Trading the E-mini

[robster970]

Stopped out - looking for a re-entry confirmation now, Suspect it is now targeting the NVPOC @ 55

 

[robster970]

Long, filled 54.75, stop @ 52.75

Ooh - low ticked and out!

Watching for the 3rd and final trade for today - nearly @ loss limit for the day now.

 

[robster970]

Today hasn't quite worked out like I thought eek:

It's on days like today when your plan doesn't work out that your stops keep you in the game for another day.

Off out tomorrow with a mate. Back to normal on Friday.

 

[robster970]

So after I last posted on here, I went about carrying on with real life and reflecting on the days trading conditions. It resonated with me for a number of reasons and I thought I would share.

The first is that I correctly assumed a sell-off to value. What I did not get right was the ferocity and volume of the sell-off, thinking this was just an average pre-NFP shakeout to get rid of the weak hands before the next leg up. It was considerably more volatile shifting delta past the -100k mark, something I have not seen for a while.

What this has done though is made me think about a particular set-up I use for trading shake-outs and how time can be used to hone the trade selection to some extent.

Looking at the hourly this morning, it does look remarkably like it will now go on to retrace back to the high and beyond, anyway that is my current thinking.

However this is not the main thought. What yesterday reminded me of was the day, quite some time ago that I lost about 40% of account on a single trade, under conditions like yesterday. It wasn't a blow-up but my god, I felt sick afterwards. What also occurred to me post trading yesterday was just how tempted I was to repeat some of the habits that got me into a 40% loser in the first place.

So for the record, yesterday landed me down 4%. Not unusual. Adhering to stops kept me in this safe space.

What got me into the 40%+ space from 3.5 years ago was a combination of factors:

a. My understanding of the market was not very well developed but I had a basic grasp on the principle of mean reversion. At the time I was using SB so no volume information was available to me. I worked on the idea that if I did not get the turn right, I could rely upon mean reversion to get me out of trouble. This proved not to be the case. Yesterday for example finished approx 2xSD south of settlement price.

b. Not wanting to take a loser. I kept moving my stop lower and lower. I now know that this is just loss aversion.

c. Averaging. Now I personally believe that averaging as an entry strategy when trading on higher TF's is useful but IMO this is only really useful if you are trading 20+ lots and you are trading off the hourly or higher. It is not useful if you are just constantly adding in because you are offside and hoping it will eventually stop and turn in your favour. This is just martingaling your way out of trouble and although the martingale is a lovely theoretical concept mathematically speaking, it has NO place in trading.

All these 3 things combined took out 4 months of work on a single trade.

So if I know this now, why would have I been tempted to repeat some of this behaviour? Well to some extent experience now, certainly in understanding higher TF's would suggest this is possible for me. Adding in at 58, 54 and finally down at 46 and then leaving this trade to run for the next 2-3 days would be viable. Also I know shake-outs and the pattern on the hourly from this morning usually indicate a retracement back to the highs so there is a good reward for this stuff. It is viable only if I had planned to trade like this in the first place. Until that time it should be treated as deviation from normal trading behaviour.

So to make the point, trade your plan and manage your risk. Follow the two golden rules of trading which are:

1. If you don't bet, you can't win
2. If you've got no money, you can't bet.

 

[tar]

It is viable only if I had planned to trade like this in the first place. Until that time it should be treated as deviation from normal trading behaviour.

+1

 

[robster970]

In my trading plan on the back page is a picture of the psychological cycle I go through. I put it there to remind myself that I am the main point of failure in my trading. It is manageable these days otherwise I would be in terrible trouble but it is still there, in the background, waiting to reassert itself like yesterday and it does take quite some resisting. It normally turns up about now (run of winners, couple of losers, think about ratcheting up the risk level to maintain ridiculous win%, get hurt). Anyway I have copied it from the plan just for general perusal by you lot. I don't think I am alone in this kind of cyclic behaviour although I think everybody has their own variation and demons to resist.

Right I'm off to the pub. Maybe trading tomorrow, maybe not depending on whether my head hurts.

 

[rathcoole_exile]

well well well, here we are again.
ES sat right on it's weekly Pivot.
will it go up or down ? hmmmmm....

I favour a move up to 55 and then a downturn, target 40

but if price touches 58, I'd fancy a wee Long to 65

 

[robster970]

51.50 is a major LVN - will be interested to see how it gets on when it revisits this level. I also have 55/56 as a candidate area too.

 

[rathcoole_exile]

if price doesn't hit 55, a short off the Daily level a 52 might be in order ....

 

[robster970]

if price doesn't hit 55, a short off the Daily level a 52 might be in order ....

I was watching it shortly before 17:00 and wondering whether this was support around 45 but thought it didn't look right so left it

 

[rathcoole_exile]

couldn't post earlier, T2W was running really slowly.
but nothing's happened anyway

have a Stop Sell entry trigger at 55, T1 49, T2 37
SL 65

alternatively, if price doesn't go down thru 55 first, I have a Limit Sell at 65
same targets, but SL is Stop & Reverse to go Long at 70

but i'm sceptical about any trigger level getting hit in this session


.
On my preferred instrument, the Russell, I am already short the TF from 931
t1 at 925 already hit, t2 way down there at 908 but not sure we'll get thru Support at the Daily level at 922

 

[robster970]

Long at 57, trailing it on 30min

So below are a couple of charts - a before and after if you will. The first chart tries to illustrate an important point (well to me at least) of how price movement works. Essentially we have a failure to make it higher right off the open and a sell-off until support around 56 is hit. Then we get the inevitable bounce and then more sellers come in. What you should notice is how the volume every 3mins is diminishing - this is a clue to the sell orderflow drying up gradually (i.e. less and less sellers coming in). This leads to a final test where no more sellers joined in.

What happens how? Well there aren't any more sellers are there and buying prevails.

This for me is how classic TA (a descending triangle indicating distribution) is gamed to create an orderflow imbalance to the buying side and an obvious opportunity for those with buy limit orders in and around the support level.

 

[robster970]

Didn't expect this one to run like this - pleasant surprise...

Stop is at 65.25 - I nearly got taken out when it hit a low of 65.50. Sometimes it just works out in your favour, other times not.

 

[robster970]

Out at 66.50 for 9.5pts today.

 

[wackypete2]

Nice trade, Rob

When are you starting your Holy Grail thread??

Peter

 

[robster970]

Nice trade, Rob

When are you starting your Holy Grail thread??

Peter

Shortly after I get a website together to sell trading seminars and a special Nazi box trading robot/EA

BTW - I found it quite hard going long as I was not entirely convinced the sell orderflow had completely dried up. They say that the best trades are often the hardest ones to take although I'm not sure who 'they' are.....

 

[DionysusToast]

Long at 57, trailing it on 30min

So below are a couple of charts - a before and after if you will. The first chart tries to illustrate an important point (well to me at least) of how price movement works. Essentially we have a failure to make it higher right off the open and a sell-off until support around 56 is hit. Then we get the inevitable bounce and then more sellers come in. What you should notice is how the volume every 3mins is diminishing - this is a clue to the sell orderflow drying up gradually (i.e. less and less sellers coming in). This leads to a final test where no more sellers joined in.

What happens how? Well there aren't any more sellers are there and buying prevails.

This for me is how classic TA (a descending triangle indicating distribution) is gamed to create an orderflow imbalance to the buying side and an obvious opportunity for those with buy limit orders in and around the support level.

Here's how I see the same slice of action...

I wasn't trading last night (just got back from a short trip away to get married) but I would more than likely not have got long at the same point as Rob...

This is a good example of how it's hard to play double tops/double bottoms based on the price alone. We came down to 1555.50 and then moved up. Then we came within 2 ticks of it. Effectively failing to get to the bottom. We also had way less delta on the way down. All good so far...

But how do you play a double bottom on price alone when it can
- fall short
- hit the level exactly (which more than likely would not get you filled)
- move through a few ticks

What do you do? Get in early to catch them all and then have a massive stop in case it's a 'push through first' type of reversal?

Double bottoms - great in theory & in hindsight but not so easy in practice.

As I wasn't watching this, I didn't see the order flow at the time of the turn and for all I know it might have been an easy trade. Reversals like this tend to get away from you before you cotton on to what is happening. Robs entry at 57 was damn good, 4 ticks away from the low & he had it nailed. To me that's as good as you could get on that move :clap:

Where I see the best opportunity (for me) is the orange arrow and at that time you have.

1 - A failure to make it back to the low.
2 - Big move up in delta on the up swing from 56-61
3 - Lots of volume on the swing up from 56-61 (89k contracts)

Which means basically that confirms 56-62 as a reversal and a continuation up more likely. Then we have...

4 - Little relative participation in the pullback from 61-59.50
5 - pullback size slightly on the low side but in line with the first push down of the day
6 - no negative delta with the pullback

As volatility has opened up again, we'll have lots & lots of opportunities like this. Less ticks in them but a lot less risk.

Anyway - good trade Rob

 

[robster970]

I wasn't trading last night (just got back from a short trip away to get married)....

Aw Pete - I'm really made up for you - congratulations to you, the new wife and kids. :clap::clap::cheesy:

 

[robster970]

BTW lads, after that conversion about placing an order 20 ticks away and also doing it on FESX, I have been watching FESX for the last week or so. Does anybody actively trade this with say, more than 100 lots? What is the liquidity like as contract volumes seem quite low. Is Eurex reliable - I have heard stories of it going up and down, etc, etc

 

[tar]

BTW lads, after that conversion about placing an order 20 ticks away and also doing it on FESX, I have been watching FESX for the last week or so. Does anybody actively trade this with say, more than 100 lots? What is the liquidity like as contract volumes seem quite low. Is Eurex reliable - I have heard stories of it going up and down, etc, etc

Very liquid and has high daily volumes .

Eurex - EURO STOXX 50® Index Futures