Only Tradestation was happy with my performance today… lots of trades for very little profit. But, the markets had volume and good moves, so hopefully that will continue.
On the bright side, I did start trading ER2 today a little, for 2 wins. I’m trying to figure out whether I want to start paying $50/month to keep my YM feed, or just stick to the CME products (I guess I’m also curious about whether YM will show up as part of the globex feed I have later this month).
Here’s my afternoon video. I give an overview of what I think the 3 most important statistics are for a daytrader, and talk more about my beautiful new bead-reading indicator that I’ve been talking about for the last two videos.
My computer never took any more trades since this morning, since it refuses to trade near VWAP, and we were near VWAP for most of the day. I took 5 trades on YM for 5 small wins.
(if you care about the articles I mentioned, they can be mostly found via the Best of MtM page. Maybe the most interesting one is this one, because for whatever reason many traders know nothing about profit factor.)
I’m too tired to write much… just watch the video. A new indicator that seems promising… Along with “jailbreak” this is another scalping indicator. One must simply learn to “read the beads.” My computer made money, which is nice.
A different view of fib extensions, a mechanical strategy, and 0 trades. Enjoy! Lots of rambling in this video… sorry but I’m a little tired. I stayed up too late last night, but forced myself to get up at the right time this morning.
On my setup, despite all the chop, there were two big opportunities today. And, I wasn’t at my desk for either of them. Damn! I did pick up some crumbs here and there, for 1.5pts. I had no losses today, so it was just 3 tiny wins and 1 b/e.
In this video I give a preview of the indicator I’m working on, codename: Jailbreak. Seems to have some promise. Too early to tell.
The trading… Started with 2 losses, down $100. Took a little break, and finished the day up $75. eh… on a day like today, I’ll take it. I went into extra cautious mode after getting caught in the morning chop. Turns out, if I had stayed aggressive, I would have done better by the end of the day. Maybe, upon investigation, I would see that staying aggressive is the statistically right answer, since it rarely stays choppy all day. But, it’s very difficult for my personality not to get defensive after starting out with two losses.
… and very satisfying to make money, even if it’s a small amount. In the relatively near future I plan to go to 2 contracts per trade. That will be nice, because at present I’m starting to feel pressure to fit some more stock trading into my routine. And, the more I think about it, the more I want to leave stock scalping behind. I never thought I’d say that, but when I look at an intraday stock chart now, it looks terribly chaotic compared to @ES. Maybe it’s spoiling me, or maybe it’s just better.
My video for wednesday… long live the mighty box play! I am still struggling with the same basic issue I’ve had since I started with futures… which is… win 0.5, win 1, lose 2, win 0.5…. which you might notice, adds up to 0! Either my winners need to get bigger or my losers need to get smaller. One thing’s for sure… I am going to conquer these markets… just need to keep adjusting my habits.
I had a pretty good day in futures, except for my EMD plays (3 stops in EMD, ouch!). I made winning trades on YM and ES, but not enough to finish positive for the day. Oh well… I don’t think they were too interesting or educational, so I thought I’d have more fun presenting an ode to the box play.
Here it is:
For reference, here are all the posts tagged “box-play”. In particular, here’s the first one, with good explanation and here’s another good example.
All futures today. This video talks about my stock watchlist, and how I didn’t see any trades to take at the open. I also spend some time talking about why you should buy into big offers, and sell into big bids. Long-time readers will have already heard me say it, but it’s a common misconception in stock trading, so I think I should repeat it every once in awhile.
On top of what I said in the video, in stocks another dimension to the issue are so-called “iceberg” orders. The theory goes like this: A seller wants to sell 2 million shares. Are they going to put out an offer with a size of 2 million? No way… they’re going to issue shares a little at a time, only showing 1000 or less on the Level-II screens at any one time. Then, maybe when they have 10k shares left to sell, they might pick a price and show the whole thing… because they want to be done with it, and a large bid is a big invitation to sellers. So, in stocks anyway, you usually only see a big bid when it’s the last portion of a big buy order. Do you want to buy in front of a big buyer, just as they are about to stop buying? NO, you DON’T! You want to be a seller when the big buyer is about to walk away… So, that’s another reason to buy into offers and sell into bids. Of course, good timing helps a great deal…
Man, as the video shows, I had the choice between going long General Electric Company (NYSE: GE) or going long Ryland Group, Inc. (NYSE: RYL) at the open… and I chose fricking GE. Oh well. Per my plan, I only watched stocks in the morning. So far, I am liking my plan. I also traded Macy’s Inc. (NYSE: M) for just a tiny gain, and it dropped like a rock a few seconds after I covered. Damn, just not my day in stocks.
In futures, I made 5 trades for 4 wins and 1 loss. I am still not a very good futures trader… the trades I choose are not ideal at all, even though I have indicators sometimes screaming at me to dive in and make a fortune. Especially today, it was difficult for me because we had so much volume that I didn’t have much time to think. Most good trades passed me by while I considered my options.
But, I do think I am making serious progress. My win rate is around 80% this week so far, which is similar to my win rate for stock trades. My number one problem is still that my average win is smaller than my average loss. That makes it hard for my PnL to get any traction, even winning 80% of the time. However, barring a string of losses tomorrow, I will have made money in futures this week. If I have a good day tomorrow, I will have broken even on my futures account (I’m down about $150 from when I started on 9/24/2007). That milestone always feels good. From there, the sky’s the limit!
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| GE |  |  |  |
| RYL | | | |
| M | | | |
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
Let me start by stating I lost $241.30 (commissions included) in the oil markets today.
Now I’m going to make a statement that I have believed since I began my quest to trade futures successfully. Futures trading is not harder than trading stocks.
My simple proof is these two charts. Pick any day, and the comparable stock index will trade the same as the futures counterpart. The main difference is leverage. If you can trade one, you can trade the other. My advice to anyone interested in learning to trade the eminis is to practice with a simulator, and/or the appropriate stock counterpart. SPY for the ES, DIA for the YM, and QQQQ for the NQ.
I keep reading posts on other blogs that talk about how futures trading is cut-throat, a zero-sum game, or whatever. They are right on both counts. Daytrading is cut-throat if you want to be dramatic. I also agree with the point about the zero-sum nature of the futures markets. However, if your time-frame is intraday, I don’t see how that matters. The only two requirements to trade any market are volatility and liquidity. That creates opportunity.
If a bear flag is printing on the NQ, it is also printing on the QQQQ’s. If you can trade a breakout on the SPY, you can do it on the ES. Leverage is a double-edged sword. The only difference between trading the different vehicles is the amount of money you will win/lose. So if you have a desire to learn to trade the eminis, start off trading 100 share lots of the stock counterpart. Your losses will be limited that way. Once you can successfully identify patterns that offer you an edge on a consistent basis, switch over to futures. If you find that the increased risk is messing you up mentally, then go back to stocks for a bit.
I have the luxury of not having to trade to feed my family. When going through a drawdown, I can always revert to paper trading. However, Phileo made the switch, and he is feeding his family quite well even with the added pressure of being a full-time trader. As far as I know, he jumped in with both feet as I did. Looking back I probably should have traded the QQQQ’s first. However, if you do that and are not a full-time trader there is one major drawback that I can see. Without the ability to claim Trader Status with the IRS, the wash-sale rule will be a nightmare if you make several trades per day in stocks. In fact that is one reason why I have not traded a stock in over four months.
If I’m wrong about my basic premise that futures trading is no different, then its only a matter of time before I’m broke, and publishing a porn blog (with ad revenue). If I’m right, then I will continue to trade the patterns that I see over and over. Any problems I have had trading futures has more to do with me than the instrument I chose to trade.
In no way am I trying to convince anyone to trade futures. However, there is a safe way to do it without jumping in with both feet.
On any given day, they look the same to me. But then again, I’m no rocket scientist. Maybe Prospectus (who is a rocket scientist) would like to give his thoughts. :-)
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com