ES - mini- alternative instrument to trade before market opens - Traders Hideout | futures io social day trading
futures io futures trading


ES - mini- alternative instrument to trade before market opens
Updated: Views / Replies:2,249 / 17
Created: by waqarshah Attachments:2

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 2  
 
Thread Tools Search this Thread
 

ES - mini- alternative instrument to trade before market opens

  #11 (permalink)
Trading Apprentice
London, UK
 
Futures Experience: Beginner
Platform: NT
Favorite Futures: ES
 
waqarshah's Avatar
 
Posts: 14 since Oct 2014
Thanks: 2 given, 1 received

Wow - this is fantastic response to my question..

As for my account size of $10,000 for the ES trading 2 contracts per trade ($1000 dollars correct - $500 per contract) does that not look like a sufficient amount?

Im curious...why?

Reply With Quote
 
  #12 (permalink)
Elite Member
Berlin, Europe
 
Futures Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,653 since Mar 2010
Thanks: 4,226 given, 25,602 received
Forum Reputation: Legendary


waqarshah View Post
Wow - this is fantastic response to my question..

As for my account size of $10,000 for the ES trading 2 contracts per trade ($1000 dollars correct - $500 per contract) does that not look like a sufficient amount?

Im curious...why?

The nominal contract value for ES depends on the index value and currently is $ 50 x 2,070 points = $ 103,500. If you trade 2 contracts, you basically make an investment equivalent to $ 207,000 in stocks. With an account size of 10,000 your leverage is approximately 1 : 20.7, which is pretty high. If ES moves 4.8 % against you, your account will be completely wiped out. This can easily happen as there is a technical risk that your stop will not work as expected.

But let us have a look at this situation from a different point of view. Your are talking about $ 500 per contract. This is equivalent to a stop of 40 ticks or 10 points. Now let us look at a simple trading strategy

- average win 20 points ($ 1,000 per contract)
- average loss 10 points ($ 500 per contract)
- winning percentage 43%
- you trade two contracts
- the gross expectancy per trade would be 0.43*$ 2000 - 0.57* $ 1000 = $ 860 - $ 570 = $ 290
- after deducting commissions and slippage the expectancy would fall to $ 250

A positive expectancy of $ 250 per trade is already a significant edge, good enough to build a millionaire.


Risk of Ruin

Now let us calculate your risk of ruin, based on the assumption that you wish to trade your account to a balance of $ 100,000 and that you need to quit trading when your account balance has fallen to $ 5000. The table below shows the result. If you start out with an account of $ 10,000, your risk of ruin is 58%. The meaning is that there is a probability of 33.5% that you will blow up your account, before you reach $ 100,000. You are trading near full Kelly, which is too much risk. I would certainly not engage in such a gamble. In reality the risk is even higher, as this calculation only takes into account market risk, but not operational and counter party risk.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).




Now let us imagine that you start out with a balance of $ 25,000. Trading exactly the same system, also assuming that you quit trading when your account balance has dropped to 50% or $ 12,500 your risk of ruin now drops to 2.4%. The Kelly factor becomes 0.31. Preferably it should not be above 0.25.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



Let me summarize:

You wish to trade the system as specified above, 2 contracts ES.

-> If you trade that system with an account of $ 10,000, the (theoretical) odds that you will survive are 2 :1
-> If you trade the same system with an account of $ 25,000, the (theoretical) odds that you will survive are 40 : 1

This evaluation does not take into account all types of risks, but just estimates the market risk assuming that all your stops will be executed as intended. Your real odds to survive are worse than the calculation. In the end your winning system with a positive expectancy is not worth anymore than a coin toss.

Reply With Quote
The following 11 users say Thank You to Fat Tails for this post:
 
  #13 (permalink)
Trading Apprentice
London, UK
 
Futures Experience: Beginner
Platform: NT
Favorite Futures: ES
 
waqarshah's Avatar
 
Posts: 14 since Oct 2014
Thanks: 2 given, 1 received


Wow thats very interesting- i currently am doing ok on a SIM account - have been trading on it since October and i usually do about 15 trades a day making around $500-$1000 per day and losses amount to around $200 a day or on some days no losses- but im improving- I usually go for 3-6 ticks for wins per trade and around 5 - 8 ticks on stops which I try to stick to but do cancel them when I trade goes against me hoping it returns to profit- it does sometimes but sometimes it really hurts closing a trade on a $500 loss (thank gawd its only a SIM) i know I catn do this on a live account so really need to close earlier than 8 ticks or get in at better times...

Going back to your sheet- do you have a copy I can use- before I even think of going live I need to really get to grip with the whole money management section- so if you do have a copy of the sheet it would really help me out with risk and projections..I would be very happy if I could do $500 a day...

As for what to trade alongside the ES- I did a sim on the FGBL which did fit in well but need to read up on this market a lot more... if anyone has anyone/sites about the FGBL I can read up that would be great...

As for my own trading...I statrted with YourTrading Coach and Macks PAT Youtube website and my trading style is based on them...solely price action and no indicators..thats the method ive adopted..but going back to what your saying its useless if if my money management is not correct and that along with the FGBL is what I need to focus on now...

Thanks a million..

Reply With Quote
 
  #14 (permalink)
Trading Apprentice
London, UK
 
Futures Experience: Beginner
Platform: NT
Favorite Futures: ES
 
waqarshah's Avatar
 
Posts: 14 since Oct 2014
Thanks: 2 given, 1 received

Sheet


Fat Tails View Post
The nominal contract value for ES depends on the index value and currently is $ 50 x 2,070 points = $ 103,500. If you trade 2 contracts, you basically make an investment equivalent to $ 207,000 in stocks. With an account size of 10,000 your leverage is approximately 1 : 20.7, which is pretty high. If ES moves 4.8 % against you, your account will be completely wiped out. This can easily happen as there is a technical risk that your stop will not work as expected.

But let us have a look at this situation from a different point of view. Your are talking about $ 500 per contract. This is equivalent to a stop of 40 ticks or 10 points. Now let us look at a simple trading strategy

- average win 20 points ($ 1,000 per contract)
- average loss 10 points ($ 500 per contract)
- winning percentage 43%
- you trade two contracts
- the gross expectancy per trade would be 0.43*$ 2000 - 0.57* $ 1000 = $ 860 - $ 570 = $ 290
- after deducting commissions and slippage the expectancy would fall to $ 250

A positive expectancy of $ 250 per trade is already a significant edge, good enough to build a millionaire.


Risk of Ruin

Now let us calculate your risk of ruin, based on the assumption that you wish to trade your account to a balance of $ 100,000 and that you need to quit trading when your account balance has fallen to $ 5000. The table below shows the result. If you start out with an account of $ 10,000, your risk of ruin is 58%. The meaning is that there is a probability of 33.5% that you will blow up your account, before you reach $ 100,000. You are trading near full Kelly, which is too much risk. I would certainly not engage in such a gamble. In reality the risk is even higher, as this calculation only takes into account market risk, but not operational and counter party risk.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).




Now let us imagine that you start out with a balance of $ 25,000. Trading exactly the same system, also assuming that you quit trading when your account balance has dropped to 50% or $ 12,500 your risk of ruin now drops to 2.4%. The Kelly factor becomes 0.31. Preferably it should not be above 0.25.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



Let me summarize:

You wish to trade the system as specified above, 2 contracts ES.

-> If you trade that system with an account of $ 10,000, the (theoretical) odds that you will survive are 2 :1
-> If you trade the same system with an account of $ 25,000, the (theoretical) odds that you will survive are 40 : 1

This evaluation does not take into account all types of risks, but just estimates the market risk assuming that all your stops will be executed as intended. Your real odds to survive are worse than the calculation. In the end your winning system with a positive expectancy is not worth anymore than a coin toss.


Hey Fat Tails
If you that spreadsheet for money management I woulld really love a copy.

Thanks again

Reply With Quote
 
  #15 (permalink)
Elite Member
Berlin, Europe
 
Futures Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,653 since Mar 2010
Thanks: 4,226 given, 25,602 received
Forum Reputation: Legendary

Answer
This post has been selected as an answer to the original posters question Answer


waqarshah View Post
Hey Fat Tails
If you that spreadsheet for money management I woulld really love a copy.

Thanks again

If you want me notified please use @Fat Tails!

I have published the spreadsheet in another thread on the risk of ruin.

https://futures.io/psychology-money-management/15602-risk-ruin-7.html#post207948

Reply With Quote
 
  #16 (permalink)
Elite Member
Calgary, Alberta
 
Futures Experience: Intermediate
Platform: NinjaTrader 8
Broker/Data: Kinetick
Favorite Futures: ES
 
JonnyBoy's Avatar
 
Posts: 938 since Apr 2012
Thanks: 378 given, 1,837 received


waqarshah View Post
Wow thats very interesting- i currently am doing ok on a SIM account - have been trading on it since October and i usually do about 15 trades a day making around $500-$1000 per day and losses amount to around $200 a day or on some days no losses- but im improving- I usually go for 3-6 ticks for wins per trade and around 5 - 8 ticks on stops which I try to stick to but do cancel them when I trade goes against me hoping it returns to profit- it does sometimes but sometimes it really hurts closing a trade on a $500 loss (thank gawd its only a SIM) i know I catn do this on a live account so really need to close earlier than 8 ticks or get in at better times...

Going back to your sheet- do you have a copy I can use- before I even think of going live I need to really get to grip with the whole money management section- so if you do have a copy of the sheet it would really help me out with risk and projections..I would be very happy if I could do $500 a day...

As for what to trade alongside the ES- I did a sim on the FGBL which did fit in well but need to read up on this market a lot more... if anyone has anyone/sites about the FGBL I can read up that would be great...

As for my own trading...I statrted with YourTrading Coach and Macks PAT Youtube website and my trading style is based on them...solely price action and no indicators..thats the method ive adopted..but going back to what your saying its useless if if my money management is not correct and that along with the FGBL is what I need to focus on now...

Thanks a million..

You have been trading since October, this October? I suggest you don't go live until next October.

And 15 trades per day? Some others on here may or may not agree with me, but I think that is a lot.

Well, good luck to you. PATs teachings are second to none. Good choice.

--------------------------------------------------------
- Trade what you see. Invest in what you believe -
--------------------------------------------------------
Reply With Quote
 
  #17 (permalink)
Trading Apprentice
London, UK
 
Futures Experience: Beginner
Platform: NT
Favorite Futures: ES
 
waqarshah's Avatar
 
Posts: 14 since Oct 2014
Thanks: 2 given, 1 received


JonnyBoy View Post
You have been trading since October, this October? I suggest you don't go live until next October.

And 15 trades per day? Some others on here may or may not agree with me, but I think that is a lot.

Well, good luck to you. PATs teachings are second to none. Good choice.

Hey JonnyBoy

Yes 15 trades sometimes more..I know I need to get this down and look at better entries cos I have a bad habit of closing my stop loss when it approaches- I need to fine tune this but am struggling- ive set my intial goal at making $500 a day-

Your right I cant go live until Ive got the discipline to let losing trades lose..but need to also fine tune my risk reward as currently its 8 ticks for loss and 4 ticks for win... do you think i need a year...my was to open an account with 10,000US dollars and trade two contracts each time...im now thinking i need to wait and open an account with 20,000

I know there is no holy grail but if you do have a strategy or advice I would be interested to hear it..

Mine is the following (SIM Account) - I trade the FGBL from 0900 -1200 (UK time) then the ES afterwards from 0900
I wait for 30mins after ES opens to identify trend direction then start trading (avoiding counter trends) in that direction based on the high low identifying trend lines..i try to buy low and sell high based on the market open prices.. it doesnt always work..and somedays Ive made $1000 by midday..i stop trading after midday

Guys any advice would be appreciated?


Last edited by waqarshah; December 4th, 2014 at 11:07 AM. Reason: Add more info- I also use Square of Nine lines
Reply With Quote
 
  #18 (permalink)
Elite Member
Calgary, Alberta
 
Futures Experience: Intermediate
Platform: NinjaTrader 8
Broker/Data: Kinetick
Favorite Futures: ES
 
JonnyBoy's Avatar
 
Posts: 938 since Apr 2012
Thanks: 378 given, 1,837 received


waqarshah View Post
Hey JonnyBoy

Yes 15 trades sometimes more..I know I need to get this down and look at better entries cos I have a bad habit of closing my stop loss when it approaches- I need to fine tune this but am struggling- ive set my intial goal at making $500 a day-

Your right I cant go live until Ive got the discipline to let losing trades lose..but need to also fine tune my risk reward as currently its 8 ticks for loss and 4 ticks for win... do you think i need a year...my was to open an account with 10,000US dollars and trade two contracts each time...im now thinking i need to wait and open an account with 20,000

I know there is no holy grail but if you do have a strategy or advice I would be interested to hear it..

Mine is the following (SIM Account) - I trade the FGBL from 0900 -1200 (UK time) then the ES afterwards from 0900
I wait for 30mins after ES opens to identify trend direction then start trading (avoiding counter trends) in that direction based on the high low identifying trend lines..i try to buy low and sell high based on the market open prices.. it doesnt always work..and somedays Ive made $1000 by midday..i stop trading after midday

Guys any advice would be appreciated?

15 + plus trades in my opinion for discretionary trading is excessive. If you are scalping for ticks, then maybe not. Your risk reward is such that if you have 3 losing trades, you need 6 winners just to breakeven, but you will be still be in drawdown because of your roundtrip commissions.

I am 5 years deep in trading and I have made many, many mistakes. Mistakes were and are my learning tool and I will continue to make them.

As a new trader you probably have visions of trading being an ATM machine, but that couldnít be further from the truth. Trading in SIM isnít real and doesnít prepare you for when you switch your DOM to live. To me, trading in SIM may help you define your skill set and hone your money management, but nothing more. Until you feel the pain of losing real money, over and over and over again Ė and trust me you will lose a lot of money and Iíll even throw in that you blow your account Ė you really wonít know what trading is all about.

I am not telling you to trade with real money now, but appreciate that the market is to be respected and your heart beats faster when real money is on the line.

I would start by creating a trading plan. What that contains is up to you and you can find so much information on this subject across the web. But, the most important line in your plan should be when to stop trading. For example, have you hit your daily goal of $XXX? Great. Stop trading. Have you hit your maximum drawdown for the day of $XXX? OK. Stop trading. Define yourself a set of rules and STICK TO THEM. In SIM and LIVE.

As for a strategy. Why donít you pick one type of trade and concentrate on that. For example, only take second entries. Take all the second entries you see and log every trade, good or bad. That will keep your number of trades down and enable you to really hone in on one type of trade.

I record my trading session and go back at the end of the day and recap. I then add a video or chart to my trading journal. It helps keep me honest and in check with myself.

Honestly, this topic is so subjective. Others may agree, disagree or somewhere in the middle. All I know is that trading is the most difficult thing I have ever done.

--------------------------------------------------------
- Trade what you see. Invest in what you believe -
--------------------------------------------------------
Reply With Quote
The following 3 users say Thank You to JonnyBoy for this post:

Reply



futures io > > > ES - mini- alternative instrument to trade before market opens

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
When ES is ranging, what alternative instruments do you recommend? Croni Emini Index Futures Trading 12 April 13th, 2015 01:27 PM
DAX IS THE ONLY INSTRUMENT I WANT TO TRADE wandaa Trading Journals 5 November 10th, 2014 02:24 PM
E-Mini NQ alternative in Europe timezone sweater Emini Index Futures Trading 2 November 10th, 2014 07:02 AM
Is it profitable to scalp the spead in ES mini tracy Emini Index Futures Trading 23 February 15th, 2014 08:14 PM
ES mini PandaTrader NinjaTrader 3 October 15th, 2012 11:21 PM


All times are GMT -4. The time now is 05:51 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-17 in 0.19 seconds with 36 queries on phoenix via your IP 54.163.210.170