Day Trading the E-mini Futures

[roztom 10]

UPdate on SIM Trade:

 

I "finally" got my 58.50 Sim fill :haha: for a wholloping 1.75 pts.. and have adjusted my next target to 59.50..based on volatility though I think we could get to 59.75ish... not splitting hairs here - or are we? Stop B/E but depending on what I see I might just exit SIM stage left...

 

One thing with this type of day, it is hard to sit with a trade whether SIM or Real...

 

This trade has been soooo slow but then again it is a good day to try to read the market through the noise.. IMHO.

 

UPDATE: I exited my last SIM @ 59.25 +2.5 for a total of +4.25 pts... per 2 lot..

 

The rational being if you look at any of the interday swings when you can expect rotation.. after all Swing/H/L are Support/Res, etc..and on any rotation there are stops on both sides of the market..those were my "logical targets." I am a practitioner of Auction Maarket Theory..the markets job is to "facilitate trade"...get all sides involved - advertise for buyers & sellers, etc...

 

That's it for me.. Hope you all have a good weekend.

Edited February 17, 2012 by roztom

[TheNegotiator 13]

N, I looked but can't find it -- you referred to a "weak low" recently and in your chart just now. How do you define this again?

 

I was talking about the 55's. If you look at a small volume chart or maybe a 1min chart you can see there was no rejection as such or "excess".

[joshdance 10]

I was talking about the 55's. If you look at a small volume chart or maybe a 1min chart you can see there was no rejection as such or "excess".

 

Interesting that you say that--I closed my short for the very reason that it kept pounding on 55 but could not get through (was watching a 200V or 500V at the time). Granted, not tons of contracts, but 55.25 took quite a few, and 55 need not be traded heavily for a rejection--that's the concept behind a LVN being a point of rejection anyway, right? Either way, it was pretty clear that sellers tried, and then when I saw buying enter around 11:15 I knew I wanted to be flat.

 

Speaking of that-- some of you guys talk about LVNs and you use them as potential market testing points. On the profile for this week or since 2/3 or even the yearly profile so far (anything current, not considering past data), you will see that 53.75 is the lowest vol. price in this upper distribution, except of course the ones at the very top. The local POC of this area is 55, which is yesterday's VPOC.

 

The market stopped at 55, and did not make it to 53.75 -- any thoughts on this Would you be looking for 53.75 to trade if you're looking at the profile? Would love to hear thoughts on LVN vs. HVN as s/r.

[roztom 10]

Interesting that you say that--I closed my short for the very reason that it kept pounding on 55 but could not get through (was watching a 200V or 500V at the time). Granted, not tons of contracts, but 55.25 took quite a few, and 55 need not be traded heavily for a rejection--that's the concept behind a LVN being a point of rejection anyway, right? Either way, it was pretty clear that sellers tried, and then when I saw buying enter around 11:15 I knew I wanted to be flat.

 

Speaking of that-- some of you guys talk about LVNs and you use them as potential market testing points. On the profile for this week or since 2/3 or even the yearly profile so far (anything current, not considering past data), you will see that 53.75 is the lowest vol. price in this upper distribution, except of course the ones at the very top. The local POC of this area is 55, which is yesterday's VPOC.

 

The market stopped at 55, and did not make it to 53.75 -- any thoughts on this Would you be looking for 53.75 to trade if you're looking at the profile? Would love to hear thoughts on LVN vs. HVN as s/r.

 

Josh..just looking at today in general.. Like you I figured Responsive Selling early then I assumed fill the gap, and Yestersyas upper balance area and Globex VPOC in line with Yest VPOC thought there wouldn't be much downside especially since we broke out of balance. I also have CHVN at 55.25 so it seemed everything lined up... I have 53.75 as a MicroLVN... but the VPOC and CHVN are more signifigen since they are aligned...

 

I took a Sim long at 56.75 which I posted about earlier...

[TheNegotiator 13]

Josh, the answer to than for me is that it really depends. In this case, there's no reason why a poor low can't end up an extreme for the day. That's not what I was pointing out. If you look we have a familar candlestick setup here if you're into that called a "hanging man". Coupled with the testing or poor low rather than a strongly rejected or competed for low with excess and you could well see a decent break there if it returns there again. That might be Monday, or it might be after we've explored a bit higher, or it might be way in the future. Who knows, over the weekend all greek bond holders might say they really like the greeks and so have decided to happily tear up all their IOUs. At the time, I agree that it looked like it would turn. If you think about it, that's where we saw the first signs of contention yesterday(or at least squaring up). So it made sense given the proximity we had to it, for it to be tested again. Thinking in another way and I know I've experienced this before, when you take a postion and it breaks against you, how frequently do you see price return to just where you are and then continue on it's breakout path? That's because other who took the position need to exit for a minimal loss too when it doesn't reverse and new trades might be placed if it feels like there's no interest in a reversal of the breakout. Failed breaks can be pretty hard in their reversals.

 

So it depends always. Context, location, balance/imbalance of current activity, conviction of move, if participants are waiting etc. etc.

 

If we could put a badge on things and say x = y then things would be easier. But it tends to be x might = y if this is happens or that doesn't happen. The useful thing though is always if x ≠ y it often means x = z.

 

Anyway, it's Friday evening for me and so rather than ramble any more, I'll bid you all goodnight and have a great weekend! See you on Tuesday(I think I said Monday before but I remembered it's President's day)!

[steve46 12]

I posted today's patterns (there are two of them today) based on the 3 minute time frame

 

Once I see price approach a node I can either watch on the 3 minute time frame or switch to a shorter chart (1 min or 45 sec). Either of them will show me a process (automated execution), and of course I am watching the tape to see what happens with the bid.

 

Today was fairly straightforward....early on, banks stayed off the buy side because they were trying to determine what the ECB was doing with the private swap....as soon as they determined what the consequences would be for them individually (very little domestic exposure) they did what they always do and that is shear the sheep early, then buy the wholesale value and mark it up into the close.

 

Since not all of us have the same aptitude, I have begun showing folks how to visualize the tape using what I call market "granularity"....for this you need to have a sub minute chart and the ability to interpret the patterns that show up as price gets tossed around by the bots...

 

We use supply/demand nodes as context for this....in the primary pattern as price approaches either underlying demand or overhead supply, if you simply watch patiently you can see price touch a number (usually a node boundary) and the bots respond by intercepting the flow and putting in their own orders. This is what I call the “initial test”....the result of that initial test depends on several factors chief among which is the noise level....if as in present markets, the noise level is relatively low, we would expect to see a shallow pullback followed by a retest.

 

On the retest, once again automated execution (bots) intercepts the order flow, putting out their own size, this time it is usually slightly bigger and for that reason price may stay there a while and bounce....I teach the algo by using a mnemonic "inside/outside...test....test...test..

 

"Inside and outside refer to volatility moving in and out of an envelope...this is where the automated execution occurs...the test/test/test part is where the temporary balance between buys and sell orders plays out... as one side gets depleted (if the bid holds for example).

 

Obviously I can't go through all the detail however I think an enterprising person could figure it out given a bit of time (couple of years ought to do it) and the ability to observe and synthesize the technical aspects.

 

Based on my work I see this play out on two time frames....3 min and then the shorter time frames (best seen on min and sub min)...so you need a charting program that provides that detail or the ability to aggregate your own bar size.

 

The nice thing about this is that if you miss the primary pattern on the three min....you can switch to the shorter time frame and get on board the train later (to the extent that the trend continues).

Edited February 17, 2012 by steve46

[roztom 10]

Josh, the answer to than for me is that it really depends. In this case, there's no reason why a poor low can't end up an extreme for the day. That's not what I was pointing out. If you look we have a familar candlestick setup here if you're into that called a "hanging man". Coupled with the testing or poor low rather than a strongly rejected or competed for low with excess and you could well see a decent break there if it returns there again. That might be Monday, or it might be after we've explored a bit higher, or it might be way in the future. Who knows, over the weekend all greek bond holders might say they really like the greeks and so have decided to happily tear up all their IOUs. At the time, I agree that it looked like it would turn. If you think about it, that's where we saw the first signs of contention yesterday(or at least squaring up). So it made sense given the proximity we had to it, for it to be tested again. Thinking in another way and I know I've experienced this before, when you take a postion and it breaks against you, how frequently do you see price return to just where you are and then continue on it's breakout path? That's because other who took the position need to exit for a minimal loss too when it doesn't reverse and new trades might be placed if it feels like there's no interest in a reversal of the breakout. Failed breaks can be pretty hard in their reversals.

 

So it depends always. Context, location, balance/imbalance of current activity, conviction of move, if participants are waiting etc. etc.

 

If we could put a badge on things and say x = y then things would be easier. But it tends to be x might = y if this is happens or that doesn't happen. The useful thing though is always if x ≠ y it often means x = z.

 

Anyway, it's Friday evening for me and so rather than ramble any more, I'll bid you all goodnight and have a great weekend! See you on Tuesday(I think I said Monday before but I remembered it's President's day)!

 

I just want to throw in that today was strictly responsive selling ... looking that the rotation up was short covering...longs are comfortable.. SO far we are accepting higher value and the 62.00 area was tested with more upside to come... (eventually).

 

Agree on todays low as not being tested... however I think that it will be at somepoint to clean out weak hands after a move higher possibly Tuesday or so...

[roztom 10]

I posted today's patterns (there are two of them today) based on the 3 minute time frame

 

Once I see price approach a node I can either watch on the 3 minute time frame or switch to a shorter chart (1 min or 45 sec). Either of them will show me a process (automated execution), and of course I am watching the tape to see what happens with the bid.

 

Today was fairly straightforward....early on, banks stayed off the buy side because they were trying to determine what the ECB was doing with the private swap....as soon as they determined what the consequences would be for them individually (very little domestic exposure) they did what they always do and that is shear the sheep early, then buy the wholesale value and mark it up into the close.

 

Since not all of us have the same aptitude, I have begun showing folks how to visualize the tape using what I call market "granularity"....for this you need to have a sub minute chart and the ability to interpret the patterns that show up as price gets tossed around by the bots...

 

We use supply/demand nodes as context for this....in the primary pattern as price approaches either underlying demand or overhead supply, if you simply watch patiently you can see price touch a number (usually a node boundary) and the bots respond by intercepting the flow and putting in their own orders. This is what I call the “initial test”....the result of that initial test depends on several factors chief among which is the noise level....if as in present markets, the noise level is relatively low, we would expect to see a shallow pullback followed by a retest.

 

On the retest, once again automated execution (bots) intercepts the order flow, putting out their own size, this time it is usually slightly bigger and for that reason price may stay there a while and bounce....I teach the algo by using a mnemonic "inside/outside...test....test...test..

 

"Inside and outside refer to volatility moving in and out of an envelope...this is where the automated execution occurs...the test/test/test part is where the temporary balance between buys and sell orders plays out... as one side gets depleted (if the bid holds for example).

 

Obviously I can't go through all the detail however I think an enterprising person could figure it out given a bit of time (couple of years ought to do it) and the ability to observe and synthesize the technical aspects.

 

Based on my work I see this play out on two time frames....3 min and then the shorter time frames (best seen on min and sub min)...so you need a charting program that provides that detail or the ability to aggregate your own bar size.

 

The nice thing about this is that if you miss the primary pattern on the three min....you can switch to the shorter time frame and get on board the train later (to the extent that the trend continues

 

Steve: I loooked at your chart and the locations you outlined are exactly where I took a short and later the Sim Long I posted... @ 56.75.. I don't know if I can slice the entry any closer than that..but I would like to but I am not using limits for entry so I give up to get..

 

Is this chart a 3min that you posted?

 

OPPS: my 56.75 was later in the morning... apx 10:30cst..

 

Tx

Edited February 17, 2012 by roztom

[steve46 12]

Yes Tom that is a 3 min chart

 

The "initial signal" occurs at 8:06 thru 8:09...the "correct" entry is the second or third "test" down to touch 1355 even which occurred at 8:24

 

There is some variation if instead of staying with the 3 min, a trader switched to the shorter

minute or sub-minute charts.....but thats about how it plays out.

 

The attached chart shows what the algo looks like on the sub minute time frame and what the

other data looks like to me, when I am reading the tape. As I have said before unfortunately you can't really get the feel of it viewing a static display....from my point of view its clear, but then I have a lot of screen time behind me.

Edited February 18, 2012 by steve46

[roztom 10]

Yes Tom that is a 3 min chart

 

The "initial signal" occurs at 8:06 thru 8:09...the "correct" entry is the second or third "test" down to touch 1355 even which occurred at 8:24

 

There is some variation if instead of staying with the 3 min, a trader switched to the shorter

minute or sub-minute charts.....but thats about how it plays out.

 

The attached chart shows what the algo looks like on the sub minute time frame and what the other data looks like to me, when I am reading the tape. As I have said before unfortunately you can't really get the feel of it viewing a static display....from my point of view its clear, but then I have a lot of screen time behind me.

 

Steve: Thanks for the shorter timeframe... I can read the chart ok and especially the later one bar test/rejection towards 8:30 is very clear... While we use different methodology to determine "areas of interest" and it may be coincidental that they seem to align quite often I believe I had posted a CHVN at 55.25 (Trading computer not running at 5am cst).

 

Based on that bar structure at 8:06 - 8:09 and then the break higher out of it I would have been a buyer or if not, definitely after the later test towards 8:30. This is assuming some of the other tools supported it... Delta & also just how those bars "look/feel" as they're being developed.

 

I did not grow up trading in the Algo world..I dealt with program trading, etc. but not what we have today.. While I can't identify the specific behavior of what is creating the market at any specific time I am able to read the activity of accumulation/distribution as it is happening or where it may happen again.. The VP and the Nodes help me with that..

 

Steve: Can you touch on Scaling. Do you scale at targets - I think you know that I do or do you use a target based on volatility, etc. ?

 

Thanks for the concise explanation and charts...very helpful..

[steve46 12]

Tom

 

If a trader understands how to characterize a target market, then they can decide whether scaling in or out offers benefits that outweigh the costs...as with all things in finance, this balance between benefit and cost should be examined carefully.

 

For example if a target market displays significant trending behavior, and the trader has sufficient capital, experience and risk tolerance, it may make sense to either hold a position until a target is hit or, if a trade is judged to have a high probability of success, to actually scale in until a target is hit (and that "target" can be a price or a profit target).

 

If on the other hand the trader lacks capital, skills, experience and/or tolerance for risk, AND they are trading in a market that displays reversion to mean characteristics, it may be sensible to scale out....in fact it is probable that this type of trader will HAVE TO scale out in order to tolerate the tension that occurs when they are "at risk"....during any type of trade process.

 

Personally I think the best way to make this decision (if you have the other elements in place) is to do a historical test of your target market....by historical I mean (for intraday traders) you need at least 400 data points.

 

For the ES market, I teach my students to scale out because they lack experience, have limited capital and (understandably) not a lot of risk tolerance. The ES contract displays mean reversion often enough that they can pretty quickly see that the benefits outweight the costs.

 

The second part of your question is about profit targets...so for the ES market I know what other institutional players are going to do...and I like to align myself with them...I work in 10 point increments....knowing that seasonally this needs to be adjusted...and at this late date in my career I also look at the individual day in light of A) pending economic reports and earnings and B) pending news....a strategy that works well in these times is to work a trade and if you think there is the possibility of continuation, to leave at least one contract to run...either to end of day or to a pre-determined target...at times of high volatility it makes sense to hold as long as possible.

 

I hope this helps

Steve

Edited February 18, 2012 by steve46

[TheDude 10]

If the market is trending, why would you employ a target? That would be like only fondling one breast when making love to a beautiful woman.

 

If it's trending really hard, and you have good entry from earlier in the day, why limit yourself to a day trade? Why not hold the position 'overnight'? ie through the shut down period which isnt that long at all. Odds are it will carry on to higher prices the next day.

 

Big money is made from big moves. Small moves cover past losses and business costs.

 

Big money makes love to beautiful women, small money doesn't.

 

The Dude abides.

[steve46 12]

No idea if your comment is directed to me so...

 

I deal with students....they have to deal with the limitations they have until they get some experience under their belts...simple

 

For me (as I have said a couple of times) I put on an options position on a longer time frame and trade around it....when I am right it means I am always in the market, and am in effect scaling in....every day...when I am wrong I trade against it and hedge my losses...again it is pretty simple...

 

Not everyone has the capital to do that so I offer them the best alternatives I know of.

 

Hope this helps.

Steve

Edited February 18, 2012 by steve46

[roztom 10]

Tom

 

If a trader understands how to characterize a target market, then they can decide whether scaling in or out offers benefits that outweigh the costs...as with all things in finance, this balance between benefit and cost should be examined carefully.

 

For example if a target market displays significant trending behavior, and the trader has sufficient capital, experience and risk tolerance, it may make sense to either hold a position until a target is hit or, if a trade is judged to have a high probability of success, to actually scale in until a target is hit (and that "target" can be a price or a profit target).

 

If on the other hand the trader lacks capital, skills, experience and/or tolerance for risk, AND they are trading in a market that displays reversion to mean characteristics, it may be sensible to scale out....in fact it is probable that this type of trader will HAVE TO scale out in order to tolerate the tension that occurs when they are "at risk"....during any type of trade process.

 

Personally I think the best way to make this decision (if you have the other elements in place) is to do a historical test of your target market....by historical I mean (for intraday traders) you need at least 400 data points.

 

For the ES market, I teach my students to scale out because they lack experience, have limited capital and (understandably) not a lot of risk tolerance. The ES contract displays mean reversion often enough that they can pretty quickly see that the benefits outweight the costs.

 

The second part of your question is about profit targets...so for the ES market I know what other institutional players are going to do...and I like to align myself with them...I work in 10 point increments....knowing that seasonally this needs to be adjusted...and at this late date in my career I also look at the individual day in light of A) pending economic reports and earnings and B) pending news....a strategy that works well in these times is to work a trade and if you think there is the possibility of continuation, to leave at least one contract to run...either to end of day or to a pre-determined target...at times of high volatility it makes sense to hold as long as possible.

 

I hope this helps

Steve

 

Tx Steve, good explanation..What makes trading so interesting is the endless ways one can approach the market and also manage positions.. I do not hedge or leg my positons. In the "old days" I did trade around my positons in currency spreads..

 

As a daytrader I do not try to go for the long ball but can and do catch large moves if they are offered.. On the other hand, with few exceptions there is usually rotation to get on a move if the train leaves without me... If not there is always another train...

 

My targets are based on market structure, nodes, etc.. I always try to visualoze where the oppsing team will get caught or at least the weak hands on the other side might capitulate..that is typically my first scale...

 

This past Fridays structure was pretty easy. Get long off the bottom as I previously posted and then there were 2 swing highs that could be tested... with the potential for a close or test of the HOD which is what happened... My scales were based the probabilities we would rotate there.. The first scale was high probability, IMHO..the second scale and test of HOD less probable..so for me the first scale was based on market structure and then I just managed the trade based on how the market developed... While it was like watching paint dry and it took all of 5hrs to play out..I had no technical indications it was failing..so I stuck with it...

 

This is rather simplistic but I always want a scale to reduce my risk, get into a risk free position ASAP and also psycologically get some positive reinforcement..

 

I am really a rather simple trader.. I trade in multiple units of 2 or 3 lots depending on volatility.. I also will scalp around my position if we are in a strong trend and we get some rotation so I can reduce my average price... that's really all I can manage since I am discretionary.. works though..

[Chartsky 10]

:rofl:

 

I'll be laughing at this one for days!

 

If the market is trending, why would you employ a target? That would be like only fondling one breast when making love to a beautiful woman.

 

* * *

 

The Dude abides.

[TheDude 10]

No idea if your comment is directed to me so...

 

I deal with students....they have to deal with the limitations they have until they get some experience under their belts...simple

 

For me (as I have said a couple of times) I put on an options position on a longer time frame and trade around it....when I am right it means I am always in the market, and am in effect scaling in....every day...when I am wrong I trade against it and hedge my losses...again it is pretty simple...

 

Not everyone has the capital to do that so I offer them the best alternatives I know of.

 

Hope this helps.

Steve

 

Steve - Sorry, yes, my earlier comment was in response to you suggesting (new) traders employ a target. I just dont understand why that would be of advantage to anyone - stopping your self out of a profitable trade when there's potentially more money on the table.

 

If they don't have the margin to hold a position 'overnight' then all they need to do is close the position before Globex close, and put the position on again about 30m later when it opens again - thus still only having to put up the typical $500 intraday margin.

 

I dont really get you comment about options - that (if Im not mistaken) sounds like a planned longer term trade. Thats fine, but I was under the impression the scenario in question is when a newbie puts on a trade, assumes it will be a 'day-trade', realises there is real momentum behind the move, so keeps hold of it as long as possible to make the most. Rarely do we know in advance when these moves emerge.

 

If anyone looked back at their trade records of day trades, I bet at least 5% of trades would have gone on to make mega bucks, never to come back to the entry price if they were held longer.

 

Telling a newbie to cut his profit short is a disastrous move. It may give the psychological 'feel good factor' of banking a profit, but as we all know, success lies in doing what at first feels very uncomfortable - going against the grain and against what seems intuitive.

[steve46 12]

Steve - Sorry, yes, my earlier comment was in response to you suggesting (new) traders employ a target. I just dont understand why that would be of advantage to anyone - stopping your self out of a profitable trade when there's potentially more money on the table.

 

If they don't have the margin to hold a position 'overnight' then all they need to do is close the position before Globex close, and put the position on again about 30m later when it opens again - thus still only having to put up the typical $500 intraday margin.

 

I dont really get you comment about options - that (if Im not mistaken) sounds like a planned longer term trade. Thats fine, but I was under the impression the scenario in question is when a newbie puts on a trade, assumes it will be a 'day-trade', realises there is real momentum behind the move, so keeps hold of it as long as possible to make the most. Rarely do we know in advance when these moves emerge.

 

If anyone looked back at their trade records of day trades, I bet at least 5% of trades would have gone on to make mega bucks, never to come back to the entry price if they were held longer.

 

Telling a newbie to cut his profit short is a disastrous move. It may give the psychological 'feel good factor' of banking a profit, but as we all know, success lies in doing what at first feels very uncomfortable - going against the grain and against what seems intuitive.

 

Thats all fine, except that as mentioned, most new traders cannot tolerate risk (at least not for very long periods of time)...and those who can, often do so because they are unaware of the risks that they are exposed to in the markets......What I try to do is to strike a compromise between risk and reward, so that they can make some money, and still feel that they are protecting their capital...eventualy those who stick around long enough learn the value of holding a position over the longer term...in my opinion to teach effectively you have to meet the student where they are, and not demand that they do things that they aren't prepared for.

 

I appreciate your comment. You bring up some valid points.

[TheDude 10]

Thats all fine, except that as mentioned, most new traders cannot tolerate risk (at least not for very long periods of time)...and those who can, often do so because they are unaware of the risks that they are exposed to in the markets......What I try to do is to strike a compromise between risk and reward, so that they can make some money, and still feel that they are protecting their capital...eventualy those who stick around long enough learn the value of holding a position over the longer term...in my opinion to teach effectively you have to meet the student where they are, and not demand that they do things that they aren't prepared for.

 

I appreciate your comment. You bring up some valid points.

 

Sure.

 

I dont have any experience training others so really cant comment on that. i just remember when i started many years back - a few weeks in I was short BP futures. My boss told me to hang on if it broke support - it did. i'll never forget that high i experienced of watching my PnL start to tick up like a stop watch with a 100's of a second counter! I was hooked! (FX futures werent that liquid then, so when you hit a liquidity vacuum, you were in for a real treat!) you could have put a gun to my head and told me to exit on a target - no way would i have done it.

 

i remember it like it was yesterday. i made 20k that week and i was 26 years old.

[roztom 10]

RE: The Target item vs.. The Larger move...

 

This is not a counterpoint..If that approach is where your belief system is and you execfute it profitably it is right for you..

 

If you define yourself as a Daytrader then large move is in the eye of the beholder... While a Swing Trade can be profitable the risk is also proportionate.. You can't get one without the other...

 

When discussing reward there is more to it then catching the big move.. Of course there are big moves but trading a highly leveraged instrument assuming you can't or don't hedge it or spread it off leaves you open to open ended risk..just the way it is...

 

If based on a trade plan and risk capital if that is appropriate - why not do it...I take no exception to that..

 

However, in the daytrade world..(onl speaking for myself) targets are really a risk management tool since I focus on reducing or eliminating risk as my first objective - getting as close to a neutral risk position ASAP.. which is why I scale.. There are a lot of variables of course... If you have shorter targets with a high probability of achieveing them then just trade more contracts... I have a friend here who reguarly does 20 - 50 lots ES... he does not hit the long ball - no interest... Takes out a good $7 figures a year... short-term Targets....

 

He has a membership so his cost is not material which is key... While I can hit short targets with a high probability my costs are substantially higher retail so it is a real challange.. so I am forced to go for a longer swing but even then I use a target...

 

If you think about it if you try to stay in for the longball (Interday), most of the time you will eventually get taken out and since you have to give the market room you will leave a good % of open trade $ on the table... Of course there are days where it is a one way ticket but those are less than 20% of the time...

 

Typically if the market goes on to a signifigent interday level and it rotates I can always pick it up again..

 

I am probably typical of a small lot trader my unit is multiples of either 2 or 3 lot so if I trade 6 or 9 I trade them the same way except when I have three lot units on typically the third is managed as a longball.. still with a long target and how many 20 pt ES days do we get? Assuming I did not buy the low and cannot sell the high I am probably in the 12 - 15 pt potential range but that is a huge ES day.

 

If I scale against/ahead major obstacles along the way..assuming good trade location I can also participate in the higher probability outcomes...

 

This is where statistics come into play...

 

Before I daytraded I was a position trader in Currencies, Ag's, Financials etc. S&P's I was a swing trader..so I am very familiar with the big move point of view..

 

I do not trade scared..but I put a premium on risk management... Scaling is just part of that side of the equation.. I also wish to say that it is much harder to trade a 1 lot successully then 2, 3 or more... since it's an all or nothing deal...

 

If a daytrader has a statistical probability to get to a specific initial target say 1.25 or 1.5 points or has a market structure like a recent Swing H/L to shoot for then they can reduce their risk, get into a risk neutral position and then work the trade..

 

I am certainly aware of "Cut you losses short let your profits run" but I think that statement does not address at all the probabilities of having setups that have high probabilities which can be combined with just putting on more contracts... Cost + Loss/slippage = Risk... Manage that side with a positive % Edge and then it is just pushing the Sausage through the grinder... then hitting the long ball can go out the window.. After all we are talking Net, right.. If you have a 60+% probability of getting 1.25pts on a paticular setup or 50+% of 1.5pts without your stop being hit first assuming the numbers netted out would you trade 10 - 20 lots or go for the long ball? Which one do you think nets more (and sleeps better)?

 

Just my

Edited February 19, 2012 by roztom

[steve46 12]

Like to move on to another item....the use of sim during the trading day...

 

I notice that some of you switch to sim trading during the trading day.....I wonder if you understand what you are doing and the effect that switching to sim has on your system's profitability?

 

Personally after working long hours to make sure that my system is profitable, I can't imagine taking that kind of risk (adding sim trading during normal trading hours)....

 

Edit

 

I can understand IF some of you are hobbyists or don't need to make a living in this business, so if you fit that category please ignore my comment.

 

Best of luck to all

[roztom 10]

Like to move on to another item....the use of sim during the trading day...

 

I notice that some of you switch to sim trading during the trading day.....I wonder if you understand what you are doing and the effect that switching to sim has on your system's profitability?

 

Personally after working long hours to make sure that my system is profitable, I can't imagine taking that kind of risk (adding sim trading during normal trading hours)....

 

Edit

 

I can understand IF some of you are hobbyists or don't need to make a living in this business, so if you fit that category please ignore my comment.

 

Best of luck to all

 

Steve: I guess since I mentioned a Sim trade here from Friday you might be referring to me... so I am going to respond with that assumption... if I am wrong then please disregard..

 

I am a fulltime trader..I have been for many years...as a upstairs Trader funds manager, then as a currency trader as I previously mentioned on a US trade desk for a early Hedge Fund, etc and then an independent after I retired from that side of the business - trading income has been and remains my primary source of income. Still I do experiment and revisit old curiosities. In addition, as I get older it becomes more difficult for me to execute parts of my dicretionary trade plan...fatigue, focus, etc. I still enjoy the mental stimulation of trying to improve.. a work in progress.

 

I am trying to add a bit more structure around my existing set ups.. Friday afternoon I referenced a specific trade that I did on SIM... it was experimental. I guess I could have not disclosed it was Sim so I would not have this response from you. But what I do here is try to provide some pragmatic guidance that I believe will be helpful...I reference an experimental trade and how I managed it...what the objectives were, why, etc.. The SIm trade was successful.

 

Since this thread is visited by individuals with varying degrees of experience and also those still seeking consistence and success I have attemped to show how some tools can be used.. If you have read my posts you already know what they are just as I have also read yours - which I do enjoy and benifit from BTW... you are causing me to revisit some concepts.. this is good.

 

Fact is I have been completely transparent here... I specifically took a SIm trade on Friday to test a lagging tool that would not function well in realtime in a chop non-volatile market.. I specifically indicated that in my post - upfront.

 

Just as you say on your posted static charts that the reader has to read the market in realtime to see it unfold..that is what I do to test something. I have studies in static, then replay and then live.. and I posted as such..

 

If I have ever inferred that I am a hobbiest than I think you might be confusing me with someone else..

 

If your comments were not directed at me then please disregard this response and let's continue the discourse.

Edited February 20, 2012 by roztom

[roztom 10]

Monday/Presidents Day GLobex:

 

We have discussed here many times VP and Nodes... Just to be clear I did not take this trade..I was sleeping.. @ 2:15 - 3:300am CST ES tested a CHVN at 62.25.. what was happening...support/accumulation, etc.. That turned out to be the low of the Globex session - coincidence?

 

If you were trading at that time would you have recognized that as an area of interest - waiting for the market to come down to that area to see what the reaction might be?

 

Might you have taken a position there knowing that this "might" be an ideal location to "attempt" to put a trade on?

 

If you slept through it, based on how the market moved off that area what information would you now have? If you wanted to participate after this test how would you locate your trade to benifit from this ? After an initial impulse off an area what is probable?

 

Will there be a rotation back against the trend as some fade it or others take profits from the initial impulse? If so what will this look like? Others who missed the initial impulse move will be waiting to get on the train...their buying will cause a swing low to be put in bring more buyers in leaning against the S/L @ 4:20a @ 64.50...

 

Now it gets interesting: ES rallied then pulled back apx 9:12 cst to 64.00 even taking the S/L by 2 ticks before moving up...Does anyone not think that there were stops resting under that S/L..does anyone not think that is NOT where your stop should be?

 

That is where I DID go long for a scalp... I might get 2- 3 points a quickie considering we close early but I am going to ring the register - why? The market offered it..I just had to recognize it.. In trading the planets need to align... Also there are typical behaviors you can anticipate from a typical market - rotation.. the market rotates to attract buyers and sellers..it also is drawn to where the business is..in this case where the stops are bunched.. is it intentional? I really don't care... If I am on the other side of that trade I would be targeting that S/L to cover a short.

 

What is the market doing? UP.. How do you want to position: Long... Until it changes: Long or for counter-rotations to flush the financial toilet.. The weak hands get their pockets picked... as just referenced...

 

Targets up above? CHVN 70.75, CLVN 72.50...

 

Hope you all have a resful Presidents Day.. I am working on my trading.. doing playback simulations on some new tools I am working on.. After Concept, design, static testing, then Playback, Sim, then if the numbers are there - live.. that is my process.. Takes time.

 

Good Trading To All

Edited February 20, 2012 by roztom

[steve46 12]

Steve: I guess since I mentioned a Sim trade here from Friday you might be referring to me... so I am going to respond with that assumption... if I am wrong then please disregard..

 

I am a fulltime trader..I have been for many years...as a upstairs Trader funds manager, then as a currency trader as I previously mentioned on a US trade desk for a early Hedge Fund, etc and then an independent after I retired from that side of the business - trading income has been and remains my primary source of income. Still I do experiment and revisit old curiosities. In addition, as I get older it becomes more difficult for me to execute parts of my dicretionary trade plan...fatigue, focus, etc. I still enjoy the mental stimulation of trying to improve.. a work in progress.

 

I am trying to add a bit more structure around my existing set ups.. Friday afternoon I referenced a specific trade that I did on SIM... it was experimental. I guess I could have not disclosed it was Sim so I would not have this response from you. But what I do here is try to provide some pragmatic guidance that I believe will be helpful...I reference an experimental trade and how I managed it...what the objectives were, why, etc.. The SIm trade was successful.

 

Since this thread is visited by individuals with varying degrees of experience and also those still seeking consistence and success I have attemped to show how some tools can be used.. If you have read my posts you already know what they are just as I have also read yours - which I do enjoy and benifit from BTW... you are causing me to revisit some concepts.. this is good.

 

Fact is I have been completely transparent here... I specifically took a SIm trade on Friday to test a lagging tool that would not function well in realtime in a chop non-volatile market.. I specifically indicated that in my post - upfront.

 

Just as you say on your posted static charts that the reader has to read the market in realtime to see it unfold..that is what I do to test something. I have studies in static, then replay and then live.. and I posted as such..

 

If I have ever inferred that I am a hobbiest than I think you might be confusing me with someone else..

 

If your comments were not directed at me then please disregard this response and let's continue the discourse.

 

Actually Tom

 

My comment is directed to anyone who may want to mix live trading with sim....as mentioned once previously, if you need to make income, mixing sim with live trading introduces a randomizing component into your system, and that randomizing element could compromise your results.

 

Good luck folks

Steve

[roztom 10]

Actually Tom

 

My comment is directed to anyone who may want to mix live trading with sim....as mentioned once previously, if you need to make income, mixing sim with live trading introduces a randomizing component into your system, and that randomizing element could compromise your results.

 

Good luck folks

Steve

 

Steve: I thought you were adressing a SIm trade I took on Friday..possibly you were making a general comment... I certainly do concur about trading stat's and that Sim has it's limitations.. I was specifically referring to my personal process of developing a setup and I put it out there.

 

After R&D on a specific setup, Concept, Creation, Playback: I will take it to Sim to see how my read and the indicators I reference respond to specific market conditions in realtime.. Friday was a situation I had anticipated and waited for to test my eye and my tools...in a Chop.. or quiet market...

 

While I don't need or want to trade all the time I do have flexibility and since we have discussed scaling, I am looking at tools to help me adjust my targets if the typical scaling refernce points I use are too far away.. or my indicators I reference flip/flop like a sailboat that has become becalmed (I think that is what it's called).

 

This is specifically related to my initial first risk management scale... I understand this is not what you do if I am not mistaken..

 

So, let's agree to disagree on the value of testing using simulation.. After all at least for me, I will not trade a setup that I've developed live until I can find it's weaknesses and under what conditions it might fail ..

 

I look at Sim as a trading shakedown cruise and I'm certianly familiar with it's limitations especially re: fills, slippage, etc. Do you not see where it is an advantage for a trader to use it as a development tool or for a rookie to create some Stat's to lean on? DO you discourage your students from Sim?

 

If your response is specifically about mixing stat's Live vs. Sim then I certainly concur.. I don't believe that was the context of my initial post... or how I referenced what I was doing in Sim or Why..

Edited February 20, 2012 by roztom

[CYP 10]

Did you guys take Tuesday off also? Strange to hear so many crickets here...

 

Sometimes silence is good also - gives me a chance to review and reflect.

 

Regards,

 

CYP