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My current focus is not necessary winning the most points but rather finding the right way to get a 4 tick stop loss (or 6 or 8 whatever is optimal). Once I can prove a 4 tick stop is possible then I'll be set. On ES this has proven to be difficult. Yesterday I took my setups but what was missing was context. But that's always easier in hindsight. I took 2 longs which would have worked for 2+ pts each but I got stopped out on both because I was slightly early. And the shorts didn't work but at that point I shouldn't have been trading short.
and I did have one "relapse" where I not only "gave it more room" but scaled in. but I did have the sense to use a tight stop on the 2nd contract I added in and both stopped out.
So yesterday was a good learning experience. The bund is going much better and I may go back to real on the bund and keep practicing on ES for another week.
Can you help answer these questions from other members on NexusFi?
Well scalping I was off again but I think I realized what happened. I switched from a 3 tick renko to a 2 tick recently and that's when my trading went downhill. The 2 tick has a lot more noise and the smallest little pullback was more visible and I think that's why I was early. I also traded too close to the middle of the balance area.
However, the swing trade I did worked great. I got +7 & +11 for +18 pts total. That's the first real money ES swing trade I've done in a long time. As I wrote in the explanation for the trade on my blog, it was really based on intuition which was screaming to go short. I hope to develop this further.
Yesterday I forgot to cancel a target at 74. Luckily I was at my PC when I heard the "bing" and I saw. So I immediately put a limit order to get back in the trade. ES stopped several times at 74 overnight and I was thinking maybe that original target wasn't so bad but fortunately I held both contracts for today where weakness continued.
I expected to hit 60 but there is buying propping it up. Since the trend has been so strong it will be slow to die so buyers will be buying pullbacks. I think the market is too far extended for a long so I'll be looking for another short entry.
I also think I'm not selective enough on my scalping, partly cause as I said I'm looking at a faster chart but also I need to be more selective as I am with swing trades..
I'm thinking of doing a webinar to discuss all this so if you're interested let me know.
Market hit 1180 which would have been perfect for a short but with options expiration I wasn't going to try it. I'm seeing some very heavy selling. Pretty cool cause we haven't seen that often lately.
Don't want to bother you, but I think a 4 tick stop loss is impossible.
I mean unsustainable in the long term.
You can find a way to achieve some success using a 4 tick stop loss, but to do it in the long term you have to always be perfect, which is impossible.
@jagui, while I realize that a 4 pip loss is diffiicult to envision as not perfect. I too use an ATM with a 4 pip loss, depending on market conditions, namely how much the DOM is jumping. I posted about this a while back.
Thanks to @Big Mike for setting up the Search Attachments Feature. Made it easy to find the figure & the post.
Basically, I believe that using very tight stops could be used to make a trader profitable, even though the win to loss ratio was only 33%.
R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
I remember saying the same thing to someone else a while ago. But my research tells me it is possible but one has to use the DOM. in the "no bs day trading" book the author trades the treasuries and cuts his loss at -2 ticks. ES is more volatile so I think 4 ticks should be enough. The trick is to be very fast with the DOM and exiting if it doesn't move in the direction of the trade.
My masterplan looks like this:
1 - identify a swing trade setup
2 - identify an intraday trade setup
3 - identify a scalp setup
4 - scalp into the trade and take some off
5 - ride it intraday and take some off
6 - keep a portion on for the swing trade
Now I'm not sure all that is possible. I know in the past whenever I enter a swing trade it often goes 10-20 pts against me. And that's why I temporarily quit doing swing trading because I don't want that much risk. I can never swing 10 contracts if I'm taking a 20 pt drawdown.
The question is how far can we go? if the scalping entry doesn't work then I'll re-evaluate. But I have to find the optimum stop for my style of trading. I've been able to trade 1-2 lots profitably, albeit with "bad" habits. So my focus right now is to lower my risk as much as possible so that I can start increasing my size.
I plan to start a serious study of the DOM, very intensive. I plan to keep one eye on ES and look for the setups I've been trading (approximately 1-3 per day) and focus intensely on the ZN DOM. I've already been recording the DOM and then watching it off hours and that's been really interesting. But part of the difficulty is staying focus and waiting patiently so realtime is best.
Once one can trade profitably with 1 contract, the thing to do is increase size. Let's say one is trading 1 contract with a 4 pt stop. If the stop can be reduced to 2 pts then one could trade 2 contracts with the same risk. With 1 pt stop -> 4 contracts. Obviously there is a limit somewhere, this can't go to 1 tick stop and trade 16 contracts. Or could they? That's pretty much what the scalpers do. I don't want to be a scalper but I want to scalp into my trades to minimize risk.
I've been studying traders who trade between 10 &100 contracts. and this is where my research is leading me.
The traders who trade between 10 & 100 contracts in ES? (why not 20 & 200?)
Using the Delta too?
Let' me understand.You are searching/verifying some kind of correlation between the ZN Dom and the ES move?
Sorry that I wasn't so clear, sometimes my brain runs faster than I can express it in words. When I said traders who trade between 10 & 100, I didn't mean that each trader trades 10-100 I mean each one is trading a size in that range.
I used to believe that if one could trade 1 then one could trade 100. Apparently this is not exactly true. When one trades 100 it can draw attention and has an impact on the market. Even on ES it can have an impact. Why not 200? I don't know. Most large traders don't like to talk about their size (unless they're bragging about it which most likely means they're on sim).
I have my doubts about the usefulness of delta. I've got it on my charts lately but it's for a few simple things: before I enter a trade I like to see the delta going my way. That tells me the market orders are going this direction. I also use it to see if more money is flowing in or out for the day. My personal opinion is that delta in and of itself isn't that helpful, for me it just provides context. But I'm open to ideas. The biggest problem with delta is the smart traders will use both limit & market orders. Delta will show the market orders. So while delta is going up, it could be the smart trader is on the offer and is distributing. Someone seeing delta going up might want to get long. But when the smart trader drives the market down will the delta go negative. And someone seeing negative delta may want to go short, right into another trader who's on the bid.
Sorry I wasn't clear about ZN & ES. I was saying I'd dedicate 10% of my brain to looking for my ES setups and 90% studying the ZN DOM. I'm not looking for any correlations.
I hope that makes it more clear. Thanks for the questions.
