FORUMS BROKERS SOFTWARE
Home
 
    Forums > Futures Trading > Index Futures > Why folks lose money daytrading ES


Reply
 
Thread Tools
Old Apr 22nd, 2012, 05:22 PM   #1
gmst
 
 
Join Date: Jul 2011
Posts: 4,354
Over the last 5-6 months, I lost more than 10k trading 1 ES contract, I was consistent - lost money every month. 10k equals 200 points, over 5 months, so each month I lost around 40 points. Meanwhile, I was making money trading FX and was using this money to burn while trading ES. I was obviously doing something correct with FX and something very wrong with ES. I had a hard time to understand what I had been doing wrong with ES. Finally, I have some insights about how I managed to lose so much money trading ES. I hope reading these insights will help some struggling traders. I will write this post over next few days, throwing one idea at a time. Experienced traders please feel free to critique.

Following suggestions apply to struggling or new traders not veterans.

Recommendation 1) Its best to not trade first 20 minutes of the day from 930 to 950 EST. Reason is market has still not find its general direction for the day and is very volatile during this period. ES typically changes direction multiple times in first 20 minutes which means higher number of whipsaws. Also, its a good idea to stop trading after 330 EST. Markets at this time can become very volatile and new/struggling traders will most likely lose money if they trade during this period.
    Quote
Old Apr 22nd, 2012, 05:38 PM   #2
nkhoi
Moderator
 
Join Date: Aug 1999
Location: VA
Posts: 8,903
sounds like you should stop trading ES and double contracts to trade on FX
    Quote
Old Apr 22nd, 2012, 05:41 PM   #3
ocean5
 
 
Join Date: Feb 2012
Posts: 934
what a huge load of caca...forgive me my dry Spanish humor...
    Quote
Old Apr 22nd, 2012, 06:08 PM   #4
gmst
 
 
Join Date: Jul 2011
Posts: 4,354
Recommendation 2) If ES is going down, its a fools game to short for further downside on a small upmove and vice versa. Example: Let us say ES makes a sharp, fast and big move down from 1383 to 1376 within 3 or 4 five minute bars (i.e. in 15-20 minutes), and then it rebounds to 1378/1379, it is generally a losing proposition to short 1378/1379 thinking that it is just a correction/pause in a much longer downmove. More often than continuing to go down, ES will change its direction or it will not go anywhere (you lose on spread and commission in this case), chances are 1376 will be low for maybe 1-3 hrs before it breaks (if it breaks). The probability that the downmove completely reverses and prices start an upmove is pretty significant. Similar is the case against buying a pullback in an upmove.

I have tried to explain using above example, but I am sure many readers will find it confusing and hard to understand what I am saying. "To put it succinctly, on most of the days, ES has a tendency to reverse intra-day direction 1-2 times after a big move in one direction, so its a better trade to look for reversals with a tight stop rather than bet on continuation after a small pullback, after a big move in one direction. The fundamental reason for this behavior is that trend days on ES are rare."

Enough for today - I welcome veteran ES traders to chime in.
    Quote
Old Apr 22nd, 2012, 06:21 PM   #5
tiddlywinks
 
 
Join Date: Mar 2007
Posts: 427
Quote:
Quote from gmst:


...

Following suggestions apply to struggling or new traders not veterans.

Recommendation 1) Its best to not trade first 20 minutes of the day from 930 to 950 EST. Reason is market has still not find its general direction for the day and is very volatile during this period. ES typically changes direction multiple times in first 20 minutes which means higher number of whipsaws. Also, its a good idea to stop trading after 330 EST. Markets at this time can become very volatile and new/struggling traders will most likely lose money if they trade during this period.
Kudos to you for directing your insight to newbies. It shows some baseline experience. However the much more important criteria for your recommendation is risk tolerance, trading style, techniques and methods. Newbie or veteran does not matter. Some traders, newbies and veterans, trade only during the first (and/or last) hour of regular trading sessions. There is a reason the first hour or so is called the golden hour.

One thing most people on this site do not get is that your job as a trader is to make money. Period. The volatility component is not a bonus, it is a prerequisite for doing the job! I am not suggesting or advocating making money by any means necessary, but only within the parameters of your risk tolerance, trading style, money management, techniques, and methodologies. Making money by "disciplined" (and ethical) trading is critical for longevity.

If your style shuns volatility, then come to grips that you are a trend follower or swing trader: Trade accordingly. Day-trading index futures is not trend following nor swing trading.
    Quote
Old Apr 22nd, 2012, 06:24 PM   #6
the1
Registered User
 
Join Date: Feb 2009
Posts: 2,354
You and I are basically polar opposites. I trade the ES very well but not so well in the FX markets. I'm very active in the ES right after the opening bell. I love the volatility and change of direction. It doens't always occur though. I agree with you on the 3:30 issue. That's when mutual funds do their exits and entries and the market becomes highly unpredictable but when it gets going in one direction it generally continues in that direction. That being said though, I tend to avoid that last 1/2 hour mostly because I don't want to give profits back with no time to recoup them.

Quote:
Quote from gmst:

Over the last 5-6 months, I lost more than 10k trading 1 ES contract, I was consistent - lost money every month. 10k equals 200 points, over 5 months, so each month I lost around 40 points. Meanwhile, I was making money trading FX and was using this money to burn while trading ES. I was obviously doing something correct with FX and something very wrong with ES. I had a hard time to understand what I had been doing wrong with ES. Finally, I have some insights about how I managed to lose so much money trading ES. I hope reading these insights will help some struggling traders. I will write this post over next few days, throwing one idea at a time. Experienced traders please feel free to critique.

Following suggestions apply to struggling or new traders not veterans.

Recommendation 1) Its best to not trade first 20 minutes of the day from 930 to 950 EST. Reason is market has still not find its general direction for the day and is very volatile during this period. ES typically changes direction multiple times in first 20 minutes which means higher number of whipsaws. Also, its a good idea to stop trading after 330 EST. Markets at this time can become very volatile and new/struggling traders will most likely lose money if they trade during this period.
    Quote
 
Reply
Thread Tools

Forum Jump



   Conduct Rules   Privacy Policy   Sitemap Copyright © 2014, Elite Trader. All rights reserved.   

WHILE YOU'RE HERE, TAKE A MINUTE TO VISIT SOME OF OUR SPONSORS:
Advantage Futures
Futures Trading & Clearing
Alpha 7 Trading Academy
Proprietary Trading Education
AMP Global Clearing
Futures and FX Trading
Bright Trading
Professional Equities Trading
CTS
Futures Trading Software
DaytradingBias.com
Professional Trading Analytics
ECHOtrade
Professional Trading Firm
eSignal
Trading Software Provider
FXCM
Forex Trading Services
Global Futures
Futures, Options & FX Trading
Interactive Brokers
Pro Gateway to World Markets
JC Trading Group
Direct Access Trading
MB Trading
Direct Access Trading
MultiCharts
Trading Software Provider
NinjaTrader
Trading Software Provider
OANDA
Currency Trading
optionshouse
Option Trading & Education
Rithmic
Futures Trade Execution Platform
SpeedTrader
Direct Access Trading
SpreadProfessor
Spread Trading Instruction
thinkorswim by TD Ameritrade
Direct Access TradingAdvertisement
TradersStudio
System Building & Backtesting
Trading Technologies
Trading Software Provider
Trend Following
Trading Systems Provider