Does Anyone Truly Make a Living Solely Trading the E-minis???

[forrestang 10]

Yes. I have been making my living solely trading the ES for the past 3+ years.

 

But I must say that before then I was a horrible trader (primarily due to poor risk management principles). Giving back weeks of profits being on the wrong side of trend days.

 

It was only due to the efforts of some prop traders (and this is not a plug - won't even mention their firm) that turned my trading around. I can't even count the number of accounts that I blew out.

 

I'm new to posting on this board and because those prop traders took the time to help me, I feel that I have a debt to repay by helping others. True professional trading has nothing to do with setups, technical analysis, or any of the commonly accepted garbage that is out there.

 

I have nothing to gain. nothing to sell, and my only motivation is to help traders who are in search of valid trading information to fill the void...

 

Ronnie

I would be more interested in what you mean about risk/management principles.

 

FP

[roztom 10]

Yes, Yes..

 

As mentioned previously.. it is trade management where the real rubber meets the road...

most spend their time on recognizing a vaid edge or setup and then executing it consistently. This is a major challange in itself but once you put the trade on, then what?

 

If you executed a coin-toss with proper money management, risk, scaling out, profit management, etc you could probably make money. The profit would be made by proper trade management of the random winner and of course managing the risk on the losers.

 

If you can define a statistically valid "Edge" that you can execute consistently then you need to add how you can manage and keep the yield... this area is typically the last to be addressed yet it is why most fail in this business...they never get there and never know why..

 

Another item that professional traders do is to trade around their positions to create an edge: ex. if long reducing their theorhetical average..that means if you buy at $100.00 and you can scalp around your position and take $20.00 out now you are theorhetically long from $80.00 which gives you more edge to stay in the trade... this is advanced but it is what professional traders do to improve their position... and "reduce" risk.. not suggesting anyone do this unless you have a skill set specifically for it...

 

I support myself full time trading exclusively ES but I can trade any market... the process is the same outside of the specific idiocyncricies of the product, etc.

 

Tough business, rewards commensurate with the challange...

[BlueHorseshoe 10]

 

I support myself full time trading exclusively ES but I can trade any market... the process is the same outside of the specific idiocyncricies of the product, etc.

 

Tough business, rewards commensurate with the challange...

 

Do you have any thoughts on minimum starting capital, Roztom?

 

Thanks

 

Bluehorseshoe

[roztom 10]

Do you have any thoughts on minimum starting capital, Roztom?

 

Thanks

 

Bluehorseshoe

 

More is better...Part of the issue is what is the skill level and psyological stability to execute consistently... the other part of the issue is can the individual invest time vs. $ to develop a plan that has a statistical edge and the plan includes entry, risk, trade & exit management.

 

I suggest that nobody put a dime in the market before having those components in place.. Otherwise, it is like driving at the Indy 500 to see how fast the car can go before installing the brakes.. an accident waiting to happen..

 

In my mind, the amount of $ is commensurate at a percentage of risk... Ex. if max daily loss limit is $1,000 then you need $50,000 for 2%... for me I like to keep my risk to about 1.5% so just extrapolate. ,etc depending on how many contracts and money management... etc. Percentage of capital at risk should psycologically let you be free of emotional attachment to $. If you trade undercapitalized all kinds of demons emerge from the dark side...

 

For a perspective, I think a 3 lot (ES) is minimum to maximize scaling which actually reduces risk. I trade in units of 3's, unless I am trading shorter rotations then units of 2's.. Time of day also affects size but that is another topic..

 

I think undercapitalization is a major reason traders fail... also if they trade $ before they have SIM'd long enough they will be throwing precious capital away...

 

Some, of course, will disagree saying the only way to really learn is to just jump in...

 

To me that is like throwing a toddler in a pool and expecting it to swim...

 

Hope this answers your question..

Edited April 14, 2012 by roztom

[BlueHorseshoe 10]

Hope this answers your question..

 

Yes, that certainly answers my question. Thanks for replying, Roztom.

 

Bluehorseshoe

[mnctigah 10]

FP:

 

By "risk management principles," I meant that I had no concept thereof...

 

I used to be right so often (fading extremes) that when a trend day came along, I'd repeatedly try to fade (having been right 83% of the time or whatever the stat may be). That proved very costly when trend days came along the other 17% of the time. In my defense, as I've grown as a trader, I'm now usually on the right side of the trend day.

 

I normally take just one ES trade per day, especially if it's a winner. I may take another if I miss the first to get my loss back. I trade primararily during the 1st 2 hours of the ES when there is plenty of liquidity. Each time you enter a trade you are assumming risk so why do so unneccesarily? I sometimes make a 1st hour bond trade, but even if I don't, it gives me so much of a better feel for the ES come that opening.

 

Stop placement needs to be based on structure. Period. If that's too much of a monetary risk then contract size needs to be reduced accordingly.

 

To the amazement of the mentors who I am eternally indebted to, I've brought my individual risk per trade down to -4T, which is really nothing more than noise in the ES. I just prefer stopping out and re-entering if structure demands a larger stop.

 

And once you get better at reading flow, you'll begin to see the traps and when traders are trapped underneath/above a level. Ever wonder why you get stopped out and then trades resumes in the direction you anticipated but you're left behind. Larger traders know that retail is using 1-2 handle stops. That's not to say that you should use a larger stop, but rather devote some time to reading flow and understanding the retail mindset.

 

In addressing the professional trader, at least the ones that I workd with, they would populate orders at the front, middle, and back of the level because they couldn't be sure exactly where the turn would be. And they would do this and trade every level, because statistically and mathematically that was their proven edge. Yes, on trend days they would have small losses, but they had a mathematically edge and those losses were viewed simply as a cost of doing business. They traded mutiple models (swngs, etc) in order to smooth results. This is the true essence of professional trading. But the bulk of profits were obtained by trading large numbers of contracts in low volume areas as markets tend to grind in those areas when revisiting and it was a simple matter of "grinding it out."

 

Not to yank my own chain, but I improved accuracy dramatically by incorporating volume breakdown and deltas in BALANCED MARKET situations, and adopting a different strategy for OUT OF BALANCED (trend) situations.

 

Hopes this helps a bit...

 

Ronnie

[gosu 10]

The amount of starting capital depends on the starting conditions. Learning on one's own without the guidance of someone who can not only do it but also show how to do it is never ideal, and it is difficult to put a number on the amount that is required because much depends on sheer luck.

 

Even under ideal conditions, the goal in the beginning is to preserve trading capital while acquiring knowledge, skill, and experience which is best done by building on incremental successes. There ought to be no expectation of "making a living" from trading profits initially and indeed the amount for personal needs have to come from a source other than trading. For learning intraday trading of, say, stock index futures, the time required during the day in front of the screens is an opportunity cost that cannot be overcome by most who have to sell their labor for income in the general economy.

 

Here are some comments regarding what I consider ideal learning conditions for someone starting from ground zero, including the amount of starting capital.

 

Were I to make a commitment to work with someone, I would require the person to have 2 years of personal living expenses prepared and initial trading capital of no more than $5,000. In today's environment of $500 intraday margins, I would even go as low as $2,000 to open the account but then the selection of brokers gets limited. Currently, I see $4,000 is required to open an account with at least one broker offering an execution platform at no additional cost.

 

We would begin by trading 1 contract with the mutual agreement that I cover all losses from the starting account while learning under my guidance. Covering the learner's mistakes is not purely for altruistic motives but to make the time spent more effective by taking the thought of loss off the table and to make clear that his only goal is to follow instructions since it is my time and money on the line. Inability or unwillingness to follow instructions ends the relationship.

 

After orienting the learner to the screens and how annotating is done on the charts, we start actual participation by doing a drill called the wash drill. We watch the screens together and I monitor aloud and announce the sentiment, dominance, and certain market events. We are anticipating continuation events and in particular what is called an AM p3 (point 3) which is the focus of the beginner's wash drill. The drill is to enter on the AM p3 in the direction of dominance and to wash the trade (exit at breakeven +/- 2 ticks ES). Sometimes it becomes apparent soon after entering that a wash won't be available soon. In this case, we wait out the AM and either wash if it becomes available or exit at the end of the 8:50 bar and just call it a wash. The drill is repeated every day until the initial capital is doubled.

 

Upon the first doubling, the learner withdraws his initial capital and spends it in any way he wants. The only thing he can't do with it is leave it in the account and increase his trading size. That comes with the next account doubling, when another ES contract is added for 2 contracts. At this point all handholding ceases and he trades on his own. I would recommend adding additional contracts sequentially until 5 is reached and then dwelling there (at least 1 long-term market cycle) while sweeping the account monthly to just get used to that routine until "making a living" drops out of the picture and the truth appears that it has always been about the use of time.

[riviera1212 10]

I did make a living day trading e-minis several years ago. Started with agricultural contracts....an expensive schooling session.Looked into day trading after taking a bath holding a beans position overnight after the "pod count" announcement after close. E-minis offered mainly unrivaled liquidity and, at that time, an electronic order platform. Fills were seconds instead of minutes and more. Commissions were less. I traded the minute charts....in a position 5-10 minutes max. I spent a year papertrading and learning the patterns and timing in this one market. The news might refer to a lackluster trading day for stock traders....I would count 20+ small trend trades in the same period. I can tell you this...day trading will brutally reveal the contents of your mind to you...quickly. Your fears, obsessions, anxieties, misplaced confidence....etc, etc, will cloud or clarify your trading. Same with the daily issues and dramas of your non-trading life. In truth, the realities of risk/reward, charting, patterns, timing, stops, money management, etc. are fairly straightforward....your emotion/history driven implementation is surprisingly not. I had a few printed sayings on my trading desk: "It's all in your mind", "It's all my fault" (the need to accept responsibility for your trades); "If you know what to do, why don't you do it" (referencing a trigger pulling problem). Self discovery WILL yield success...good luck!

[SpearPointTrader 10]

I am going to start this off by stating that I am currently a broker for Aim Futures and Options.

 

That said, we are currently gearing up to offer access to a trading system for the e-mini based on a computerized algorithm.

 

The system started in January of 2011, and to date, including commissions and fees, has gone from a 5k start, to just under 12K.

 

Yes, I know that Past Performance, is Not Indicative of Future Results, however, it is really hard to look at that and not think the risk may be acceptable to many people.

 

I would say that it is possible to make a living trading the E-mini, if you have a good strategy.

 

 

Please note that there is an inherent risk of loss associated with trading futures and options contracts.

Futures trading is not suitable for all investors. Past performance does not guarantee future results.

Edited December 4, 2012 by SpearPointTrader

[steve46 12]

I am going to start this off by stating that I am currently a broker for Aim Futures and Options.

 

That said, we are currently gearing up to offer access to a trading system for the e-mini based on a computerized algorithm.

 

The system started in January of 2011, and to date, including commissions and fees, has gone from a 5k start, to just under 12K.

 

Yes, I know that Past Performance, is Not Indicative of Future Results, however, it is really hard to look at that and not think the risk may be acceptable to many people.

 

I would say that it is possible to make a living trading the E-mini, if you have a good strategy.

 

 

Please note that there is an inherent risk of loss associated with trading futures and options contracts.

Futures trading is not suitable for all investors. Past performance does not guarantee future results.

 

OKay so I am going to "start off" by saying what a load of crap

 

and now back to the topic;

 

I think the challenges have been outlined by so many folks over time

 

You have to find an edge.

You have to have sufficient capital and knowledge of the market structure to trade it

You have to have the discipline to execute it, and keep records so that you can do the periodic evaluations necessary to know if that edge remains viable over time.

and finally if the edge you are trading goes away, you have to enough skill to find a new edge and repeat the process.

 

Its not that big a deal....but those are the obstacles and it requires an investment in time and effort that many of you simply won't or can't make.

 

A couple of things to think about (just my opinion)

 

Traditional indicators like cigarettes will eventually kill you (kill your account)...however some folks learn to use traditional indicators in "non-traditional" ways....that seems to work, but it takes creativity and investigative work....as with all things, some folks can do this, some can't

 

There are a few approaches that seem to work pretty well IF you have the (educational) background)....like my distributions for example...and for the record you don't need MY method to make it work....look at the thread and at the end is a document that shows how to calc a "basic) distribution....to make it worth while, you have to learn some math (stats) and you have to understand what a distribution "does"....again some will, some won't.

 

You can learn to read price action using trend lines only (like DB phoenix)...thats fine but realize that you have a partial picture of what is going on in the markets....keep in mind that TODAY'S markets are news driven, so the more you understand about the way that news affects markets the better off you will be...this is especially true for those trading currencies.

 

There are some basic ideas that have always seemed to work pretty well....these are based on human behavior. They work because human behavior never (almost never) changes and is mostly about "habits".....as just one example, traders seem to want to defend the previous day's range (open to close). The basis of this is my "time based pivots" (yearly, quarterly, monthly, weekly, and daily open high and low)....I still use them successfully. Today for example in the NQ futures, price tested the area around the monthly, weekly and daily low repeatedly. I watch and trade this behavior all the time...and I make a nice living doing it....

 

One last thing, if you get to the point where you see the light at the end of the tunnel, one thing you will have to learn is that you need to

 

LEARN TO BE SELECTIVE ABOUT TRADE ENTRIES.....

 

The more you trade, the more your broker makes, and (usually) the less YOU make....

 

Good luck

Steve

[SpearPointTrader 10]

OKay so I am going to "start off" by saying what a load of crap/

 

Not sure why you would say this is a load of crap. I have the trade logs that show each trade since inception. I think this pretty much establishes a winning record. One could have traded the Emini for a living, with that system if they choose to, so long as they had enough capital to put up. The system requires 5K for each contract traded.

 

and now back to the topic;

 

I think the challenges have been outlined by so many folks over time

 

You have to find an edge.

You have to have sufficient capital and knowledge of the market structure to trade it

You have to have the discipline to execute it, and keep records so that you can do the periodic evaluations necessary to know if that edge remains viable over time.

and finally if the edge you are trading goes away, you have to enough skill to find a new edge and repeat the process.

 

I think we can all agree on that.

 

Its not that big a deal....but those are the obstacles and it requires an investment in time and effort that many of you simply won't or can't make.

 

True.

 

A couple of things to think about (just my opinion)

 

Traditional indicators like cigarettes will eventually kill you (kill your account)...however some folks learn to use traditional indicators in "non-traditional" ways....that seems to work, but it takes creativity and investigative work....as with all things, some folks can do this, some can't

 

That is the route I took with my personal day trading method. I have my own way of using the Bollinger Bands, and the 3 main moving averages to time entries, and exits.

 

 

You can learn to read price action using trend lines only (like DB phoenix)...thats fine but realize that you have a partial picture of what is going on in the markets....keep in mind that TODAY'S markets are news driven, so the more you understand about the way that news affects markets the better off you will be...this is especially true for those trading currencies.

 

I really don't agree with this at all. Maybe 15 years ago, but todays markets are donated by High Frequency, computerized algorithms. Quite frankly they make it difficult to be in for very long. I went from looking at 30 minute charts to trigger pulling, ot the 10 minute, as an example.

 

Over all fundamentals still determine over all direction, as they always have, but getting from here, to there is just not what it was.

 

There are some basic ideas that have always seemed to work pretty well....these are based on human behavior. They work because human behavior never (almost never) changes and is mostly about "habits".....as just one example, traders seem to want to defend the previous day's range (open to close). The basis of this is my "time based pivots" (yearly, quarterly, monthly, weekly, and daily open high and low)....I still use them successfully. Today for example in the NQ futures, price tested the area around the monthly, weekly and daily low repeatedly. I watch and trade this behavior all the time...and I make a nice living doing it....

 

 

This thought is that this is because the extremes of the previous days range have a high percentage of getting hit, or surpassed (in the direction of the trend). So a safe bet is often to buy under the previous days high (In a bull trend), and set an MIT at that high to exit, because it's a good risk to take. What is more risky, is trying to figure how far beyond that previous days high will the price go. Makes sense to try and take the easy money. This should cause a lot of MITs to he bit right at, or near that level, which drives the price down, giving the impression traders are looking to protect that level.

 

LEARN TO BE SELECTIVE ABOUT TRADE ENTRIES.....

 

The more you trade, the more your broker makes, and (usually) the less YOU make....

 

Yup. I suggest making sure you only trade near perfect setups. It's easy to chase the markets around when they are bouncing around like a ping pong ball...but that does not mean you can get in and out at good times. Better to wait for the opportune moment. If you have a set up, that wins 80% of the time, you are way better off loading up on that one trade, riding it out and calling it a day, than trying to trade 1 contract at a time, all day long chasing what is essentially random market action.

Edited December 4, 2012 by SpearPointTrader

[steve46 12]

No problem princess, I am sure you have say 5 years of data to back up your claim....

 

and (of course) you can provide a letter of audit....?

 

Where do we find and download that data for analysis?

[SpearPointTrader 10]

No problem princess, I am sure you have say 5 years of data to back up your claim....

 

and (of course) you can provide a letter of audit....?

 

Where do we find and download that data for analysis?

 

For what? The trading system I was talking about? That started in jan 2011. If you want to PM me, I can provide you with a copy of the logs on PDF if you like.

 

Oh, and thats 'Mister Princess' to you.

[steve46 12]

Having a problem with your short term memory...yes YOUR system...MR. PRINCESS

 

So less than 1 year of data.....thats you definition of "proven"?

 

Ahhhhh no thanks, not necessary....

[SpearPointTrader 10]

So less than 1 year of data.....thats you definition of "proven"?

 

Less than 1 year?

 

Do you trade as well as you do math? Maybe you should not be challenging people and calling names. You might do better in social settings.

 

As for my system, no. I don't have an audit on it. I don't share my personal method with anyone. I don't trade anyone's accounts with it, and I didn't intend to. So other than general conversation, it's not relevant to anyone but me. The computerize algorithm is what I have records for.

[steve46 12]

YOUR absolutely right Mr. Princess...2 whole years (not quite)....but close enough

 

Wow.....again....no thanks. no sale...

[SpearPointTrader 10]

YOUR absolutely right Mr. Princess...2 whole years (not quite)....but close enough

 

Wow.....again....no thanks. no sale...

 

Also, maybe in your rush to lynch someone for no reason you became a little confused. When I said proven, I meant I have the actual real time trade logs showing each trade as they occurred. Those logs prove what the performance was from Jan 2011 to now.

 

As for your "No sale" comment. I don't quite understand that. I was not intending on selling you the trade logs if you PMed me. i was going to just send you a copy.

 

I never really intended to make an offer like that. You have been challenging and insulting. I was basically answering your challenge with the facts...which you are now clearly running from by acting like you are not interested.

 

The truth of the matter is you have been acting like a disrespectful ass, and are about to get checked by the trade logs if you were to actually look at them. so now you have to run away.

 

I mean, God forbid someone you have been attacking actually have some proof you can't refute.

[MightyMouse 12]

I am going to start this off by stating that I am currently a broker for Aim Futures and Options.

 

That said, we are currently gearing up to offer access to a trading system for the e-mini based on a computerized algorithm.

 

The system started in January of 2011, and to date, including commissions and fees, has gone from a 5k start, to just under 12K.

 

Yes, I know that Past Performance, is Not Indicative of Future Results, however, it is really hard to look at that and not think the risk may be acceptable to many people.

 

I would say that it is possible to make a living trading the E-mini, if you have a good strategy.

 

 

Please note that there is an inherent risk of loss associated with trading futures and options contracts.

Futures trading is not suitable for all investors. Past performance does not guarantee future results.

 

You should have a gold "C" so that us non "C's" can quickly identify you and know if you are drinking at the right water fountain. Personally, I don't let my children mingle with the children of "C's".

 

When you say real time trades, do you mean demo real time?

[Predictor 11]

First, I think there is a major distinction that needs to be pointed out because it may not be obvious. There is a difference between being able to make a living wage trading the e-mini over a year versus trading the e-mini for a living. Typically, when one thinks of "making a living" they think of steady, consistent, and risk free income whereas trading results are often non steady, inconsistent, and are at risk.

 

Typically, I look at making 30% of my max risk per day good while keeping my average realized max risk and gain about equal. I also think that risking up to 3%-5% of daily capital is not too excessive if one is consistent. This implies that one needs about 34k to be able to attempt to make a living wage of around 55k.

 

The problem with this model is that its not at all realistic but is based on best case vs worse case scenarios. In reality, it is best to consider worst case scenarios. In worst case, a trader should need enough savings to be able to run himself for at least a year and a trading account large enough to cover a year's losses. Some might say 2 years even. Based on this new minimum, one is looking at about just over 100k. Yet, in truth most traders will see the benefit in having a multiple of that to forgo the benefits of a career and to reduce the risks of over leverage. The mathematics change quite dramatically to favor the trader if the trader has additional income streams, side businesses, etc -- which is why every trader should have such streams.

 

The lesson is clear: for most, it is a much better deal to attempt to make a living wage trading then to attempt to trade for a living.

Edited December 5, 2012 by Predictor

[BlueHorseshoe 10]

 

This thought is that this is because the extremes of the previous days range have a high percentage of getting hit, or surpassed (in the direction of the trend). So a safe bet is often to buy under the previous days high (In a bull trend), and set an MIT at that high to exit, because it's a good risk to take. What is more risky, is trying to figure how far beyond that previous days high will the price go.

 

Hi,

 

You're talking about the ES, right?

 

I agree that the prior day's high has a high probability of being hit, and that trying to estimate any further excursion beyond this is tricky; I concur that exiting at the prior day's high is therefore a sensible option.

 

However, precisely where 'under the previous day's high' would one want to get long?

 

The prior day's low would seem to make sense, wouldn't it?

 

Now, how are you going to buy, market or limit? And what impact will each of these order types actually have (as opposed to what you might optimistically imagine that they would have) on your net profit, bearing in mind the typical daily range of the ES? By the time you've covered the spread plus slippage, or lost a few winners due to unfilled limit orders, paid commissions, and covered your other overheads, are you anywhere near to turning a profit?

 

BlueHorseshoe

[/\/\ 10]

@roztom... thanks for your post... Not sure what you meant by creating an edge? Do you mean a person can create an edge through proper risk management? I believe in cutting short the loser and riding the profits, however, this is difficult as profits take long to earn. Cannot expect to hit home runs all the time... Appreciate your reply... thank you.

[SpearPointTrader 10]

You should have a gold "C" so that us non "C's" can quickly identify you and know if you are drinking at the right water fountain. Personally, I don't let my children mingle with the children of "C's".

 

When you say real time trades, do you mean demo real time?

 

No. I mean the logs are the actual real market entry trades that were taken. Not demos.

[SpearPointTrader 10]

First, I think there is a major distinction that needs to be pointed out because it may not be obvious. There is a difference between being able to make a living wage trading the e-mini over a year versus trading the e-mini for a living. Typically, when one thinks of "making a living" they think of steady, consistent, and risk free income whereas trading results are often non steady, inconsistent, and are at risk.

 

Typically, I look at making 30% of my max risk per day good while keeping my average realized max risk and gain about equal. I also think that risking up to 3%-5% of daily capital is not too excessive if one is consistent. This implies that one needs about 34k to be able to attempt to make a living wage of around 55k.

 

The problem with this model is that its not at all realistic but is based on best case vs worse case scenarios. In reality, it is best to consider worst case scenarios. In worst case, a trader should need enough savings to be able to run himself for at least a year and a trading account large enough to cover a year's losses. Some might say 2 years even. Based on this new minimum, one is looking at about just over 100k. Yet, in truth most traders will see the benefit in having a multiple of that to forgo the benefits of a career and to reduce the risks of over leverage. The mathematics change quite dramatically to favor the trader if the trader has additional income streams, side businesses, etc -- which is why every trader should have such streams.

 

The lesson is clear: for most, it is a much better deal to attempt to make a living wage trading then to attempt to trade for a living.

 

My personal thoughts on this are along the lines of, I don't like to trade more than 1/3 of my account at any one time. maybe even no more than a 1/4.

 

Based on my personal day trading system (Not the automated algorithm I am also discussing), I would need 50K of operating capital to make a living. This means a minimum of a 150K account. Frankly, I want 250K to trade 50K at a time.

 

The system works by taking very small slices, when maximum momentum, is on my side so I have a very high probability of winning. If I am not confidant I can make $50 to $100 on a trade, with an 80% chance of success, I won't trade. If we are talking something like corn, I only need one winning trade month to pay all my bills and have money to chase women.

 

However, that system will not work exclusively with the E-Mini. I have to search all major market sectors for the right set ups. I can't limit myself, so it' not really relevant to this particular thread other than to discuss the money management issue you just brought up.

 

I also agree that having a side stream of income is essential. To me, this is not to have a steady flow of income because trading is erratic. But more for psychological reasons.

 

When you know your bills are covered, you don't feel pressured to trade, to meet your financial responsibilities. Having a side income that can cover your basic expenses, means you can relax and just trade when you feel like it, no pressure. This prevents over trading.

 

Over trading blows out accounts. You want to avoid it.

[SpearPointTrader 10]

Hi,

 

You're talking about the ES, right?

 

I agree that the prior day's high has a high probability of being hit, and that trying to estimate any further excursion beyond this is tricky; I concur that exiting at the prior day's high is therefore a sensible option.

 

However, precisely where 'under the previous day's high' would one want to get long?

 

The prior day's low would seem to make sense, wouldn't it?

 

Now, how are you going to buy, market or limit? And what impact will each of these order types actually have (as opposed to what you might optimistically imagine that they would have) on your net profit, bearing in mind the typical daily range of the ES? By the time you've covered the spread plus slippage, or lost a few winners due to unfilled limit orders, paid commissions, and covered your other overheads, are you anywhere near to turning a profit?

 

BlueHorseshoe

 

Yes, I am talking the ES

 

Here is the thing. I don't actually trade this way. I wouldn't. It's not my forte. I do understand how that trading style works, of course. However, I have my own set ups that I look for.

 

On the other hand, many times one of my set ups will occur somewhere below the high of the previous day. In THAT case, I may enter and set an MIT at, or right under the previous high, to get me out so i can take the money and run (as they saying goes)

 

If I am going to keep my eyes glued to the screen, I can also exit using my exit rules based on the relation of the price, the 3 main moving averages and the bollinger bands to each other. If I am not glued to the screen, then I might use the MIT at the previous days high so I don't have to watch it every second like a horse race.

 

So for me, I can't really answer where i would enter, because my entry is based on another system of trading. It varies, because my set ups occur independently of where the price is. I don't look to break areas of previous support and resistance.

 

My set ups are totally based on the price, moving average and bollinger band relationships. When I see the right relationship, I enter, and hold until it dissolves. Where the price is, or isnt when the set up forms, and dissolves is not even relevant to me. I only care if the set up IS, or ISN'T solid.

 

Again, my personal method. It's not limited t the ES (but it does work with it)

 

As for the order type, since I generally like to enter manually, if I see a solid set up, and my entries are not based on price, but the existence, or not, of my set ups, I generally pull the trigger with market orders for the fastest in and out execution. The only real exception, like I said above, is if I am being lazy and just want to exit as son as I hit a level I am really sure it's going to hit. The previous days high is one example. I more often use my MITs at, or near the outer bollinger band.

 

I use MITs over Limit orders because they become market orders on execution. I do this because I want a rock solid exit. where as a Limit order may be touched, but before your order gets filled the price drops below it and never goes back up. This often happens when you are too optimistic of the range for the day. The MIT helps me to ensure a fill, even if it's a bit under my price (Because I am probably wrong anyway).

 

I never care how much I made on a trade, ONLY if I profited, or not. so if I had a $100.00 with a limit order, but instead used an MIT, and filled with half that profit, I don't care. I still made $50.

 

If I had used a Limit, and the price just touched it, and the 20 orders ahead of mine got filled, then the price dropped under the limit before mine could, maybe I will never get filled because the market turned at that point and just dropped and dropped until what was a win, is now a loss.

 

The MIT helps prevent that.

 

 

Sometimes i set MITs at arbitrary points with the intention of getting out manually. However if my MIT gets hit, i want an automatic out because I may be trying to hold on too long by then. I now my psychology. If I set an MIT at a place I could make good money, I am good. I can do this BEFORE the heat of the game starts effecting me.

 

I may still get out sooner if my set up is obviously dissolving though. In that case my MIT becomes a bit of an insurance policy against my own psychological weaknesses.

 

All that is way off topic though. Really needs it's own thread.

Edited December 6, 2012 by SpearPointTrader

[cfrn 10]

Yes.

 

That was my original answer, but it was rejected as being too short. I understand forum mechanics so no problem there. However, the original question posted which started this thread is in fact a Yes or No question and the factual answer is Yes.

 

To the original poster I pray you've already found your answer. If not, now you know.

 

Merry Christmas to all.

 

Blessings

DeWayne