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I have been trading equities for many years, and currently have a semi automated EOD system trading the S&P 500 with good results. My exposure to the market is only 40% however and I would like to use futures as an opportunity to use the money most efficiently.
I am totally new to futures, as previously I had been "frightened of the unknown". Over the last few months I have been educating myself and I now feel comfortable to dip my toes in. This forum has been a godsend for me. I am starting on the Mini Dax and my goal is 20 ticks a day.
Trading style
Trading Breakouts and breakdowns, trend continuations on pullbacks and potentially some fades on strong support and resistance levels.
Yesterday evening (in Australia was my first evening with real money). I have written up my experience on a private journal which I will share next, but it was an eye opener!
I expect this journal to develop over time. I don't trade every day but I am making a point of doing it as often as possible.
Last night was the first night I traded with real money on the Mini Dax. I made some money but I broke a lot of my rules! On reflection my emotions got the better of me and I kept in the game too long, always wanting to enter another trade. This is clearly something that I need to watch.
The Trade activity log in Sierra charts is not displaying the result correctly, but the bottom line was that I was up 423 AUD dollars or approximately 280 euros which coincided with 48 ticks (or points, they are the same on the Mini Dax).
There was a great run up to hit the magic 10,000 level and most of the gain was from this run up when a position that I opened wasn't closed. (I was having problems communicating between TWS and Sierra, I think it was down to the account orders were going in to was not synchronised between charts. Due to the problems I didn't get the orders in I wanted to so I could have done better I feel.
Rules that I did not adhere to:
I should have tried to validate the technology (Sierra charts & TWS) was working from the beginning and when it wasn't I should have stopped and tried to fix it. I was so worried that I would miss the next big move. THERE WILL ALWAYS BE ANOTHER TRADE!
I didn't quit when I hit my target of 20 points.
I didn't stop when the time hit 9pm (local time).
I am going to score myself on two performance aspects daily on the following to help get me on the right track:
A - Adherence to trading plan rules. 4 - Yes, 2 - Mostly, 0 - did not trade, -2 - somewhat ignored, -4 mostly / fully ignored
T - Target reached, 2 - Yes, 1 - positive result, 0 - did not trade, -1 negative result, -2 maximum daily stop reached or exceeded
This will have the added bonus of forcing me to review my trading log regularly.
Today I scored myself A, -4 and T, 2, RESULT = - 2, so clearly some work to do.
Trading Result = -210 points
Self Performance = -6 (-2 stopped out max, -4 didn't follow rules)
Ok, I am hoping that this happening at the very beginning will stand to me in time (hey, I am looking for positives here), but yesterday's trading performance was abysmal. I didn't follow most of my rules, while I was trading the action was quite choppy and I got stopped out quickly two times in a row before 15 minutes had passed. I ended up just over 200 points down for the day, which was my daily limit loss (which now appears too much).
What went wrong?
The number of positions I chose was inappropriate for the stop distance required - From when I was paper trading I had been entering 4 positions every time without fail. When I lost paper money I could keep going hard and would usually make the money up no problem after enough trades. The logical stops here for my money management rules had me at 20 points away which had me 4 x 20 = 80 points down twice within 10 minutes. I do realise that 4 x 5 point wins will get me my target so it feels like I really over did it here with the number of positions. I like to have two early bankers with two runners, one realistic and one speculative to satisfy my fear or missing out, but I think that after last night I should be using 1 and 2 positions entries especially when the stop is 15+ points away. Action - adjust trading plan, change from automatically entering 4 positions to tailoring it for the stop distance.
I dived in too early - At 5pm Brisbane time you can start trading DAX and Mini Dax. I was sitting ready and willing at 5pm. At about 5.12 pm I was placing my first trade while the signal bar was being drawn. I was counting on a breakup. The bar did not complete the way I thought it would and the action reversed. In hindsight I should have waited until at least some lines of support and resistance were formed and the initial trend for the day had been better established. Action - No trading before 5.45pm and at least some direction / support resistance has been established to start the day. THERE WILL ALWAYS BE ANOTHER TRADE!
I had other things on my mind. We have 2 young children (1 and 3 year old boisterous ruckus makers) and 5pm here coincides with bath time and preparing dinner. It is a practical thing, but when I am not helping out with either of these things, and not making money it weighs on my mind. Action - in line with no trading before 5.45 pm, no trading before children washed and dinner organised (sounds weird to put in here but I am being honest).
I didn't come up for air - after the initial quick stop I just followed through as I would have always done for paper trading, after a loss I was keen to get a win and again I rushed into the second trade. THERE WILL ALWAYS BE ANOTHER TRADE!
I doubted my system and didn't take trades that I should have after the initial one - two sucker punch.
A daily stop of 200 points down for the day is way too much for my comfort level. While I understand that I need room to move, I don't feel comfortable having this so much more than my target now that I am using real money.
Action - revise daily max stoploss to 80 points. If I am running this regularly while chasing 20 points there is something wrong.
What went right?
I still think system still works. In hindsight, had I the diligence and patience to wait, the signals that did arise worked the majority of the time.
I stopped out at my max daily stop (which was too high).
I am no pro, but I have been in similar spots and I think your approach of self analysis and gradual correction is a good one.
This particular comment regarding family definitely strikes home. Don't want the mission toward profitable daytrading to bleed over negatively into family life. Have to know what you are willing to sacrifice. I personally don't want to end up on my death bed regretting throwing away the golden years of parenthood in exchange for any outcome. I have deliberately set cutoffs around my trading activity so I don't get sucked in when there are honestly more imporant (for me, at least) family matters to give my attention to. It's a tough balance but without it the stress and anxiety can compound and weigh on the psyche which is a disaster for trading performance.
down 200 ticks on the fdxm is about $1000- obviously a stressful result.(better than with the FDAX though)
If you use Interactivebrokers they have a dax cfd which allows a much smaller position size and might be a way to learn without losing too much- until you are sure of your method..
I fully agree. Thankfully I have a very supportive partner in life which helps a lot, I am pretty much full time Daddy day care during the day right now so that helps too
Thanks for that I will check out the dax CFD - perhaps it has better liquidity than the mini dax (which can be lacking, especially at certain times of the day).
Trading result = +21 points
Self Performance = 4 ( 2 point for a positive result, 2 points for mostly following rules)
Much calmer affair today. I cooked dinner, kept an eye on the market but didn't step in until things had settled somewhat at home. I waited for the entries, and had the added complications of chop around the 10,000 level but I kept to my system and after 2 losing trades to start with (with only one position each), I followed up with 2 winning trades, one with 2 positions to just nudge me over the target of 20 points.
What went wrong
I could have followed my trading rules a little bit more disciplined / earlier - I would have reached the target earlier.
What went well
The lower position size took the pressure right off. Now I will concentrate on ensuring I have an edge.
Not diving in at the beginning allowed me to read the movement a lot better.
I'm taking tomorrow off, because its St Paddy's day and I plan to meet up with a few other blow ins over here in Australia to reminisce of the green grass of home (I forgot to add that I was Irish).
(I forgot to add that I was Irish).