It looks like live trading will start in two weeks now. Just waiting for some funds to hit the account. I'm kind of split as far as what I want to trade. I was thinking hard about micro Bitcoin thinking there would be opportunity to catch some good trades in a illiquid market. But, I don't see the contract available to trade with my broker so I guess that is out. This leaves me with the MES, MCL, micro euro fx and micro gold. I can probably trade any one of those four markets with great enjoyment. The micro euro FX is liquid and moves all day basically which is great. I also find the fundamental story behind the euro to be very interesting and straightforward. Micro gold has great movement during NY hours but is slightly less liquid than the other 3 making it a possible option for good scalps. I do personally think a less liquid contract could be beneficial to my trading style. I just don't have a very good handle on what moves the gold market fundamentally and I need to study news and price action some more. Micro oil has limited movement outside of the 9am-2:30pm trading hours and makes for a short day. I feel like I have a pretty good handle on the fundamental story behind oil and I enjoy reading about the oil market. Finally the micro ES is another option for me to trade. I know some about stocks and how to value a stock. The MES is the most liquid of my options which makes me like it less because the market is so competitive. The trading day is nice and long ranging from early morning all the way to 4pm which I like. The MES is like walking into a big party and everybody is there which is great. I guess it's nice to have options and still have plenty of time to think before I start trading again.

Thanks. I can't wait to post some trade results and looking forward to it.

Blackgrey45

My four simple rules for when I begin trading again:

1. Determine a max loss for each trade and exit the trade when it gets hit. I should not hold a position if the loss becomes very large in hoping that it will turn around. I traded during the 2010 flash crash and price kept going down with no end in sight that afternoon. Another example when oil went negative during the covid pandemic. Anyone holding long hoping for a bounce lost a lot of money that day.
2. Have only one position on at a time. I have found trouble in the past when having multiple positions going at once. Much easier to think clearly about one position at a time.
3. Sell highs and buy lows. I like to do mean reversion trades and selling highs and buying lows suits me very well. I understand this may not end well during big trending days but this is how I approach the market. The market is range bound for 70% of the time and if I follow rule #1 I will avoid big losses that may come from buying low and selling high.
4. Don't average down. There are numerous stories of large traders losing huge sums of money because they added to the position as price moved against them. Some may average down with success but its not something I will be doing. It goes back to rule #1. Why would I average down if I have already determined my maximum pain level.

So I'm keeping rules 1. 2. And 4. And I'm dropping rule 3. I no longer want to buy lows/sell highs as a strategy.

New rules list:
1. Exit a loss
2. Only one position at a time
3. Don't average down

I'm starting to question whether I should buy lows and sell highs. I ask myself why should the rise or fall in price affect where the price is going to go which is unpredictable. If one thousand one lot orders come into the market and push price higher and then a two thousand contract sell order pushed the market down right after there is no way one could predict these orders would appear in the market. The whole idea of buying lows/selling highs is based on the idea that there will be a reaction to the trend in the opposite direction. If the market is making new highs and I sell a contract there is no guarantee that price will reverse. In fact I don't think there is any affect the trend and higher prices has on orders that come into the market thus moving price up or down. I think all I can really rely on is the ability to exit a losing trade and stop the bleeding and survive another day.

Thanks, I can't wait to start trading again.

blackgrey45 

Plan is to start trading live again next week. I will likely trade the MES and a few MCL trades sprinkled in there. The goal is to trade the ES but still do not have enough cash saved up to trade the ES live. I also changed brokers. Went over to AMP using Sierra Chart as my platform of choice. I will see how things go and how I like the new broker.

Have you considered doing a trading combine with a company like TopStep? On another thread here a few months ago, I dogged these types of companies out. However, I took another look and actually am doing one myself. It's $50, which is cheap. While I still trade my own account (the executions from my thread recently where you recently participated are live trades on the OSE which is not offered on any trading combine I know of), I am trying some things in the combine alongside my regular account. It is a cheap way to get some comfort, test some strategies, with defined risk.

blackgrey45 

Very very interesting to note: 3072 contracts sitting at 4451.50 in the ESU23 orderbook, currently 10:07pm. This is one of the biggest limit orders I have seen in the order book ever, especially at this time of night.

I thought you might find this interesting. This screen shot I found online looks to be from 2010. Back in the day when ES was 1/4 its current value and when liquidity was not as low as it is, the order book was much thicker. As you can see here, it was common to see 2000 contracts at each price. A 10 handle day was almost 1%, and working orders in the book really mattered. It was more like the treasuries are today actually.

josh 

Have you considered doing a trading combine with a company like TopStep? On another thread here a few months ago, I dogged these types of companies out. However, I took another look and actually am doing one myself. It's $50, which is cheap. While I still trade my own account (the executions from my thread recently where you recently participated are live trades on the OSE which is not offered on any trading combine I know of), I am trying some things in the combine alongside my regular account. It is a cheap way to get some comfort, test some strategies, with defined risk. I thought you might find this interesting. This screen shot I found online looks to be from 2010. Back in the day when ES was 1/4 its current value and when liquidity was not as low as it is, the order book was much thicker. As you can see here, it was common to see 2000 contracts at each price. A 10 handle day was almost 1%, and working orders in the book really mattered. It was more like the treasuries are today actually.

I have looked into doing a combine. Although $50 is really good price I have a bias against trading for a prop firm and doing a combine. I have this idea that I need to make it work with my own money. I don't know why I think this but maybe it has something to do with trading with rules that I don't like.

Yeah the order book back then was super thick in the ES. I remember trading during the flash crash in May 2010 when the ES lost 9% in 20 minutes, I was lucky I didn't lose everything because I had no idea what I was doing and still don't know lol.

Josh, you convinced me to do a combine. I signed up for the 50k combine with Topstep. I will get set up with the platform and post the trades I do as I go.

Topstep Combine trades
Trade 1, MES, Long @1:55pm EDT, Entry 4547.00, Exit 4545.50, Profit/Loss -$8.92
Trade 2, MES, Long @2:20pm EDT, Entry 4547.75, Exit 4533.25, Profit/Loss -$72.50




Great to be trading again!

blackgrey45 

I'm starting to question whether I should buy lows and sell highs.

I am glad that you are beginning to wake up.

If I have to pick just one reason for my failure to make money in the 1st 5 years of my trading, this is it. 'Buy low and Sell high'.

Don't get me wrong. I love the way it sounds and it's very seductive but I got hammered countless times on trend days. Or even on range extension days since I didn't have a clear exit plan.

I am more nimble now. Today's trade is a good example. I sold the high @ 4555. It made a new high. I got out breakeven. Waited for the market to test the swing low. Then I sold again @ 4552. This time, I got lucky and grabbed 20 points. Not ticks. Points.

Yesterday started in a similar fashion. I sold the high. ES made a new high. I got out breakeven. We never tested the swing low and the market crept up 20 points. I just stayed back. No harm done.

Be safe out there.

HumbleTrader 

I am glad that you are beginning to wake up. If I have to pick just one reason for my failure to make money in the 1st 5 years of my trading, this is it. 'Buy low and Sell high'. Don't get me wrong. I love the way it sounds and it's very seductive but I got hammered countless times on trend days. Or even on range extension days since I didn't have a clear exit plan. I am more nimble now. Today's trade is a good example. I sold the high @ 4555. It made a new high. I got out breakeven. Waited for the market to test the swing low. Then I sold again @ 4552. This time, I got lucky and grabbed 20 points. Not ticks. Points. Yesterday started in a similar fashion. I sold the high. ES made a new high. I got out breakeven. We never tested the swing low and the market crept up 20 points. I just stayed back. No harm done. Be safe out there.

I can not say I am fully converted to a trend follower but I am definitely questioning the buy lows sell highs stuff. You are right the idea of buy lows sell highs is attractive. I watch market action all day and see lots of peaks and valleys in price. But in practice trying to call tops and bottoms has bad results and leaves me exposed to big losses. Trading in the direction of a trend also is dangerous to me. Almost every trend seems to end in a violent reaction in the opposite direction from what I've seen. I really never look at a chart because I see patterns and setups that aren't really there. I'm not saying charts can't be used to provide edge. I am just saying I choose not to use them.

I think the most I can ask for is a chance to exit a losing trade as early as possible and use great risk management as the bed rock for my strategy.

Part of the idea of abandoning buy low sell highs is because I do not want to wait all day for the market to make new highs lows. Waiting gets boring and I like to trade which I know is not a good approach.

Thank you for interacting with my journal, really enjoyed your comments. Nice trading on getting that 20 point runner!

Blackgrey45

I think the Fed should be hiking rates more aggressively. From what I gather the only guidelines they have have adhere by are the full employment and 2% inflation mandates. Employment is very strong so this leaves the Fed to focus on getting inflation down. I think a Fed funds rate of 6%-7% would be sufficient which means a increase of 100 to 200 bps from here. Keep raising until unemployment ticks higher in a meaningful way then stop.

Trades for 50K combine

Trade 1, MES, Long @6:05pm EDT, Entry 4533.25, Exit 4528.75, P/L -$22.50