The Evolution of an E-mini Trader

Discussion in 'Journals' started by Huios, Jun 9, 2002.

  1. Huios


    This is a journal, not about trading, but about me, Huios, becoming a trader. I chose to do it online to make me more accountable to it (I hate journaling) , and to allow others to give constructive criticisms.

    Background… I first started trading about 5 years ago. Opened a small (3K) account, and within six weeks almost doubled it. Thought I was da man, and this was a piece of cake. I was trading commodities, ie. softs, ags, metals, and meats, and paying $95.00 round turn. I was doing so good, and so full of myself that I went from trading one contract to two. Imagine, trading two gold contracts, with a $750 stop loss, on a 5.5K account. Within 6 trading days and several margin calls between gold and FCOJ, my account was down to $98.10. I figured out I wasn’t da man, and it was a piece of luck. That was the wake up call. The next four years I spent watching the markets, and reading a lot of books, and spending a lot of time on the old FutureSource board.

    It was in ’99 that I read Phantom of the Pits online book, and Van Tharp’s book and it changed my thinking completely around. There is no spoon, errr, Grail. I had to bend me!!! All that psycho stuff I used on other people was now turned on me, again (that is another story for another thread in another board another time).

    In April of 2001, I knew it was time to trade again, call it a Divine Appointment, but this time to do it the right way. Whatever that meant. So, by the end of summer, I sold my business, apartment buildings, house, and most of the furniture, and moved my family to NC to become a full time trader. God was doing a new thing.

    Opened a “real” account with a “real” broker and started position trading the ags, softs, and meats in March, ’02 using end of day data. This time being a little smarter, or so I thought. Traded the account up almost 12% in 6 weeks, mostly by shorting Feeder’s. I was using the CME 10 minute delay quotes to check prices during the day. Then one day, I wanted to get into feeders, but was almost already limit down, so I jumped in Live Cattle. Cows are cows, right? I placed my stop to get in, but thought price had already traded thru, cancelled the order, got the cancel confirmed (or what I thought was a cancel confirmed), placed another stop below the market, again thought the price had already traded thru, cancelled, got my confirm, and placed a market. Got a fill, but it was a fill on the first two contracts I cancelled over 30 minutes ago. Then got another fill, then another. By this time the feeders came up off the bottom, and was taking the LC with them. I was short 6 LC in a fast rising market. Soooo, I thought I would do like any good trader would do, manage my losses and get out at the best time I could, off a move back down. Now, remember, I am using EOD data and 10 min delayed quotes. You know the rest of the story, the cows never moved back down, I had sold the lows of the day, and of the move. Ended up losing almost all of my previous profits in the short span of 2 hours.

    Called my broker, and asked what happened. What I thought were cancel confirms, were of course, cancel rejections, because they were already filled. The problem was the pitman stuck them in his pocket and never reported the fills. I don’t blame the pitman, it was my responsibility to know my software. Oh, by the way, this was the same day I called my accountant and learned that I owed twice what I thought in taxed. Not a good day to trade!!!

    I learned a lot that day and the weeks that followed. The biggest thing I learned was that the market don’t give a hoot about me. The market is gonna do what it is gonna do, when it wants to do it, and the best I can do is to buy when it is going up, and sell when it is going down, cut my losses immediately, and let my profits run.

    So here I am, daytrading the ES contract. Placed my first trade May 13th.

    Let’s see how well I learned my lessons.

    To be continued…
  2. Never trade a floor traded product from off the floor unless you've got a phone straight to the pit and can have your order arbed in.

    The only reason why any of us are here is due to the fair execution found in the electronic products. There is no way to make money otherwise.
  3. Huios


    My first week hit me like a load of bricks…

    Monday, May 13th

    7 trades for a net of –21.10

    Tues, May 14th

    6 trades for a net of –28.80

    Wed, May 15th

    5 trades for a net of –374.00

    Thurs, May 16th

    5 trades for a net of –236.5

    Fri, May 17th

    No trades. Just watched.

    First week ended up net – 660.40. I was really shell shocked. Not that I didn’t expect losses, just didn’t think they would be so big. I had 7 losses that were more than 1 point, my mental stop. The biggest was 3 points.

    23 trades, 17 losers, 5 winners, and one scratch. Wait, it gets better.

    To be continued…
  4. Rigel


    This is interesting.
  5. Huios


    Week 2

    Not much better…

    9 trades, 9 losses for a net loss of 618.20.

    That Friday (24th) I did not trade. I froze. Took the next week off, (last week of May) not because I wanted to, but because I couldn’t pull the trigger anymore. I spent that week watching the market, rereading books, and then I saw some things.

    I was trying to play the e-mini game with the same strategy I used with the commodities, trend following. Basically buying strength and selling weakness, ie when the market rallied above the recent high, or fell below the recent low, I would get in. What I saw, was that most of the time, any new high is met with a lot of selling, or low is met with a lot of buying, and when it isn’t, the mini moves with a lot of passion. Then I am chasing the market, and I learned not to do that the week before.

    The mini is a new game. A trend is still a trend, but a trend in the mini is different than a trend in feeders. I had to change my thinking to adjust to the new game.

    Six of my losses were over my stop of 1 point. I was not cutting my losses. Didn’t know if I was letting my winners run cuz I didn’t have any that week!!!

    I went over my minute charts and plotted my trades directly on the chart. What an eye-opener. What I saw was I was buying the tops, and selling the bottoms. And when the trade went against me, I was “hoping” it would turn around. Several of those trades initially went in my favor, but I wanted more (to make up for the losses) and had winners turn into losers.

    I ended up my first month of trading sitting on a 13% net loss in my account.

    After revising my trade plan and reviewing the rules I wasn’t following, I was ready for last Monday, the 3rd.

    To be continued…
  6. PuffyGums

    I tried to let it pass but I have to ask?
  7. if your losses are unexpectedly large due to not getting your mental stops in, then try hard stops.
  8. nkhoi


    it take a brave man to admit the loss, I admire your honesty and courage. You might want to try trendVUE Essentials for $10
    to equip yourself with some simple but effective stratergy for today dynamic trading.
  9. Huios


    Last week

    Mon, 3rd – Two trades for 6 points to the good. Both were in the afternoon. Couldn’t pull the trigger in the morning. First trade was a short, cuz the trend was down. No more longs on a down day, shorts on an up day. (duh) The trade was a good trade, and started out in my direction, but it reversed and I held it for a –1.25 loss. The second was a short late afternoon. Market made a double short term top, then a lower high. At that time my wife walked behind me and asked if I was in the market. I said no, and she asked why not? I clicked the mouse and we watched the market fall together. It was very romantic. That trade was good for 7.25 points. The market continued to drop another 10 points. Didn't let my winners run. Finished the day up 290.40.

    Tues, 4th- 7 trades for 1.5 points to the good. Range bound in the am. 1st trade, chasing the market, good for 1.25 points, but was a lucky trade. 2nd trade a short for –1.5 pts. (biggest loss of the week) Letting the losses run. Afternoon was a big rally followed by a big drop. 3rd trade was what I thought a good short for a range bound market, but I didn’t realize the market was in an up trend. Small loss of .75 pts. 4th trade, figured out it was a trend!!! Long for a gain of 2.5, but if I would have let it run, could have been a 10 pointer. Not letting my winners run. 5th trade, decided to jump back in long and bought the top. Chasing the market. Loss of 1 pt. 6th trade, didn’t catch the beginning of the drop, but decided to chase it again, right before a correction. Loss of .5 pt. 7th trade, shorting off the bounce for a gain of 1.5 pts.

    Wed, 5th – 3 trades for 4.75 points. Didn’t play in the am. Watched during the federal numbers announcement. 5 points in one minute!!! Trended down the rest of the am. 12:30-short trend up, caught some for 1.25 pts. Range from 13:30 to 15:30. Bought bottom of range and sold at top for 1 pts. Got sloppy or could have had more. End of day the market shot up, made a flag formation, and I bought the breakout of flag for 2.5 pts. Three winning days in a row!!!

    Thur, 6th – Feeling my oats. 9 trades for -.25 pts. Downtrend in the am. 1st trade, shorting on a correction. Good for 1.5 pts. 2nd was shorting on another rally, but rally kept going, lost 1 pt. Same thing on the 3rd trade, lost .25 pt. 4th trade bought the bounce (what bounce) for .25 pt. Should not have taken that trade. 5th trade was shorting the top of the lunchtime range for .5 pt. Run up to 13:30, then dropped thru the afternoon, of course I didn’t realize it was a downtrend till later. 6th trade was buying the dip of the uptrend, was in my favor for a short time, but never made a new high, and made a sharp move down, and I lost 1.25 on that trade. 7th trade was a scratch. 8th trade was shorting a rally of a downtrend. Good for 1 point. Got out just before the floor dropped out and the market fell another 8 points. 9th trade was playing the bounce of the big drop, lost 1 pt. Done for the day. Reading the market better, but I think I overtraded today.

    Fri, 7th – It was gonna be an interesting day. 15 pt drop overnight. I had a feeling the market would fill that gap, but wasn’t sure. 7 trades for a loss of .5 pts. 1st trade, selling the top of the morning range, but the top of the range was the beginning of the morning up trend. Good trade, but lucky to get out with a .25 gain. Watched it go up all morning. Why didn’t I trade it, who knows. 2nd trade short what I thought was a correction, but was heading for the double top, loss of .25. 3rd trade was selling the top of what I thought was a triple top, but was the beginning of the afternoon run up. Loss of 1pt. 4th was buying into a correction, which kept on correcting for a loss of .75. Right after I got out the market resumed the up trend for another 3 points. 5th was buying after a 2 minute, 3pt run up to the first of the double top at around 14:20. Wasn’t a good trade, gain of .25. 6th trade was buying at what I thought was a correction of the double top, but w3as the beginning of the big run down between 14:30 and 15:00. Lost .75. Last trade was a buy after the correction to the small run up around 15:20. Sold at 1031.25, almost the high of the move, which was 1032, for a gain of 1.75.

    I realized that Fri I was playing someone else’s game at times. That is not gonna happen again. Although he was right on most of his calls, I don’t want to depend on someone else to call my trades. Nothing wrong with that, I just don’t want it for me.

    Ended the week with net positive 440.60.

    It’s easy looking back, seeing where I should have gotten in, and should have gotten out, but it is a lot tougher when you’re looking at that hard right edge. Did much better cutting my losses this week. Five trades with losses exceeding 1 point, the largest being 1.5 pts. 28 trades with 15 winners, three of which were over 2 pts. The largest was the 7.25 pt trade on Mon.

    Sorry that this was so chopped up. I hope to post charts if I can figure out how to do it.
  10. Huios


    Now you tell me, where were you several months ago!!!

    Actually, I was originally just position trading using eod data and software, it was only when started using the 10 min delayed, and trying to "daytrade" (if you can call it that) is when I started getting in trouble. And the main fact was I had no business trading that day anyway.

    As to electronic markets, that is why I trade the ES.:D

    Post the origin of your user name, I'd love to know, along with easyrider. Orthodontist?:p
    #10     Jun 9, 2002