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E-micro S&P 500-sim...
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E-micro S&P 500-sim...

  #1 (permalink)
Portland, OR
 
Trading Experience: Beginner
Platform: NinjaTrader
Broker/Data: NinjaTrader/Jigsaw
Favorite Futures: Emini ES
 
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Posts: 4 since Oct 2017
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E-micro S&P 500-sim...

Hi all,

This is a test post to get familiar with the layout as I begin posting my journal here. Looking forward to starting to be open and honest with everyone and myself as the journey proceeds. In my next post, I'll be outlining my trading plan and ideas, along with trades I've taken and how they've worked out.

Looking forward to feedback on any part or parts of my trades or ideas.

Cheers,
dye

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  #2 (permalink)
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  #3 (permalink)
Portland, OR
 
Trading Experience: Beginner
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Broker/Data: NinjaTrader/Jigsaw
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Posts: 4 since Oct 2017
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E-micro S&P 500-sim...


Hi All! Here is a little more information about what I've been doing...

Right now, I am a stay at home dad with a 2.3 y/o that I've been home with since he was born. I am learning verrrrrry early in the AMs (up at 445 or so) and while he naps.

Method: Looking for intraday turning points (absorption/flush out of orders/liquidity vacuums) and intraday breakouts (with increased auction velocity on the tape).

Risk: This is variable. I know everyone says "risk 2 points or risk x%" but I've been working with a slightly more flexible risk schedule while always understanding my approximate risk and my exposure level. I know this is currently easier for me because I am only trading sim so I am very curious how I operate under live conditions.

Position size: Here is something I picked up from the institutional videos produced by the prop firm that makes sense to me and I'm going to start my explanation with a question that helped me get my head around it: If you KNEW with extremely high certainty that your trade was going to move 1 tick, 3 ticks, 5 ticks, 85 ticks, etc, during the next short amount of time, wouldn't it make sense to really size up and take advantage even it was only for 1, 3, 5, etc. ticks? Put another way if you risk 1% of your account per trade and you come across a situation where you're 80-90% sure the market is going one way, doesn't it make sense to risk 2%? or 4%? or more?

Trading education: Aside from blowing out 3 accounts over the past 10 years and "learning" from those episodes, I recently signed up through Jigsaw w/Ninjatrader and have also purchased their institutional order flow package. This seems to not only help me understand market movements better but gives me much more confidence with my trades. I feel it also alleviates a lot, not all, fear for me and replaces it with understanding of how markets move. When I have a losing trade, I review to make sure I am understanding what is going on and where my error was in the trade. I also understand that sometimes s&*t happens and I can have good execution and the market participants moved the market against me. So be it.

Here are a couple trades from today in the Mirco ES. I tried to short a little early, closed my position then reshorted after the turn at the top of the move. There is also a
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  #4 (permalink)
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Welcome! I would suggest you do not trade sim, if you have been around the trading world more than a few months. It is a real blessing that the e-micros are available now. They are perfect for taking small risk, but having enough risk in the game that it counts. Sim is completely unrealistic and more harmful than helpful, when a contract like MES is available.


dyeprod1 View Post
Method: Looking for intraday turning points (absorption/flush out of orders/liquidity vacuums) and intraday breakouts (with increased auction velocity on the tape).


dyeprod1 View Post
Here are a couple trades from today in the Mirco ES. I tried to short a little early, closed my position then reshorted after the turn at the top of the move. There is also a
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Why did you cover for a point? If you saw something, cool. If you covered because you had a point, then of course you know, that's not cool.

Yes, shorting worked today. But looking to buy after strong open will often give you more upside potential. ATHs are tricky, so it's kind of a wash day. But, at ATHs you have no real technical frame of reference as you're in uncharted waters. Shorting this is just not the best idea.


dyeprod1 View Post
Put another way if you risk 1% of your account per trade and you come across a situation where you're 80-90% sure the market is going one way, doesn't it make sense to risk 2%? or 4%? or more?

4% is a lot to risk on a day trade, but for a small account then I suppose it's not a lot. But yes, you're right. Knowing how to size is a very tough problem but it's the only way to get large enough chunks to survive. When a trade is working for you, you'll always wish you had more size on. Gaining the confidence to increase your risk when you see something you can identify as an unusually good opportunity is very hard, but necessary. But you must be absolutely certain of your edge, and be sure that it's not just risking more because you're bored, or for any other reason.

That being said, I think an even better approach that you can even combine with this is to allow the market to work for you after you get in a trade which is going your way. It makes no sense to risk double your normal size and then cut the trade for no good reason after 2 or 3 points of profit. Let the winners run. This is the hardest thing to do in trading, IMO. But how many times have you taken a 3 point profit and seen the market go another 10, 15, 20, 100 points your way? Traders as a whole lack the patience to allow the market to work for them, but that's one of many reasons why most fail. So, yes, size up, but also look at the larger picture and let the market work for you after you put your capital at risk. When it's handing you money, keep your hand out and let it pay you. Yes, you can take this too far. Recently I was up 70 ES points on multiple contracts and gave about 70% of that away. But, closing for 5 points profit on a trade which has a good potential to run 20 is worse than letting it run 20 and then giving back 10. Never letting the winner run in the first place will lead to far more problems than letting them run too long, IME.


dyeprod1 View Post
I feel it also alleviates a lot, not all, fear for me and replaces it with understanding of how markets move.

This is important, and congrats. I've reached the unfortunate conclusion that a very high majority of traders don't understand what actually moves a market. It's not that hard really, but they just don't get it. And they can't be told either, they have to want to actually know. Seems like you have taken that important step.


Last edited by josh; October 28th, 2019 at 11:49 PM.
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  #5 (permalink)
Portland, OR
 
Trading Experience: Beginner
Platform: NinjaTrader
Broker/Data: NinjaTrader/Jigsaw
Favorite Futures: Emini ES
 
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Posts: 4 since Oct 2017
Thanks: 0 given, 8 received

Josh, first I want to say thanks so much for the constructive feedback. I understand how valuable time is and really appreciate the insightful response(s)! Looking forward to continuing dialogue as my trading journey continues!



Quoting 
I would suggest you do not trade sim, if you have been around the trading world more than a few months. It is a real blessing that the e-micros are available now. They are perfect for taking small risk, but having enough risk in the game that it counts. Sim is completely unrealistic and more harmful than helpful, when a contract like MES is available.


Makes a lot of sense to me! I'm getting back into trading and only have been for the last month or so. I'm also getting used to Ninjatrader and the DOM's order entry/exit capabilities. I will be going live soon with micros then ultimately e-minis.


Quoting 
Why did you cover for a point? If you saw something, cool. If you covered because you had a point, then of course you know, that's not cool.

Great point and you're right. I'd like to say that I saw the end of the move and that was why I covered but it was a combination of seeing the bids hold and fear. Honestly, mostly fear. It was like the bids holding shortly after entry gave me the excuse I needed to give into the fear of the position moving against me.


Quoting 
Yes, shorting worked today. But looking to buy after strong open will often give you more upside potential. ATHs are tricky, so it's kind of a wash day. But, at ATHs you have no real technical frame of reference as you're in uncharted waters. Shorting this is just not the best idea.

Understood, which is most likely why I also "needed" two tries until I was able to find the short term top. I was strictly watching the DOM from Jigsaw that shows market orders executing into the bid and offer. There are certain similar repeating patterns that can help gauge exhaustion in a market, similar to volume profile from what I understand. You don't know 100% of the time when something will happen but you can have a great deal of confidence in some future price movements. Looking at your avatar and frame of reference example, I'm guessing you are a proponent of volume profile? I've also studied this and am somewhat familiar with the concepts involved.

Also out of curiosity, do scale in or out of trades?


Quoting 
4% is a lot to risk on a day trade, but for a small account then I suppose it's not a lot. But yes, you're right. Knowing how to size is a very tough problem but it's the only way to get large enough chunks to survive. When a trade is working for you, you'll always wish you had more size on. Gaining the confidence to increase your risk when you see something you can identify as an unusually good opportunity is very hard, but necessary. But you must be absolutely certain of your edge, and be sure that it's not just risking more because you're bored, or for any other reason.

That being said, I think an even better approach that you can even combine with this is to allow the market to work for you after you get in a trade which is going your way. It makes no sense to risk double your normal size and then cut the trade for no good reason after 2 or 3 points of profit. Let the winners run. This is the hardest thing to do in trading, IMO. But how many times have you taken a 3 point profit and seen the market go another 10, 15, 20, 100 points your way? Traders as a whole lack the patience to allow the market to work for them, but that's one of many reasons why most fail. So, yes, size up, but also look at the larger picture and let the market work for you after you put your capital at risk. When it's handing you money, keep your hand out and let it pay you. Yes, you can take this too far. Recently I was up 70 ES points on multiple contracts and gave about 70% of that away. But, closing for 5 points profit on a trade which has a good potential to run 20 is worse than letting it run 20 and then giving back 10. Never letting the winner run in the first place will lead to far more problems than letting them run too long, IME.

This is extremely hard for me. I think mostly because I'm not too experienced and I really want the money wins...regardless of how big or small. I've also read about and understand following the trend until it ends-I will never give myself the opportunity to capture a large move if I don't risk the trade moving against me. I DO believe this to be 100% true, it's just really hard for me right now.

That being said, I was thinking about this point and if we know the market auctions up and down on the way from our entry to our target, isn't it optimal to ring the register for lunch money while building a core position to hold for the car payment? If you can use LIFO for entries/exits, you could size up and down as the market auctions during the "70 point move" in order to capture points on the way. That way you, in theory, wouldn't give half the position away. Maybe you end up with 3/4 of the max potential profit instead of half. As you know, at $50/pt for the e-mini, you'd be eating some nice lunches wouldn't you?

I'd really like to hear your thoughts on this if you don't mind.


Quoting 
This is important, and congrats. I've reached the unfortunate conclusion that a very high majority of traders don't understand what actually moves a market. It's not that hard really, but they just don't get it. And they can't be told either, they have to want to actually know. Seems like you have taken that important step.

Thanks! It's taken a LOT of error and some trials along the way.

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  #6 (permalink)
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dyeprod1 View Post
I'm guessing you are a proponent of volume profile? I've also studied this and am somewhat familiar with the concepts involved.

I not a proponent as such, but yes, market auction principles drive or play a role in most every trade I take.


dyeprod1 View Post
Also out of curiosity, do scale in or out of trades?

Both -- the stronger the conviction of a market, the more opportunity to add; the more balanced a market, the more opportunity to scale in and out. If the trade looks great, I'll get in with bigger size. If it starts working and conviction is one-sided, I'll add; if it begins to fizzle and looks questionable, I'll cut some or all of it. I try to let the market dictate the strategy, instead of having a one-size-fits-all-scenarios approach.


dyeprod1 View Post
This is extremely hard for me. I think mostly because I'm not too experienced and I really want the money wins...regardless of how big or small. I've also read about and understand following the trend until it ends-I will never give myself the opportunity to capture a large move if I don't risk the trade moving against me. I DO believe this to be 100% true, it's just really hard for me right now.

It's hard for everybody, not just you. Losing open profit is harder than a net loss, in fact, for humans in general. If you hand over money to someone to play a game with a chance to win, you're disappointed if you lose, but when you play a game and someone hands you $1000 and then takes away $800, that is even harder to accept, because you had the opportunity to "take the money and run." It's this "taking the money and run" mentality that is dangerous.

You really have to just not care about the money. Not in a reckless way though. Ask yourself, if you're happy with 1 or 2 points, why are you even playing the game? Fear and greed drive everything. Fear leads to taking a 2 point profit. Greed leads to ignoring information which tells you that your trade isn't working and that it's time to get out. Understand both and recognize in yourself when you're being greedy, and when you're being fearful, and try to remove the veil of subjectivity to see the market for what it is. Doing so when money is on the line is hard enough, but when the money matters, it's impossible. So, try to view the market for what it is, and while you're in the trade, the money should not be on your mind. Hard? Yes.

When you're long (which you should be 80% of the time the last few weeks), and you want to get out, ask yourself, "would I short here?" If not, then stay long. The market has a tendency to run. Have you ever patiently waited for a trade, maybe a short after a dip is bought, and you take it at just the right place... and then it grinds a little against you, and then before you know it, it keeps going... That's when it will go another 5-7 points, and really wash people out. So, if you're on the right side, then think about those people and how they're positioning. They will bail after a 3-4 handle loss, and that money goes directly to you. Don't be afraid to let them pay you.


dyeprod1 View Post
That being said, I was thinking about this point and if we know the market auctions up and down on the way from our entry to our target, isn't it optimal to ring the register for lunch money while building a core position to hold for the car payment? If you can use LIFO for entries/exits, you could size up and down as the market auctions during the "70 point move" in order to capture points on the way. That way you, in theory, wouldn't give half the position away. Maybe you end up with 3/4 of the max potential profit instead of half. As you know, at $50/pt for the e-mini, you'd be eating some nice lunches wouldn't you?

I'd really like to hear your thoughts on this if you don't mind.

You basically just said that the optimal thing is to catch every/most peak/valley in the direction of the trend/move. Well, I can't argue with that being optimal, but catching a big move itself can be hard--selling the highs and buying the lows along the way is harder, and prone to error (selling before a good high is put in, then adding too aggressively too high and seeing it move against you after you add, ...). IMO, focus on being able to position for and hold a trade overnight to start with, before you think much about scaling in this scenario.

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