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With the launch of the micro e-mini index futures, I've decided it's time to seriously begin journaling my trading in the hope of formally identifying and addressing my failures, as well as creating positive habits and planning to aim towards success.
The maxim "First, do no harm" seems to be a good place for me to start, and with that in mind, my initial Trading plan draft is below:
Objectives
Use the MES & MNQ as a training ground for seriously trading the ES,NQ in a couple of years . I will use this time to identify my plan, errors,edge and expenditures. Gotta treat this like a business!
How long will I give this process to work?
I have no fixed end date. I plan to assess my progress regularly.
What are my performance goals to validate this plan?
I will assess the winrate %, Risk-Reward , MFE,MAE to determine whether my current style has any edge.
I will also be assessing stops. I have recently moved up one timeframe and need to amend my stops accordingly.
How will I measure the quality of my performance? For example, how many errors would be considered an improvement and is tolerable?
Once I have a clear definition of my errors as I see it, I will keep a tally of these and try to minimise these systematically.
How will I be able to increase the quantity traded?
I will implement a scaling plan Which I have yet to define. I will update this for my records once this is complete.
Financial Considerations
Cost analysis
What am I paying for? How much do I need to earn each month to break even? Is keeping a leased ninjatrader license a good idea? Is buying a perpetual a good idea? Cost analysis goes here!
Risk & Scaling
I will trade 1-2 risk units until I reach $1k balance ( risk units = Longs - shorts after position size adjusted tick value).
After my stops comfortably sit within a 5% risk/trade envelope, I will then add an additional unit every $500-750, the exact amount has yet to be determined.
I will optionally add 1 risk unit in situations where I am deep in the money and can position a protective stop and let my position run favorably.
I will maintain a daily drawdown limit of -$150 or 10% of my balance, whichever is bigger.
When will I trade, and what timeframes?
As I'm based in Ireland, I have the advantage of being able to trade part of the US Session after work. The downside is that by the time i'm home its 3pm US, so i'l be missing out on the open and some of the volume spikes pre lunchtime.
60 & 30 min :- I will only enter trades on these timeframes with some Clean TD Sequential or TD Combo setups (rare as I don't have time to set and watch the market).
15min :- < This is currently my primary timeframe due to time and margin constraints. I will plan entries & exits here
400tick :- I will place entries here.
Educational Growth
I will formally review my journal and trading log monthly to identify trends that I can take action against. I want the sample to be statistically significant to prevent overadjustment/curvefitting.
I will devote at least 2 hours a week completing final prep for my CMT Level 1 exam which is scheduled for late June.
I'm not gonna set any other study goals yet as I have outstanding university modules to juggle along with my dayjob.
I may share some excerpts from the texts if anyone is curious
Accountability
I hope to find some likeminded individuals and form a channel for voicechat capability to allow for collaboration with other traders. This is probably gonna be a summer project, but for now I will be accountable to myself
Health & Mindset
I will sleep/play games/study instead of trading when I feel tired,stressed or frustrated.
I will also take time away from the markets. The markets will be there when I get back
as an example, if I consider 2 MES contracts as one risk unit (tick value wise this is $1.25 tick x 2 = $2.50), I can offset my risk by taking the opposite position for 5 contracts ($0.50 per tick x 5 = $2.50) on MNQ. If these markets have a perfect correlation, this would give me 0 Risk units as I would be net flat.
Of course the NQ and the ES aren't perfectly correlated, but its a useful tool nonetheless. When I have a bigger account , I could possibly hedge against a running position using the e-mini ES instead, but of course this isn't something you want to do often as the fees would add up quickly.
A positive start. I felt good about my entries, I feel like overtrading is one of my current challenges, so entry frequency is something i'm keeping an eye on. I'm gonna make a checklist for my trades so I can start scoring myself, a project for the weekend!
Was particularly pleased about my short entries, I do feel like Volume is starting to become slightly readable to me, I hope that trend continues. I'm tempted to look at Up Down Volume, but honestly I feel like that's more significant on bigger timeframes to find trapped longs/shorts .Not gonna worry too much about it for now, but I will be investigating it's use. I'm also keen to investigate the NYSE TICK and TRIN/Arms index a bit more, Ive read about it in my textbooks, but not tried to apply.
trades brought me back to my starting balance of ~$500, so i'm gonna roll with that.
Can you share you entry system that your using, also I am curious how long you typically stay in a position. I have been learning and trading with some success scalping on momentum, but I know I am missing the bigger picture.
Majority of my entries on 400 tick I judge based on how price action behaves at different price levels. I don't use a formal system, but pay attention to how much volume it takes to move the market. I have an idea about turning this into an indicator, hopefully I'l get to share that sometime soon!
I do however think there is a ton of value in Tom Demark's work when it comes to time analysis, so I do try to take TD Sequential and TD Countdown setups aswell on 15min charts or above, but learning when to enter after a signal print takes some time. don't blindly take all the trades. I see you trade Crude. I did some brief testing on crude at the beginning of the year, and the TD signals on crude were impressively clean.
Not that many good general overviews of the systems around, so Ive uploaded a video that covers it briefly (among other time analysis tools)
See 54:35 in the video below for demark indicators:
Video title- the use of time in technical analysis , Mark Newton, CMT.
If you want to learn how to use it, this is the best guide and it has tons of great examples:
Thank you so much for the detailed response, this is a approach I had not considered at all so far. With regard to your last link hoi mention information on page 23, the doc I can view seems to only have 5 pages, is there another link in that doc that I should be looking at?
. I will use this time to identify my plan, errors,edge and expenditures. Gotta treat this like a business!
