I can see what you are saying about the 2% goal potentially causing problems. Fortunately, as you can see, I have no problems just (1) not trading on a given day or (2) just scaling back considerably and walking away early. The 2% is a guide, not a minimum. I would be thrilled with 1% per day at the end of the year. But even this may be too high... But I am going to stick this out for a full 12 months and see where it takes me.
I Think your decision to go full at 10k is the right one and you have already cleared a huge speed bump out of your way.* Don't worry with your win rate you'll be there by summer.
Hi @traider, was this question for me? If so, my answer is "No Way! Those guys are all like gods. But I can be a dang good low-risk scalper."
1) I do think the psychology is the biggest factor. Trading so that your max loss day is no more than 1/25th of your total account balance is a HUGE deal that I am only beginning to understand. 4% loss on the day keeps you alive! Until you can so "Oh well" at a loss, then you are trading too large, or your stop is too big. If you cuss with each loss, then you are trading too big. 2) I agree with your statement and I need to remind myself of the losses by analyzing or at least posting them. 3) I used to do hedging trades on just the YM and NQ. I would trade the weaker one short and the stronger one long. This worked about 50% of the time. The problem came when I quickly realized that I needed about 2 YM contracts for each NQ contract. It is easy to see that things quickly became messy. I determined that it is better and safer to trade just one contract in the correct direction and quickly get out if I was wrong. So, yes, now I do trade the MES, MNQ, MYM, and M2k all in the same direction.
What happens is I will enter just one trade on the MNQ (for example) when I see that the market is weak, and the MNQ is the weakest of the 4 instruments. If the market continues to drop, I may add one on the MYM. If it drops further, I may add one of the MES. In this way, I am not averaging down but having discreet trades I can exit. I am still debating with myself over your point. On the one hand, I could have fewer charts up and do simple all-in, all out scaling up of just one position. It would be easier on the gray stuff between my ears. On the other, this "distribution over 3 or 4 charts" method has worked well for me so far. It is a method I learned trading FX way back in 2006 from those jokers at now defunct Millennium Traders. We would add to our winners by taking a new trade on a second dollar-denominated currency pair. EUR/USD up? Add a GBP/USD. Both up? Add an (inverted) USD/CHF. We never did more than 3 that I recall. (I called them jokers because they would can entries and exits in the room, but their P&L was always based on the maximum size of the potential move of the instrument, even when they called the exit at 50% of the move. I am glad they are gone.) In any event, I will figure this out soon.
I think the $10k is the right thing to do. That puts me at 20 micros (max). I am hating the commissions, but it feels safer to me because I can trade with just 5 or 10 at a time and build up still vs. a mostly binary 1 or 2 E-minis.
I first started to write a longer reply, but the more I wrote, the more I realized that everything I was saying really detracted from you achieving your goals. I was discussing my take on the hedging, and trying to explain why I think scaling-in is a better strategy. But I stopped because I think what you really need now is just to continue doing exactly what it is that you are doing without any consideration for anyone else. You did after all grow your account 75% in one month. If you were trading the mini vs. the micro, this growth would have been even bigger because the commissions are a smaller fraction of the profit. It was only a week ago where I pointed out how I thought you were already going down the wrong path with changing things up, and I can't help but feel this is so true again today. https://www.elitetrader.com/et/thre...0-at-2-00-per-day.339591/page-16#post-5011516 I wish you would just continue to do everything the way you were doing it a few weeks ago. Perhaps the gravity of what you're trying to accomplish is now hitting you, and this is precisely where 99% of traders fall off the wagon, so to speak. They let the dollar values affect them, and they start second guessing the care free attitude they had with regards to trading before it got more complicated. So now the strategy changes, and along with this, the stats of their trading. So in order to not make this too long, I will finish with just these two points. 1. Was there anything really wrong with your trading? You talk about so many things you are trying to change with regards to hedging, and holding longer, etc. But since you grew 75% in a month, I think nothing needs to be changed at all, unless of course much of this was luck. I doubt this since it was hundreds of trades, but perhaps your mind won't be able to replicate this style of trading when you have more on your mind. But keep in mind the style of trading worked, at least for that environment. So this is why I keep saying don't change anything right now but just try and get another month of stats. There is no reason to change anything at all right now. 2. I think what would help process of detaching yourself emotionally from the trade, since this will have to be done as you increase the size you trade, is to just track everything in terms of ticks or points. This way, it won't matter if its 1 mNQ tick, or 1 NQ tick. We both agree the math works exactly the same, so who cares about the dollar value. You know that at $3500 account size you can trade 7 contracts, at $4000 you can trade 8, etc. But at the core of what you are doing, and precisely for the purpose of scaling up, you're simply trying to make ticks/points, and the money profit will fall into place. So going forward, I think its best to just report points made per trade, and then the total for the day. You would end up with something like this. Trades (lets assume NQ) ------------- +6 points -5 points +10 points +5 point - 8 points + 10 points = 18 points This is the only number that matters, a total of 18 points. Who cares if its with 1 NQ contract, or 1 mNQ contract, or 6 mNQ contracts. The result is the same for someone hoping to grow. What's beautiful about this is that it will allow you to keep track of how you are really performing over the months. If your first week to made $30 in a day, but this was with only 1 mNQ, and then 2 months later you made $100, you might feel better about your progress. But if that $100 comes from trading 6 contracts, your actual performance is dropping. The $30 profit meant you made 15 points, whereas the $100 profit meant you made 8.3 points. Now of course you can only take what the market offers, so I'm not saying you need to make 20 points per day, every day, since this may not be possible on some days. But by keeping track of point lost or gained, it will help you focus more on keeping up the consistency and allow you to better track your progress. Then use your account size simply as a guide for how many contracts you put on.
@Seaweed Thanks so much for taking the generous time to write both posts and sharing some wisdom. Indeed my original intention was to do nothing but slowly increase my position size. And you have helped me break the tie on the big issue that has arisen regarding scaling and number of instruments I trade! So thanks for this too. I have made an important decision. For many years now I have traded only NQ and YM, merely using the ES and RTY for help with my bias. I have preferred the NQ and YM for their improved granularity. Until the micros came along, trading more than one or two contracts wasn't an issue! So only recently with the micros have I had to make the "which contracts to trade" decision. And it has been intensified when I think about 7 micros, which I should be able to trade beginning Wednesday or Thursday this week when I (hopefully) cross the $3,500 line. I got a taste of trading all 4 micros on the CME micro challenge. But I admitted it was not risk-appropriate trading. And if I go back to my roots and remember your words and the words of @Overnight from my last journal ("DON'T CHANGE A THING!") then the only conclusion I can come to is this: Beginning now, I will only trade MNQ and MYM (and when over $10k, only the NQ and YM). I will not even have the MES and M2k on my charts, but will use the ES and RTY for reference. I will enter "All-in." No averaging-down or adding-in if positive on the entry. While these are viable entry modes, they change the dynamic of my trading. I will exit "All-out." Again, scaling out is a profitable strategy, but I choose to have no runners on the exit. If the direction looks great then I can let the whole position "run" and trail the stop. I will trade no more than 50% of the max per position. Not only will this be easy to calculate on the fly, but it solves the problem I was discussing earlier about "all the eggs in one basket." So with 6 or 7 permitted micros, I can trade up to 3 micros on each trade. And if the market is moving too fast or if I am uncomfortable, I can continue to trade less than 50% of the max size. When the market is bullish, I will trade the stronger of MNQ or MYM long. When the market is bearish, I will trade the weaker of MNQ or MYM short. However, I am permitted to enter two trades in the same direction on both instruments when I see a high-probability setup. I will NOT do any hedging trades (i.e. no longs on MYM when short on MNQ.) And to finalize the list, I will try to record my daily results in terms of number of trades and ticks per trade earned ("MNQ/MYM ticks") and not "dollars per trade." This will help me evaluate my performance going forward, normalizing the daily results as the position size grows. Once I start trading the E-minis exclusively, then my results will be called "NQ/YM ticks." I take a lot of trades and sometimes the market moves very fast, but I will try to do this. @Seaweed Thanks again for helping me see through the haze here! I can see $4,000 on the horizon...
Thank-you for the kind words. Your plan sounds awesome. I like that you will focus more by just trading two instruments, but I also like that you will keep ES for reference. When I look back at my NQ charts from a few years and see that price turned, I could never figure out why there. Then when I looked at what ES was doing at the time, 80% of the time, ES hit a level I would have been watching and expecting the turn. It was like at first walking into a room with just a flashlight, and only being able to see directly in front of me, and then when adding the ES, I literally flipped on the light switch and I could see so much more of the room. I also like that you will be all-in and all-out. Maybe some trader has stats to show that scaling is more profitable for them, but with your performance so far, there really is no need to tweek. All you need to do is rinse and repeat. And yes, journaling, even if just for yourself, the number of trades and total points gained or lost will allow you to keep the goal that much more in sight. I think it simplifies tracking consistency, and consistency is the most important element for scaling up. Looking at the money made or lost hides some important variables, and it also shifts focus to what might end up causing emotional stresses.
Please do whatever gets you to trade more. this is the only way to see if you have an edge faster. What you are risking in terms of pnl now is very low so go ahead and take more trades.