Not sure what I'm doing wrong when scalping futures
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.
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.
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?
Sounds good, in principle, to me.
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.)
That there may be, certainly. Among many other potential signs for this (I find recent support/resistance levels more helpful for this).
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?
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".
Last edited by Tymbeline; February 6th, 2016 at 08:33 AM.
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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.)
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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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I would ask one question about your strategy. Or maybe a question you should ask yourself....
The question is...
"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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