Day Trading the E-mini Futures

[joshdance 10]

I am long from 90, with my stop at 89.75 right now ... I would love to see a move beyond 94, and see some short stops start getting hit.. maybe wishful thinking, but risk is low in the trade right now. Bulls feel in control.

[joshdance 10]

stopped out at 89.75 :-/

[TheNegotiator 13]

stopped out at 89.75 :-/

 

Oh well. My plan when market is like this = don't force it.

[joshdance 10]

Good plan ... either way I'm staying focused for one more hour, see if this thing will do something interesting.

[TheNegotiator 13]

Good plan ... either way I'm staying focused for one more hour, see if this thing will do something interesting.

 

Nice one. Big gap below if it does get going!

[joshdance 10]

wouldn't you expect it to sell off a little more than that below the IB low / LOD? Still looks down for the moment, considering selling 89 to 90 area if it comes back

[TheNegotiator 13]

wouldn't you expect it to sell off a little more than that below the IB low / LOD? Still looks down for the moment, considering selling 89 to 90 area if it comes back

 

Not sure Josh. Not paying much attention right now but I would say that I try not to assume anything when the market is acting a bit shitty. Gotta see some decent increase in activity to make it worth while.

[joshdance 10]

N, took a long 84.25 near the close, and instead of leaving my stop at 82, I moved it to 83.25 ... shaken out before my target of 93.. (well it's at 92 now). .... please tell me that you used to make stupid mistakes like that and learned?

[TheNegotiator 13]

N, took a long 84.25 near the close, and instead of leaving my stop at 82, I moved it to 83.25 ... shaken out before my target of 93.. (well it's at 92 now). .... please tell me that you used to make stupid mistakes like that and learned?

 

Of course and sometimes I still do! There are a few reasons for doing this kind of thing. Some valid some not. If you have a good reason for exiting early then you generally won't be annoyed at yourself. I have seen you do this a few times though and I could hazard a guess at why.

 

I think it probably stems from having a good trading idea but not having a solid entry point and/or plan. Having a good trading brain is a big asset once you learn how to trade with it. I think you can quickly see what is going on. But, I also think sometimes you are entering a trade on the fly. This is because I see you not giving the trade a little room to breath. Sometimes when you see the market not moving strongly in your direction the trader might get nervous and want to exit. But if it's not going against you either, why should you exit? It's the same on exits. The market is onside and you might get nervous that the market will snap back hard. But exit when it does. Would you buy the market a point below the high because you felt the market was going to break out? Well you might, but if it were a momentum play like that and it din't go, you'd be out pretty quick else you'd have bought the high!

 

I think you need to elaborate on why you exited so we can nail down what's going on.

[joshdance 10]

Thanks N..

 

I think there's some truth that I don't have a good plan in some cases--but the two stopouts at the beginning and end were both in areas that I had planned on looking for trades. And I was in the first trade for almost an hour and a half. The last trade I was in for 15 minutes. The problem is essentially this: I patiently wait for the trade to work; the first one did not go in my favor immediately; the second one did. When I give a trade room to work, which I did, and then it goes in my favor, especially in the first one when it spends the bulk of an hour in profit, then I start to get antsy. The psychological wear and tear starts to set in after 15 minutes or an hour, both of seeing profit and loss. My stop in both cases was initially at a logical place; however, when it goes 3 points in my favor, then I get antsy and want to reduce my risk. So, I move the stop. So, I think it's a case (it feels like it anyway) of fear of losing a lot, when in fact I could lose only a little or breakeven. However, in so doing, again and again I have nickled and dimed my way to a losers, when in fact a correctly placed stop would have made it a winning trade. Attached is my chart of my trades; notice how close I was on each one (except the third one). Wanting to saves pennies cost me many dollars.

[TheNegotiator 13]

Thanks N..

 

I think there's some truth that I don't have a good plan in some cases--but the two stopouts at the beginning and end were both in areas that I had planned on looking for trades. And I was in the first trade for almost an hour and a half. The last trade I was in for 15 minutes. The problem is essentially this: I patiently wait for the trade to work; the first one did not go in my favor immediately; the second one did. When I give a trade room to work, which I did, and then it goes in my favor, especially in the first one when it spends the bulk of an hour in profit, then I start to get antsy. The psychological wear and tear starts to set in after 15 minutes or an hour, both of seeing profit and loss. My stop in both cases was initially at a logical place; however, when it goes 3 points in my favor, then I get antsy and want to reduce my risk. So, I move the stop. So, I think it's a case (it feels like it anyway) of fear of losing a lot, when in fact I could lose only a little or breakeven. However, in so doing, again and again I have nickled and dimed my way to a losers, when in fact a correctly placed stop would have made it a winning trade. Attached is my chart of my trades; notice how close I was on each one (except the third one). Wanting to saves pennies cost me many dollars.

 

A bit of hindsight analysis for you here before I log off for the day.

 

Trade 1 - I think there was some decent volume just below 90 and into open it was grinding through that area. 1 tick below a round number is not something I'd advise generally either.

 

Trade 2 - Didn't really work and maybe you should've been out already, but when it moved in your favour but didn't take last swing high at 94 you should have exited probably actually at 91 for a scratch as here it broke the upward move structure.

 

Trade 3 - You probably didn't do a whole lot wrong. I don't think you had the best price and that's something I'm always aware of when I am assessing the trade at the time. A poor location, even if it was the best you could get at the time, when it starts coming back on you is a killer as you still need your stop in the right place and so it screws up your r:r. I'd rather let it go and see what I get. I think had you taken 2.5-3 points and called it quits that would have been a victory. 87 from memory was a reasonable level and failing to break at that point wasn't a brilliant sign.

 

Being really good at trading isn't about always being extremely profitable. It's about trading well. If you're down but you have a positive trade on close to the end of the day, give it some space but don't cling onto it- book the profit in. You won't get another chance that day.

 

The other thing I'd say although I think location was more of the reason you were nervous, is that you have to think why you are getting nervous. Has the market failed in your direction? Has it shown lack of intent in your direction? Has it stopped at an area you think is important? Is there any true reason for being nervous or is it like any performer where you are just getting butterflies in your stomach?

 

Anyway I think I'm going to start rambling in a minute if I haven't done so already!! So I'll leave it there for now and we can discuss stuff more tomorrow if you're up for that.

[joshdance 10]

The other thing I'd say although I think location was more of the reason you were nervous, is that you have to think why you are getting nervous. Has the market failed in your direction? Has it shown lack of intent in your direction? Has it stopped at an area you think is important? Is there any true reason for being nervous or is it like any performer where you are just getting butterflies in your stomach?

 

One thing I have started to realize is that a well-placed stop precludes me from needing a perfect entry--I used to miss lots of good trades because I would strive for the perfect entry with a 4 tick stop, and you and others and experience helped me see that a 2-3 point stop is much more reasonable in most cases, and will keep me safe from the noise. Well, in the first trade my original stop was 2.75, the last it was 2 points, and in both cases they would have kept me safe. The first and last trades were based on solid entry criteria though I could have done better on the 1st trade. On the last trade, the entry was in my mind about as perfect as I can get without getting lucky. So, the location was not ideal in all cases, but not terrible either. Other two trades were okay entries, nothing great.

 

I don't think it's so much nervous as emotional discomfort and wanting it to go in my favor enough for me to take the profit or move the stop and be safe. On a day like today with not much directional movement, it kept pushing and pushing in my favor (just look how many times 92 was hit before it bounced back up to get me), and just wouldn't go. And when it does that I think, "well, it's going my way but it won't break and feels like it's going to come get my stop." So, in an effort to avoid a full stopout of 2 or 3 points, I move it in to reduce the risk to 4 or 5 ticks, but then I move it into the danger zone, and then I'm tested and it comes and gets me.

 

Though you recommend taking the 3 points on the last trade and calling it a day, I've done this kind of thing in the past and then watch the trade go 8 to 10 points in my favor. Granted, I'd rather have the profit than the loss, but I'm actually happy that I was disciplined and did not take the profit early on this one. I was undisciplined in that I moved the stop early and the result was bad--however, after having 3 losses, in the past I would have let my P/L dictate where I take profit, and in this case sticking to the trade idea had I left the stop alone would have made it a pretty good day.

 

I think I've turned a corner in the stop loss department after today -- I see clearly where time and time again, moving the stop really damages my P/L. If I can take the emotional fatigue out of the equation, perhaps by going for a walk (started to do that but was raining here today ), then I see some very promising things for my upcoming trading.

[MightyMouse 12]

One thing I have started to realize is that a well-placed stop precludes me from needing a perfect entry--I used to miss lots of good trades because I would strive for the perfect entry with a 4 tick stop, and you and others and experience helped me see that a 2-3 point stop is much more reasonable in most cases, and will keep me safe from the noise. Well, in the first trade my original stop was 2.75, the last it was 2 points, and in both cases they would have kept me safe. The first and last trades were based on solid entry criteria though I could have done better on the 1st trade. On the last trade, the entry was in my mind about as perfect as I can get without getting lucky. So, the location was not ideal in all cases, but not terrible either. Other two trades were okay entries, nothing great.

 

I don't think it's so much nervous as emotional discomfort and wanting it to go in my favor enough for me to take the profit or move the stop and be safe. On a day like today with not much directional movement, it kept pushing and pushing in my favor (just look how many times 92 was hit before it bounced back up to get me), and just wouldn't go. And when it does that I think, "well, it's going my way but it won't break and feels like it's going to come get my stop." So, in an effort to avoid a full stopout of 2 or 3 points, I move it in to reduce the risk to 4 or 5 ticks, but then I move it into the danger zone, and then I'm tested and it comes and gets me.

 

Though you recommend taking the 3 points on the last trade and calling it a day, I've done this kind of thing in the past and then watch the trade go 8 to 10 points in my favor. Granted, I'd rather have the profit than the loss, but I'm actually happy that I was disciplined and did not take the profit early on this one. I was undisciplined in that I moved the stop early and the result was bad--however, after having 3 losses, in the past I would have let my P/L dictate where I take profit, and in this case sticking to the trade idea had I left the stop alone would have made it a pretty good day.

 

I think I've turned a corner in the stop loss department after today -- I see clearly where time and time again, moving the stop really damages my P/L. If I can take the emotional fatigue out of the equation, perhaps by going for a walk (started to do that but was raining here today ), then I see some very promising things for my upcoming trading.

 

It looks like most of what you anticipated happened without you in it. Have you thought of a reentry strategy? Maybe smaller stops and the commitment to reenter as long as B doesn't occur before A type of thing.

 

A stop isn't a right or wrong thing; It's a risk thing.

 

I apologize about the Monday morning quarterbacking.

[gosu 10]

@joshdance:

 

Do you monitor primarily on the 1m bars? What are you looking to extract off the trades you entered? A few ticks? A few points? 20 points? You made 4 trades and as you noted they all were in profit, or would have been in profit had you held slightly longer (trade 2), but you ended up closing them all in the red. More accurately, you allowed the market to reach an arbitrary price at which you wanted the trade to end and that arbitrary price was a loss in relation to where you entered. This is not a rational trading paradigm but for some reason you think you've turned a corner today in your progress. That is very puzzling. It looks to me you've put yourself in a box labeled "Hit or Miss" and that is how it will continue for you until you break out of it.

 

I had decided to no longer post on this board after the last PM from the owner asking me to not go around bursting people's bubbles. Your series of posts caused me to make an exception for some reason. My apologies if I'm out of line.

[joshdance 10]

gosu, glad you made the exception and decided to post. When I said I've turned a corner, I meant a shift in perspective mentally; in other words, it's more clear to me what I should do. I did not successfully do what I should have done, but the seed has been planted. If you have any specific feedback regarding the trades (other than what I have stated regarding moving my stop) I welcome it. 1st trade target was 84; 2nd was 92; 3rd was new highs or at least 96; last was 93.

 

MM, good suggestion-- reentry is not a strong point of mine and will need lots of work... Armchair quarterbacking always welcome..

Edited November 29, 2011 by joshdance

[gosu 10]

gosu, glad you made the exception and decided to post. When I said I've turned a corner, I meant a shift in perspective mentally; in other words, it's more clear to me what I should do. I did not successfully do what I should have done, but the seed has been planted. If you have any specific feedback regarding the trades (other than what I have stated regarding moving my stop) I welcome it. 1st trade target was 84; 2nd was 92; 3rd was new highs or at least 96; last was 93.

 

* * *

 

You requested specific feedback regarding your trades. In general I do not make comments regarding specific trades of others on a message board because the posting of entries and exits on a chart falls under the heading of trade tactics, and to make any sense of them requires that I know what the trader's underlying strategy was that gave rise to them. However, for intraday trading of ES the strategy is dictated by the landscape provided by the market itself, and on a day like today the landscape is rigid and the strategy is clearcut.

 

The day's landscape is a 300 point gap open on the Monday after a long weekend following a bearish close the prior week. At the open the sentiment is long. This is not an opinion or a subjective viewpoint dictated by personal beliefs. It is a certainty that can be relied upon to know exactly what is going on. Either a person has obtained the knowledge, skill and experience to discern that truth and trust in his judgment 100% or he is still struggling to make sense of what he is doing.

 

To reiterate, the sentiment is long and strong on the large gap open which was a reversal from the close of last week. Thus the strategy for the AM is clear: trade the dominant; hold through the first retrace; exit on the left side; sideline and wait for reentry after the retrace to play the resumption; no reversal until the test of hod at the start of midday.

 

The tactical execution of this strategy is where the rubber meets the road and determines what is extracted into the trading account. Tactical execution deals with the timing of actions and I use a pair of charts for this - ES 5m and YM 2m.

 

Regarding your requested feedback, I will limit my comment to only your first trade, as it is the only trade that falls within the AM. Your first trade was a short on the 10:15 5m bar. This is a short during a dominant traverse of the long channel and would be at best an early entry to play for a retrace back to the right side of the channel. While playing the nondom short can be profitable, the strategy I laid out above is to sideline at the end of dominant moves and to reenter for the resumption after the retrace until the end of AM. The fact that your "target" was 84, which would require a reversal of the entire morning, tells me that you are either unfamiliar with the landscape or playing a much larger fractal than the use of a 1m chart implies (i.e., you're willing to hold through the long sentiment in the AM and perhaps playing for a reversal in the PM or after today).

[joshdance 10]

Your first trade was a short on the 10:15 5m bar. This is a short during a dominant traverse of the long channel and would be at best an early entry to play for a retrace back to the right side of the channel. While playing the nondom short can be profitable, the strategy I laid out above is to sideline at the end of dominant moves and to reenter for the resumption after the retrace until the end of AM. The fact that your "target" was 84, which would require a reversal of the entire morning, tells me that you are either unfamiliar with the landscape or playing a much larger fractal than the use of a 1m chart implies (i.e., you're willing to hold through the long sentiment in the AM and perhaps playing for a reversal in the PM or after today).

 

Thanks for your feedback gosu. The short was a bit early I agree. However, being up over 40 points from the close on Friday, with an ATR of around 30, near major resistance, in the midst of some of the crappiest economic conditions in memory, a short is warranted in my opinion. But, as you said, the direction was long from the open. For this reason after I chose to not buy, I decided to wait to take the short.

 

The target of 84 was based on a few factors. I would have considered closing the trade at the low of the day near 87 as well, but 84 was my real target. The sentiment and order flow was bullish, but it was not the type of strength that would make 84 an unrealistic target IMO. After the stops were hit in the first half hour and sellers came into the market, it seemed to me that the bulls had put in what might be the HOD. And we wouldn't be having this discussion if I had left my stop alone. I would not have gotten 84; I would have been out at 91.50, as I would have moved my stop down after it broke 92 convincingly; then it bottomed out at 88.50 and I would have been out of the trade with a small profit. I would like to think I would have covered where I tried my long around 90, but I can't say for sure, so worst case is a 2.50 profit on the first trade.

 

I outline my thought process merely to point out that my strategy was a bit different from yours, though I intended to buy early on but did not. You say this is "the strategy" -- in truth, it is "your strategy" .. as we all have different strategies. My error caused me to lose money, but it was not a fault of the strategy, it was a fault of the execution of it.

 

As a side note, I use the 1m chart, but the one I posted is simply what NT uses to show my trades for the day, so it's not the same chart I trade from. I use longer term, and a shorter term chart as well.

 

Thanks for your comments and I would love to discuss anything else further.

[gosu 10]

Hi josh, thanks for adding more detail to your previous posts. Just a comment and a couple of clarifications. I've parsed your post below.

 

Thanks for your feedback gosu. The short was a bit early I agree. However, being up over 40 points from the close on Friday, with an ATR of around 30, near major resistance, in the midst of some of the crappiest economic conditions in memory, a short is warranted in my opinion.

 

I like to be precise in the timing of my actions. For me, the considerations you list do not provide any guidance for precise timing of actions. They are statements about why you think the short side is the side to play, or what I consider to be statements about a thing I call "sentiment." For the fractal that I play on, the sentiment is long at the open, even though I agree with you about all the conditions you list.

 

But, as you said, the direction was long from the open. For this reason after I chose to not buy, I decided to wait to take the short.

 

Just want to clarify that I said the "sentiment" was long at the open, not the direction. I won't go into detail as to the difference but to say that just because the sentiment is long at the open doesn't mean I'll take a long trade at the open.

 

The target of 84 was based on a few factors. I would have considered closing the trade at the low of the day near 87 as well, but 84 was my real target. The sentiment and order flow was bullish, but it was not the type of strength that would make 84 an unrealistic target IMO. After the stops were hit in the first half hour and sellers came into the market, it seemed to me that the bulls had put in what might be the HOD. And we wouldn't be having this discussion if I had left my stop alone. I would not have gotten 84; I would have been out at 91.50, as I would have moved my stop down after it broke 92 convincingly; then it bottomed out at 88.50 and I would have been out of the trade with a small profit. I would like to think I would have covered where I tried my long around 90, but I can't say for sure, so worst case is a 2.50 profit on the first trade.

 

I outline my thought process merely to point out that my strategy was a bit different from yours, though I intended to buy early on but did not. You say this is "the strategy" -- in truth, it is "your strategy" .. as we all have different strategies. My error caused me to lose money, but it was not a fault of the strategy, it was a fault of the execution of it.

 

Also want to clarify that I did not mean to imply that the short side could not be traded. Of course the strategy I laid out is my strategy and not a claim that it is the only strategy or even the best strategy. The important point is that the position of the market at the open was what is popularly known as a "trend day." Now this does not necessarily mean it will be a trend day the entire day, but I do not look past the AM until the AM is over, and the PM is informed by what goes before it which includes not just the AM but the midday.

 

As a side note, I use the 1m chart, but the one I posted is simply what NT uses to show my trades for the day, so it's not the same chart I trade from. I use longer term, and a shorter term chart as well.

 

Thanks for your comments and I would love to discuss anything else further.

 

Noted about the chart. Likewise regarding your final comment.

[TheNegotiator 13]

Hi Josh,

 

I think I missed one of your trades out yesterday, but not to worry!!

 

Regarding the last trade, there was no real break from the lower balance which was developing. So there was no reason to actually move your stop at all. Moving your stop can be a very useful strategy but it can also kill your account. Just a note though. Many people will not exit using stops, only using them as 'failsafes'. They are out when the market tells them to be out. Anyway, I think you have to look at exactly why and when you will move your stops and have fixed rules for doing so.

 

The rest of your entries have a recurring theme at least on this day. Your direction is good but your entries always seem to be a little early, putting you under pressure.

 

The first trade for example I felt was a good idea. BUT, the market had gapped up and was grinding higher at that point. There was no break from the move to suggest it had stopped and so there is a question to be asked. When you fade(like you did on all 4 trades btw!), do you get in at what you feel is a good price and see if the market then breaks the structure of the move, closing the position quickly if it doesn't or do you wait for the structure to break and hope to be able to get a good price after that has happened?

 

One last point. You said you felt that even though the market had gapped up, we are amidst some terrible economic conditions and clearly after the initial push higher on open it struggled. So while your overall idea was to short the market, 75% of the trades you took were actually long trades...

 

Unfortunately, to me it was at the point where your first trade was stopped out that told me we'd be testing lower. All that pressing and a failure to break higher felt ominous.

Edited November 29, 2011 by TheNegotiator

[TheNegotiator 13]

Given that overnight we have broken to the up side to test 1206.50 prior balance low and now we've fallen back into a kind of balance area and at least yesterday's rth range, there could well be a further exploration of prices lower to test towards 80.75/79.75. Depends on what the open looks like but that is the initial thought anyway. Take a look at the chart for a few ideas.

 

[joshdance 10]

Hi Josh,

 

I think I missed one of your trades out yesterday, but not to worry!!

 

Regarding the last trade, there was no real break from the lower balance which was developing. So there was no reason to actually move your stop at all. Moving your stop can be a very useful strategy but it can also kill your account. Just a note though. Many people will not exit using stops, only using them as 'failsafes'. They are out when the market tells them to be out. Anyway, I think you have to look at exactly why and when you will move your stops and have fixed rules for doing so.

 

The rest of your entries have a recurring theme at least on this day. Your direction is good but your entries always seem to be a little early, putting you under pressure.

 

The first trade for example I felt was a good idea. BUT, the market had gapped up and was grinding higher at that point. There was no break from the move to suggest it had stopped and so there is a question to be asked. When you fade(like you did on all 4 trades btw!), do you get in at what you feel is a good price and see if the market then breaks the structure of the move, closing the position quickly if it doesn't or do you wait for the structure to break and hope to be able to get a good price after that has happened?

 

One last point. You said you felt that even though the market had gapped up, we are amidst some terrible economic conditions and clearly after the initial push higher on open it struggled. So while your overall idea was to short the market, 75% of the trades you took were actually long trades...

 

Unfortunately, to me it was at the point where your first trade was stopped out that told me we'd be testing lower. All that pressing and a failure to break higher felt ominous.

 

 

Thanks N, all very salient points!

[TheNegotiator 13]

Thanks N, all very salient points!

 

Np Josh. I have every confidence you'll nail it today!

[joshdance 10]

Thanks N..

 

Looking to buy 99 if it makes it down, stop will be close, 97.50

[TheNegotiator 13]

Thanks N..

 

Looking to buy 99 if it makes it down, stop will be close, 97.50

 

How far are you looking for it to move in your favour before taking profit?

[joshdance 10]

How far are you looking for it to move in your favour before taking profit?

 

1205 -- thoughts? ..........