The transition to Futures trading

[CanOz]

Over the weekend I'll post a chart of the trade from last night.

I was a whisker away from taking a second contract. But all good.

It just shows the potential. Could have easily been a few thousand with a little luck.

Being new to taking 2 contracts I'm a little hesitant at times. But this will change with experience.

Very excited at the moment

I'm not sure that holding overnight with geopolitical tensions in the background is a wise idea. A resolution to the Crimea thing, or a new stimulus package out of China might see a massive gap up beyond your stop, wiping out an entire quarters worth of profits.

Certainly an exit before close would have payed you well last night. I have a little twist to my open range trade that I'm hoping will show you that there is little benefit in changing your day trade into a swing trade. With NinjaTrader, even possibly IB you can set a time to flatten your trade. If you want to try and leave a runner on into the close to try and catch these rare opportunities then that to me would make the most sense. But lets try and prove it factually using the Open Range system. Will try to get this done today.

 

[pavilion103]

Yeah I do that too. Have things that I am working on with a big conscious effort. More so than all the 100s of other things that I'm also trying to improve on.

Oh come on... If you've got that many things to improve on then there is no hope for me :O lol!

 

[pavilion103]

I set my alarm to 5:45 and intended to exit in the morning.

Can it gap like that while the market is trading?
Or only once it's closed in the morning?

 

[CanOz]

I set my alarm to 5:45 and intended to exit in the morning.

Can it gap like that while the market is trading?
Or only once it's closed in the morning?

A news release during treading might result in a massive sweep, but generally you'd get out with some slippage...Yeah exiting on the close is the go. Check out IB for setting that up, maybe a MOC order, Market on Close.

 

[beachlife]

Just need to reinforce the key parts of my plan that I need front of mind!

Then you need to find a way to write them in a positive way that will reinforce. All the mindset books say the sub conscience mind doesnt recognise words like never, dont, wont etc. A bit like goal setting. It must be a positive statement.

 

[pavilion103]

Then you need to find a way to write them in a positive way that will reinforce. All the mindset books say the sub conscience mind doesnt recognise words like never, dont, wont etc. A bit like goal setting. It must be a positive statement.

I disagree.

I think there are two parts

1) heavily drum in the things you need to be doing
2) heavily drum in the traps to be avoided.

Do more of 1) and do less of 2)


I've read over 200 books on mindset/personal development so I know what you mean....

But this isn't about hyping myself up to be a great trader or changing my mindset to think that I can achieve. I already have that.

It's about practically (and objectively as possible) identifying the good and bad things in my trading.

 

[havaiana]

I disagree.

I think there are two parts

1) heavily drum in the things you need to be doing
2) heavily drum in the traps to be avoided.

Do more of 1) and do less of 2)
...

I think beach may be referring purely to the wording:

change
never take a large risk trade unless it's open profit

to
take large risk trades only when in open profit

or something like that


I don't go for much of the psychology stuff myself, but I have noticed when I have a focus for the day, I do find it easier to focus on 'doing' something rather than 'not doing' something, so I will usually find a way to 'do' something to prevent whatever I want to eliminate or reduce.

 

[beachlife]

I think beach may be referring purely to the wording:

change
never take a large risk trade unless it's open profit

to
take large risk trades only when in open profit

or something like that


I don't go for much of the psychology stuff myself, but I have noticed when I have a focus for the day, I do find it easier to focus on 'doing' something rather than 'not doing' something, so I will usually find a way to 'do' something to prevent whatever I want to eliminate or reduce.

exactly. I'm not saying stand in front of the mirror and chant I'm a super trader 50 times, but make your statements more about what you are going to do.

eg,

never trade out of fear... could be I will trade according to my plan

I can miss many big moves... could be there is a big move every day.

never take a large risk... could be I will follow my money management rules.

you get the idea. Shift the focus to what you want to do.


It also sounds like the 2 contract thing is stressing you a bit. Maybe pyramid in and take the second contract once the first can be moved to break even, that way the loss risk is the same as for 1 contract.

Also you seem to want to catch longer moves, maybe open a second account and trade 2 systems in 2 accounts.

 

[pavilion103]

Definitely considered adding in a second contract with further confirmation but I think I'm trading well with one and it won't take long before putting two on is natural.

Definitely multiple contracts gives more trade management options!

 

[pavilion103]

Will likely be a low-key couple of weeks from me boys.

I won't be on next 2 nights I've decided. I have class and then I want to go to bed early.
Even though I think a good short could be on I need to forgo it.

Will be on start of Wed (1st hour), all Thurs and start of Fri (first hour).

In 2 weeks when the D/L savings in UK changes it will help.
The following week when it changes in AUS, it will help further.

Then I will be 100% committed each day and raring to go.


After some really strong success and long hours at the screen, I am going to pull myself away in these next 2 weeks except for the hours above and get a clear mind and hopefully get even better results upon return.

Enjoy guys!

 

[CanOz]

Today on the DAX, used the 'hockey stick' pattern as my exit criteria on my runner.

 

[havaiana]

This is a blog post, but as no one reads it, figure there will be a higher chance of receiving some comments/advice/criticism here:

"here's my first couple of hours today, I wrote down my thoughts as it was all happening in real time and have posted as quick as I could. This is a pretty big distraction so going to concentrate on trading now. AUD/USD top, USD/JPY bottom.



context
I like buys in both into the new highs today, whether it goes straight there or we have a retracement first. After highs are gone will wait for momentum to start to wear off, stocks reverse and look for fades. So plan is long on open into highs. if if going lower to to fade after momentum of downmove wears off and hold into highs. Possible fade above highs if gets there.

1. get filled on first long at blue arrow. yen is fighting the nikkei a bit early and i start to feel we could have a bit of a squeeze lower. exit a contract at first pink arrow with plan to scratch and re enter lower if there is a squeeze lower and still have a contract on if it doesn't happen. exit second contract at 2nd pink arrow after watching reaction on nikkei at highs, just don't like it. will think about getting short now above these new highs or above 102 depending on reaction.
2. trying to work an order in at the x here, not filled
3. this is the reaction i was looking for first time, wish i was still long. still looks too bullish to fade here even though nikkei is struggling
4. looking for long here on aud, nikkei is looking very heavy and I am again liking short of USD/JPY. These moves are against eachother in terms of buying or selling risk so I decide USD/JPY is the best to go with as RBA statement comes out soon, stop looking at AUD for now.
5. looking for short here with small stop at highs. will exit and look to reshort at break of highs.
6. Nikkei still looking heavy but someone still bidding up USD/JPY. hold off short for now. Going to wait for RBA statement which should be nothing of surprise and not really a big focus, will fade any decent move in either direction of AUD after announcemement
7. Going to short above this first bar (first bar after statement) if it gets there again, if not I will have a pretty strong bias short and look to get in somewhere else later.
8. wanted short before break of this level. bias more heavily short now but will hold off for good spot, Also like AUD short better so that will be my main focus unless something happens to change my opinion"

 

[Caveroute]

This is a blog post, but as no one reads it, figure there will be a higher chance of receiving some comments/advice/criticism here:

"here's my first couple of hours today, I wrote down my thoughts as it was all happening in real time and have posted as quick as I could. This is a pretty big distraction so going to concentrate on trading now. AUD/USD top, USD/JPY bottom.

View attachment 57269

context
I like buys in both into the new highs today, whether it goes straight there or we have a retracement first. After highs are gone will wait for momentum to start to wear off, stocks reverse and look for fades. So plan is long on open into highs. if if going lower to to fade after momentum of downmove wears off and hold into highs. Possible fade above highs if gets there.

1. get filled on first long at blue arrow. yen is fighting the nikkei a bit early and i start to feel we could have a bit of a squeeze lower. exit a contract at first pink arrow with plan to scratch and re enter lower if there is a squeeze lower and still have a contract on if it doesn't happen. exit second contract at 2nd pink arrow after watching reaction on nikkei at highs, just don't like it. will think about getting short now above these new highs or above 102 depending on reaction.
2. trying to work an order in at the x here, not filled
3. this is the reaction i was looking for first time, wish i was still long. still looks too bullish to fade here even though nikkei is struggling
4. looking for long here on aud, nikkei is looking very heavy and I am again liking short of USD/JPY. These moves are against eachother in terms of buying or selling risk so I decide USD/JPY is the best to go with as RBA statement comes out soon, stop looking at AUD for now.
5. looking for short here with small stop at highs. will exit and look to reshort at break of highs.
6. Nikkei still looking heavy but someone still bidding up USD/JPY. hold off short for now. Going to wait for RBA statement which should be nothing of surprise and not really a big focus, will fade any decent move in either direction of AUD after announcemement
7. Going to short above this first bar (first bar after statement) if it gets there again, if not I will have a pretty strong bias short and look to get in somewhere else later.
8. wanted short before break of this level. bias more heavily short now but will hold off for good spot, Also like AUD short better so that will be my main focus unless something happens to change my opinion"

Hi, I read your blog.

If understand things correctly you seem to be on average scalping for < 1t per RT, 30-50 trades a day, a form of manual HFT if you like.

If your comfortable with that then ok, but it seems an an awful lot of hard work for very limited returns.

And commissions really eat into your bottom line.

Is this an experiment or are you committed to trading this way ?

 

[havaiana]

Hi, I read your blog.
...

If understand things correctly you seem to be on average scalping for < 1t per RT, 30-50 trades a day, a form of manual HFT if you like.

I wouldn't refer to it as scalping as I have winners frequently in the 15-30 tick range. I would consider myself a liquidity provider I suppose. The currencies in Asia don't have the sort of range that index futures do over the euro open that most people here are trading, so the opportunity is a bit different, the average return is much smaller, but crucially the losses are much smaller too

If your comfortable with that then ok, but it seems an an awful lot of hard work for very limited returns.

Agree on the hard work bit. A key point is the potential returns and the ability to size up, that's why prop usually want active traders. I can lose 10 trades a day and still have a decent day whereas if you are less active, yes your returns per round turn can be a lot larger but so are your drawdowns and ability to size up and have a somewhat smooth equity curve in comparison with someone who is having a couple of trades a day.

If you have a big return per round turn, but could make more money trading more while making less per round turn why not do it? I could definitely make more money per round turn trading a lot less, but it wont necessarily make me more money, especially in the future.

If I can maintain an average of 1 tick per round turn consistently enough, that would be enough to make me rich pretty quickly

And commissions really eat into your bottom line.

Tell me about it. The first 3 weeks of barely above breakeven after commission are below my usual results with this but yes I do pay a ridiculous % in commission in comparison to how much i take out of the market. I may switch to index futures when I have the bankroll for it

Is this an experiment or are you committed to trading this way ?

I have been doing this for about a year now (it has evolved over time and still is), it's still definitely a work in progress and looking to improve it substantially still


One more comment/question, maybe kid hustler can answer? about how much on average per round turn would a spreader make? I would guess it isn't much but that is what prop seem to be after these days and they are only in the business to make money trading

 

[havaiana]

My post is too long and all over the place. Just want to emphasise the point I was trying to make so it's not lost in it

In my opinion a high frequency of trades + smoother equity curve + less return per round trip

beats

low frequency of trades + less smooth equity curve + higher return per round trip


As long as the strategy can be traded with larger size without negatively effecting the returns too much

 

[Trembling Hand]

If your comfortable with that then ok, but it seems an an awful lot of hard work for very limited returns.

Actually its the opposite. If you are going to trade you are going to be wasting a lot of time in front of a computer. It seems like a better approach to actually get paid for that time rather than wasting day after day, year after year waiting for the hot run.

If you do 10 trades a day it only takes you a month to find out if you can trade without any doubt. My bet is that 99% of people here who trade less than 2-4 times a day cannot say with 100% confidence that they can trade.

 

[peter2]

Haviana: You post that you generally trade with two contracts. I think it would be constructive for you to calculate your edge on each contract every time you started with two. IMO you will see that you don't have a positive edge with your first contract as you exit too soon. If you have an edge on your second contract then it is being eroded by the losses of the first contract. IMO your first contract should be managed to pay for your trading costs leaving the second contract to earn the big bucks.

I should point out that I don't manage my trading this way and I wouldn't normally advocate this management style, but in this case I think it might help you improve when you see the facts (1st/2nd contract edges).

 

[havaiana]

Haviana: You post that you generally trade with two contracts. I think it would be constructive for you to calculate your edge on each contract every time you started with two. IMO you will see that you don't have a positive edge with your first contract as you exit too soon. If you have an edge on your second contract then it is being eroded by the losses of the first contract. IMO your first contract should be managed to pay for your trading costs leaving the second contract to earn the big bucks.

I should point out that I don't manage my trading this way and I wouldn't normally advocate this management style, but in this case I think it might help you improve when you see the facts (1st/2nd contract edges).

Yeah good point, I have done this previously and the first contract was profitable, but barely (could quite easily be in the negative given my recent results).

It reduced my overall profits (compared to just holding it with the second one) but also reduced drawdown pretty significantly which just meant less daily stops hit and less risk to my small bank. It also makes trading much easier mentally, which should not really be a deciding factor but was definitely part of the reason

My trading has changed a little bit since I tested it though so I definitely need to check this out again. Think I'll make it one of next weeks focuses.

 

[pavilion103]

I obviously trade completely differently but seems like excruciating work.

I'd rather come on take a trade in the first hour or so, hold for 30 or 40 points x 2 contracts.
Sit there and read/do something else or set a profit take target and walk away (can put an SMS alert to tell me when in out).
Then maybe hit the market the other way if there is a good setup.

Different personality types prefer different approaches I guess. But I'm more a set and forget. Make 40-80 points in the night and not have to be glued to the screen constantly trading. This is working very well for me.

But as I said, different approaches.

 

[havaiana]

I obviously trade completely differently but seems like excruciating work.

I'd rather come on take a trade in the first hour or so, hold for 30 or 40 points x 2 contracts.
Sit there and read/do something else or set a profit take target and walk away (can put an SMS alert to tell me when in out).
Then maybe hit the market the other way if there is a good setup.

Different personality types prefer different approaches I guess. But I'm more a set and forget. Make 40-80 points in the night and not have to be glued to the screen constantly trading. This is working very well for me.

But as I said, different approaches.

Yeah more than 1 way to skin a cat.

If you don't mind my asking, what sort of win rate are you running at and how many trades do you average a night? Have you calculated what sort of losing streak you can expect to go through given your win rate after 'x' trades and have you hit that losing streak yet?

Reason I ask is because most people taking 1 or 2 trades a night have no idea what a normal losing streak would be for them and how long the streak could last for (or even what their true win rate, R:R etc actually is) because they haven't had a large enough sample of trades. Then when the normal losing streak finally happens many don't/wont survive. Then it can be hard to tell if it is just a normal losing streak or a changed market that no longer offers the edge.

I'm not implying your one of these people by the way, I certainly couldn't make 30-40 points a night, much respect.

here is a calculator for anyone who might want to do this, the results can be surprising over a large sample especially if win rate is less than 50%. Note that this is only for consecutive losses, doesn't take into consideration chances of losing streaks broken up by a win or 2
http://www.sbrforum.com/betting-tools/streak-calculator/