Day Trading the E-mini Futures

[bakrob99 11]

Strangely I find myself short the NQ while still long the ES. Slight change in plan.

 

Still plan on sailing.

[TheNegotiator 13]

goodoboy, here's another bit of conflicting advice to add to the mix--while some type of approach is important, only a good plan is worth following. The market may not agree with your plan, in which case it would be foolish to adhere to it (I did this yesterday in fact). It comes down to reading what the market is doing. Early exits, both for winners and losers, if there is a good reason (and not based out of fear, etc.), are okay in my book. Bowing down to the holy temple of "the plan" may not be the wisest course for all circumstances. If one is able to detach himself from being in the trade and objectively see what's going on, then one does not need a plan--that's easier said than done of course, and we are all humans and can easily succumb to making poor decisions due to a bias while in a trade.

 

Sorry, but no, and if I seem argumentative, it's only because I've been doing this for so many years and I've worked with an awful lot of beginners.

 

A beginner cannot take trades outside his plan until he has developed a consistently profitable trading plan that he can trust. If during his trading he sees that certain modifications are necessary, he can make those modifications and try again the next day. But he cannot make a habit of changing horses in midstream. By following the former path, he may have a rigorous plan in a matter of weeks. By following the latter, he may never have one at all.

 

Db

 

Db, perhaps I didn't articulate myself particularly well. Having and following a plan for a beginner is crucial to developing method and consistency and understanding. I may be wrong, but I don't believe Josh was suggesting that a beginner should trade 'planless' either. The point is that there are times where given what the market is telling you, you know your plan needs to be adjusted realtime within your risk parameters. Then of course it's important to subsequently study what happened and whether or not your plan needs to be fixed, added to, slimmed down or whatever. Again, this isn't for a beginner to try. However, if it's clear that a plan isn't working to a beginner, it's perfectly fine to sit back and not trade at all or at least sim trade it.

[DbPhoenix 42]

Db, perhaps I didn't articulate myself particularly well. Having and following a plan for a beginner is crucial to developing method and consistency and understanding. I may be wrong, but I don't believe Josh was suggesting that a beginner should trade 'planless' either. The point is that there are times where given what the market is telling you, you know your plan needs to be adjusted realtime within your risk parameters. Then of course it's important to subsequently study what happened and whether or not your plan needs to be fixed, added to, slimmed down or whatever. Again, this isn't for a beginner to try. However, if it's clear that a plan isn't working to a beginner, it's perfectly fine to sit back and not trade at all or at least sim trade it.

 

I completely agree with the "again, this isn't for a beginner to try" part. And as for the following sentence, I agree with the "it's perfectly fine to sit back and not trade at all" part, but not the sim trade part. When the market throws the beginner a curve ball. his best option is to sit back and study what's happening objectively, which is next to impossible for a beginner to do if he has a trade on, sim or otherwise. If he tries to trade anyway, tentative loops are set up which will retard or even sabotage his efforts and set him back.

 

The most common of these curve balls is the unanticipated trading range. Beginners believe that as soon as they've transmitted their order, price will immediately begin to move in the anticipated direction, surely in an extended trend that will net them large profits. But when they instead find themselves taking lots of tiny profits and tiny (hopefully) losses, they're stumped. And if they don't understand support and resistance, they keep throwing themselves against the wall, making modifications to their trading plans -- if they have any -- and drifting farther and farther into the weeds. Once a pattern of successive stopouts occurs, the beginner ought to just stand aside until the behavior -- trading range or trend -- becomes clear. At that point, he is far more likely to know what to do and far more likely to profit from whatever he does.

 

Db

[DbPhoenix 42]

Here, for example, both the NQ and ES are finding R in pretty much the same places tho the NQ folded before the ES. Short ops arose for the NQ around 10:20 and for the ES around 10:30. If one sees only the "uptrend", these ops escape notice entirely.

 

Db

[TheNegotiator 13]

I completely agree with the "again, this isn't for a beginner to try" part. And as for the following sentence, I agree with the "it's perfectly fine to sit back and not trade at all" part, but not the sim trade part. When the market throws the beginner a curve ball. his best option is to sit back and study what's happening objectively, which is next to impossible for a beginner to do if he has a trade on, sim or otherwise. If he tries to trade anyway, tentative loops are set up which will retard or even sabotage his efforts and set him back.

 

I'm actually glad you disagreed with the sim part. There are those who say you must take trades in your plan no matter what and I wasn't sure of your stance on this. It's better for a beginner to stand back and watch so they can try to be objective and this really should be part of the way the market is observed. None of this screentime = experience bs. It does, but only if you're focused and objective about what you see. Beginner or otherwise. Plus an important point imho, is that if said beginner is struggling and probably frustrated, taking the same trades on the sim is in no way going to change this, only it could add to the frustration and have an additional detrimental affect on emotions.

Edited August 8, 2012 by TheNegotiator

[Predictor 11]

Market is getting a bit heavy at the top here. My bias is to the downside.

[bakrob99 11]

Here, for example, both the NQ and ES are finding R in pretty much the same places tho the NQ folded before the ES. Short ops arose for the NQ around 10:20 and for the ES around 10:30. If one sees only the "uptrend", these ops escape notice entirely.

 

Db

 

Holding a long in the ES is easier if you're making money in a short in NQ.

[DbPhoenix 42]

I'm actually glad you disagreed with the sim part. There are those who say you must take trades in your plan no matter what and I wasn't sure of your stance on this. It's better for a beginner to stand back and watch so they can try to be objective and this really should be part of the way the market is observed. None of this screentime = experience bs. It does, but only if you're focused and objective about what you see. Beginner or otherwise. Plus an import point imho, is that if said beginner is struggling and probably frustrated, taking the same trades on the sim is in no way going to change this, only it could add to the frustration and have an additional detrimental affect on emotions.

 

If the plan is thoroughly tested and has become consistently profitable, then, yes, one must take the trades no matter what. HOWEVER, one must also understand behavior well enough to know when to exit the trade if it doesn't meet expectations, and beginners are by their nature incapable of doing that because their fear triggers are firing like crazy. And, as you said earlier, if a pattern of bum trades manifests itself, then it's time to revisit the plan.

 

Beginners ought not to be trading at all, sim or otherwise, without studying the market. But finding beginners who are willing to do this is a rare occurrence. Which is likely why successful traders are also a rare occurrence.

 

Db

[DbPhoenix 42]

Holding a long in the ES is easier if you're making money in a short in NQ.

 

And if the NQ range is four times wider:)

 

Db

[Predictor 11]

Just my 2 cents but this thread works best when everyone focus on what the market is actually doing right now versus our differences in philosophies..

 

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I am seeing some problems with my short bias. Higher probability I am wrong. Evaluating the data.

[bakrob99 11]

Out of my ES long. Nice price action for me today in NQ and ES.... sort of a natural hedge.

 

Off to the boat. It's summer after all.

[DbPhoenix 42]

Out of my ES long. Nice price action for me today in NQ and ES.... sort of a natural hedge.

 

Off to the boat. It's summer after all.

 

Congratulations. Notice how "light" they both became when they turned and broke through resistance?

 

Db

[Predictor 11]

Much of what I do is reading the order flow.. Reading the order flow involves reading the book supply, market orders, and the tape (price action). There aren't many patterns I've learned in the book but there are a couple.

 

My bias is toward the downside... I am weighing if we may run back to the 92ish level.

 

To me it looks like a buy program triggered the run to the upside.. institutions seem to be leaning short still. I'm weighing many possibilities though. I don't want to get set in one mindset.

 

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A buy program was just exhausted by institutions.. look for a run down here if my hypothesis is right.

 

LQ providers have turned on the book now... feel a higher probability to the down side... (turned seller)

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Buy programs are often set to go off near new highs... speculate may involve buying specific baskets of stocks.. likely designed to run stops

Edited August 8, 2012 by Predictor

[MightyMouse 12]

Thanks joshdance,

 

The comments I can agree with, I notice sometimes the plan does not follow through. It will take alot of thinking and day to day market action and analyzing.

 

ES is at a major crossroads: 1400. It is going to react very differently than you might have learned to expect over the last 100 ES points. So, you may like the plan you developed is no longer valid..

[Predictor 11]

The longs seem to be broken here by strong limit resistance. I look for a drive down very quickly if my hypothesis is correct.. possibly take out the entire buy side book.

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Questioning my outlook... need to see development. The bots seem to be very aware of where traders enter and look to target the break even stop extensively.

 

The best patterns is when the order book is flooded and traders are driving with market orders.. not seeing that here.. seeing some sellers but no book flooding... yet

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LQ providers are taking other side to institutions.. need to see a drive lower here.. anticipating it

Edited August 8, 2012 by Predictor

[goodoboy 10]

Absolutely. But, there is certainly merit in having rules to allow you to take trades outside of a plan. I think the point is that whilst it's very important to have a plan, becoming fixated by it at times may lead your trading into being rather one-dimensional. Of course, if you're taking more trades outside of a plan than in it, maybe it's worth changing the plan.

 

A plan is must, I agree. But, what if the trader thinks his/her plan is too simple? As a beginner, and like Db suggested, I started crosses out stuff that was confusing me and only focus on the things that was helping me.

 

I started trading ES from buy and holding stocks. When I join one of those livestream chat rooms where everybody takes trades off the leader method and this is how I come to future trading. There the method was watching the /DX, the /6E, the SPX, rsi (4hr, 30min, 1hr, 15min) head and shoulder, etc etc. For me, it was just too much. Bout time I take the trade, my head is all over the place. So, i crossed out all that stuff, and only chose 2 timeframes and only watching the ES and one momentum indicator. And thats my direction for now, until I prove that's wrong way. I think for newbies, its just too much information overload out there. And all of it plays with emotions while in the trade. I stop watching the news, data reports, what Ben is saying. I just want to know the market reaction from these events and time and date. That is simple enough for me right now and focusing on my skill.

 

Maybe, I am thinking too small, but for the past few weeks, I just define areas of interests (resistance and support, pivots, LOD, HOD, etc.) and analyze those areas and try to think how a buyer or seller is thinking at those levels and take the trade. Basically, buying and selling off key support and resistance and using one momentum indicator. Now, of course I am still developing a plan (discipline rules) for what I want and don't want and how to manage the trade. Also, more knowledge on volume profile.

 

I don't know, I just think experience is great teacher and yes, having a plan is worth it. But I also think, not being emotional attached to either direction this market will go, is helping me. I am coming to the point where I really don't care if this market goes up or down, I just want to be in a position either way. So that's why I say to myself let me define a method that will get on board in the direction wherever the market goes.

 

That's how I see it for now.

[joshdance 10]

ES is at a major crossroads: 1400. It is going to react very differently than you might have learned to expect over the last 100 ES points. So, you may like the plan you developed is no longer valid..

 

Said another way, the market is total bull shit this week, so anything goes. Maybe less to do with 1400 than with the lack of anything market-moving in the news this whole week. Or maybe not, I dunno.

[goodoboy 10]

Morning everyone. Pretty tight ranges Mon/Tues then?

 

Here's a chart:-

 

 

Thank you for sharing. This 1396.50-1395 is interesting level. I was ready to short if 1395 did not hold.

[Predictor 11]

I rarely focus on the absolute price levels. Much of the time, I'm not even sure what the price is. This is true today as a day trader but also applied when anticipating longer term forecasts.

 

The market is often an interplay between short term traders and longer term traders. As longer term traders initiate positions, shorter term traders drive the market away from those locations. This is a cost but they are always required to cover which is what creates many of the dynamics in the markets.

 

The true LQ providers are always providing some liquidity. They were able to reset their positions lower as the institutions sold into them. I suspect they use semi martingale and layering...

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There seem to be 2 market order execution strategies. For market orders, some will feed in markets at a specific rate... others will execute a large single order at MIT (sell on uptick and buy on downtick)

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Bias is down again. Not always updating my bias.. obviously it hasn't been down this entire time but looking for possible drive back to previous lows.

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Anticipating a close near 96.50...

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HFTs seem to use a strategy of sending in orders at a fast rate to drive price beyond where it should go. This just conjecture but there are 2 order strategies in use.

 

----

 

Didn't quite get there... tested but moved higher.

Edited August 8, 2012 by Predictor

[goodoboy 10]

long 1396.50 target 1403.75 stop 1393.50.

 

Reason: trend is up, support is pivot point and trendline before it. Also, 15 min slow stoch just crossed showing some momentum upwards.

 

Here is chart for look.

example 1 - goodoboy25's library

[bakrob99 11]

long 1396.50 target 1403.75 stop 1393.50.

 

Reason: trend is up, ...

 

Which trend is up ?

 

 

The Thurs or Friday BEFORE OEX week often makes a new low. Just something I keep in my journal.

[MightyMouse 12]

long 1396.50 target 1403.75 stop 1393.50.

 

Reason: trend is up, support is pivot point and trendline before it. Also, 15 min slow stoch just crossed showing some momentum upwards.

 

Here is chart for look.

example 1 - goodoboy25's library

 

not to flood you with conflict, but 93-94 might be a good entry, risking a few points, attempting to catch the whole range on a day like today. Risky taking a trade a few minutes before the open so close to a globex extreme with the stop at the extreme. But, I am a pussy who doesn't like to lose.

[bakrob99 11]

long 1396.50 target 1403.75 stop 1393.50.

 

Good going. You got that right.

[DbPhoenix 42]

long 1396.50 target 1403.75 stop 1393.50.

 

Reason: trend is up, support is pivot point and trendline before it. Also, 15 min slow stoch just crossed showing some momentum upwards.

 

You got it right, but the only criterion you're using that has any pertinence to the trade is that the trend is up. Support lies elsewhere and trendlines don't provide support. As for the slosto...

 

Be that as it may, congratulations. Now stick with your plan.

 

Db

[sdoma 10]

A beginner cannot take trades outside his plan until he has developed a consistently profitable trading plan that he can trust. If during his trading he sees that certain modifications are necessary, he can make those modifications and try again the next day. But he cannot make a habit of changing horses in midstream. By following the former path, he may have a rigorous plan in a matter of weeks. By following the latter, he may never have one at all.

 

Db

 

100% right. For anyone who disagrees, analogize it to surgery. A surgeon learns to perform a procedure exactly as it is taught. Later on, as he or she gains skill and what Rommel called "fingertip feel," they can become more creative, think about other ways to perform the procedure, and develop a "style" as a surgeon. But first, you learn the "textbook" way as it teaches you fundamentals.

 

If you don't first follow a plan, through draw down as well as profit, how will you gain a feel for the system's performance and profit curve? Remember, for a beginner, it's easy to get that feeling that "it's not working!" after a couple of losses, but losses are common, even in a system with a high win rate. So, if you stick to it, you may realize that you're making money and losses are just a cost of doing business.

 

If your plan requires modification, then you can do that in a controlled manner by making a formal written change to your plan and then testing it. Your plan can grow and adapt over time along with your skill set, but it should be done in a thoughtful and controlled manner.