Request Trading Advice for E-Mini Dow

Discussion in 'Trading' started by Senior Novice, Nov 6, 2010.

  1. Hi Fellow Traders,

    This is my first post on this forum. I have been reading for a while. I’m not a native English speaker but will try to post here anyway since I like the quality and down to earth approach of many of the traders here. To start out I will introduce myself. I live in the Netherlands, have a day-job, 39 years old and have been trading the markets in the evening hours (US stock markets open in my timezone at 15:30 my time and are open upto 22:00).

    My aim is to become a successful trader and succes is defined by becoming a consistent profitable trader generating a nett income of about USD 3000~3500/month. This in order to be able to quit my job.

    I have been trading since 2007 and currently trade with a spare capital of around USD 25.000. Currently have switched back to the e-mini dow jones, were I trade one contract at a time. I have traded dutch stock market options not too bad but due to my job I don’t have the necessary time to make a proper judgement of the market.

    Then I switched totrading US markets in the evening(for me) and traded S&P e-mini , Dow Jones e-mini, Russel E-Mini,Gold en EUR/USD. All of them without any structural success.
    The ES I did not like as it seemed to be crowded and could not get a good fill, which forced me to adjust my entries and exit and this screwed up my trading plan. The ER was more risky and I traded it for a long while but in the end I was chopped up by the volatility of it so I left the ER.

    The I switched to the YM. Because of the small USD 5 increments it allowed me to have better money management and more precise entry and exit. This went OK for some while and I was making around 100 dollars a day at a certain point. Then my character/emotions started to take over and I lost all of my carefully profit with some stupid trades that were based on my expectation, instead of what the market was showing me in front of my eyes on the screen. Hard lesson learned. I gave up and after a while came back to the Gold (GC) . Altough I was good at taking the best probability trades, a too tight stop loss was killing me (probably because of the low volume and too big spread) and ofcourse after I was stopped out the market rallied in the other direction and gained 10 points(USD 1000). In the GC market I got the strong feeling I was being manipulated so I left it as well and will not touch it again.
    Then switched to EUR/USD. Thinking that the liquidity and volume would not allow for manipulation. But here the problem for me was that I was not monitoring my positions close enough, which turned out to be a very bad idea as the market is strongly trending in my opinion. I think my psychology is not set-up for currency trading as I tend to think that I am not losing money if I still have the same amount money, just in another currency, which is not a good state of mind for trading.

    Finally I’m back now at the dow-mini and what I changed is that I am now logging all of my trades, analyzing equity curve, averages, winners,losers, entries, exits. This allows me to start trading based more and more on my statistics and not on my current state of mind (which is disastrous).

    After some weeks my statistics are showing me that only 45% of my trades are winners. My equity curve seem to have bottomed and slightly and consistently raising, but yesterday I had 12 trades from which 11 losers ( I got the rally in the end though ;-) .

    My equity curve went slightly under the previous bottom but thanks to the winner at the end I was able to hook-up and close below the low. Ofcourse I am now doubting again wether I am on the right road or not. That is why I decided to post my story here and hopefully get some help and pointers from you guys here (you would be stupid to do that, since I’m probably your bread & butter! ) .

    I will tell you know about my trading set-up:
    - First screen: IB TWS chart for 3 min e-mini YM with RSI 14, Stoch 7,3,3 ( as highs/lows seem to form at a 14 period interval on this timeframe). Bollinger Bands at 14,2. (No moving averages as the backtest seems to be bad, but understood that some pro-traders still use an MA… anyone any ideas on MA’s? )
    - Second Screen: Amibroker (feed with IB) CASH Dow 3 min, same set-up as the YM chart.
    - Average time in the market is only a few minutes, unless I have a winner riding the waves,I let that run as long as possible. I could be in the market for hours.
    - Around 6 ~12 trades per day.

    What do I look for:

    Here is where I go wrong (or maybe in the set-up). My statistics show me that my only best probability trade in the current YM market is when I go long when RSI is at 60 or higher (67% probability for a winner). All other set-ups are losing for me at this moment.

    Stoch crossings above 20 or below 80 is see as a signal but not necessarily see as immediate entry. (although my feeling/screentime is telling me it is a good signal). It has to be confirmed by RSI (rising? Declining? Divergence?) and candlestick price-action.

    Candlesticks breaking through Bollinger Band, may be a signal as well to catch the rebound. This is for very short exposure in the market only. After rethinking this, this might actually not be a very good strategy as breaking through Bollinger bands could also mean the start of a strong trend.

    Price Action. Candle stick patterns. I feel the most succesful is to trade a candle that opens higher or lower then the previous candle. You can feel sometimes that the market is gearing up for a rally and I jump at it. (These are my only winners now, in the current bull market, long with RSI at +60)

    Price Action: Support/Resistance level. For example: yesterday it seemd to me that 11400 was a being tested several times and the dow could not make new highs when bouncing of 11400 (also no new lows). It did not seem it could take a direction and that chop around 11400 killed me. Finally the dow seemed to want to try 11400 again and it failed , and the market turned and rallied up sharply.

    I mean, I see these patterns, but how to trade the? (Now I just anticipated on a sell-off below 11400 that ofcourse never came). In general, how to trade these round numbers? 100’s.

    Charting: break through support & resistance lines. (Square trading ranges, triangles etc.) These usually would trigger some(short term) movement.

    I tried Fibo’s and Gann but these probably are not suitable for my style (?). Also was in woodies CCI club that was OK but in the end it seemed there were more losers then winners and they would only get into the trade when (imho) the trend/momentum was already nearing it’s end). I also thought of joining other trading rooms or hiring a coach but I never could get rid of the thought that most of these are scams. How to filter the good from the bad. I trust nothing. Also thought of buying a black-box, but since I can not know how that works, I have declined that idea too.

    I am determined to become a profitable trader someday, and I know I am learning and making progress all the time, but after three years fos till not being consistently profitable, I think am lacking help and feedback from an experienced trader or group of traders. I am not sure If I can make it on my own. Since there are many here, trading for a living and probably have felt the same pain and sometimes even desperation if it is ever going to happen, I am wondering if anyone could have a look at my story and give me some advice from a real trader perspective.

    No doubt some posters will jump at my post with some good cynics, but OK, so be it! Fair enough, but I also hope for some more serious reactions.