I've recently started getting my stuff together and I found a volume/price action strategy that I was having great results with in sim trading the ES. I traded nearly every day in April and was making great trades in the mornings for 1-2 points with 2 (sometimes 3) contracts totaling almost 80% return on my sim with a 67% win rate. I was ecstatic that after 6 years, I finally had a strategy and put it use in a sim account that I stuck with, had a plan, executed it, and was getting rewarded for it.
So I continued trading sim until this week where I can't seem to catch a break. Every single day in sim, I was either breakeven or up to +200-$300 each day. Now that I moved to live, I can't seem to find the same trades I was having such great success with. I know it's only been two days of live trading and I'm going to keep at it but my first day was -$100 and today was basically breakeven minus commissions.
Trades in April for me were plentiful but now recently in May, particularly since last Friday, I can't find the same type of trades as I did in April. For the more experienced traders, was April an odd month? Does my strategy only work in odd market conditions? Are off days/weeks just going to happen?
I plan to stick with it but its just disheartening after being diligent with live sim and market replay proving my strategy to come to starting off with bad days.
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Why do you say that? I understand there's a much stronger emotional and psychological aspect to it when there's real money on the line. Wouldn't it help to train your strategy and practice finding good entries and exits and finding how/where to scale in and out?
Not really. @Big Mike is correct. The emotional aspect cannot be overstated. It's like masturbation, it feels good. But, its not quite like getting laid by some hot babe. Emily Ratajkowski immediately come to mind...again. In addition, the fills on SIM are an approximation of what you would receive in a live venue, not the actual thing, and are not representative of reality.
What you experienced in April is nothing more than random luck. There's even a law in probability theory that insures it. According to the "arc sine law," mechanical trading rules applied to price movements in financial assets will result in long periods of cumulative success, but equally long periods of cumulative failure. The long periods of success will tempt investors to apply trading rules to actual decisions. The long periods of failure make it very likely that such application will eventually blow them out of the market.
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Plus, trading sim is (whether you admit it to yourself or not) is like trading with money you don't care if you lose.
The moment you trade cash, with leverage, in this market especially -- isn't it interesting how all that changes.
With sim, you always have a reason or rational as to why that particular trade was to be skipped or didn't qualify as valid or whatever the excuse is. With cash, it's a whole new ballgame.
Best advice (short) put away the sim entirely, trade micros with more than 1 contract with scale in/scale out strategy. Fund your account with 10x the ADR point value of whatever you are trading, per contract. That money is going to be gone. Accept it, it's like going to college to learn to trade. How many years does it take to become a Doctor? Be realistic and expect to pay up.
MES point value is $5 I believe, and ADR 50+ points a day lately. So 5x50 = 250 dollars per day in range, I recommend you have at minium 10x that calculation, meaning $2500 per contract for MES. And I recommend at least two contracts so you can scale in/out. So at least $5000 and make sure if you lose it all, much quicker than you ever expect, that you are 100% fine with that. It's tuition.
If you can't treat it like that, you are trading scared money. Do you think you have a chance to compete against others who aren't scared? I don't. This point cannot be understated.
Also, don't scalp. If ADR is 50, aim for at least 5 points at absolute minimum per trade. 10 makes more since (20% daily).
Last, read as many journals as you can. Watch as many webinars. Don't copy what others do, learn what NOT to do and take notes on what stands out, and make your own way. Best place on the site to learn right now is here:
Both Fed Chairman Bernanke’s remarks yesterday and President Obama’s speech last night about his jobs plan; combined, failed to reassure the market that a solution to the country’s economic woes was at hand, and the …
Like everyone said, Sim trading is pointless, except for learning the platform you are on. One time I lost $1700 on my "fun account" due to leaving an open limit buy order overnight...got filled while I was asleep and woke up to my account having only $300 left.
Once you get the hang of it, your April will look like my April last month. I won 80% of my trades, but I had some garbage trades for sure.
My April might also be a fluke. Except it's with real money. After this month I will know more.
Posting my results, only to boost your motivation if needed! It can be done, on real money yup.
Definitely as BigMike stated, when you consider the money to be risk capital that you can afford to lose, you'll essentially trade your method even better since you are not operating with scared money. Realize it will most likely be tuition if it's your 1st or 2nd account. Expect to blow 1 or 2 small accounts.
My biggest tip is to be flexible and not too rigid.
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That reminds me, don't focus on win percentage. It doesn't matter, and is often a sign of inexperience and many vendors love to focus on that to lure in rookies. Don't fall for that.
Let me add, trading 60 times a day is ridiculous, in my opinion and experience. Only the broker makes money. You shouldn't even trade 60 times a month (per instrument), that's putting on a new position 3x a day which I think is crazy.
Much better to trade 1x per day and instead of scalping for ticks, hold for 10-20% of ADR at minimum.
Anyway, I'm done here -- rest is up to you, I've linked the single most informative/educational thread on the site right now above if you want to learn more.
I used to have a SIM journal here, not long ago. When I was active in it I was posed with lot of dilemma regarding validity of it in other sections of this forum.
Eventually I came to realize its mistake to invest time in SIM extensively and be dependent on it for measuring performance. I had it deleted.
While this is no bite of profound knowledge, I just wanted to mention that. Its better to try hand at micro even if losing some money. Like people say it, you need to have skin in the game. SIM doesn't do that and you end up carrying lot of bad habits which becomes problem in itself later when you are trading for real.
Before I begin let me say that compared to most on this forum I'm a beginner.
I will 100% agree about trading sim VS real money. I traded sim a little(probably should have been more) but the difference in making a decision with "sim" money and "real" money is huge, at least it was/is for me.
Ive been trying to learn as much as I can the last couple years. Finally decided a couple months ago to give it a go. Start small. Right now I'm only swing trading stocks on TSX(I'm from Canada). I thought I could do the day trading thing but quickly realized that it doesn't fit my risk profile, especially right now, it might later. Also, I didn't feel like losing my money that quick. I'm trading small sizes, because I don't want to get blown out, and trying to understand how I feel when I make the trade, but I wanted to do it "for real" because I felt like I was just clicking buttons and not understanding with the sim thing.
Having said that, using a sim is a good way to learn the platform.
Anyway, there's my 2 cents.
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Well thank you all for your responses. Looks like the past few days were indeed just a little odd since I found a bunch of trades today that I took and could've taken. Basically broke even again in the morning besides one trade around lunch I normally wouldn't have taken that put me a few points below breakeven. I suppose I'll learn eventually I decided to switch to the MES today and for the foreseeable future to get a feel for real money in the market without risking too much. It is a different feeling trading live but smaller size on the MES feels substantially much better emotionally. I keep taking profits too early (similar to what I did in sim) but I'll keep on keeping on.
I appreciate the advice weening me off of sim. I still like to think it had its place giving me confidence to execute but y'all are right in that it is still a different league to trade live. I'm not a fan of the 4x increase from ES to MES for commissions&fees/tick ratio but I suppose it's worth it to learn.
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I think it's jumping the gun to blame it all on the jump between sim and live. The question when the performance of your strategy changes is whether it's you, the strategy, or the market.
Now you can look at your own decisions and determine if you're really trading it the way you should, but what I'm hearing is "I don't think I'm doing anything different and it just isn't working".
Well we were up 2/3 of the days in April and saw one of the most unreal bull runs I've ever seen. Meanwhile the past two days have turned down with today in particular having insane action.
That sounds to me like a bad sample. You did well in an environment where a lot of money was coming into the market and all you really had to do was buy more often than sell and you'd make money. Meanwhile the past two days are very violent markets where the noise is going to really screw up such a short term scalping strategy. Remember, when money is coming into the market it seems like everyone is making money, and when it's coming out it seems even the best have a hard time breaking even. Your performance is much more likely to be a function of the market. But you don't really have enough data to be sure. I would not recommend risking much until you know more about how your strategy behaves in different markets. Frankly I'm not really a huge fan of scalping in this volatility in general. There's a reason the liquidity decreases.
When evaluating a trading strategy you need to consider sample size, both in the number of trades taken and the amount of time (weeks, months, years) evaluated. I believe that before moving to live trading you should test your strategy for at least 1,000 trades over different market conditions.
April market conditions were much different than the were last October, November and December. I would advise going back through and finding in sample and out of sample periods and test your strategy and see what happens. You'll want to know your performance in a variety of market conditions if you plan on trading your strategy live.
I disagree a little bit with the comments on sim trading. I think that you have no real chance of making real money in a live account if you can't make pretend money in a sim account. If you are sim trading and constantly going in the red then you're not going to move to live trading and suddenly be profitable. Sim trading is important for you to find, test and define your trading edge. This is the part that is nearly impossible. But if you find that you can trade with a positive expectancy then live trading is the next logical step. I do agree that the psychological difference between sim and live is extreme and that a successful sim trader will not always translate into a successful live trader because there's extreme psychological roadblocks to overcome. This is where staying on sim too long is detrimental. But most people don't have a defined trading edge and they are better off not trading live and not losing money. Most people are afraid to enter live trades using their strategy and in most cases this fear is well founded because they will consistently lose money over each set of 100 (or whatever reasonable number) trades.
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This is is very difficult and very usual market to trade, even for very experience and profitable traders. This is not the norm or the pace I am used to.
prices are moving incredibly fast. Scalping is also a very easy way to loose money quickly. I am always surprised how many people do it, there is little money to be made. Longer trades-hours to a few days- is where the big money is. Scalping to me is like gambling, at the end the house always wins.
If you don’t mind me asking, did you journal your daily trades writing down what you did right and what you did wrong? Did you write down what your bias was and why? Did you write down your thoughts as to why you took the trade?
Go back to sim for a couple of weeks and journal your success and failure and explore why your are making money or losing money. It is the only way to find out what is going on.
Monitor your thoughts when you switch to real currency to see if there’s a psychological change in your thinking. If you fears are kicking in or what. Maybe you are worried about losing money so you keep jumping out. Or you’ve lost some level of confidence since you are now trading currency.
Know when to get in- support
Know when it to get in - not enough room to control pivot or resistance.
Know when to get out - resistance or pivot.
For me the most important step I took to becoming consistently profitable was trade analysis.
I analyze EVERY trade I make and over time have built a strong set of data that I can query against
for different markets, my mental state, day of the week, hour of the day. I know exactly how I
normally perform in almost all situations. If my results start getting away from a mean level of performance I stop and figure out why. It may just be a draw down or something may have to be tweaked with what I am doing. I easily spend 10x more time analyzing what I have done then doing it.
I also have worked to build up size, I trade 2 instruments only. I almost never take more then 2, sometimes 3 trades in a day. Some days I will take none. I view each and every entry as a serious event, that I know is random with an edge.
I believe that to really earn a good living in this industry you have to be selective in your trades and trade good size. Of course when you are starting out you cannot do this but if this trading style makes sense to you it should be your thought from the onset.
I know there are many that make many trades in a day, I think an earlier post showed almost 1200 (~2500 contracts) trades in one month for a $4000 profit. For some I am sure this methodology works for me it would never be compatible with my mindset.
You only need to make ONE good trade a day with size and you can make a substantial living.
In the end though I think any good system or approach can be profitable it if matches who you are and you do a few no so simple things.
Follow your rules
Be in control of your psychology
Love what you do each day
Mark
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if you are a daytrader...trading changed about 2-3 weeks ago and depending on your trading process... the last 2-3 weeks are similar to what happens in the summer and you have to be extra vigilant to stay profitable. often it is extremely difficult to be profitable during the summer.
daytrading for 6 weeks (mid march to end of april) starting with the virus hiccup to the markets was extremely good for some daytrading processes... there were more trends and the trends were smoother with fewer pullbacks that take you out of trades. after that 6 weeks, daytrading got more difficult.
That thread you posted is such a wealth of knowledge, but the information is almost overwhelming at first since it was started years ago. Is there any suggestions as to where to jump in and begin reading from? Or should I use this quarantime to read the whole thing? I guess this could be a question for anyone who participates in that thread. Thank you.
Hi Snowman,
Everyday is a new day in the markets. So the challenges are new. If you have the right framework and a proper system that works then you don’t need to worry too much. We as traders cannot expect a winner everyday and most importantly after being successful for a bit a losing streak comes as a non acceptance. But as they say trading is a business. Since you have recently moved to a live account give it few more weeks or a even months before you decide what works and what does not. April was a decent month for me as a trader but may not have been for you or someone else that does not mean anything since the market presents opportunities everyday. So keep trading and follow your system and your rules. Most important that we procrastinate to do is maintaining a trade journal so always keep a trade journal handy and log all your trades on a daily basis. Good luck
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You didn't say if your 'slippage' was set to 0, 1, or 2. My testing has shown that letting slippage in sim remain at zero is a sure way to believe that you'll be moving to Beverly Hills in a matter of weeks. Keeping it set to 2 will bring you back to reality. Keep on plugging away- it's the only way, or find a mentor that's a really good trader and learn from him.
First off, April was definitely not a "normal" market. Volatility has been over the top crazy for 2 months. Daily ranges have been greatly increased. So if you could survive the volatility (read "stomach the stop loss sizes) then the potential for profits (and losses) were much enhanced.
Second, the transition from "sim" to "live" is a cruel affair. You think you are doing the same trade plan but the anxiety over losses tends to make you (consciously or not) more likely to be overly cautious getting in and too scared to stay the course if the trade seems to be going against you.
My advice (for what it's worth) don't expect the market to always be the way it has been for the past couple of months. And, double check your behavior when you are getting in and out. Are you demanding more "confirmation" than before? Are you bailing out sooner than before?
Hope this helps!
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April was a very nice month for trading. Volatility was falling at a fairly smooth rate. The chart below shows beginning May 12 there is a good chance for a sideways range in the market or maybe a bounce in volatility. Usually once you see it coming, it actually already started. Doesn't mean you cant trade May...Just means you might need to change gears.
There is a lot of good stuff there just in the past few weeks, it shouldn't take a very long to catch up, and it's all about the current market so it's very relevant. I'd advise to start following it from where we are today
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Any short time frame results can be considered an anomaly since market behaviour changes constantly. Its the longer term results that can provide a clearer picture of true results.
That being said, sim results can be very different than live trading results as well since there are so many additional factors that can come into play such as execution speed and fill price and psychological factors.
Only when you have traded live for at least 6 months can those results be considered reilable. But as always markets change results can change too.
Automate your strategy in all markets : Choppy, Uptrend,Downtrend using Market Replay to observe and adjust with a proper money management on it. Learn how to code it or search some coder to do it, here in this forum or some vendor.As said micro futures is a good option to have more margin with the drawdowns.I trade MYM instead of MES ...its moving similar and the losses are less with one contract. Then increase contracts if your account is growing or decrease if not.
You will have an idea testing in market replay exactly the same in Sim with the difference that you can test years/ months in 30 minutes and see his behavior.
Hope this helps. This was my solution.
Snowman:- I've recently started getting my stuff together and I found a volume/price action strategy that I was having great results with in sim trading the ES. I traded nearly every day in April and was making great trades in the mornings for 1-2 points with 2 (sometimes 3) contracts totaling almost 80% return on my sim with a 67% win rate. I was ecstatic that after 6 years, I finally had a strategy and put it use in a sim account that I stuck with, had a plan, executed it, and was getting rewarded for it. Yogi:- Congratulations on finding the strategy. However, let me ask you few questions - this will help you to introspect further.
Did you backtest that stratgy on historical data? If yes, for how many years of data or how many total trades tested?
This will show you that whether this strategy gives result consistenly or its just that specific time period or specific movement giving the positive result. I have seen in the past, that the streatgy is working superb in recent time period, but when we test that in the past, it's not eligible to trade as it doesn't give positive result.
So if you says that you have found system which worked too great in April, as per your SIM trading result, and its not working in May, then I suggest first you do backtesting on historical data - atleast 10 years data or about 5000 trades. This will cover various market cycles and you will see how the stratgy performed.
You may find that the strategy is superb which gives similar results like April month most of the time, and rarely it gives bad result, which are perfectly fine for long term.
If you backtest your stratgy you will get below metrics-
No. of Winning trades
No. of losing trades
Winning Rate (%)
Losing rate (%)
Average winner (points)
Average Loser (points)
Average Winner/Average Loser (Reward:Risk ratio)
Max No. of winners in a row
Max No. of losers in a row
These metrics data will help you to find if this strategy is profitable over long term.
Snowman:- So I continued trading sim until this week where I can't seem to catch a break. Every single day in sim, I was either breakeven or up to +200-$300 each day. Now that I moved to live, I can't seem to find the same trades I was having such great success with. I know it's only been two days of live trading and I'm going to keep at it but my first day was -$100 and today was basically breakeven minus commissions. Yogi:- The last parameter says that there could be x number of losing trades in row.
Ofcourse when you start trading, it doesnt have to be same as bactesting, but you can consider atleast twice the backtesting result. Example - If backtestin shows that there were 7 losers in a row, then should be ready to face 7*2=14 losing trades in row. Alternatively, you can look for Monte Carlo probabilities method to find possible number of losing trades in row.
Snowman:- Trades in April for me were plentiful but now recently in May, particularly since last Friday, I can't find the same type of trades as I did in April. For the more experienced traders, was April an odd month? Does my strategy only work in odd market conditions? Are off days/weeks just going to happen?
I plan to stick with it but its just disheartening after being diligent with live sim and market replay proving my strategy to come to starting off with bad days.
Yogi:- I would be very straight-forward to say that, you are not ready yet if you have tested strategy only on April month's data. One month's data testing using backtest or SIM trading is just not enough.
Based on my experience in market, I can say that System with positive Edge and Money Management are crucial for successful trading. And to find if system have edge ove time, you need to test it on large historical data set.
With current movement on charts, we could see some specific pattern and we consider it as strategy. And it also works on recent market. I have seen it multiple times. But it could be just temporary. It's also possible that system is really great and you may get similar results in 10 out of 12 months, but there could be 2 out of 12 months when system doesn't perform well.
You would not know what is your scenario without testing it on large historical data set.
Regards,
Yogi
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Some days this week have been a lot of whipsaw or (Consoldation) no one can make money when this happens. I'm trying to do 20-25 ticks a day on a live account. Somedays are pretty good, I had a 40 tick trade this week, gave it all back the next day. Trying to work on my plan and be more disciplined. I have to build up my account again after yesterday, it took quite a hit yesterday (All my fault). KevinB
Emmanuel - I began journaling when I switched to a live account this week (only 4 days so far but it's something). I do write down my faults and my wins and why they happened. It actually helped today because I kept getting scared out of trades which I noted in my journal and today. I remembered that today when I turned a medium loss into a small winner. I've been considering starting a journal here to keep my accountable and get feedback.
In the beginning I used the SIM mainly to learn the platform and the different type of orders. It lasted for a very short time, maybe a month. Now the only time I will use the SIM is to test some new kind of trade setup. I am mainly an options trader and playing different scenarios with volatility setups before I commit my money, the SIM is indispensable, BUT only for this reason. Depending on the trading platform/broker combination, the SIM can help a lot in fine tuning your trade selection, your trade entries, and of course, your trade exits. Overall, expect to pay your dues, like all of us have, and your persistency and determination will get through this tough training period. Try using mini contracts and don't loose more than 2.5% of your account in any trade and eventually you will make it. Good luck my friend and welcome to our trading world. All the BEST........
First off, good job for developing a working strategy, if it works for 1 month really well, it's probably a viable strategy for specific market environments.
Just my opinion, March and April were when the market had extreme volatility, so day trading with those volatility by nature has good risk reward ratio as long as you cut losses short and let winners run.
But the catch is this, my gut feel is ur a momentum trader by the fact u did well in April? Because if u are then you may want to readjust, in the sense that by your strategy works for momentum trades but if the markets are mean reverting u will have to have a 2nd strategy to handle these scenarios.
For example what u may need is to figure out what phase of the market are you in? At least to stay out of the unprofitable market environment with respect to your strategy. But otherwise alternatively you could attempt to identify the type of market environment which works really well for you but widen the number of market for you to trade
BTW additional areas u can check out are market seasonality behaviours and how does summer time really trades like.
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There is a big difference in the human mentality whether you trade Sim or Live. - Trading is not about fear and greed as many say - It is chemical in your brain and this come to an expression in pleasure and pain.
So, when you trade SIM is easier to manage the pain as there is really nothing at stake. - If you trade ES try to move to MES and only trade 1 contract at the time.
If you trading system is 100% automated and no decision make from you is involved at each individual trade, them it might more be a matter of that you have curved fitted your system the market condition in April. - As an opinion poll in this forum has showed many traders has found there trading better ( making more money) during the Corona, this is probably due to the much more volatile markets that makes it easier to make profit - That is for most approaches, which does not work well when there is little movements in the markets.
Should be mandatory reading for all newbie threads...
...originates from a similar thread
I find it ironic, but not surprising that this thread is currently the most active thread on the forum. In the almost 10 years that I've been a member, (and @Big Mike will attest to this fact) we've gone through many, many, iterations of discussions on this very topic. It's almost a cyclical phenomenon. Another generation of aspiring traders embarking on what they think is going to be a walk-in-the-park, until they discover that achieving success in trading isn't quite as easy as they had envisioned.
Most of them are under-capitalized, and the majority of them don't know the difference between a stock and a bond. A lot of them believe the market owes them a living, and will blame the market for their lack of success, when in fact they lack the self-determination to succeed. There is nothing novel about this phenomenon. And, there is certainly nothing surprising about the response it is generating.
Other aspiring traders are eager to offer their advice. What's ironic is most of these traders are experiencing the same problems, and are incompetent at trading themselves. Incompetent traders are at a double disadvantage, since they are not only incompetent, but they are unawre of it. Almost 1/2 of them couldn't even pony up the $ to become elite members, most are on SIM and have no skin in the game, and I truly wonder how many of the others are consistently profitable to the point, where they can actually support themselves and a family, from their trading. Yet they are crawling all over themselves to tell-like-it-is; to explain how they have reinvented the wheel, and found the answer to the eternal question.
Their advice is a panoply of retail aphorisms and urban trading myths that have been propagated over the years, and regurgitated to the newbie masses. And, it's the same worthless garbage every time. You have to find your edge! Trade your plan! Find what suits you and makes you comfortable. Find a nice indicator you can settle down with and crank out 4 tics at a time. I haven't heard one expert that was offering advice say, "learn how the markets work" before you attempt to trade it.
What's ironic, Is that you'll never see these "experts" participating in threads about the markets and trading, because they really have little knowledge of how markets function, and little idea of what it really takes to make consistent and scalable profits. But they are very inclined to tell a newbie how to trade, and dispense advice with no uncertainty, blissfully ignorant of their own ineptitude. This only serves to perpetuate the cycle of retail mis-information, and re-cycle uninformed, unprepared traders that provide the winners their fresh and unknowing counterparts.
Most people are unlikely to think highly of anyone whose views they oppose. So when the newbie thinks about which person to listen to, whose advice to respect, and where to get his information, it’s likely that he will choose the one that parallels his views, even though it may not be in his best interest. There have been countless times that @Big Mike and I have tried to steer people in the right direction, but people hear what they want to hear and disregard the rest. And what's sad, not ironic, is that these words will probably fall on deaf ears, or not really be comprehended nor believed, and most assuredly, they will be ignored by most
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Sorry for the expletive that is coming. But this post is fcuking brilliant.
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- Trade what you see. Invest in what you believe -
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Thanks , agree with everything
This thread is for help somebody that needs help. Even the most new trader or master trader can give his opinion to help.
The answer for sure is in some post of this thread to solve his issue of bad trading in april. Filtering is a must when you are taking things,oppinions,strategies,etc from forums...
