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Absolutely killed it with the new strategy today. I watched all the bad entries I would usually take go by and sniped the good ones. Missed a few waiting for the perfect entry, but that can be solved with time. So much less stress today, I was even able to trade NQ without getting ragdolled like I was a few weeks ago. Really pleased with how this going. Eval I got Friday is halfway to completion, hoping to finish it this week and maybe finally work my way towards my first actual payout!
I use the Zig Zag indicator in Motivewave along with tick charts. Since Motivewave is geared towards Elliot Wave traders, it seems to be pretty good at picking out rotations. You have to mess with the settings a bit to get your preferred rotation size, but it works quite well for me!
Since I'm here: today's results. $375 left to complete the account, then I'll probably start a second while I wait to hit 7 trading days.
As your NexusFi help assistant, I'm here to provide some feedback on your trading. I'm @Oracle, and my goal is to help you improve your trading strategies.
Your switch from options to futures and the exclusive trade of MNQ Micro E-mini Nasdaq futures seems to have been a positive step. Your application of ICT and Jim Dalton's concepts, along with the use of statistics and volume profile, shows a solid basis for your trading strategy.
Risk Management: You've evidently been practicing robust risk management with a maximum daily loss limit. This is commendable and aligns well with the core trading principle of focusing on risk management and capital preservation.
Following Your Rules: It's excellent to note that you've been consistently following your trading plan and managing your emotions, which is crucial for long-term success. However, you've mentioned struggling with holding onto winning trades. It's worth revisiting your rules for exiting trades and perhaps adjusting them if necessary.
Trading Journal: I didn't come across mentions of a trading journal in your summaries. Maintaining one can help you take ownership, be accountable for your trades, and provide valuable insights into areas for improvement.
Distractions: Distractions seem to be a significant obstacle for you in catching good trading opportunities. It might be helpful to find methods to minimize these distractions and ensure that you can focus on your trading during key market hours.
Win Rate and Other Statistics: While you have provided some PnL breakdown, including your win rate, expectancy, and other relevant metrics in your summaries could provide a clearer picture of your trading performance.
Your journey so far shows a willingness to learn and adapt, which are essential traits for a successful trader. Keep up the good work, and don't hesitate to reach out if you need more assistance.
Recommend you don't focus on the payout but just rather keep trading the new strategy. Don't open another account and wait. You want to keep testing your strategy because no reason to wait, pay Apex the PA conversion fee, and then blow it right away. If the strategy is consistent, then prove it to yourself and trade through the 7 days.
I do something similar in terms of trading within rotations, but do it by trading between key levels, such as S/R, Fibs, Pivots, etc.
Very interested to hear about zig zag indicator. Is it okay to ask you for what parameters you found that work well for you? Deviation type, value, use high low? And how many tick chart? 2000?
Well, you were all right. It didn't end up working, I blew up my PA and some evals and overall had a very rough October. I essentially started from square one and built an entry/exit model from scratch. My inspiration for this was FT71's videos on risk management. He talks about the "coin flip experiment", where one sets various brackets and flips a coin to determine if they go long or short. According to him, it is possible to have a slight edge less commissions and fees with only a well crafted bracket and solid entries.
I found this very intriguing, and set off to find out what it would take to break even or turn a profit with random entries. I've probably done over 1000 coin tosses across multiple products and many sessions with quite a few different brackets. What initially started as curiosity turned into a habit as I uncovered quite a bit about how the markets work through randomly trading fast-forwarded replays.
#1: An R/R of 2-3 is necessary. I started with 1R brackets. Those lost pretty handedly. It seems that no matter how you cut it, a 1R bracket can't make headway with random entries. This aligns well with FT71's assertion that random entries tend towards a 25-40% win rate. 2R brackets performed better, but I found quite frequently that my MFE and ETD that when my trades hit 2R, 3R was likely to hit as well. Finally, I started testing with 3R brackets, and found that they performed the best. Surprisingly, this holds across multiple products: NQ, ES, YM, RTY, etc. handled 3R brackets pretty well, provided they were sized properly (eg. you can't run a 15/45pt bracket on ES).
#2 Not only is an R/R of 2-3 necessary, but it is attainable: Watching my 3R brackets get hit over and over again in replay gave me the confidence to try them live. I've rarely cracked an average of 1R in the past due to wide stop-losses and killing winners too early. Now, I'm more confident letting my trades run to 2-3R live--and they frequently have
#3 You don't need wide stops: As it turns out, when you're right, you usually know pretty soon. I've found that widening my stops is of little value, as bad trades tend to have very little MFE before going south. There's no point of paying extra when you already know you're wrong.
#4 Basic trend following is an edge: In my tests, I've found that most my losses were counter-trend, and my wins were along with the trend. It seems then, that even the most brain-dead trend following strategy combined with solid risk management can grant an edge. Many aspects of the market seem to behave as a random walk save for two things: trends/momentum and volatility clustering. Therefore, if an edge is anywhere, it can be found in trend-following. Given that I know I have methods of analyzing the market and determining the trend that works, I can save myself a lot of headache by not trying to fade it. Today was a great example: gap & go, something of a trend day (transposed into a short-squeeze profile later on though). I only traded on SIM today: all my wins were on the long side. I tried a few shorts and won zero. This lines up very well with what I've seen in backtesting.
This next discovery comes from the work I've done on harmonic rotations & zig zags instead of the coin toss experiment. In my opinion, time is an illusion in the markets. By this, I mean that while many people assert that the market can be seen "most clearly" through naked time-based charts, I actually believe that this is the charting equivalent of looking for the "right" moving average period to trade off of. Instead, I believe the auction is purely driven by volume, and here's why:
Firstly, there is VERY LITTLE difference between the RTH and ETH sessions in terms of rotation size. I have painstakingly recorded many rotations by hand across multiple products: ES, NQ, YM, CL, UB, GC, etc. (I think I've found a way to partially automate this--thank god) and have found that, generally speaking, that while overnight rotations tend to be a bit smaller, they're roughly the same size as RTH ones. This surprised me, as I expected the overnight to have smaller rotations and more chop. What also surprised me was that, despite covering a significantly longer time period than the RTH session, the ETH session has significantly less rotations, I believe on the order of 10:1.
On the opposite extreme, there are periods of (sometimes extremely) high volume where the market appears erratic. By accident, I noticed that the rotations which occur when news drops are VERY similar to normal ones, but they happen so fast that it seems random.
So then, the ETH session is like a time-dilated RTH session, and higher-volume periods such as news drops, the cash open, and the last few minutes before the close are a like time-compressed RTH session. This explains why for months I have gotten killed during the overnight: I was expecting rotations to occur at RTH speeds, instead of the 10x slower ETH speed. I would fade a move only to lose because it was nowhere near over yet. 10 minutes later I'm wondering why we haven't had any pullbacks, which is equivalent to looking for a pullback after only 1 minute during the cash session!
To demonstrate my point, here are some screenshots from a tick chart on ES with zig-zags overlaid:
A large rotation from last night, which lasted 4 hours (until news dropped). The subrotations were up to 1 hour long.
This is CPI today. Not the greatest example since we did get statistical anomalies in terms of rotation size (aka big-ass rotations), but Apple earnings are too far back for Rithmic to fetch tick data for. Anyways, this looks somewhat like a stretched version of the overnight, with many normal (4.75, 14, 4.25, 11.50, etc) subrotations. The only difference is, these all occured in a 5 minute period, instead of a 15-60mins. The large rotation was only 2 minutes long.
Finally, here's a sample from today's RTH open. Lots of subrotations, which occur much faster than the ETH session, but slower than a news drop. The large rotation ended up being 3 hours long as we trended, but the one immediately after was only an hour long--much faster than the overnight. Despite that, they're all roughly the same size as what we saw in the other two images.
Again, not the best example, but hopefully gets the point across: volume is the true driver of the auction, and serves only to distort it. Given this, I've also decided to include a Renko chart to my main trading screen, which I'm finding use in. Also finally abandoned NQ, but that's for another post.
This post is long enough, so without going into too much detail, I've essentially combined my usual macro analysis (TPO charts, daily statistics) with a proper risk management scheme and entry model using zig zags on tick charts (+ Renko trends and reversals) and have finally settled in on a system which seems to work. Yesterday I finally passed another Apex eval, and am holding onto it while I work on some $11 TopStep accounts I picked up this weekend. Speaking of which, TopStep is dramatically better than Apex, in my opinion. Sucks that they cost so much more, but it seems you get what you pay for.
After nearly a year of prop trading, passing an eval for the first time with good risk management and a ground-up strategy which doesn't rely on indicators, yoloing, or negative R/R scalping is a great feeling. I'm hoping things continue to go well as I practice and refine my strategy further.
