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Trading fast markets
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Trading fast markets

  #1 (permalink)
Elite Member
prague, czech republic
 
Futures Experience: Intermediate
Platform: NT7, MT4
Broker/Data: LMAX
Favorite Futures: DAX, Gold, Euro
 
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Posts: 1,517 since Feb 2013
Thanks: 1,739 given, 2,592 received

Trading fast markets

Here we go. I applied for a Combine yesterday and today is my first trading day. I have introduced myself in my first thread now moved from Elite to regular forum, so if you are interested - feel free to check it out. It also includes my pre-combine practice with both methodology and CTS T4 platform.

I am a momentum trader. I like to go with the flow and be done fast. I don't like to nurse winning trades and I despise keeping losing trades on a life support. So I trade with a small stop and large target, not being afraid to be wronged by the market even if it continues to move my way after stopping me out. It's not about direction only, much more important is anticipating volatility and timing the trade.

I am not married to a trading system or an instrument. I use what suits me best and what works best at the moment. I have found success previously trading news releases on Forex market, being consistently profitable. I could still do it, but I have chosen to move up to the professional arena and not be a subject of brokers' manipulations and tricks they play constantly in retails FX, having heated conversation with brokers confiscating profits and promising to have an FSA Ombudsman to go after them. Enough is enough. I traded different styles from 3 pip scalps to trades off daily charts with 500 pips stops. I am most comfortable however with intra-day trading and with fast trades that prove you wrong or right without unnecessary delay. Thus momentum trading in fast moving markets.

The reason I am taking a Combine is first and foremost I want to test myself as a trader, I want to force myself to improve my discipline and patience, and I want to place myself into a more professional atmosphere than trading from home lonely staring at charts and having zero accountability. I love very strict risk management of Combine and I believe it will improve my trading. I also wouldn't mind getting funded with a larger account, since I prefer not to put together a sizeable trading capital myself at this point, having other financial commitments. Perhaps when I am funded and if I like the way it goes I will look at option to trade both PTP and my own funds.

I believe there are two type of people in markets: analysts and traders. First group is much more populous. Most people with technical degree and analytical skills and mindset naturally assign themselves into a first group. These people concentrate on what market did before and trying to find out what it will do next. They find all the reasons to support their argument. They also find all the reasons why they are wrong and they wrong often enough. Another group is traders. These people trade what they see, not what they think. Paralysis by analysis never applies to them. I had started in the first group like most people, having a masters degree in IT and natural aspiration for analysis. It took me a long time to cross the border and get into a second group. I am by no means is master trader and I do have lots of faults like impatience, periodical lack of discipline. However I understand them and control them as much as I can.

Trading plan.
It is very simple. I trade with momentum. I start my day by doing a basic top-down analysis from daily to trading time frame. I mark major support and resistance zones and channels. I don't use any predictive indicators or oscillators. I use EMA 21 for general guidance and I use zig-zag for anchoring and knowing sizes of rotations and legs. I trade normally from just one chart but currently I use a secondary chart with range bars and Keltner channel to look inside bars of my main chart.
I have decided to trade Gold for the Combine, because this is the most appealing market right now with shocking volatility and huge swings. I have chosen 2 minute GC chart as my trading chart and 2 ticks range chart as my peeking-inside-candles chart. I use EMA21, 50 ticks zig-zag and volume on my 2 minute chart and 20/20/4 Keltner channel on my 2 tick range chart.

I have just one setup. I establish the direction of market sentiment by comparing recent rotations on 2 minute chart, which must be at least 50 ticks in size (zig-zag does it for me). I want to see a current rotation to be in the same direction as a previous one, so to play a reversal of sentiment I need to see one rotation completed before I will enter on next one. My trigger bar is a large 2 minute bar with little or no wick in a direction of sentiment. For current volatility is should be 20-30 ticks tall at least. During quieter times I would settle for at least 15 ticks. I enter with a stop market order 2 ticks above high or below low (for up and down markets respectfully). My stop is 10 to 20 ticks wide depending on volatility.

Normally I use 10 ticks even if market making large swings. I only opt to 20 ticks if price discovery is malperforming and spread is jumping, like it was last two days. I still try to decrease my exposure as soon as possible by reducing stop and putting to break even as I am 10 ticks in profit. If I use 20 ticks stop I use 2 times smaller position size. That simple.

I strive to trade less. This method allows me to take just few trades per day. I look to trade 3 to 5 trade per day tops and maximum 3 full stop losers. Then I just stop. Even if I had winning trades that day I stop after 3 losers, as it means either I can't read the market or market is too erratic.

I target 50 to 100 ticks depending on recent rotation sizes (I look for no more than 70% of rotation). I look to add to a winning trade once it is at BE and I have a new signal - another strong closing bar. Therefore I never risk more that just 1 position.

For 150k Combine I have chosen 5 cars position as my base position. Relatively large DLL can be deceptive and the Max DD is only 1.5 time of it, so it's foolish to risk a full DLL per day unless a sizeable cushion of profit is already established. Certainly not at the beginning of Combine. I will start first day with 1 contract positions striving to make some cushion to move to 2 contracts per trade. If I have a losing day and I stopped myself, next day I go down one car on my base position until my cushion is re-established that day or later. I will only trade maximum of 7 cars as a base position by the second half of the Combine when a large profit is already there, allowing for 1 scale-in. Normally I will use 5 cars as a base and allow 2 scale-in 5 cars each. (In reality last one will be just 4 cars as T4 has funny ways of calculating exposure but I don't care). This tactic will allow me survive much longer than I would with an inflexible position sizing.

20 day Combine required average of 800 usd net per day profit. In reality it can be as low as 400 as you can trade 40 trading days, not 20. But let's leave as a backup plan. My ambitious target is to look for 3100 usd per day target at which I stop trading. This figure assumes I trade with 5 cars base position size, I have 50% winning day rate and my losing day is 1500 and I need to make 800 per day, therefore 3100 will cover 1500 of losses and still make 1600 per two days. This is of course very simplistic approach and I do plan to have much less losing days than 50% and have few or non 1500 losing days, but I need to put some sort of boundaries in place.

Here I am, hope you weren't bored to death by reading it and let's enjoy this ride together!

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https://futures.io/trading-journals/27004-trading-momentum-150k-20d-tst-combine.html#post320694

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Last edited by xelaar; May 29th, 2013 at 02:58 PM.
 
  #3 (permalink)
Elite Member
prague, czech republic
 
Futures Experience: Intermediate
Platform: NT7, MT4
Broker/Data: LMAX
Favorite Futures: DAX, Gold, Euro
 
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Posts: 1,517 since Feb 2013
Thanks: 1,739 given, 2,592 received


The first day is behind me now. Despite being a live trader before trading up to 30 contracts (lots) at a time, I had a bad night sleep before the Combine start. It felt like a high school exam! I knew I know the stuff but just need not doing things stupid. To reinforce it I have decided to start with just 1 contract and all the rules as written above. I.e. max 3 stop outs, etc. Well, gold was more less swingy during London session and I managed to book 16 ticks on two trades each. One of those trades could do 50 ticks but the move was not convincing. I should hold at Break Even of course but I wanted to get some cushion in. Then more trades in, all break even, some with slippage, from positive slippage of 1 tick to negative 2. I am happy about being protective of the trades as most of them would stop me out. During US session there was not much momentum continuation. Just one trade could again make me 50 ticks but likely to stop out at break even before that. Another 7 ticks gain, then bar reversed. And then I stopped. Still up 300 on the day after commissions. Tomorrow I look to move to 2-3 contracts given the market cooperation. And definitely less trades.

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  #4 (permalink)
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xelaar View Post
The first day is behind me now. Despite being a live trader before trading up to 30 contracts (lots) at a time, I had a bad night sleep before the Combine start. It felt like a high school exam! I knew I know the stuff but just need not doing things stupid. To reinforce it I have decided to start with just 1 contract and all the rules as written above. I.e. max 3 stop outs, etc. Well, gold was more less swingy during London session and I managed to book 16 ticks on two trades each. One of those trades could do 50 ticks but the move was not convincing. I should hold at Break Even of course but I wanted to get some cushion in. Then more trades in, all break even, some with slippage, from positive slippage of 1 tick to negative 2. I am happy about being protective of the trades as most of them would stop me out. During US session there was not much momentum continuation. Just one trade could again make me 50 ticks but likely to stop out at break even before that. Another 7 ticks gain, then bar reversed. And then I stopped. Still up 300 on the day after commissions. Tomorrow I look to move to 2-3 contracts given the market cooperation. And definitely less trades.

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I, like you, am a momentum trader , I generally watch gold and oil..but the last two days I have only traded Gold on paper (but oil live). I have made some great wins on Gold..but it actually seemed too volatile and too fast to trade live right now. The meltdown has caused some pretty chaotic moves. I'm impressed that you would choose to trade this instrument considering the current conditions.

Failure is not an option
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  #5 (permalink)
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prague, czech republic
 
Futures Experience: Intermediate
Platform: NT7, MT4
Broker/Data: LMAX
Favorite Futures: DAX, Gold, Euro
 
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Posts: 1,517 since Feb 2013
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lancelottrader View Post
I, like you, am a momentum trader , I generally watch gold and oil..but the last two days I have only traded Gold on paper (but oil live). I have made some great wins on Gold..but it actually seemed too volatile and too fast to trade live right now. The meltdown has caused some pretty chaotic moves. I'm impressed that you would choose to trade this instrument considering the current conditions.

Well these conditions favor my method. Yesterday I had to trade with 20 tick SL due to rogue spreads and bad price discovery. But if days like yesterday would continue I would make Combine profit target during this week I only risk 10 or max 20 ticks and moves like yesterday could yield 300-400 ticks with no pull backs. 30-40 to 1 risk reward. Can one wish any better?

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  #6 (permalink)
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west palm beach florida usa
 
Futures Experience: Advanced
Platform: ninja trader
Broker/Data: Optimus Futures/ Rithmic
Favorite Futures: Cl, TF
 
Posts: 719 since Oct 2011
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xelaar View Post
Well these conditions favor my method. Yesterday I had to trade with 20 tick SL due to rogue spreads and bad price discovery. But if days like yesterday would continue I would make Combine profit target during this week I only risk 10 or max 20 ticks and moves like yesterday could yield 300-400 ticks with no pull backs. 30-40 to 1 risk reward. Can one wish any better?

I agree with you for the most part..since on Friday I made over 200 ticks on Gold (on SIM). But I noticed if timing wasn't absolutely flawless..the moves could bounce 20 to 30 ticks against you in a few seconds...So yes, I love strong speedy moves, but I found it risky to go live..mainly because I feared with the huge volume that maybe some of my stops wouldn't trigger or slippage could be too great.
Anyhow, I wish you the best in your combine.

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  #7 (permalink)
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prague, czech republic
 
Futures Experience: Intermediate
Platform: NT7, MT4
Broker/Data: LMAX
Favorite Futures: DAX, Gold, Euro
 
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Posts: 1,517 since Feb 2013
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lancelottrader View Post
I agree with you for the most part..since on Friday I made over 200 ticks on Gold (on SIM). But I noticed if timing wasn't absolutely flawless..the moves could bounce 20 to 30 ticks against you in a few seconds...So yes, I love strong speedy moves, but I found it risky to go live..mainly because I feared with the huge volume that maybe some of my stops wouldn't trigger or slippage could be too great.
Anyhow, I wish you the best in your combine.

That is true and this is why I take entries very carefully and protect to BE right away. I dont thibk we will have volatility that great for a long time but a regular move on gold 50 ticks good is what I am planning for.

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prague, czech republic
 
Futures Experience: Intermediate
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Broker/Data: LMAX
Favorite Futures: DAX, Gold, Euro
 
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Posts: 1,517 since Feb 2013
Thanks: 1,739 given, 2,592 received

First report from yesterday

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  #9 (permalink)
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prague, czech republic
 
Futures Experience: Intermediate
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Broker/Data: LMAX
Favorite Futures: DAX, Gold, Euro
 
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Posts: 1,517 since Feb 2013
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2nd day completed

I am more satisfied today. I took only 3 trades, market was very docile and very thin during London hours. First trade was a loser for 10 ticks, nothing could save it - it triggered entry and fell to SL right away. Second was more of a lucky one - captured 15 ticks, I have closed on stall and it reversed. No more opportunities until Comex open. I got in and should be getting 50 ticks at TP but closed manually at +33. Need to let good trades work better.

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Very little trading opportunities in markets but I am very satisfied by not doing trades out of frustration, not getting chopped up (my manual simulation of Combine a week ago teached me a lesson of getting chopped up on low vol), not overtrading, and following my plan.

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Futures Experience: Intermediate
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Favorite Futures: DAX, Gold, Euro
 
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Posts: 1,517 since Feb 2013
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How not to trade out of frustration


I have got a new MultiCharts 8.5 demo from Zenfire and fire it away if I need to release the urge instead of doing damage to Combine or live accounts.

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