I'm a brand new member. Thought I'd share where I'm at with my strategy development. I hope you guys can contribute any ideas so please comment away.
The idea is to catch some decent intraday trends using only price action and 50 period EMA on my entry/exit chart.
I'll be using a 20000 tick chart to gauge trend direction and a 500 tick chart for entries/exits. In a nutshell I've developed my own spin on Sam Seiden's supply and demand strategy from watching the ES for countless hours. Sam says when you see a rally base rally wait for price to return to the base area to enter long. My spin on this is to see the rally (on the 20000 tick chart), wait for the base to form and then enter within that base area (500 tick chart) for a breakout to the upside and the next leg of the move. This same pattern can obviously be played on the short side too with a drop base drop. Hope all this makes sense.
Entries have to be taken with a buy or sell stop market order.
The EMA is so I only buy above or short below it. The idea is that it signals that the next leg of the move is about to begin.
The strategy works great on trend days and reasonable sized range days but I still need to work on staying out of the market during tight choppy days. This is a question of personal discipline which I'm working on at the moment.
Also, When I catch a big winner it normally turns into a loser because I have no exit strategy. Any ideas are welcome. I really need to maximise my winners because trading the 500 tick chart obviously leads to many small losses.
I've attached some images of two set-ups that occurred recently long and short (16th and 17th May).
Look forward to hearing your comments!
P.S. I'm still demo trading but have a NT account funded, but I'm not going to trade live until I'm sure I've got this system nailed
The above is the crux of the problem. Trend trading the ES intraday is very difficult to do unless you are very experienced at reading the price action at multiple levels. Typically the ES is range bound about 75-80% or more of the time. You need to use discretion to tell you when to stay out of the market. If you are too conservative you will miss a lot of big winners, too eager and you will get chopped to pieces. Its a very fine line to walk because when trend trading a few big winners make the difference between a profitable and losing trading system.
Not to discourage what you are doing, I myself have given up on trend trading and am happy taking 2-4 points at a time from the ES. Every so often I stumble into a good trend and ride it as long as possible but I do not count on it on a consistent basis.
Everyone is different so trend trading may suit you just fine but do not expect much more than a 40 percent win rate if you are very good.
I don't really know if such a futures market exists. The more liquid the market is the more range bound and choppy it will be in general. That is because liquidity equals more participants which means more differing opinions and more back and forth trading.
Honestly with only $7.5K you should really not be considering futures at all, you can lose that in a few months if not careful. I suggest you stay with ETFs such as SPY until you have more capital and experience. Find a low cost equity broker such as Interactive Brokers ($1 per trade) and trade that for a while, it just like trading the ES but you are risking a lot less per trade.
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You might want to try keeping track of the daily (weekly, monthly?) ranges when "trend" trading depending upon your trade duration. If you are day trading, knowing when the current day's range is close to the average daily range will help making an exit decision. Keep your exits closer to these ranges and it might help prevent those winners from turning into losers or scratches. Along the same lines, you might want to stay away from entering a trade and looking for a "trend" that day if you are closer to these ranges, for instance, if there was a big run overnight or right when you start your day and you miss it.
Since you are just starting out, you will most likely ignore most advice directed your way that you do not like or that seems irrelevant to you but I hope you remember (and do something about it) that it is true in trading as it is true in life that you are your own worst enemy. You don't need a great system to succeed as much as you need a great you!
Last edited by Hulk; May 30th, 2016 at 12:23 PM.
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I know you weren't asking me but I'm wondering whether NQ might be more suitable than ES, for your purposes? It often moves a bit more than ES.
It also has the added advantage, to someone with $7.5k, of being only $5 per tick instead of $12.50. (I'd think that's quite a significant point, actually? It's kind of debatable whether one can/should be trading futures at all, with $7.5k?).
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