ES Daytrading: "only 1 trade per day" or "1st trade a loss, rest of day a loss"

increasenow · Aug 21, 2008

Quote from FerdinandAlx:

This won't work. Why don't you come in during the last two hours of the day, wait untill you see increasing volume along with price moving in the general direction of the day and short or buy 1 contract. Close out your position when you spot price moving opposite to your position on increasing volume. Don't trade at all if you're unable to spot the general direction of the day.

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do you do this?...is this an actual strategy employed by you for end of the day trades?...do you find that the end of the day "mirrors" the earlier part of the day?

increasenow · Aug 21, 2008

Quote from NoDoji:

On 8/5 first thing in the morning I had two stops trigger for a loss of $10,800 on a $130K account as a result of straying from my usual trading strategy. I pretended it was someone else's P&L I was looking at and continued to trade using my regular strategy. I had a loss of $100 on the next trade. I put that behind me too and then gained almost $1000 on the next two trades, followed by three profitable days in a row.

It was very tough not to walk away, but I figured if I'm doing this for a living I can't just leave the job because I made a mistake. I think the psychology of handling "1st trade a loss" is to literally put it behind you and start with a fresh slate. Every trade is brand new and holds the profit potential of your best trade. If it turns on you, toss it out and start fresh again.
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thanks for sharing your experience...wow..be nice to trade with $130K!!!

increasenow · Aug 21, 2008

Quote from musclemoney:

It's helped me to turn off P/L when in a trade. I used to see the red to green, to red, etc., and that drove me nutty. I think my blood pressure literally went down when I set P/L to false (off)
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yea...I never dealt with this when swingtrading the QQQQ options etc...the deal is because I trade with low daytrade margins...must exit that day...so...cannot forever endure the drawdown or not acknowledge it as the "trading day will end" and here comes OVERNIGHT MARGIN!!!

increasenow · Aug 21, 2008

Quote from osorico:

As someone said... you just don't get it dude.

Here's the deal Increasenow...
The trading-day consists of making trades. The number is irrelevant, and should not be fixed for the sake of having a fixed number.

First what you need to understand is that 100% winning (or losing) TRADES in a day is in outlier. It is not normal. Contrasted against 100% of trading DAYS being winning (or losing) which is neither an outlier nor is it normal. It just is. Case in point 10 trades in a day 8 winners, 2 losers, the day is a winner. Next day, 10 trades, 8 winners 2 losers, day is a winner. Next day, 10 trades, 2 winners 8 losers, day is a winner. Next day 10 trades, 10 winners, day is a winner. Next day, 10 trades, 5 winner, 5 loser, day is a winner. Trades provide diversification and dispersion.

By limiting yourself to 1 trade a day you are guaranteeing yourself that each one of your trades will be an outlier (100% of trades in a day being winner or loser) and the cumulative result on winniing and losing trading days will be no better than the probability of your methodology. If your methodology is say 70/30, then you should prepare to withstand a MINIMUM of 30 consecutive losing days, making 1 trade per day.

What you need to do is trade. The number of trades is irrelevant. What is important is that you employ discipline against the loser outlier (100% of trades in a day) and inevitable string of losers. And too that end, you must find a number lets say $250 for example that is a MAXIMUM LOSS for a day. It doesn't matter if it's in 1 trade or it appears after you've generated a string of 25 losing trades in a row. Once the number is hit, THEN you are done for the day. Period. Note that this "discipline" does not exist in any way on the upside.

If $250 is inappropriate (too large or too small) for your account, than find a number that works. But it must be realistic. Wanting to profit $500 and willing to risk $10 to do it is not a calculated risk. That is a lottery game. Or maybe I am just underestimating your trading ability. I mean last week you were trading CL, DAX and YM.

Osorico
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Osorico...thanks Man...really appreciate the time on this...I agree with the MAX loss for the day...my problem is my level has been hit and I go for more and have lost more!!!...interesting thought on the upside profit and that "no limit"...just FYI...I have never traded all day...I wonder how that would go and what it would be like to literally trade from 9:30am-4:00pm NY time...trading the YM or ES...hmmm...

increasenow · Aug 21, 2008

Quote from lilduckling:

True,

but for those who still sometimes struggle with the mental aspect of it, an unexpected larger loss in a fast moving market or a string of loses in a row....... may rattle their confidence or cloud their judgement. In which case it would be better to stop trading and start with a fresh clear head the following morning....

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this has been my deal...large losses/sting of losses really hurt and cloud...hate it!

increasenow · Aug 21, 2008

Quote from gnome:

The idea of "1 trade per day" is illogical.
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I disagree...the math speaks too loud...gain 2 ES point or 20 YM points per day(per 1 trade per day) and throw 2 cars at them...that is about $52,000.00 per year approx...seems like a great plan...traiding too much could lead to over trading and losing all your profits...I guess it is your approach to your "business of trading"...

The Swordsman · Aug 21, 2008

Just do it then. Thats the only way you'll learn patience and discipline to follow your trading plan (if daytrading is the route you wanna take). Asking a million questions will never take the place of sitting there and watching on your own.

Quote from increasenow:

just FYI...I have never traded all day...I wonder how that would go and what it would be like to literally trade from 9:30am-4:00pm NY time...trading the YM or ES...hmmm...
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The Swordsman · Aug 21, 2008

Overtrading is a RELATIVE term. Of course given your level of skill it seems dangerous and you try and protect yourself by thinking just 1 trade a day will make you your fortune. What you don't understand yet is that there are tons of opportunities everyday but the only way you will learn is to do what you haven't done yet, sit and watch a FULL DAY over and over and over.

Btw, Gnome has been trading for probably longer than you've been alive so I'd tend to listen to guys like that if I were you

Quote from increasenow:

I disagree...the math speaks too loud...gain 2 ES point or 20 YM points per day(per 1 trade per day) and throw 2 cars at them...that is about $52,000.00 per year approx...seems like a great plan...traiding too much could lead to over trading and losing all your profits...I guess it is your approach to your "business of trading"...
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Thunderdog · Aug 21, 2008

I agree. It pays to hear what gnome has to say. Osorico's post was detailed and very good, and essentially in agreement with gnome's view.

increasenow · Aug 21, 2008

Swordsman, Osorico, Thundedog, Gnome or everyone else...thanks, really thank you for taking the time to answer my questions...you guys have HIT IT RIGHT ON THE HEAD!....

question...on average...how many trades (roundtrip) do you guys take per day trading the eminis?...5,10,20,50,100?