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Making a Living with the Micros


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Making a Living with the Micros

  #31 (permalink)
 mbondiett 
Pittsburgh, PA, USA
 
Experience: Beginner
Platform: NinjaTrader
Broker: NinjaTrader Brokerage
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Plankton View Post
WOW SSTHEO! Are you sure you have not been secretly watching me trade and just telling everybody here what not to do. Although I'm sure I'm no different than most traders. You are so right about believing that a trade is going to turn around at any moment and go your way. I have been away from trading for a while and finally jumped back in a couple of months a go. I put up $11,000 in my account and increased it to a high of $26,000 as of last week trading 1 or 2 contracts on the NQ during ETHs. I thought I had become a trading god. Well last week I took a 5 contract trade during RTHs and after it had gone down to the point that I thought it was going to turn around I added another 5 contracts. Needless to say I finally closed it out after a $16,000 loss. Things didn't get much better after that. As of now my account is sitting at $900.

Sorry to hear that Plankton. But Thank You for posting. It is a reminder to All of us that it is possible to destroy our account in a single day if we are not prudent.

Sounds like you Know how to make money. Just need to get your management in control.

“The major work of the world is not done by geniuses. It is done by ordinary people, with balance in their lives, who have learned to work in an extraordinary manner.”
― Gordon B. Hinckley
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  #32 (permalink)
 
sstheo's Avatar
 sstheo 
Holladay, Utah, USA
 
Experience: Intermediate
Platform: Multicharts
Broker: AMP/CQG
Trading: MES, MYM, MNQ, M2K
Posts: 285 since Oct 2012
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Plankton, I am so sorry. Wow, what a story.

We all feel invulnerable when we are in sync with the market rhythm. But sometimes there are much bigger forces at work. We have to be prepared for anything and PLAN on keeping the losses manageable.

With the fast growth you had, I am confident you will get your mojo back again quickly, but go a little slower and try to only add only to winning trades OR just set a fixed stop loss and honor it no matter what - knowing you can get back in again after a small loss.

I wish you success! And I do recommend starting a journal. Honestly, it helps me be just a little less impulsive when I trade.

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  #33 (permalink)
 
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 Sandpaddict 
Vancouver, Canada
 
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Platform: Ninjatrader, MT4
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Trading: Futures CFDs
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sstheo View Post
You are very kind. Thanks.

I entered the Varengold FX contest but did not place. However, it really opened my eyes to what was important to a BANK. They didn't want 100% returns in 30 days with an 80% drawdown. They wanted a 10% return (maybe) in 30 days with a 10% max drawdown. The concept is easy to grasp but hard for traders in the heat of a trade to pull the plug - admitting that they were WRONG.

I previously mentioned ZuluTrade's signal providers. It was mind-blowing how many providers claimed something like "100 pip max stop" a few months prior. And then you would look at their actual trades and you'd see 150, 200, 300 pip draw-downs = maximum adverse excursion (MAE). And then you would see that they eventually got the trade back into profit, only to close it out for a 7 pip win. Total craziness.

As for the first part I'm sure banks are smart enough to realize that to repeatedly post %100 returns in 30 days there's a high chance of risk of ruin.

If your looking for %100 returns in a month with appx 20 trading days per month your looking at 1/20=.05. %5.

%5 PER DAY... EVERYDAY!

If you make less one day you have to make up for it the next day!

Heaven forbid you have a losing day as the more you lose the larger percentage gain you need just to get back to break even and your capital erosion makes it even harder.

Then under all these conditions add trading on top of that!

Banks aren't stupid.

As for the second part... been there done that. Thought I had finally found a good stratagy till the inevitable string of large losses took me out for that round for good.

I could hold for days in a loss then POW out with a profit of $12.56 at first chance. Then do it again.

And feel good about it!!! Like hey ma look I made a profit. Stupid. Lol.

Cheers


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  #34 (permalink)
 
Sandpaddict's Avatar
 Sandpaddict 
Vancouver, Canada
 
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Plankton View Post
WOW SSTHEO! Are you sure you have not been secretly watching me trade and just telling everybody here what not to do. Although I'm sure I'm no different than most traders. You are so right about believing that a trade is going to turn around at any moment and go your way. I have been away from trading for a while and finally jumped back in a couple of months a go. I put up $11,000 in my account and increased it to a high of $26,000 as of last week trading 1 or 2 contracts on the NQ during ETHs. I thought I had become a trading god. Well last week I took a 5 contract trade during RTHs and after it had gone down to the point that I thought it was going to turn around I added another 5 contracts. Needless to say I finally closed it out after a $16,000 loss. Things didn't get much better after that. As of now my account is sitting at $900.

Oh no Plankton!!! Sounds like you were doing well too. Been there. It sucks!

A Position Size and Risk Management reminder for all of us.

A real unfortunate thing. Hopefully you never make that mistake again.

Thank you for posting.

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  #35 (permalink)
 
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 Plankton 
Blacksburg, SC
 
Experience: Beginner
Platform: NinjaTrader
Posts: 20 since Aug 2019
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Thanks for all the support guys! I really appreciate it. It's not fun to think about it or even talk about it but I'm glad I did. When I talked about what happened I didn't even think about it maybe helping other to see what not to do. Even though it was at my expense. I always believe there is a silver lining in everything that happens so I have definitely learned a valuable lesson and I hope others will learn from my mistakes also. All I know is that when it kept going against me it was almost like I was a deer in headlights. Paralyzed almost. Just realize that a lot of hard work can disappear in a couple of hours if you don't do things right and stick to a plan.

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  #36 (permalink)
 
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 Plankton 
Blacksburg, SC
 
Experience: Beginner
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I didn't think the image of my trade was going to work but it looks like it did post. I think I am going to frame it and put it on the wall as a reminder of what not to do. Anybody else can do the same so they can say "I don't want to be that guy so I'm going to stick to my plan!" LOL!

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  #37 (permalink)
 
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 sstheo 
Holladay, Utah, USA
 
Experience: Intermediate
Platform: Multicharts
Broker: AMP/CQG
Trading: MES, MYM, MNQ, M2K
Posts: 285 since Oct 2012
Thanks Given: 198
Thanks Received: 1,490

Money Management: Stops

Here is the final installation on MM (for now).

Setting the best stop always has been and always will be the bane of traders. We have all experienced the anger and crazy-making that goes along with setting a stop far from the current price only to be stopped out by ONE tick and then having the price quickly completely reverse and go on to reach our original target. Is there anything more frustrating??? Obviously scalpers, day traders, and swing traders all have different stops, but the concepts are universal:
  • Some traders bail at the very first sign of trouble, only suffering through a measly 5 or fewer ticks average per loss on the ES. Awesome.
  • Some set reasonable stops of 10 to 20 ticks and are super-disciplined; taking a stop is never hard for them. Awesome!
  • Some traders trade without mechanical stops, but they use "mental stops." To me it sounds like a recipe for disaster, but whatever.
  • Some use no stops and all and just martingale their way into trading Nirvana adding and adding and adding until the cost basis is mere ticks away and then they walk right into heaven with cash in hand--unless they don't, and end up in the other place with a blown account and shrapnel wounds everywhere. Arghhh.

I have done them all. However you trade, you have to think about risk management. You can't win the ball game if you can't even pay the parking fee to get into the ballpark because you blew your account the day before.

Staying alive is #1!

Cue the music... Go Brothers Gibb!




So how should you set stops? Here are some clues. Only YOU can make the final determination.

Determine how many days you want to stay alive if you royally screw things over. 10 days? 20 days? 25 days? 33 days?

10 days would be 10% max loss per day. 20--5%. 25 -- 4%. 33--3% per day. If you do 3%, then you can lose a maximum of three 1% trades in a row. But it seems really likely that every trader would hit it. 1% is $100 on a $10k account. My max daily loss is about 4%, or $500 on a $13k account.

Look at your win loss ratio. Look at your average winners and average losers as you have already been trading. Run the expectancy formula and make sure things work

Expectancy = (Probability of Win * Average Win) – (Probability of Loss * Average Loss)

Once you have this info, you can make an informed choice and do lots of tweaking, perhaps using one of the 10 options below. But you MUST have a plan for losses. Because we all know that they have a plan for you, LOL.


(1) Fixed % loss per trade


(2) Fixed $ loss per trade


(3) Penetration of a fast moving average


(4) Logical placement above or below the previous 1 or 2 high or low bars on the chart you are using.


(5) ATR. The SuperTrend indicator based on ATR is found in multiple versions here on FIO is great for stop placement. (Search "SuperTrend.") What I love about this indicator is it can also give great reversal entries!




(6) Daily ATR (for swing traders). Place your stop just beyond the daily ATR.


(7) Just beyond Recent Support or Resistance, like with Zigzag.


(8) When a trade goes against you, get out "immediately" as taught by the legendary "Phantom of the Pits." See his interview here. Rule 1: "We must assume we are WRONG and reduce our position until the market proves we are correct." By getting out at the first sign of trouble, our winning % will drop significantly, and we will have many break-even trades, but the risk/reward ratio goes WAY up. I heard that the best futures traders use this method. Rarely is it taught because it is counter-intuitive and stressful. But long term it makes the most sense. (Rule 2: Press your winners.)




(9) Eliminate the skewed outliers. Observing a skewed set of negative excursions, WD Gann taught a statistical method for setting stops. He called it "Drawdown Minimizer Logic."

He said to examine all your trades from a sample of at least 30 trades and determine the "adverse excursion" (MAE) of each trade. Where is the 80% threshold? That is your stop. The last 20% are all dangerous trades. When I was trading FX, the 80% mark was historically at about 24 pips. So I should have set my stop at 25 pips based on his method for FX trades. Those that are beyond the 25 pips were usually horribly bad trades anyway, so I would just get rid of them this way! I love this method and it helped me identify the 30 pip stop that I usually used when trading FX. I need to do the same now for the Indices.




(10) Many other methods out there!!! Find a method- test it - use it - keep it.

Remember, you can always get back in later if you were ultimately correct in your directional thinking. But it doesn't matter at all if you lose your account.

You have to stay alive.

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  #38 (permalink)
 
sstheo's Avatar
 sstheo 
Holladay, Utah, USA
 
Experience: Intermediate
Platform: Multicharts
Broker: AMP/CQG
Trading: MES, MYM, MNQ, M2K
Posts: 285 since Oct 2012
Thanks Given: 198
Thanks Received: 1,490


Plankton View Post
Thanks for all the support guys! I really appreciate it. It's not fun to think about it or even talk about it but I'm glad I did. When I talked about what happened I didn't even think about it maybe helping other to see what not to do. Even though it was at my expense. I always believe there is a silver lining in everything that happens so I have definitely learned a valuable lesson and I hope others will learn from my mistakes also. All I know is that when it kept going against me it was almost like I was a deer in headlights. Paralyzed almost. Just realize that a lot of hard work can disappear in a couple of hours if you don't do things right and stick to a plan.


You definitely made things very real, very fast. Great reminder of my most important points regarding money management.

This is 95% of trading, right here.

Thanks again for posting.

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  #39 (permalink)
 
sstheo's Avatar
 sstheo 
Holladay, Utah, USA
 
Experience: Intermediate
Platform: Multicharts
Broker: AMP/CQG
Trading: MES, MYM, MNQ, M2K
Posts: 285 since Oct 2012
Thanks Given: 198
Thanks Received: 1,490

Today was the first big down day in WEEKS. We just finished the longest bull run in 10 years. Pretty wild.

I don't really care if it goes up or down. But odd-happenings like a 10-year record and ATH's for days on end really mess with me. My brain is screaming, "Something is amiss! Cuidado!" Consequently, I have been a little more conservative than normal the past week or so.

I don't post most of my trades because you guys will confirm your suspicions - that I am verifiably insane. That, and it takes up too much room to post all my scalps.

Here is the trader blotter for the last 4 hours. All the trades that say "$0.00" are entries. So this shows approximately 32 trades.

I have been taking about 35 micro trades per day.

I met my low-end goal of $200 today and am close to $13,300 now.



Times are US Mountain time.

Here are some long trades on the MNQ after we reached the bottom today.



On the MNQ, I am using a 7 tick renko bar with a 20 EMA. The brighter blue line is the -1 standard deviation of the VWAP. The squiggly blue line is the OBV indicator that I will write about soon.

I used to have a 1% to 2% goal each day, but sometimes the market doesn't want to cooperate.

My new goal is to take the good entries the market presents to me and scale up appropriately, using a max of 1 micro per $2000 in the account.

I have still not scaled up to 6 micros on one trade, but I did trade with 3 on one position today. As can be seen in the blotter, I still trade with all four contracts: MES, MNQ, MYM, and M2K. So rarely would I have a full 6 micro position on just one anyway. Normally I will be short the two weakest instruments OR long the two strongest instruments with 1 to 3 micros per trade.

Success story: I am working on holding on to some trades longer, and my best trade over the last 3 days was $26.00 or about 52 ticks.

After my previous post on STOPS you may be wondering how I use stops. If you look at the trade blotter, you can figure it out:

A. I have an emergency stop of about $20 per micro traded, but I do my best to never let it get hit.

B. I mainly try to use the method outlined by the Phantom of the Pits where I will get out immediately when I feel the market is going against me (#8 on the list of stop types on that post).

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  #40 (permalink)
 
Plankton's Avatar
 Plankton 
Blacksburg, SC
 
Experience: Beginner
Platform: NinjaTrader
Posts: 20 since Aug 2019
Thanks Given: 51
Thanks Received: 29


I will say this @sstheo...you are definitely not getting bored sitting in front of a computer screen all day waiting on the perfect setup. Thanks for posting your trades. Great job! Very interesting stuff you are giving us here so thanks for that.

I know you traded forex before and the way you said " The squiggly blue line" made me think about TRO (The Rumpled One). You may not know who I'm talking about though.

BTW..I took my very first Micro (MNQ) trades this morning before I headed off to work and I made a $2 profit. So I'm on my way back baby! LOL!

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