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To achieve $1750 target in 15 days with 100% consistency requires ~ $120 profit per day. This does not allow for any losing trades.
Increasing the daily profit to $200 will allow room for some losing days.
Earn2Trade allow max daily drawdown of $550, so a daily hard stop needs to be set at 40 ticks.
Max total drawdown of $1500 allows 3 losing days at max loss. The aim is not to take max loss, but to exit a losing trade at a sensible point. If my entries are good, there should be a high probability I can exit a losing trade near break-even.
So the plan is to make one trade per day, take profit at 17 ticks, hard stop of 40 ticks. Exiting a losing trade will be discretionary up to the hard stop.
In the next post I'll discuss the strategies and setups I'm using.
A strategy I use is when the market is actively seeking liquidity (supply or demand) in the run up to a risk-off event. Key to this is in determining whether there is more supply or demand, and then entering a position in the direction of the supply or demand at what I consider to be the best price achievable before the risk off event.
A lot of new traders get caught out because they see price going down, so assume a short position. However, it is often the case that the market is going down to seek out liquidity to fill demand. After the best likely price is achieved, the remaining demand will chase price into the risk-off event. The speculators that misread the market as bearish will exit their position, further adding to demand.
Under normal trading, the exit point would be just before the risk-off event. But for the Earn2Trade challenge, I want 100% consistency so will take profit at 17 ticks regardless of the trade potential. Because of Earn2Trade's consistency rules, there is no point trying to maximize a trade. If the trade exceeds more than 30% of the profit total, it will be discounted.
Here is an example of a trade I took yesterday:
Note the times on the chart are BST as I'm trading from the UK. 14:30 is the US open. The risk-off event is the 1600 BST European Close.
I'd watched the market for an hour after open, and what struck me was how difficult it was for price to break below the orange support line. The only way it was possible to breach the line and trigger stops was to start trending away, and then fail, and the long liquidations provided the fuel to break below. We also had a rounded bottom, which is indicative of demand, and watching order flow supported more demand than supply.
Just before point A was a tight area of consolidation, and this is where I first became interested in a trade. My thesis was that the break below the orange line was not bearish action, but rather the market looking for short liquidity to meet demand. On that basis, I wanted to take a long position.
The final confirmation was when price dropped below consolidation at point A, but there was no follow through.
My target would be a retest of the previous breakdown area, or 16:00, whichever came first. That is about 56 ticks. But for the purpose of the Earn2Trade challenge, it is only necessary to obtain 17 ticks, which is simply to the top of consolidation!
Risk Analysis
I need to consider what will likely happen if I'm wrong and the market breaks consolidation to the down side. Looking at a higher timeframe, I can see the previous lowest wick which is likely to have stops below is at 4444.75. This is the 'danger zone' and I would not want to be long if price was trending below this area.
On probability, I would not expect price to breach 4444.75 on the first try. This price will likely act as support and there is a good probability price will retest the bottom of the consolidation area (where I entered). I would then be able to exit with minimal loss.
If I wanted to trade short, I would be looking for a measured move from high volume bearish candle (where my rounded bottom mark stops) to consolidation, then from consolidation down again the same amount. The expected target would fall below 4444.75. On that basis, I would not take the trade even if I were bearish, as I always want my expected target not to have any congestion in-between.
To summarize:
Order flow in the first hour showed demand
Price was unable to break below the orange support line when expected (due to demand)
Risk off event marked as 16:00 BST
Eventual break below the orange support line was the market seeking short liquidity to meet demand
Many new speculators would see the break below support as bearish action and provide liquidity during consolidation
Break below consolidation had no follow through
With only 10 minutes to the risk-off event, this is likely the best price achievable and therefore any remaining demand is likely to chase price
Speculators that got short on consolidation expecting follow through to the downside would need to exit, adding the the price rise
I only need 17 ticks, which is to the top of the consolidation range. Expected target is over 50 ticks back to retest the breakdown area
Any further downside is into the first test of support on a higher timeframe, making this a low risk trade.
I finally got my live account setup, it took just over 2 weeks. Part of that was the Easter Bank Holiday, part was my delay returning the forms due to having Covid, and part was working out how to combine a Professional execution only feed with a non-professional market data feed.
Earn2Trade quote 3-4 business days to send you the contract, then 5 business days from when you return the contract. So in general I would expect accounts to be setup in 9 business days.
For my strategy, the most important thing is the trailing drawdown. If I have a bad run where I hit max daily loss per day on consecutive days, the trailing drawdown tells me how many consecutive failure days I can have in a row.
25k = 3 consecutive maximum losing days
50k = 4 consecutive maximum losing days
100k = 7 consecutive maximum losing days
My strategy requires trading a position size based on the trailing drawdown available, not the margin available. So if I have a losing day, the following day requires trading a smaller size until I'm back to max trailing drawdown.
Taking profits
Withdrawing before you meet the profit target eats into the trailing drawdown. So it is not practical to withdraw early, even if Earn2Trade allow it.
The 200k account is slightly different as it allows a fixed drawdown of 194k. For traders looking for a regular income instead of account growth, this is the only stage where it makes sense to withdraw profits prior to hitting the target.
I wasn't aware of this until I tried to trade some micros today:
On a live account, Earn2Trade limit the number of contracts you can place but their risk system cannot differentiate between Micros and Minis. So a limit of 3 ES also means a limit of 3 MES.
In order to trade the full 30 micros, it is necessary to raise a support ticket, then they block ES, and up the MES limit 10x. This change can be requested once per month.
I got to 6 profitable days, $1180 profit, then on day 7 I mistakenly traded Minis instead of Micros - with a stop calculated for Micros.
At the moment I can only trade from my laptop, so I have to flick between DOMs rather than having them side-by-side. I mistook which one I should have placed the trade on. I need to think of a solution to prevent this happening again.
