High Volatility and Long Liquidations

[Soultrader 12]

Volatility has been insane in with the US index futures and each trader needs to adjust their money management accordingly. 10 lot YM traders can make the same amount with 5 lot. It does seem like ER2 traders have shifted into the YM and I personally congradulate any intraday trader making money in this current condition. There is alot of noise and I would feel alot more comfortable staying away from any intraday trading. There are plenty of other markets that are easier to trade at the moment. Longer timeframe participants have been liquidating over the the last 2 weeks followed by slight short covering. Nervousness, fear, panic... all these emotions have been expressed over the past 2 weeks by the bulls. While shorts have been gaining further confidence since early this week.

 

For traders who are struggling with the index futures, perhaps look for a less volatile market to trade in. This market condition is not ideal for new traders and traders with small accounts. (it will easily wipe out your account!) Anyways, been reading some of the trade logs and has been great. Keep it up guys and congrats to brownsfan who takes 30 plus ES pts a day. Freaking amazing. Seems like US traders are having a lot of fun now :woah: Out here in Japan is like.... :sleep:

[brownsfan019 17]

I feel the exact opposite James. This has been great. Getting 5+ pts on an ES trade in minutes is killer. I know it will stop, but hopefully not soon!!!

 

Kill or be killed is appropriate for the current daytrading environment.

[GCB 10]

For traders who are struggling with the index futures, perhaps look for a less volatile market to trade in. This market condition is not ideal for new traders and traders with small accounts. (it will easily wipe out your account!)

 

I recommend soybeans. I could have made bank today on beans but I didn't have time to take the trades I was so focused on YM. (Plus my little sons kept knocking on my office door. Gotta love 'em now though because when they get bigger you never see 'em.)

 

Anyway. Soybeans. They breakout and trend better than the indexes.

 

[notouch 10]

What timeframe are you thinking of in terms of breakouts and trends in soybeans? Daily, hourly, 5 minutes?

[Guest cooter]

WARNING: Do not hold any of the grains overnight unless you are fully capitalized.

 

These markets can and do routinely open limit-up or down. Which means you may be stuck in a position moving 50 cents AGAINST you with no way out until the next trading day.

 

NEWBIES, beware.

[brownsfan019 17]

I don't know... I guess if you JUST trade volatility (or lack thereof) then you could look for something new to trade. That doesn't make much sense to me though. I mean, you can try to be a jack of all trades or an expert in a few. And if you plan to be an expert, you NEED to watch and learn your market(s), regardless of conditions. I'm having a hard time seeing how you can become good at trading something if you jump from one contract to another b/c you don't like the current conditions. Why not study and learn, so when this happens again (and it will) you can make money?!?!?!

[notouch 10]

We've had this argument before brownsfan and I've got to disagree with you again. It depends totally on your trading style. If you want to microtrade a single market then of course that market needs your undivided attention. If on the other hand you like to swing trade a few markets or just look for one or two set ups per day per market then you're better off looking at different markets. You need to stop thinking "my way of trading is the right way of trading" if you don't mind me saying.

[Dogpile 10]

YM was routinely moving 40 ticks in under 2 minutes today.... these are truly abnormal times -- I am definitely adjusting size... for example, today I was adding YM contract size 'around' my entry point. my usual 15 tick stop loss just doesn't make sense in this environment -- it can move that much in literally seconds. so I found myself 'averaging into' a position -- just 2 measly contracts at a time.... picking spots over the course of a 2-6 minute timeframe rather than lumping full size on at one arbitrary moment. much easier to ride out that first 40-tick range 2-minute bar when you only have a few contracts on...

 

I am having big week but today was the least profitable day of the week for me. Made a lot on YM but gave a chunk to others on NQ. hope somebody here was the recipient of my NQ donation. NQ patterns today were needless to say --- 'highly complex' -- I couldn't interpret them until well after the fact.

[brownsfan019 17]

We've had this argument before brownsfan and I've got to disagree with you again. It depends totally on your trading style. If you want to microtrade a single market then of course that market needs your undivided attention. If on the other hand you like to swing trade a few markets or just look for one or two set ups per day per market then you're better off looking at different markets. You need to stop thinking "my way of trading is the right way of trading" if you don't mind me saying.

 

Yes, swing trading is a different animal; however it appears most here are daytrading futures. Maybe I'm wrong there, but the majority of posts are about the ES, YM or ER2. Those are daytrading vehicles primarily. Look at charts posted here, most (if not all) are daytrades and most are for minutes.

 

So, working under the assumption that most are daytraders of the US indexes, then focus on these market(s) is necessary to become successful. I doubt many here are swing trading US index futures contracts.

 

It would probably be useful to take a poll to see what types of traders are here.

[notouch 10]

I wouldn't say they were day trading vehicles. Just look at the open interest and you can see that a lot of contracts are held overnight. Big moves like today are caused by longer term traders liquidating not by scalpers (who are active every day). Of the day traders I think a large proportion must be people who just make one or two trades per day.

 

I would agree though that if you actively day trade a single market you don't want to be running away from volatility. You need to learn how to trade it.

[brownsfan019 17]

That open interest you see is the big boys. Most retail accounts couldn't hold overnight if they wanted!

[notouch 10]

You're probably right. Most retail traders like to use heavy leverage and can't keep their eyes off the screen when they have a position open. Their tight stops and margin calls provide intraday liquidity for the big boys who hold positions for longer. Of course there are many scalpers and intraday traders who succeed (such as yourself) but there are even more who fail. Personally I find I can make more money using smaller contracts and aiming for bigger moves.

[MrPaul 10]

I feel the exact opposite James. This has been great. Getting 5+ pts on an ES trade in minutes is killer. I know it will stop, but hopefully not soon!!!

 

Kill or be killed is appropriate for the current daytrading environment.

 

Brownsfan,

 

I agree! I was nabbing 4-5 point trades all day on the ER2 and was only aiming to maybe get 2!

 

This environment is like manna from heaven for me lol

[notouch 10]

I was tempted to trade YM today. I was looking at it on a 5 minute chart with two EMAs thinking "there's a short, there's another one, there goes another one". I probably could have made as much profit in one day as I made in a month by holding a long position (which I liquidated earlier this week). A couple of years ago I would have been distraught at having missed "the Big Move" but now I'm pleased with myself for being disciplined enough not to care. The key thing is to find yourself a market and a strategy and stick to it, not to flounder from one market and strategy to the next as the market conditions change.

[Dogpile 10]

<<A couple of years ago I would have been distraught at having missed "the Big Move" but now I'm pleased with myself for being disciplined enough not to care. >>

 

I am with you. I hope it moves big every day and I miss most of it. Just give me a few good set-ups a day -- I really couldn't care less what the close-to-close pt/% move is...

[Soultrader 12]

Brownsfan,

 

I agree! I was nabbing 4-5 point trades all day on the ER2 and was only aiming to maybe get 2!

 

This environment is like manna from heaven for me lol

 

I feel the exact opposite James. This has been great. Getting 5+ pts on an ES trade in minutes is killer. I know it will stop, but hopefully not soon!!!

 

Kill or be killed is appropriate for the current daytrading environment.

 

For the experienced traders this is heaven. I agree absolutely. Especially with this wild swings.... wow! But for those who trade with small accounts and lacking the years in experience, these emotional markets can be difficult. You need lightening speed execution and the ability to act.

 

Its been pretty wild here in Tokyo too... but since there is no overnight trading hours the gaps are RIDICULOUS!

[MrPaul 10]

For the experienced traders this is heaven. I agree absolutely. Especially with this wild swings.... wow! But for those who trade with small accounts and lacking the years in experience, these emotional markets can be difficult. You need lightening speed execution and the ability to act.

 

Its been pretty wild here in Tokyo too... but since there is no overnight trading hours the gaps are RIDICULOUS!

 

Soul,

 

Funny you mention that. I was talking to another trader about how earlier in my career I would have had no idea how to properly trade these volatile markets!

[Soultrader 12]

Soul,

 

Funny you mention that. I was talking to another trader about how earlier in my career I would have had no idea how to properly trade these volatile markets!

 

Same here Paul. We all learn from our mistakes. I feel like a complete idiot when I first started trading. And i was so prepared to make a killing back then. Ha!

[notouch 10]

I tripled and blew my first account within a month. :cry::help::support::lol::rofl::baffled::pissed:

 

It was a spread betting account where you could trade as large a position as you like as long as your maximum loss on any one trade didn't exceed your declared assets. I was trading £100 a point on GBP/USD! I thought I'd be a millionaire within a month but it turned out to be the best (and most expensive) lesson I ever learned.

[MrPaul 10]

I tripled and blew my first account within a month.....

 

Really??

 

I did the same exact thing. Except for the tripling part :p

[darthtrader 10]

i just watched the john carter webinar that was recommended in one of the ag threads on here and a blurb he said thats a joke with traders is "if you can't make money trading, trade corn".

 

if you want to day trade the ags are there any intraday reports that come out during the trading day to be aware of?

[Nick1984 10]

I've looked at the ags a cpl time only cause I frankly am kinda bored by those markets but if i were to ever trade them I'd only really trade them on news announcements.

 

I reckon that if you're new (like me) then in current conditions you'd be better off to step back and only take positions that have a high success rate. Paper trade the rest and learn to trade these conditions,

 

Contrats to Brown and others who have sufficient experience to make a killing in these conditions. With only 5 trades a day your making 30 points on the ES! Thats a whopping $375 a contract lol. If I ever make it to the US soon you can shout me a beer or twenty!