I am new to this forum and new to trading. Opened a $5'000 futures account at Tradestation and had a few successful trades already. Also a couple of bad ones, but I was able to pinpoint the mistakes I made. So hopefully the lessons learned are worth it :-).
I am focusing on ES, YM, NQ, CL at the moment, still figuring out what my trading style will be exactly as I am based in Switzerland and have a day job. I will be using supply & demand zones, this concept resonates with me. Like to keep it simple... Still experimenting how often and on which timeframe to trade though.
I am pretty confident at the moment, as I observed that neither losses nor winners affected me emotionally too much at all, also I am good enough at keeping my discipline. Also I am lucky enough to have money to play with that I don't depend upon.
I am a passionate board game player, I love taking controlled risks, I don't mind failing (I rephrase failures for myself usually this way: "There, you learned something again!")
Welcome to Big Mike's!!! If I may offer a little advice......
I too, "played with money I could lose". That means nothing. You are in no way ready to be using real money. Who cares if you lose your capital, right? Wrong. You will blow that account, and what have done is blown your mental capital. You may have all the money in the world, but you only have so much mental capital before you throw in the towel.
Now, I don't expect you to actually follow this advice. I was told the same thing, and I had to learn the hard way. But, at the very least, I feel obligated to at least say it.......Turn off the live account, and withdraw your money. You are not ready, and the fact that you say "I am new at this" and trading CL is proof. There are other ways to learn, without damaging your psyche and without throwing away perfectly good money.
Wishing you the best.
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Interesting thoughts... can you elaborate a bit more about how losing capital depletes my mental capital or - even worse - damages my psyche? You mean I'll get frustrated and quit? Love to hear more...
Yes, you pretty much nailed it. At this stage, you won't be able to distinguish between probabilities and failure. You won't be able to tell the difference between a good losing trade and a bad losing trade. Mainly because, you don't even have enough of a record to know your probabilities. How many $5,000 accounts can you afford to lose? After you lose $50,000, do you still have money to "play" with? How about a $100,000? It could take that much, before you figure it out and really "get it". At some point it will not be "playing", it will be failing.
My plan is to only risk little on any trade so I can make many trades and learn from losing trades. I just had a bad trade, and actually find it very interesting to analyze what went wrong, I am even discussing it here on the forum. I even enjoy the learning experience I must say, at least so far...
Do you suggest to trade on SIM instead, until I got enough history? When would I know when I am ready to risk real money?
One trade means nothing really. You could put on a bad trade, and it ends up being a winner and you then think you did something right, even though it was a horrible trade. It is good that you are analyzing your trades, but what really matters is your track record over many trades. You should have at least a 100 trades, and then you can see where you really stand. And be honest with yourself. It is very easy to lie to yourself in SIM and say, well "I wouldn't had really taken that trade". You have to be completely honest, and completely realistic in SIM. SIM has a way of making people think they're going to be rich in a few months. There is no pressure, and no skin in the game. Have you heard of TopStepTrader? I can't recommend them enough. It is a cheap way to trade, but feel the real pressure of live trading.
There is a holy grail to trading, and that is risk to reward. What is your average risk to reward for a trade? I saw you post in another thread saying that you risk $200 on a trade. Are you making at least $400 for the winners? If you are risking $200, to make less than $200, you are fighting a losing battle.
Risking $200 on a $5k account, that is 4% risk of your capital. Say you have 5 losing trades in a row, you now have a $4k account and a $200 risk is now 5% of your account. The general rule of thumb is to never risk more than 1%, maybe 2% of your capital on a single trade. You should also look into something called the risk of ruin.
You are grossly under-capitalized with a $5k account with that type of risk. A 1% risk would be $50. That is a 4 tick stop in the ES, or a 5 tick stop in CL. That is not realistic. And I hope you are using stops, every single trade.
I also got the impression from another one of your posts that you may be scalping for a few ticks? Is this the case? Maybe I misread, but I think most new traders, including myself, think scalping ticks is the way to go. It just doesn't work. I promise you this. It is the hardest way to go about it.
Another bit of advice. Forget the CL for now. Just forget about it. Pick ONE market, and learn it like the back of your hand. You are in over your head trying to trade 5 markets starting out.
One more bit of advice. Do not over trade. Focus on make ONE GOOD TRADE each day. Actually, there is a book called One Good Trade that I would highly recommend reading.
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I would suggest developing a full compliment of trade performance metrics for a minimum of 100 trades using your method. Some traders can automate this 'backtesting' process, but in this case I don't know how you automate "supply and demand" zones for a backtest. In which case do it by hand, which for you will be a good learning experience in itself. Then look at the expectancy produced by those results. (Expectancy is a math formula). A positive expectancy indicates the system was capable of producing a profit over the backtest period. All this homework will give you a more realistic basis from which to move forward.
Once you have the expectancy established, then move to sim and run the test again, (forward test) in the sim account and do the full set of metrics and expectancy. See if your able to replicate the backtest results, or if the system is even tradable as you defined it for the backtest. If you can clear this hurdle, then maybe move forward with live trading risking as small % of your working capital as possible on any one trade.
The goal is to preserve your working capital while you gain much needed experience during the learning curve (which is much steeper and longer than you think it is today).
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Thanks so much for all the excellent advice! pretty dense, gotta digest this first :-)
A few answers:
Yes, immediately after switching to live, I tried to scalp, but gave it up quickly.
I'll follow your advice to only focus on one market (not CL), I am still torn between ES and NQ. what would be your recommendations?
My learning so far is to go to higher timeframes, probably 240min & 30 min
One good trade a day is my goal, so I already follow this piece of advice
I wouldn't say I am undercapitalized, I just got 5k in the account at the moment. I have more that I am willing to risk, but just didn't want to move everything to the broker account, risk management I guess.
You will fail with your attitude. You got money to burn go for it Croni,most don't here.
Most of us have blown accounts,even sizeable ones and have gotten smitten between the ears and the heart.
Not to mention the crap we got from family members before we regrouped and found a edge in trading.
This game is the hardest thing I have ventured in,but through perserverance,tenacity,experience, and remembering
battles won or lost I make a living.
That 5k account is nothing that TS allows you to play with,you are guaranteed to fail. Save the 5k,demo trade for awhile with a good setup. Lots of threads here and on TS forum.
Hate to see someone get torn up by the markets...it hurts in the beginning when you are fresh and most give up.
That failure rate of 90% is no fluke....its very real. Might want to see some of the videos on futures.io (formerly BMT).
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