My scalping was better in spite of starting out the gate with 5 losers in a row. Several trading plan changes will be implemented. Trades 1-7 were random, aggressive, momentum chasing trades.The immediate cause of this is my overweighting the value of a minute bar in the session’s trading plan. By aggressive, I mean entering at my moving average instead of waiting for a more substantial pullback. The underlying cause of this issue is psychological. I am excitement seeking and not even spending the time to setup a proper trading plan. Based on these issues, I will make the following changes to my trading plan: 1. I am only allowed 1 aggressive entry per trading session per instrument unless evidence of a possible reversal exists, allowing 1 additional entry. 2. Instead of treating trading like a video game, I should be respectful of the profession. To that end, I will utilize a virtual mentor of a trader I respect. This trader has a significant physical handicap and a young family to take care of. He had to make trading work. He is very contemplative and became a great trader. Trades 8 and 9 were in anticipation of a gap fill attempt. Trade 9 was inappropriately adding to a losing position. I now have more specific conditions concerning adding to losing positions and money management policies: 1. Adding to losing trades are not allowed on aggressive entries. 2. Aggressive entries will have a fixed maximum stop amount, currently 3.00 points on ES. 3. I may not add to a losing position if down more than 4 ticks. 4. My stop for the added position that meets the above criteria with be tighter than the original position. This stop will be a momentum bar beyond the entry of the add-on position. Trade 10 was a reversion to mean scalp. I did not wait for full retracement because of strong DOM. Trade 11 - Dumped WFC. I’m not going to suffer from this underperforming dog any longer. I’ll wave to it tomorrow morning when it gaps up! Trade 12 - Closed the hedge on my SI ‘fly. Rising equities through monetary debasement should be favorable for alternative monetary instruments. Trade 13 - Shoot me. Took what was to be an overnight shot at some negative ES delta on a directional put ‘fly, but came to my senses soon after. The US Government buying ETFs will cause a positive feedback loop in equity prices and beyond. The Internet Tech Bubble will soon be forgotten and be replaced by a new era of hyper speculation. I predict Millennials will be getting tattoos of their favorite stocks symbols for their children. Trade 14 - Reversion to mean trade. Got in late, could have easily passed on this trade. Trade 15 - Tried to get lucky on the second momentum bar. No dice.
Interesting trading day brings my account back to green. Trade 1 - Exited my directional SI ‘fly at a loss. Although some of this loss was previously mitigated with a hedge, theta and reduced IV hurt this OTM ‘fly. As mentioned in an earlier post, setting up a iron condor is probably more often a better structure for many directional outlooks. I gave up on this trade due to continued underperformance. Energy and equities seem like the only game in town right now. Trade 2 - Scalped CAD profitably on a classic setup. Strong energy markets and some risk taking as evidenced by the strong equities markets and AUD rally encouraged me to go long. However, CAD was not the lead dog. energy and equities were, leaving a trade with modest potential. Chart of this trade below. Trade 3 - Tried to buy out the body of my WFC ‘fly, as a lottery ticket. Only 1 contract was executed. Trade 4 - Bought a ES calendar spread in puts slightly OTM on favorable term structure. Exited later in day after belief that market was going to sell off significantly beyond the profitability zone of this position. Trade 5 - Sold MES on a what I was thinking? trade. This was a even better long setup than CAD. Then a telemarketer called and interrupted my tethered internet connection and ultimately required me to restart my platform twice. I did wait a few minutes after reconnection before closing this trade out. What should have been a 12 tick loss became a 35 tick loss. Chart of trade attached below. Trade 6 - Bought a bearish directional ES ‘fly in puts because of risk environment deterioration and seemingly increasing robustness of ES offers in spite of the market rising. Financials were still anemic and AAPL was approaching a 2 month high, which seems a bit much for now. Although this trade was about 10 ES points early, I don’t know if I would have gotten any better pricing later by waiting. Trade still open. In spite of all the US Government and Federal Reserve actions, there seem to be multiple areas of areas of concern. Could the US fall behind in what seems to be a huge game of Whack-a-Mole coming up? Is the Eurozone banking system going to need shoring up on third world debt concerns? Post Brexit, the EU has less capacity to deal with issues. Economic stress in EU members who are not Germany may manifest itself into civil unrest that may force a decision on whether to remain in the EU. EUR has been under performing lately and is near 2 month lows. In the US, policy makers are getting ready to open things up again without sufficient preparations being made to effectively limit the spread of COVID-19. Look at what’s happening with Singapore and their recent increase in cases. Assuming other people feel the way I do about a too early reopening, it is likely going to be an extended period of time when consumers spending returns to normal. This is not even considering the fact their confidence and money will be low. The financials cannot seem to get out of their own way. Who cares about a few loan losses when you are backstopped by the US Government? Apparently, some people with a lot of money do. Is (are) there major financial institution(s) under serious distress? Not sure what is going on in energy. The extreme recent rally may foretell a major Mideast geopolitical event. An old Soviet nuke in an old Mideast oil field, perhaps? No real damage, but it would be a big return to risk premium, wouldn’t it? We have seen lesser examples of this before. What a mess. Stops, anyone?
Not much trading today. Bean focusing on refining my setups. Closed the ES ‘fly at small loss. Scalped JPM for breakeven. Lost almost $80.00 going long the 5000 oz silver contract instead of the 1000 oz contract. Had what would be normally a great long setup fail. My fantasy of the financials rallying in the afternoon was not to be. Reminder to self, buy the strong; short the weak. Bought NQ ‘fly late in day only to be facing heat in AH. It seems like if there is a sell off during RTH, there is like a 80% chance of a big no or small correction rally in the AH. As Riddick in Chronicles of Riddick said, “Take the money, Tombs”. Been watching AAPL and assume it will test at least the 305 area tomorrow, its 11 week high and the bottom of gap area to about 310. Similar situation for NQ. Or is there even more ahead, such as ATH for AAPL at 328 or so? This will be a lot of capitalization for a stock in this economy, but I guess where there is easy monetary policy... there is fuel for the fire. Edit: Account value is now 29.9k.
Account equity reaches new low of $29.3k since inception on declining value bearish NQ ‘Fly. 5/6 scalps were profitable. 5 trades were trend following and the one loss, where I lost $.05 in SPY, was a reversion to mean trade. Was watching CVNA at the $95.00 area for a possible short, then the $96.00 area, the $97.00 area, and finally the $98.00 area. There never was any “stoutness” to the offers on the way up. Looking back on the 1 minute chart, most all up momentum bars below the moving average were heat free until CVNA got above 98 later in the day. Another example of how joining the strong side can be profitable, even when it seems a stock lost it’s “Sense. of proportion”. I suspect many Nasdaq stocks will be having these very same issues in the future. I need to plug the big, gushing leak of fighting strong trends overnight with directional ‘flys. To that end, I will employ the following ruleset: 1. Trade only in the direction of the weekly, “Long term”, chart. 2. Look for corrections in the daily “Medium term” chart. 3. Enter on bar break in the 30 minute “Short term” chart that is in the direction of the long term chart if correction seems sufficient. 4. These types of trades will usually be entered late in trading session. 5. Stop will be a threshold amount beyond the opening range of the next trading day. Feeling pretty good about my scalping. Very little heat and recent high win rate suggests a scalp trade size increase would be appropriate.
I only day trade various futures. You day trade various futures and and stocks and index/stocks options. I take my hat off to you.
Do you feel I am taking on too much by following “As many” instruments as I do? My setups are very well defined and even though they are based on the one minute chart, only show a signal every 30 minutes or so on average. I follow 12 futures and 12 stocks. So far I’ve only had 1 to 2 scalps on at the same time.
I think it is really up to individual. because we have different experiences, mind set, competencies, expertise, preferences, belief ... I have traded hundreds of things like day / swing / position trading, stocks / options / futures, outright trading / spreading, various option strategies (credit / debit spread, vertical / horizontal / diagonal spread, spread on spread ....), trading exchanges from Asian / European / US countries ... trading index/bond/currency/energy/food / meat ..... futures and finally I narrowed down to just day trading various big futures that move. I actively trade about 10 to 15 futures. I also archive about 20 futures because those have rather poor day range. those are mainly food and meat and currency futures. things I haven't tried are: - to be market maker - to take physical delivery ( of say crude oil) maybe one day, I will do that I haven't try HFT. I will not do it because I know I can't make it.
Although I had a profitable week scalping with a % trades profitable of 54.1% and PL ratio of 1.08:1, my account equity closed at all-time lows since inception. Taking on directional overnight butterfly spreads against the trend and not hedging them has not been working. Not working at all. Even worse, I have been increasing my exposure by selling off the short puts of the body of the ‘Fly and adding a AAPL fly near the close on Friday. All of these positions will be gone on Monday. Account value now down 3.7% from inception. I am struggling overall during excellent trading conditions. It is all psychological. Do I think I’m smarter than the market? Even if I were, it sure doesn’t seem to pay well. Since my trading goals includes making money, it appears some effort in behavior modification is necessary. Trading as a form of psychotherapy? Who knew! I will take the following 6 steps in an attempt to mitigate my destructive trading behaviors: Simplify - Reduce the number of setups and time frames I trade. I will focus on scalping and two trending following setups until my account reaches a new equity high. Set small, easily attainable goals - I will start with a half session goal of following my modified trading plan. If I reach this goal, I will trade the 2nd half. Increment goals after successfully achieving prior goals - I will add on other trading strategies if I adhere to my trading plan and am profitable, in June. Be aware of and avoid any triggers that may set off bad behavior - My countertrend strategies tend to cause me to lose focus on the more common and more easily traded setups. Therefore, this setup will be suspended indefinitely. Reinforce my focus by studying setups each day - I will go over each of the day’s trades and see what I missed and investigate where I could have avoided going wrong on losing trades. Code my setups - By forcing myself put the elements of my setups in absolutely precise terms so a computer will execute my trades as intended, I will see issues and new ideas that can only increase the overall robustness of my setups. This is also necessary for proper backtesting so I know my setups truly have a positive expectation and what conditions cause that particular setup to falter. As a bonus, advanced reversion to mean strategies can be employed without exposure to emotional risks. I will also write down and post where I can see it every day, My Big Why. What do I want to accomplish by being a successful trader? For me, the only thing holding me back is myself. I was so biased on Friday that I ignored 4 prime setups where I could have reduced my negative delta exposure or better yet, reversed my position. So instead of potentially making a few thousand, my equity drops by $400 or so. My success in trading, and beyond, for that matter, comes down to my overcoming psychological issues. I will document this here and now.
Closed out my losing overnight option trades. Profits from scalping only were $94.19 with a P/L ratio of 1.86:1 and profitable percentage of 46.6%. Now flat. T1 - SI trend continuation play. Trade timed out. T2 - CL trend continuation play. Incorrectly estimated correction size and was stopped out. T3 - CL trend continuation play. Entered on momentum in direction of perceived trend. Got impatient and missed out on run beyond support as I recall. CL is too big for me right now, so I will avoid until account is profitable. T4 - AUD trend play. Had thoughts of a general risk on day, but no dice at that time. At least I exited trade before reversal gained momentum. T5 - AUD add on. T6 - Closed NQ put that was a part of last week’s butterfly spread trade. Closed out the body of this trade last week for a profit, but not nearly enough to mitigate my huge loss overall on this trade. T7 - Same as above. T8 - Closed AAPL ‘fly from Friday. T9 - VLO trend continuation play. Held on a whole 37 seconds before changing my mind on the trade. Good thing I exited when I did as I avoided getting stopped out. T10 - MGC trend continuation play. Stopped out. T11 - HE trend continuation and relative strength play. Profit objective just beyond LOD obtained. T12 thru T15 - Trying to get short micro index futures, but God the bids were resilient overall. The 2 long MNQ trades were buy instead of short errors. F me! The play over the last few months, through the crash and recovery was buying NQ and selling ES. Very little, if any heat on any particular day, whether the market was up or down. I don’t even want to contemplate what the RAR of that trade would have been. Last I saw, NQ outperformed ES almost 100 basis points today. Somebody please show me how to spell “Concentration”, as in the market move being heavily weighted towards large cap Nasdaq issues. RTY lagged even more than ES today. Now that I’m focused solely on scalping, I expect to be able to share in the bounty the indexes have been offering traders for quite some time. Really the best game in town right now, including overnight sessions for us USers.