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GlobexTrader's Journal of a method to consistently cashflow the market
Welcome to GlobexTrader's Journal - If you are trading futures, you are trading on Globex
To be a consistent successful trader you need to be a student of the markets. How did the markets go from trading under a Buttonwood tree to collocated super computers. Over the centuries the markets have evolved. What worked long ago may no longer apply. You either keep up or you are soon left behind. And yet, some things never change. Why? Because they programed them into the computers. So by knowing your history, how things were done in the past, you may get an inkling of how the computers are programmed giving you some insight into the madness of the markets.
Rule number 1: I have no idea what the market is going to do. The market will do what the market wants to do. All I can do is look to see what it is doing and go along for the ride.
Rule number 2: It is ALWAYS easier to trade the charts after the fact. At the end of the day looking at the charts it's obvious what the market did and when it did it. In the moment though, all you can do is take educated guesses.
Rule number 3: The computers, which is how most trading is done these days, are programmed to take your money. They are very good at it.
Rule number 4: One of the most important indicators that is on every chart that most traders ignore is TIME. What TIME is it? Hint, computers work on TIME.
Money is a highly charged subject. People don't always act rationally when it comes to money. To take the money out of trading so you can just concentrate on the trading I've invented Globex Points (GP). A Globex Point is worth $10. So if you want to make $200/day, you need to make 20 Globex Points. Sure, it's just a gimmick, you can easily convert to money just by multiplying by 10, but guess what, it actually works.
There are lots of ways to make Globex Points. I exclusively trade the indexes. In the past I've dabbled in other futures, but these days just because of simple math, the "easy" money is in the indexes.
YM = .5 GP per tick, per point
ES = 1.25 GP per tick, 5 GP per point
NQ = .5 GP per tick, 2 GP per point
RTY = .5 GP per tick, 5 GP per point
So if you want to make $200/day you need 20 Globex Points (GP) which is 40 YM points, or 4 ES points or 10 NQ points or 4 RTY points or any combination of those. If you are trading multiple indexes at the same time, by using GP it's easy to keep track of where you are at after each trade and what you need to make your goal for the day. You can also use GP to grade yourself to see how well you did for the day. If you had the chart for the day in advance so you knew where to buy and sell, about how many GP could you have made for the day. Just eyeball it. Don't worry about every little squiggle, just the major turning points. So if the contract you are trading had say 150 GP available to be made and you only made 10 or some how even managed to lose some GP, maybe you should try doing something different. Where if there was 150 GP available and you managed to capture 40 of them, that's decent, just keep doing what you are doing.
The futures trade almost 24/5, 52 weeks a year, but because of holidays there is only about 250 trading days a year. So if you multiply your daily goal by 250 you have about how much you are going to make in a year. And yes, once you learn how to consistently cashflow the market, it just becomes a job. It's just something you do. Your mind frame goes from will I make money today to how much. The correct answer to that is, I don't know (remember rule #1), depends on what the market offers today. But you should know depending on your skill level and resources about how much you will make on a usual day. If the market is being generous that day, then you will just make more.
The indexes trade 4 quarterly contracts a year, March, June, September and December that expire on the third Friday of the month at 9:30 and is cash settled. I believe in the past you could trade contracts 2 yrs into the future, but it appears in 2021 they started adding contracts as much as 5 yrs out. There is only liquidity in the current closest contract. Some of the further out contracts have no trades at all in a day. All the volume switches over to the next contract the "weekend" before expiration, Friday/Monday so that by Tuesday the only traders left are the stragglers. So typically you have 13 weeks to trade a contract.
I bought my first stock over 50 yrs ago when I was a teenager. One share of IBM. Started trading futures about 20 yrs ago. I own stocks, I trade futures. I just trade futures for "fun", ie play money. Oh it's real money, I just use it to play with.
One of the most important indicators on your chart is TIME. How do we know this? What happens everyday at 9:30am? What happens everyday at 4pm? What happens some days at 10am? What about 8:30am? What about 11:30? 5pm? 6pm? 7pm (until daylight saving when it becomes 8pm since Asia doesn't do daylight saving. 8:30pm (9:30pm)? 1am (2am)? 2am? 3am? 4, 5, 6, 7, 8am? As you can see on your futures charts, since futures trade pretty much 24/5, time is very important.
9:30am - US markets open
10:00am - end of Opening Range (9:30-9:59:59), some days economic indicators are reported
11:00am - last 30 mins of Europe trading
11:30am - close of Europe trading, FSTE, DAX
12:00pm - "lunch"
1:00pm - end of "lunch"
2:00pm - 2:00, 2:20ish, 2:40-2:45ish some days market moves begin at these times, why?
3:00pm - last hour of US trading
3:50pm - frequent violent spikes up or down are seen
4:00pm - US markets close
5:00pm - Globex stops trading for dinner break
6:00pm - Globex resumes trading
7:00pm - Japan markets open (8:00pm during daylight saving)
8:30pm - China markets open (9:30pm during daylight saving)
9:30pm - Japan morning session ends (10:30 during daylight saving)
10:30pm - Japan afternoon session starts, China morning session ends (11:30 during daylight saving)
12:00am - China afternoon session starts (1:00am during daylight saving)
1:00am - Japan markets close (2:00am during daylight saving)
2:00am - China markets close (3:00am during daylight saving) Europe premarket starts up
3:00am - Europe markets open FSTE, DAX
4:00am - 5, 6, 7, 8am - premarket trading starts, earnings releases, US traders start getting ready for the day
8:30am - some days economic indicators are reported
So you can see, there are lots of times throughout the day when potential market moving events are happening. If you aren't paying attention to time on your charts, you are missing half the data. If you are trading the US indexes you need to be using 24 hour charts. Sometimes the most important stuff on the chart happens in the 3-4am hrs. The markets around the world are all interconnected, influencing each other. By paying attention to time you can start to see those influences.
Breaking time down even further you will notice things tend to happen on the 10s, 10, 20, 40, 50. Less frequently on the 5s, but sometimes. Is it exact? How many traders are there trading against each other? Sometimes you will see traders front running by a minute or two. Or a turn is a little late. If you start looking at time on your charts you will start seeing patterns. Patterns that you can use to trade off of.
When I look at a chart the first thing I want to know is what time is it. Where are we at in the trading day. Then I'm looking at what time certain things on the chart happened. Then I'm looking at various times to see what happened. When Japan/China were trading, what happened. When Europe started up, what happened. The computers are doing most of the trading these days. Computers work on time.
Finally finished that post on time. I've been busy this week. Going to try and once I get this journal setup post daily. One of the reasons for starting a journal is I find when I teach others I usually end up learning more than they do and yet I'm the teacher. I've also been thinking of daily capturing some data to see what it might tell me. Hadn't been too motivated to just grab pencil and paper but figured if I was going to put it in a spreadsheet, might as well post it to a journal. Maybe by posting it we could figure out a way to automate it. Some of it requires just eyeballing the chart, but maybe we could come up with an algo to do that. Especially now that AI is out.
I'm using Schwab and it is finally fully integrating TDAmeritrade into it. Doing a quick check, bought it back the end of 2019 and finally going to make Think or Swim available to Schwab clients. It means StreetSmart Central is finally going away so I'm going to have to change my trading platform. Thank god. Finally going to get a real trading platform again. Just been too lazy to change and making do. I had an old dormant TDAmeritrade account that was left over from when Datek got bought out and tried setting it up a few years back the way I wanted it. I played with it for about 6 months while continuing to use StreetSmart and never could get it setup how I wanted it. I didn't try very hard though. Need to look at it again in the next week or two.
Few years back had a friend that wanted me to show him what I do. No way he was going to be able to use StreetSmart so I looked into NinjaTrader. Played with the paper trade version. Wouldn't let you do stops though. Funded an account. Set it up somewhat how I wanted it, but it was way more complicated then it needed to be. But even the "free" version wouldn't let you do stops. What the hell. Read some of the threads on here about problems people were having with it. Especially people having troubles with it lagging. How you needed a pretty robust computer to run it. That tells me the programmers probably aren't very good and the code is way more complicated than it needs to be. Wasn't about to give them $99/month or buy a lifetime license just to see if you got stops with those versions. Certainly wasn't going to have my friend start shelling out money before he knew if trading was for him. He said he downloaded it, looked at it, couldn't make heads or tails out of it and lost interest. I just deleted it.
Way back in the day I use to use QuoteTrader. Loved it. Back then I was using an old 486 with Win98 and it ran great. It's not available for Schwab but it is for TDAmeritrade. I checked the Quotetrader support forums to see if it's going to be available on Schwab once TDAmeritrade is rolled in. It is. Jerry said he's still waiting for Schwab to finish the new API. So I'm hoping I can go to QuoteTrader soon. Been so long since I've used it, but pretty sure I can set it up just how I want it. If not I can just ask Jerry to add me a new feature. I wonder if we could do Globex Points. That would be cool. My setup is pretty basic. When you see it you'll be, wait a minute, that's it? My response will be, what else do you need? Once I'm able to ditch this stupid StreetSmart Central I may add a few things, but not much. *
When I see some of these traders with multiple CPUs, multiple screens, charts with gazillions of indicators on them, complex looking software, the first thing I wonder, you think they are making money doing that? That looks like an awful lot of work. Remember rule #1, I have no idea what that markets are going to do. I find I get in the most trouble when I try telling the markets what they supposed to do. They quickly let me know in no uncertain terms, they don't care what I think. About all I can do is look and see what they are doing.
As I switch trading software I'll show you what I go with and how I set it up. Most important thing I need from my trading software is to tell me, where are we at, and what time is it. I'll use Superbowl Sunday to give you an example. If I tell you the score is 21-17 in the middle of the third quarter and I ask you, who do you think is going to win, what is going to be your answer? You might want more info, like how did they score? Were they passing or running touchdowns? You might want to know when they scored. You might want to know how many first downs they've each had, or passing and running yardage. But that is drilling down more into the data. What if I told you the score is 21-17, middle of the 3rd, and we just had a score. Before the score it was 17-14. What if before the score it was 21-14. What if I told you the score is 21-17 and it is the end of the first quarter? So If the Dow is up 300 and it's only 10am, that might tell you one thing. But if the Dow is up 300 and it's 3:30pm, that might tell you something else. So the most important things I need from my charts are, where are we at and what time is it. And then if you want to drill down, look for chart patterns and trend lines and things.
For me, price and time are my most important indicators. Then you have things like chart patterns and trend lines. Why, because those things are programmed into the computers that are doing the trading these days. Some of the indicators you need to be watching aren't even on your charts. Some of those are economic indicators and are one off events, and yet they move the markets. These days the markets are all interconnected. You need to be paying attention to what the bond market guys are doing, ie treasury yields. Options are becoming important. I use to never pay attention to the VIX, but started watching it and am seeing interesting stuff. Just yesterday saw an article on zero dated options. Had vaguely heard of them. Now I'm wondering if they are what is causing the 3:50pm spike you see a lot of days. I need to research more. The markets keep evolving and changing. Some things that worked 20 yrs ago I don't even have on my screens any more. They are now a total waste of time and worthless. If you tried using them today you would basically be trying to trade against the computers. There's no way you could win that. Why waste your time trying.
So are we having fun yet? What a crazy week in the markets. Some days free money was literally falling from the skies. As much as you could stuff in your pockets. Of course to get any of that money you had to be prepared and know what you are doing. The average person on the street as they say has no clue that anything even happened let alone that there was free money falling from the sky.
So if you ever hope to cashflow the markets you need to become a student of the markets. Study, study, study. Learn, learn, learn. There are no magic indicators that I know of. If there was, we all would be rich. I actually spent about half a day doing research. Here I had been trading the RTY for almost 2 months and I didn't even really know what it is other than something to do with small caps. What I found is most interesting. I'll do a whole other message on that. I'll give you a hint though, SMCI. Is that one crazy stock or what, And it's in RTY. Not for long. Probably get kicked out when they rebalance it in June. At one point Tuesday RTY was down over 4%. And there I was thinking it's just this sleepy little index that might be fun to trade. Oh it's fun alright, but you better know how to trade or you are going to get your head handed to you.
So we are at week 10 of 13. Cross over weekend will be the 8th/11th. So far for February on RTY I'm up about $15k, and since Jan 1 about $27k. So as I'm learning more about how RTY trades I'm about doubling how much I was making. Since 12/20 when I did my first trade up about $30k. So I was thinking of doing about $500/day but after trading now for a bit, going to try for $1k a day on it. Looks like it's doable without too much effort. So doing the math for you, that's $5k a week or about a quarter a year. That's where the quarter in my tag line, K a day is a quarter a year comes from. I also have another saying, if you ain't talking taxes, you ain't making money. Did I ever mention they want to much.
So I trade the 4 indexes, YM, ES, NQ and now RTY. YM use to be my main and only trader but started adding in NQ and ES. Now NQ is my main trader, then YM and finally ES. Since I've been trading it and especially after this week, I can see RTY becoming my second most preferred trader. All 4 indexes kind of, sort of follow each other with NQ and ES mirroring each other the most. Then YM, but not as closely and then there is RTY. Sometimes it follows along and other times it's doing it's own thing.
RTY doing it's own thing is opening up more opportunities. Sometimes trading is just a lot of waiting and watching to see what the markets are doing. Looking for a setup. Waiting to see what happens at certain times. Since the three main indexes tend to follow each other, you look at one chart you looked at the other two. With RTY at times doing it's own thing you look over at it and it's, whoa, what's going on over there. Also I'm starting to see the small cap/large cap play. Sometimes they are buying large cap and selling small cap or vice versa. The indexes are doing 180s from each other. And then after a move like that, you see all four indexes sync backup. At times it's like having another indicator. I'm still learning, studying, looking for the interconnections. Watching, waiting, seeing what happens and stuffing money in my pocket as I learn.
I need to decide how I want to post my trades and what data to include. Maybe work on that later this weekend.
Thanks for your input so far.
I like your writing style. You make it sounds so easy and obvious
I hope to see some of what you are doing in future posts. Especially because you have been teaching, and I (and for sure many others) are here to learn.
Sure, price, time, but how do you trade all those events. What are you looking for?
Seeing what the markets are doing is based on the past (maybe just seconds away).
Do you consider volume?
Hey Deetee, Oh look, I finally made it back to my Journal. The last week of the month I get busy doing some other stuff mostly as an excuse to get out of the house. I keep trading, but kind of get busy and don't have time for much else. I've got so many other projects going on one thing I was worried about when starting a journal was when was I going to find time. I'll try and start filling it in.
So these days, just because of the math, it is WAY easier to cashflow the markets then it was 20 yrs ago. 20 yrs ago it was hard. These days any so so trader should be able to fairly "easily" do $200-300 a day, everyday. $200/day is $50k a year. You should be able to live on that. If you can't consistently make $200-300 a day, maybe trading just isn't for you. For me though, if all I was doing was $200-300 a day, I wouldn't even bother. Be a waste of my time. But if you start talking a K a day or more, after a year that's like real money. I'm like, ok, you convinced me. I'll do a post showing the math on how it is easier to trade these days.
To be a sucessful trader you need to be a student of the markets. And you have to know how to trade. So you have to know how the markets work. Things like these days the markets are all about the computers. The NYSE is basically a data center in Mahwah, NJ and co-located in the same data center are the super computers of the hedge funds and HFTs. The Nasdaq is basically the same thing. Doing google, the data center is in Carteret, NJ. Whoa, check this out.
What is the NASDAQ colocation service?
With Nasdaq's co-location services, participants are able to reduce latency and network complexity by utilizing a single hand-off to reach all Nasdaq markets. High-Speed 10G Ethernet Network, round trip order-to-ack and market data order-to-tick latency is sub-50 microseconds.
A microsecond is a millionth of a second. So the hedge funds and HFTs super computers that are co-located in the same data center as the exchange have a latency under 50 millionth of a second. What's the latency between you and your IP? Between your IP and your data provider? Is your data provider co-located in the exchange, or is there a latency between it and the exchange? Any data you are getting is ancient history compared to the super computers that are in the data centers that control the markets.
Have you heard of spoofing? That is the hedge fund and HFT computers trying to fake each other out to gain some kind of edge. So even ignoring the latency, these days who even knows what the data is. Is it "real" data or is it just the computers playing with each other. So stuff like tick data, totally useless these days. Volume. So say a sell order comes in to sell $1 billion of whatever. That gets handed off to the computers that then break it up and very carefully manage the price and volume to get the best execution price. So what is volume data these days. I can click and bring it up on my charts, and once in awhile I will out of curiosity, but I haven't found it to be of any use. I just ignore it.
Try and post some pics of my charts later. They are pretty basic. I just trade the chart. i look at some of these people with all kinds of indicators on their charts and wonder what half of it is. The first thing I wonder is, you think they make money doing that? I mostly do KISS. There is no way you can out trade the super computers so why even try.
Post a few pics of my trade setup before I start switching them over to the June contracts. Since we are at week 14 my charts get quite messy. All the data on them is about to go poof as we switch to the June charts and a clean slate. All the markings on them are simply to tell me where are we and what are the computers up to. Pretty much everything else is irrelevant. The pink lines are simply the 4pm close and I make the current day 3 pixels wide. I'll keep about another week of pink closes around, but change them to 2 pixels. Then after a week or so I change them to blue and 1 pixel. So currently there are about 90 lines on my charts of all the closes.
All the green and red lines are the opening range high/low. The opening range is the first 30 mins from 9:30:00 to 9:59:59. The opening range is programmed into the computers so you need to pay attention to it to help you figure out what the computers are up to. Other than that I'll draw some trendlines here and there. Usually off of a pivot high or low. You'll find that the computers that do the trading and thus control the markets do that too. I've never figured out if they are using Gann Fans since this StreetSmartCentral software is so crappy and if you get more than a few fans on your chart they become ridiculously messy.
I usually keep the charts at 5 days with 2 minute candles. You could do 1 minute candles, don't really matter. 5 minute candles you're missing too much of the data. Less than a minute, you are just kidding yourself. You ain't going to be able to out trade the computers. You could go to 10 days. I usually keep them zoomed in so I can see the last 3-4 hrs. I only zoom out to see where we were earlier in the week, and to look for chart patterns and trendlines. It's all about knowing how the markets work and looking to see what the computers are up to.
Mar5dayzoomed
Here's a 1 month with 30 min candles just so you can see what it looks like. They start getting pretty messy towards the end of the contract. The trendlines tend to be temporary and I'll now and then delete old ones that are no longer relevant or I'll be lazy and leave them. No need to exam these too closely. They are about to get discarded. I'll do more pics as I switch over to the June contracts and start marking them up. You'll easily be able to see how I mark them up and do your own, Wow, 7am already. Need to start switching these charts over, get something to eat and then get ready for 8:30.
Thanks for taken the time to show your work. Trading is very difficult to navigate without a Captain to show you the ropes. Problem is, there are way to many Captains in You tube land. Every once in a while you might find someone willing to show some waypoints, to help with the navigation. I look forward to your guidance and mentorship. One question, being that this is your journal is it ok to ask questions from time to time?
Here's my charts with everything switched over to June and reset up. Without 14 weeks of data on them you can better see how I set them up. The pink lines are the close which I take as the opening price on the 4pm candle. The green/red lines are the high/low of the opening range (9:30-9:59:59) with the line starting at 9:30 so when I look at the charts I can easily see where the 9:30 open is by just looking at those lines.
Here's everything zoomed out to see the last 5 days and I drew in all the lines going back to last Wednesday. You can see on the left of the charts that some of the indexes, especially RTY didn't have a lot of liquidity before Friday and that even using 2 minute candles, sometimes there was no trade. By looking at the green/red lines you can easily see where the 9:30 open was and the pink lines where the 4pm close was. Then by looking along the pink line to the next 9:30 open you can easily see what happened overnight. It all tells a story. You can look to see what happened at the 4pm close, then what happened after the close up to the 5pm break. What happened on the 6pm reopen, then what happened on Japan starting up at 8pm, then Hong Kong/China at 9:30, the 2am Japan close and Europe premarket, then currently because Europe hasn't switched to daylight saving time yet, the 4am Europe open, what if anything happened at 8:30 on any economic reports, the 9:30 open, and then what happened during the opening range. It all tells a story on what is happening in the markets and what the computers are up to. Everything is connected. What happens in Asia, and then Europe effects us, and we effect them.
You'll notice I don't have any volume on the charts. You think there is any volume in the middle of the night? i haven't found volume useful for anything. I don't have any moving averages or anything and they just clutter up the charts. How do you do say a 20 day moving average on something that for all intents and purposes wasn't trading 20 days ago. My indicators are time, price, chart patterns, trend lines, and then things that aren't even on the charts. Treasuries, VIX, certain key stocks, plus which stocks or sectors are moving today. It's a knowledge of how the markets work, and looking to see what is going on. There are no special indicators. There is being a student of the markets.
