I never knew about pairs trading before. It looks like it's a fairly slow, low risk way to trade from what I've learned about it, and from what I've practiced it so far in after hours trading on more contracts than I'm allowed to for TST.
For some odd reason I think pairs trading is going to be a whole lot of fun. This may be exactly what I was needing to problem with not trading trends right and to keep me busy trading multiple pairs at once before big trades.
Today I made a few thousand on SIM 101. I don't how many exactly because I was down around -$14,000 last night when I was practicing a new trading style with hundreds of contracts.
Today I was only practicing with 15 contracts. I traded pairs all day, and I nailed 6 out of 6 trades.
I'm not supposed to trade the last hour of the day because of the volatility and the lack of time for an overdrawn trade return the trade to break even. Every time I get in in the last hour of the any session the trade goes wrong, it goes the wrong way out of no blue, or it goes my way, but I get stopped out. Just like a mad man from the computer company. Yes, just like that.
I traded the last hour to test drive the pair trade there, and to see for myself what I'd be missing. I made it out of the trade that lasted almost an hour. I was brought down -$900 before breaking even right on the close as the bulls slammed blocks of orders on the market last minute. To me that break even was a profit because losing big bucks doesn't just mean lost cash. It means starting from -$900 down from scratch.
That last trade was a 5 x 10 pair trade with 5 on /ES short and 10 on /NQ long. The other six trades were 5 x 5 trade pairs with 5 on /ES long and 5 on /CL short. The way I made the six trades are the ultimate pairs to trade that way.
I closed somewhere above -$10,000 which was an improvement over the -$16,000 that I was down this morning when I cranked on the "scooter" to begin working down the market.
I'm like how the pair trade is working. I made $1,000+ easily, but I closed a few hundred negative for the day because I ran a trade into last hour which I'm not supposed.
I need to study more pairs more closely to understand their behaviors. I have a list of them. These are going get me through the combine like a breeze. Trust me.
The main thing I need to know about the pairs I will be working with from now on is their correspondences to each other. For instance one side can be grossly more volatile than the other side which is why I lost my $1000 I made in the last hour. I need to fine tune this. There are a few indicators for these that measure pair distance from their mean and so forth.
I didn't trade today, and tomorrow is closed for Good Friday.
I'm so burnt on working in this. 3 years working non stop on trading and 6 years working non stop on a arborist company, and a few years before that working non stop on other things all at a rate of 60-100 hours a week trying to get rich before I'm too ol' so I can get marry and raise some actual human leadership for this place, and I'm still hundreds of thousands in the hole on just the tree business and trading business alone.
I have arrived to my destination with all of this. It's golden streets ahead for me now. I'm just going to take a huge weekend off, and revamp my brain and body, and turn on the power to the rest of my life on Monday.
I have an options trading deal with 2 years in the making that I need to fund from my profits from Top Step Trader which I'll be doing in no time now that I know how to make this prop fund job work right.
+$700 on the day yesterday, but I took off today. I'm just going to rest up, and get up with the CNBC USA crew tomorrow morning after resting up so much. I don't like being out of the loop anyway, so it's just as well I rested up today in prep for the CNBC morning.
I used the pair trade at strategic locations on the charts, and I didn't have one losing trade.
I'm going for the $150k TST account, so I need to get my income up to about double that. In my mind I think about $1400-$2000 is right to make up for any mistakes during the 10 day trial.
I started off the day with the smallest size, and as I accumulated profits, I raised the size of the trades. I think if I start with the larger size, I can pull off $1400 a day. Then I need to catch a few really good trades to make up for the rest to reach my goal of $2000.
I have a few tricks up my sleeve to make up for the remaining deficit. For instance an OCO order on EIA reports is how I'm going to start scalping /CL. That's virtually guaranteed. I think if I put together a few other pairs to pair trade in the futures department, I can make up a little more profit to reach that goal. I think I have a few more ideas to add to this.
Yesterday I pulled in $2,400. The mistakes were a $300 losing trade which was the last trade of the day that ran into the last hour 11 for 12 trades that won.
I make the mistake once in a while of not tending to my target movements. I look away, and price hits my safety target instead of me raising the target until I think price is going to stop. I could make more money that way. Also I make the mistake of letting one side run when it should run without out the other side to hedge it. It hasn't become a costly problem, but it has the potential to do it.
Today I pulled in $4,400 which was my best day since I started trading this way.