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Dissecting this morning's bad /ES trade


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Dissecting this morning's bad /ES trade

  #1 (permalink)
 
snax's Avatar
 snax 
Chicago, IL
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Greetings,

I would like to learn and improve my ability to analyze and dissect my bad trades. I am hoping to learn how to create better set-ups for my trades moving forward.

This morning I felt really good about the /ESH9 with all the hopeful news of trade talks between U.S. and China, plus the market seemed to be recovering from a downward trend overnight.

The market began to look bullish this morning, and as you can see from the screenshot, there was a big buy-in at ~7:15am CST, which got reversed very quickly. I saw the following dip and thought 2716.50 looked like a strong spot to go long, expecting the bullish trend to continue. I was patient and clear-headed. The price struggled a bit to get down that low, but once it hit I thought it had a good chance to bump up to around 2718.75 and beyond.

I went long 1 contract at 2716.50 at ~7:15am CST and it felt like a good trade, but as you can see from the screenshot (edit: this is only my 2nd post so I can't link images until my 5th), it has entered a new trading-range and my timing was poor, doesn't matter if it rallies big today now, I'm out. Stopped out for an 8-tick loss at ~7:45am CST.

My questions are:

0) Did this seem like a reasonable trading opportunity?
1) I am getting squeezed a lot these days between tight stop-losses and volatile price-oscillations, one thought I've had is cutting my allowed number of losing trades in half and doubling my stop-loss width on the trades I make...that actually may have helped here, time will tell.
2) What types of set-up strategy could I have used to time this better? Did I just see something in random market noise that wasn't really there? I am not using many technical indicators or stuff like DOM (I don't think my platform even has DOM tools, I've looked). I've tried setting up Bollinger-Bands with Fast Stochastic Oscillator and things like that but it just seemed to add noise without benefit. I don't think they would have helped here but I am a beginner so I am probably wrong on many layers.

Any help is appreciated, apologies for any typos and inability to post links, etc.

Cheers,
snax



EDIT: having image-sharing issues since this is only my second post, but you need 5 posts to share images.

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  #3 (permalink)
 
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 Anagami 
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snax View Post

My questions are:

0) Did this seem like a reasonable trading opportunity?

You have to find your edge first, and know exactly what it is.

Without that, you will just endlessly end up second-guessing yourself.

If you are not clear about what your edge is, you don't have one.

You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
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  #4 (permalink)
 
snax's Avatar
 snax 
Chicago, IL
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Thank you for your thoughtful reply, Anagami.

I would like to be able to measure my 'edge' probabilistically/mathematically, do you feel you have a rigorous definition of your edge that consistently proves to be (mostly) true? This is an avenue I wish to explore next.

Thank you,
snax

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  #5 (permalink)
 
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 Anagami 
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snax View Post
Thank you for your thoughtful reply, Anagami.

I would like to be able to measure my 'edge' probabilistically/mathematically, do you feel you have a rigorous definition of your edge that consistently proves to be (mostly) true? This is an avenue I wish to explore next.

Thank you,
snax

You are welcome, my friend.

There are two components:
1. What identifies an edge being present
2. The mathematical expectation of trading that edge

The more specific #1 is, the more meaningful #2 becomes.

#1 needs to be objective, but need not be algorithmic... in fact, I think it better not be! (...as algo trading, particularly short term, is super saturated).

You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
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  #6 (permalink)
 
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 snax 
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Ahh thank you again. This search for an edge seems to be the next huge obstacle for me, I saw this but didn't want to admit that I would be looking for something so elusive. I hope I find my way.

Cheers!
snax

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  #7 (permalink)
 
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 snax 
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in hind-sight some factors contributing to this poor trade were:

1 - thinking i'd seen a favorable set-up based on price-movement that had worked for me in the past but did not exhibit the same behavior as in previous trades. I wanted to believe my intuition was correct.
2 - looking at the pattern and thinking 8-ticks was too far for it to drop in the current conditions.

This type of thinking won't scale because things are always going to look favorable, I need to find the other factors.

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  #8 (permalink)
 
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 cory 
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snax View Post
in hind-sight some factors contributing to this poor trade were:

1 - thinking i'd seen a favorable set-up based on price-movement that had worked for me in the past but did not exhibit the same behavior as in previous trades. I wanted to believe my intuition was correct.
2 - looking at the pattern and thinking 8-ticks was too far for it to drop in the current conditions.

This type of thinking won't scale because things are always going to look favorable, I need to find the other factors.

you make 5 posts try to post image again.

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  #9 (permalink)
 
snax's Avatar
 snax 
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Thank you for the reminder, Cory


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  #10 (permalink)
 
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 Anagami 
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snax View Post
Thank you for the reminder, Cory


A question for you: Had the the trade worked out, would you have considered it a 'good' trade? In other words, are you evaluating individual trades in terms of their outcomes?

You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
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Last Updated on April 21, 2019


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