, stop changing things. If you have a set entry method, don't change it. If you always use a 5 point stop, don't try a 3 point or 10 point stop. Part of the randomness which plagued me for a long time was that I was constantly looking for a perfect setup and perfect stop and perfect way to trade. None of these exist. The only thing that you can control in this business is your attitude and your willingness to prepare yourself for the next trading day.

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