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Zen & the Art of The Small Account


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Zen & the Art of The Small Account

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  #891 (permalink)
 PandaWarrior 
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Private Banker View Post
I've been trading CL like this for years and feel it's the best way. I scale out @ .15 and .30 and let my remaining 1/3 trail letting the market take me out. It allows you to participate in the big moves that CL often provides while booking profits and removing risk along the way. If I get 2/3's filled, I'm guaranteed to make a profit on the trade even if my remaining 1/3 is a full stop out. I don't begin to trail my last 1/3 until my 2nd target of .30 is hit of course.

Hopefully this is helpful in determining your money management and strategy.

Cheers,
PB

I'll do this when I have more money to play with. I cannot trade a 3rd contract at the moment. In general though, I think this is the ideal way to trade. Scale out in thirds.....

Simplicity is the ultimate sophistication, Leonardo da Vinci


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  #892 (permalink)
 Lornz 
Oslo, Norway
 
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aztrader9 View Post
Well today was the wrong day to test big targets, but I still gave it a go. After the slow opening, I thought we were either gonna blast out to the topside or just trade in a range which is what ended up happening.

That being said, price was fairly structured fairly decently and I managed to make a profit even with having to modify the profit targets.

There were two trades that could have given me 50+ on them but I did not have the nerve to take one and I completely missed the first one which was a short off the top of the morning range. The other one was a long that I talked myself out of....but was a beautiful long......

Other than those mental errors, I had one mechanical error that cost me two ticks. My DOM reset itself (again) after a service disconnection and instead of placing a stop order below the market, it fired a trailing limit order at the market. I instantly closed the position and fixed the DOM to once again place stop orders.

After the first ill advised loss, I was forced to go back to one lot and I went WLWW to get back to above zero for the day. After that I went 2 lots with smaller targets on both lots due to the narrow range. I kept notes on the MFE on these trades and a 20-25 tick target would have been good....So I left some money on the table here.

My last trade I used the scale out method and took a net of 46 on the trade. I had some negative slippage on both the entry and the exit.

I ended the day net +74 ticks between the singles and double lot trades. Not bad considering the range was only 148 ticks top to bottom and it spent the majority of the time in between that. Of course it could have been better had I taken the two trades that actually ran but I am satisfied.

I think if I can maintain what I did today and hold the runners next week, I will have a very nice week come Friday next week. I rather like the idea of a runner or two most days.

Everyone have a great Easter weekend.

Cheers.

74 ticks is respectable, it seems you are on the right path. It will be exciting seeing how next week plays out. Good luck!

I had similar problems with NinjaTrader btw, I think it is a far too unreliable platform to trade from. If you continue your path to prosperity, you might want to get a more "professional" software.

Happy Easter!

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  #893 (permalink)
 PandaWarrior 
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Lornz View Post
74 ticks is respectable, it seems you are on the right path. It will be exciting seeing how next week plays out. Good luck!

I had similar problems with NinjaTrader btw, I think it is a far too unreliable platform to trade from. If you continue your path to prosperity, you might want to get a more "professional" software.

Happy Easter!

I think I am too....as for trading, I chart with NT and trade on T4....I would much rather trade on NT at this point. Its order handling capabilities are far superior imho.....but i am biased as I own a lifetime license....oh well....My favorite function is the chart trader and the ATM strategies....makes it very easy to build and manage order entry and exit functions. I am sure there are other more robust and perhaps easier to use but at the moment, its what I have to work with....

Thanks for the encouragement.

Cheers

Simplicity is the ultimate sophistication, Leonardo da Vinci


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  #894 (permalink)
 Big Mike 
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aztrader9 View Post
Everyone have a great Easter weekend.

Cheers.

Happy Easter!

Mike

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  #895 (permalink)
 Lornz 
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aztrader9 View Post
I think I am too....as for trading, I chart with NT and trade on T4....I would much rather trade on NT at this point. Its order handling capabilities are far superior imho.....but i am biased as I own a lifetime license....oh well....My favorite function is the chart trader and the ATM strategies....makes it very easy to build and manage order entry and exit functions. I am sure there are other more robust and perhaps easier to use but at the moment, its what I have to work with....

Thanks for the encouragement.

Cheers


Ok, my mistake. I've had some untimely disconnects with NT, and I've also experienced pressing the "close" button and having NT reverse my order. All in all, NT is very flexible, but as time passed, I grew increasingly worried about stability. I switched to CQG and haven't looked back. You have to be consistent to justify the cost, though.

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  #896 (permalink)
 tderrick 
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Hey, AZ. What proportions are you using for your scaling out with two cars?

I want to get to this point as quickly as possible...

tia


AJ
Nashville, Tennessee


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  #897 (permalink)
 PandaWarrior 
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tderrick View Post
Hey, AZ. What proportions are you using for your scaling out with two cars?

I want to get to this point as quickly as possible...

tia

For now, 1st lot off at 15, second at 50 and trail stop under MAJOR swings......

When I can swing three lots, it will be just like Private Banker.....1st off at 15, 2nd at 30 and the last undefined....maybe 100-250 ticks and trail the stop....this is down the road a bit and probably not this year. The risk is to large on a three lot trade and it will be to large for quite some time. I still struggle a bit with the two lot trade but thats how you make money....

I read a story somewhere about a quote on the bathroom wall at the Chicago Merc...it said, "If you're not sweating while in a trade, you're not trading big enough." Two lots makes me sweat...when its no big deal, I'll go to three.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #898 (permalink)
 tderrick 
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aztrader9 View Post
For now, 1st lot off at 15, second at 50 and trail stop under MAJOR swings......

when its no big deal, I'll go to three.




I Can't wait until one car is no big deal !! lol


AJ
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  #899 (permalink)
 PandaWarrior 
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I thought I would use the day off to do some reflection and play around with some ideas I have had over the last couple of weeks.

First of all, the idea of holding a trade for 50+ ticks is both exciting and daunting. But I held a trade yesterday for what seemed like forever and now I know I can do it.

Some caveats to this though. 1. Never put a big target on a counter trend trade. 2. Always put a big target on a trend trade. Maybe 50 is to small for this but for this next week, 50 ticks is my magic number. 3. In light of rule number 1, is it necessary to take counter trend trades?. The answer is maybe. IF and its a big if, there is room to have target large enough to justify the risk on the trade, then yes. If not, then no. And then, take off the trade regardless of profit at the point where I anticipate the trend resuming. No sooner, no longer.

After spending some time thinking while otherwise engaged in non trading activities, I am comfortable with sitting in a trade longer than 22 seconds which is about how long I've wanted them to last. Here's the thing, smaller profit targets are hit sooner, but that also means you are looking for a new trade sooner thereby exposing yourself to the market once again. Better to stay with a sure thing than book small profits and perhaps lose them the next trade.

So I spent some time today looking at the last few days of charts with an eye toward seeing larger moves. I tried on a few different MA's. A few different indicators (No one suggest super trend here, I've done that already) and finally some different time frames and bar types.

Conclusion, I am sticking with what I have but I found one thing of interest. HeinkenAshi bars. I did some reading on these, understood what they were doing and applied them to my range chart. The result is interesting to say the least. They filter out noise or at least appear to and using my normal thought process, am able to see entries and more importantly, exits and stops much clearer. Of course this is on a static chart and so could be useless in real time but I will sim one day on one chart with them to just see how they perform in real time vs my normal range chart. Another thing I like about them, sometimes the stop is much smaller than my standard stop size....this could be a huge win all by itself.

So my set up is this:

12 range bar
HeikenAshi indicator (if these turn out to be useless in real time, its a simple matter of removing them and resume trading with normal range bars. Everything else will remain the same)
50SMA
8SMA (seems to work well with the HeinkenAshi bars as opposed to the 15SMA on normal range bars)
Fibs. (These are primarily for daily range awareness as opposed to actual trading aids)

Rules:
1. Wait for pull back to 50SMA

2. Wait for price to form a trend color HeinkenAshi bar, enter at the body (not the wick) of the trend direction. This should also close with trend beyond the 8SMA as well....8SMA should be color of trend.

3. If price moves beyond 50SMA, price could be reversing trend direction. In this case, price must move away from the 50SMA in the counter trend direction and then pull back to the 50SMA to have a valid entry. Price should close beyond the 8SMA in the new trend direction and beyond the body of the most recent HeikenAshi bar that was part of the pull back leg.

4. 2 lot trades. [email protected], [email protected] Move stops with major swings.

5. 14 tick initial stop....adjustable to accommodate the swing that created the entry signal. Max stop size = 20 ticks.

6. Hold the trade. Use either the target, the major swing stop placement or worse case scenario, price closes against the 8SMA on a HeikenAshi bar.


This is the first time in two years I've really been able to condense and make rules super simple. The part that pulled it all together was @MWinfrey's requirement there be separation from the MA to take the pull back. This kills the chop issue and clarifies the trend issue.

The next piece of the puzzle was the larger target requirement which demanded I consider that each trade MUST have big tick potential....this meant looking at big pull backs.....hence the requirement that price pull back to the 50MA BEFORE I consider a trade. Everything else can just go by. This means that some days, I may get only one or two entries....thats ok because if I can capture 50 ticks the majority of the time, I am a happy camper......no, I would be a deliriously happy camper.

The final piece of the puzzle clicked in for me this week with the realization that fewer larger trades trumps many smaller trades. The truth is, many small multi lot trades might make more money IF you could trade perfectly every day. I have and I think many other people have proven this is not possible. So with a small stop of 20 ticks or less and you give yourself the chance of a large trade, you can withstand a couple of stops and still make money on the day taking only a few trades. For instance, yesterday there were 5 trades using these rules. Not all made 50 ticks but one did and the trailing stop kicked in on the rest and the net was 194 ticks on the second lot and 75 on the first......for a total of 269 ticks possible. On a day where the total range was 148. I netted 74 ticks total. Not bad but far less than possible. Trading well enough to only capture half the 269 is fantastic in my book.

On narrow range days, this will probably get me to break even or slightly negative or positive on the day. But there are enough days just as good or better than yesterday to make tons of money on CL. The trick is to take advantage of them and make sure the narrow range days are as close to BE as possible.

So next week I will be far more strategic in my trade philosophy in terms of looking for the big trade potential. I will take advantage of every one that I see in real time.

Take a look at the chart and see if I have overlooked something important.....

Cheers

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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 bluemele 
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AZ,

I think you will find HA charts kind of a waste of time. Just an MA cross I believe as I have programmed one w/ MT4, but can't remember what the exact code was.

Put an underlying line type or a dot for the 1 moving average to see where the bars close or have been. They look brilliant w/ a static chart, but harder to trade in my opinion or really just an MA cross that I believe is weighted or something.

Keep us posted and good comments.

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