I'm about 2 years into trading and I believe I've finally found my niche. I've traded various CME/CBOT products but I keep finding myself back at the ES. I've decided to focus on one product and one style. I've had some pretty devastating losses due to every newbie screw up in the book. I've revenge traded, blown accounts, over-traded, you name it I've done it.
I enjoy being active in the markets and taking more of a scalping approach. I don't care to sit in front of the screen for hours waiting for that perfect set up, this may be the death of me as a trader but I prefer being much more active in the market. I watch the ladder and time/sales and base all of my decisions on this information. I keep a 5 min chart open for general reference but don't run any indicators or trade from the chart. Most of my losers run 4-5 ticks and most of my winners run 3-4 ticks. On occasion I'll get a 6-8 tick winner and unfortunately on occasion I'll have a 20-30 tick loss and completely screw up my week/month etc.
My trading cycle for the past year is, small profit, small profit, small profit, large loss, rinse, repeat. I have a win rate pushing 70% but historically I have let my losers get way out of hand at times. I believe that my style will work because I have thousands of trades under my belt using this style, I can NEVER again allow a large loss. I can NEVER move my stop again "just a tick" and "just another tick".
I'm open to any suggestions or thoughts this community can provide me. I don't know everything by any means and I'm always willing to listen and learn.
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I trade extremely discretionary, therefore I really don't have any rules or conditions on when to enter. There are times I may see price breaking a level in the daily volume profile and I may go with the break but there are other times I'll let the price break the level and attempt a fade trade. I try to get in the flow with the market and let it guide me on my entries. I'm a very short time frame trader and I'm not looking for a big move. If I can take a quick 3 or 4 tick scalp within a few mins I'll take my profit and look for the next trade.
Can you help me out here, because I can't get the math to work using the numbers you gave earlier (I realize they are just estimates, but a tick here or there in scalping can really change things).
From your earlier post...
Winners 3-4 ticks (let's say 4 ticks)
Losers 4-5 ticks (let's say 4 ticks)
.70*4 - .3*4 = 2.3 ticks - .4 ticks commission = 1.2 ticks = $15 average per trade
But if instead your average win was 6 ticks, then that would yield $32.50 per contract per trade, in line with your estimate. Or if your win % is 80% (with 4 tick win, 4 tick loss), then you'd be at $25 average.
I'm always intrigued by scalpers like yourself, and I am trying to understand your basic approach.
Can you tell me what I might be doing wrong calculating your numbers?
If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Sorry I read your question of "net profit" to mean what do I net on average out of a profitable trade. I used $30 since I assumed a 3 tick winner less $4 for commish then reduced it down to $30 for conservatism.
When factoring in losing trades to be honest I'm not really sure. I've just recently "turned the corner" with an above 50% win rate. I also have traded with 3 different brokers over two different machines in the last 6 months and I haven't kept track of my trading statistics in an independent spreadsheet (I think this would be a good idea).
I know that over the course of the past 2 years my average trade has to be negative since my trading capital has been on a decline. My equity curve would be downward sloping but not a consistent drawdown. It would start with a large amount, spike downwards, level off, curve upwards a bit and then spike down again. Only within the past few months have I allowed myself to just be okay to focus on one market (ES) and just go with the flow and stop worrying about looking for setups etc. I have been trying to just buy when the market appears to be going temporarily higher. I'm only interested in what is going to happen in the next 3-6 ticks. I'd like to eventually work up to significant size to make the smaller tick movements worthwhile. That is a big reason why I'm trading the ES. I figure if I'm going to learn a market through and through, I might as well learn a market that I can trade enough size to make my style have enough dollars profit.
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