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Not sure what I'm doing wrong when scalping futures


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Not sure what I'm doing wrong when scalping futures

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  #1 (permalink)
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I was wondering if anyone can throw a tip or two at me, so I'm writing in this trader forum.

Here's what I have:

Size Control: Never go in full position, or be blown up fast. Start small, and allow space between entries as the position builds up. If there is size on, reduce size quickly when the market looks like it's going against the trade, or blow out the draw down limit of $3k possibly.

I'm sure anyone who trades knows this.

2 Kinds of Days: Oscillating days and trending days. Trend days are when the market doesn't come below the 34EMA. Instead it bounces off of it, and it continues to trend higher or lower. Oscillating days are subtle no news days. The market swings above the 34EMA becoming overbought, and then reverses back to the other side of the 34EMA line becoming over sold. The trick is to know if it's going to trend or oscillate, so caution has to be used around the 34EMA before confirming it's going to trend or cross and oscillate.

Watch volume bars to show inflection points: The price and volume bars in combination are like gems on the ground. Look for the inflection points in them, pick them up, and trade them in for your money.

Engulfing Candles and Doji's: These indicate that there may be an inflection point.



I trade nearly every day, but for the life of me I feel like I have it all down, but I continue to fail my prop fund test by blowing out the max draw down. I've switched back to practice money mode to trade until I hammer this issue out.

What is weird is the more I scalp futures, the less I seem to lose. At first I was making huge amounts of money, but then I'd blow the test for some reason or another nearly every single day. I still make good money for a while, but then I blow the draw down limit still. I've been studying and practicing scalping futures to get a funded account with the prop fund for 6 months without hardly missing a trading day, and I trade after hours and overnight.

My goal is to raise money from the prop fund making 80% commissions, so I can trade my personal account.


Any tips? Thanks

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  #3 (permalink)
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Sounds like you're doing TopStep Combines, and needing to reset regularly/semi-regularly through hitting trailing max drawdown limits?

That suggests a position-sizing problem? Have you looked through your trading records at what the overall effect would have been of smaller position-sizes? For example, doing a $50k Combine and trading only a single lot, or a maximum of two?


Trader2016 View Post
Never go in full position, or be blown up fast. Start small, and allow space between entries as the position builds up.

Sounds good, in principle, to me.


Trader2016 View Post
Trend days are when the market doesn't come below the 34EMA.

It's one way of looking at it, and for many people a perfectly valid and reasonable one, I think. We (trend-traders) all have our own methods of determining whether there's an adequate trend for us to be trading. (I don't determine this according to indicators, myself.)


Trader2016 View Post
Watch volume bars to show inflection points: The price and volume bars in combination are like gems on the ground. Look for the inflection points in them, pick them up, and trade them in for your money.

Engulfing Candles and Doji's: These indicate that there may be an inflection point.

That there may be, certainly. Among many other potential signs for this (I find recent support/resistance levels more helpful for this).


Trader2016 View Post
I've switched back to practice money mode to trade until I hammer this issue out.

Good luck with it.

I know people (in this forum, at least) use the word "scalping" with quite a wide range of meanings, so I'm not making assumptions about exactly what you're doing. I strongly suspect that literal "scalping" (very fast entries and exits designed to snatch a tick or two) are probably one of the hardest ways to pass a Combine, but I also suspect that isn't quite what you're doing, anyway?


Trader2016 View Post
I still make good money for a while, but then I blow the draw down limit still.

Assuming that you have a proven overall edge (net positive expectancy) with your trading method, if your main problem appears to be hitting TopStep's drawdown limits, I think the answer will be to trade fewer lots/contracts with a wider drawdown limit, so you might want to try a $50k Combine trading 1-2 lots, or even a $100k Combine trading only 2-4 lots, and just be patient until the profit builds more gradually?

(Another possibility might perhaps be to look at NQ/YM instead of ES, and trade at $5 per tick rather than $12.50 per tick? But I see, of course, that if you're an ES trader through and through, that suggestion might not appeal.)

Again, the suggestions I've made above are offered on the basis that you do have a proven overall edge, and that we're therefore discussing "how to pass the Combine" rather than "how to trade profitably".

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Advice taken. Thanks, Tymbeline. I'll put this into action this week.

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Tymbeline View Post
Assuming that you have a proven overall edge (net positive expectancy) with your trading method, if your main problem appears to be hitting TopStep's drawdown limits, I think the answer will be to trade fewer lots/contracts with a wider drawdown limit, so you might want to try a $50k Combine trading 1-2 lots, or even a $100k Combine trading only 2-4 lots, and just be patient until the profit builds more gradually?

For what it's worth, I think this is very well-said.

You need to keep the leverage down to a level that gives you a chance to survive your mistakes, and to survive the losing trades that even a good edge will always have. So, if you do have an edge, give yourself enough leeway (larger loss limits) and keep the potential losses small enough (lower contract size) so that the edge has a chance to work. It may mean pulling ahead more gradually, but that's where the edge part comes in.

You also need to be sure that you execute your edge correctly: no trades based on impulse, or fear of missing out, or to "make back" a loss (which is suicide) or about which you later say, "Why did I do that?" Or at least only a few of them, anyway.

An arbitrary rule that says you stop for the day when you have made a certain (smallish) number of losing trades in a row, or exceeded a personal loss limit that is lower than the Combine limit, may help you defend yourself against the times when you don't execute well -- and these times will come, inevitably.

These two things of position sizing (risk) and execution (consistency) may be part of what's holding you back if you are often in danger of blowing up.

You also might start a trading journal here; it can be painful, but it can also help to bring your issues to the surface, and to get some feedback. (But only if you're comfortable with the self-exposure -- not if it wouldn't serve you. Try reading a few other peoples' journals first and see if that's something you would want to do.)

Good luck.

Bob.

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  #6 (permalink)
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I'll make sure to hone in on the advice, Bob. It is the most consistent advice available everywhere including from the traders hea on BM, so I assume that's where the success is "buried" so to speak. X marks the spot so many times before it has to click that's where it's at. Hehehe

In the past 2 weeks I started journaling tips and tricks, and I've been writing down my "deficits." I review them a little to remind myself before I fall for the same problems again. It's a lot of details that I need to build into my second nature, to acquire the "gut feeling," intuition, premonitions that kind of psychological development. I'll just transition to the journal here. I know the journal helped a lot of the best traders out there hone their skills. The anecdotes about that are common in the scene, so I'm going follow suit.

I'd like to take a break. So much time at this, but I'm so close to nailing it. LOL my hair is all grown out, the Jack Dorsey beard is hanging there, and little is invested in time for eating and sleeping here and there. I can vacation when I retire some day. I'm just not interested in ordinary until ordinary includes a funded account and no fails. I'm so close like the dog that can't reach the pizza in the middle of the table......yet. Need a chair so to speak.

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What do guys say about scalping a few ticks with a few contracts, taking profits on all but one a runner to pass this prop firm combine?

How do you guys know about that?

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Trader2016 View Post
What do guys say about scalping a few ticks with a few contracts, taking profits on all but one a runner to pass this prop firm combine?

That's my approach every day trading unirenko bars on CL. Two contracts come off at .05, then I hold the last until I get a reversal bar. It's not for everybody, but it works for me.

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How do UR bars work?

I've been watching the one tick brick renko chart along side of my 5 min chart to see where the patterns work and not. I'm still learning.

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I would ask one question about your strategy. Or maybe a question you should ask yourself....

The question is...

"Why?"

or

"Why - when you buy - would other, less wise traders buy after you giving you an opportunity to exit at a profit?"

I don't think you've answered that question as it relates to how you want to enter and exit the market. Position sizing isn't your issue at this point, I don't think you have a "why" - a good reason that a market move would occur after you enter.

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Trader2016 View Post
What do guys say about scalping a few ticks with a few contracts, taking profits on all but one a runner to pass this prop firm combine?


I think you perhaps shouldn't be looking at trading "a few contracts" at all, let alone with different profit targets, as a way of passing a Combine: what you need is one simple method with a proven edge, reliably and consistently applied, to get you through a Combine by applying its edge to the market often enough, even with one contract.

Question: do you have a proven edge, here? Do you have, outside of Combine attempts and outside of TopStep, a series of 200+ consecutive trade results of your own (on either a real account or even a simulated/demo one) that shows an upward curve without any big drawdowns? I don't suggest that you necessarily need to answer this question in public, of course, but it's clearly a question you need to be able to answer for yourself, and confidently.

If you do, and duplicate it with appropriate position-sizing during a Combine, you can pass a Combine.

If you don't, then actually we're talking about "How to trade profitably" rather than "How to pass a Combine", I think?

Sorry if I sound pedantic about this, but I think you really do need complete clarity on this point, before trying to pass a Combine.

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Really good advice here, from both guys. I've read tons of posts on this forum so I know their average contribution is pure gold. Nothing to add to that.

If it makes you feel better, you're in good company. I find myself thinking "ah, finally I'm so close" and then hit a streak of losses. For me there have been multiple reasons: excessive confidence leading to looser money management, market randomness giving you a cluster of losses after a cluster of trades that inexplicably go your way. At the core though there usually is unsound money management (trading too many contracts, adding to losers, bad entries) and only you are in the best position to find out exactly what it is. Review your trades, pick a few mistakes you seem to be repeating, and make a spreadsheet to track their frequency, then you'll have metrics (even approximate ones) to review your trading.

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The last few comments I'm caught up on already. I think they are more applicable for complete beginners. I've been day trading futures to get a funded account since August or September straight through day and night. The previous two years were spent on research and development of markets and strategies. I'm just doing the prop firm gig to fund my own boat.

I did exactly what we were talking about by reducing size, and staying that low today. I never went over 3 cons today, and 95% of the time I was on one contract. The profits and losses were not nearly as wide ranging as they have been for the past several months of training, and the bulk of the time I was in the green. I closed out at about $6-700 up today, and I'm going to work the over night in a few hours after I get some zzzzzzz.

I made a few mistakes that I could have avoided today, so that number should be up, but over all I was impressed because I could trade the market sell off trend on the up and on the down waves through the day like riding an alley between two waves, and carving both walls on nearly each move I made.

I'm thinking this week is going to turn out the most positive one so far.

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Thanks all for helping fools trading the markets like me ay.

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"2 Kinds of Days: Oscillating days and trending days"


the market can change on a dime, trying to gauge it on a daily time frame is too high of a time frame if you're merely scalping.

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Itchymoku View Post
"2 Kinds of Days: Oscillating days and trending days"


the market can change on a dime, trying to gauge it on a daily time frame is too high of a time frame if you're merely scalping.


I do the same thing they would do in the pit or if the guys from the pit wanted computer assistance. I look for inflection points in the auction prices, and I trade those inflection points called the reversals. The rule is if there is no oscillation from oversold to overbought, but it's a one way deal with just oversold, oversold, oversold bearish trending or just overbought, overbought, overbought bullish trending through the day, then you are trading a trend day that day.

I use assistance to know the score though. I know the score the first thing in the morning that will let me know what "paper" is thinking and is going to do that day. I know if paper wants to stand back or do little of nothing, I know if they want to take profits, and I know if they are scared selling or they see big hopes in the future buying. I constantly study global politics, economics, culture, technologies, and military news to know the score. To me the world is this big behavioral economic topographic map of human expression and resources that I watch on the news from multiple sources scouring for deviations that are going to set off the "paper" to do something out of the ordinary, do little, or do nothing. I'm going to trade those deviations on trending days, and I'm going to trade those oscillating reversals on subtle no news days.


The top wave on the oscilloscope is more like a subtle oscillation day in the market. The bottom wave is more like a trend day which each time becomes over bought continues to be over bought although on an actual 5 min chart the day looks more alike stairs upward or downward than that.......99.99% of the time. Actually that bottom wave looks more like the Alere ALR chart after it was bought out by Abbott last week.

I'll put it a another way.

The day can start off with a big drop on the /ES for example, and then it might trend the rest of the day without oscillating oversold and overbought reversals over and over. The oversold and overbought conditions imply a reversal is due, right? All traders know that one. The market begins to travel back and forth on a 5 min chart like an electric wave on an oscilloscope.

When there is some kind of economic indicator that strongly affects the mood of the market, the oscillation process will not complete itself. The market is not going to oscillate. By that I mean that instead of oscillating oversold and overbought then reversing each time the conditions are met, it will build up to an overbought condition for instance, and then it will continue higher repeating the same thing; building up, pausing, and continuing higher to trend producing a stair step like ascent higher on a 5 min chart.

A bullish trend day for something like a really great economic indicator that day will look like that, but a bearish trend day that results from bearish news will stair step down.



Therefore what I have seen in my experience is that there are subtle oscillating days of oversold and overbought reversals on the chart like the electric wave of the oscilloscope, and there are bearish or bullish trend days.

And there you have: secret to the world.

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Marc Abell View Post
Hello! I would like to sagest you at first to look through trading records at what the overall effect would have been of smaller position-sizes? For example, doing someK combine and trading only one lot. And of course you need to be sure that you using competitive edge in a right way - no trades based on impulse, or fear of missing out.

Yeah, I started trying that after reading the replies here. It's working well.

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