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I've been dabbling in financial markets for about 30 years. Mainly stocks and options, with some Forex.
Since I took early retirement a year ago I typically spend several hours a day researching and developing trading systems and trading.
I have focused on 2 areas, long term ETF trading using TQQQ/SQQQ, and short term futures trading with NQ. I will describe my ETF strategy in a separate thread, this one will be for futures day trading, which is a much more recent obsession.
Trading futures is completely different than stocks. No big surprise there.
I like to use vehicles as an analogy. If stocks can be thought of as driving a sedan on the highway, then trading Futures are like driving a Formula One race car on the Nurburgring.
The combination of leverage, institutional shenanigans and your own emotions, can destroy an account in minutes if you are not careful.
That's why I quickly realized that visualization of the short term trend is paramount. My favorite candlestick charts were pretty useless to me for futures trading. Some time with Google quickly identified Renko charts as being a helpful way to x-ray a fast moving market. After trying out several approaches I've settled on ninzaRenko bars as a good representation to quickly identify trend changes measured in ticks rather than minutes.
Here is an image of the typical charts I use for trading NQ.
More so than other areas, futures trading requires a plan and the discipline to stick to it.
Every time I've had trouble, the cause was me. I believe in being honest with myself and keeping track of my performance.
To help me work on my discipline, and tighten up my trading plan, I decided to join a TopStepTrader combine. I read all the reviews here and on ET and have joined it with my eyes wide open.
I'm aware of all the arguments for and against and believe that there is a great benefit in going through it. At the very least it will give me feedback on my trade plan and will be good training in holding to discipline. If I blow up, then it will be my own fault. I know what the rules are.
I joined on Friday of last week and have one day of trading under my belt. I downloaded the trades into the Tradervue journal site. No particular reason why I chose them over others.
Here is a screenshot of my first day's trading results. I plan on updating this thread for each day I trade.
While I get used to driving in F1 races, I'm just going to stick to 1 NQ contract at a time. Going too big in size seems to be a common reason why many people blow up their accounts.
I've noticed that 1 contract is enough to do well if you can hop on a nice trend and not get caught up in chop.
I selected the 50k challenge as it seemed to be the sweet spot for me.
Today was a down day. Down $728 to a balance of $49,479. Ouch!
What Happened?
After the first 30 minutes or so I could see that there was a lot of chop in NQ.
Instead of doing the wise thing and waiting for better action, I decided to trade it. Not only did I take bad trades, I decided to do on the fly experimentation (adding indicators, changing parameters, etc). This is an ongoing problem for me as I am an inveterate tinkerer, prone to on the fly R&D in my live account.
The chop and my experimentation went on for way too long. I eventually called a halt around 2pm and went for a long walk with the wife.
Actions
Obviously I need to make some changes to my trading plan:
My max drawdown for the day is now limited to $300. TST allows, $1000/day, however, that's way too much. If I'm down $300, then I need to stop and reassess.
I am now forbidden from adding and/or tweaking indicators in my live account. If I want to experiment, then I need do so in the Test account.
I must not force trades. If the action seems choppy, then no trades.
Yesterday was a wild ride when news broke of tariffs to remain on China until after the election. In spite of the volatility, I ended up +$10. Worked on fine tuning my setups and exits.
So, I crashed my Formula 1 race car into the $1000 daily drawdown limit. That's what happens when you take the chicane (volatility) at 200 mph.
I've spent the last 2 days back at the drawing board working on a better system. One thing is clear, I was trading on too small a block size (8 ticks). I am backtesting 8x and 16x bigger blocks with decent results.
for a Reset.