I was thinking...

First of all I can trade careless as long as I become careful at the right time, of course that won`t provide outstanding returns on that particular trade because more than half of its duration I`m going to struggle to recover the careless part a thing that I did today with the last trade. The market its doing the unexpected sometimes and it does not forgive. I was also playing with Ninjatrader - buying and selling on hunch in the same time with doing it on this account and its only when I look at the result of that account - which is far worst than this one`s but its positive - when I realize that the precision of this particular trading strategy is very good, meaning that even without money management in Ninjatrader - or with a money management based on hunch - the signals part of the strategy allowed me to breakeven.

  A little talk about what ES is doing

Looking at the long term chart of ES with the help of Ninjatrader Kinetick free EOD data, I`m seeing a contract that is going up without going anywhere. ES is in the mood of doing the unexpected anytime. The current move its a move that I suppose can fall in to the out layers category from a certain point of view. Of course all oscillators show overbought levels and overbought might be or it might continue for a while to go up since its obviously in an up trend as it can be seen in the chart bellow.

As you can see I have the EOD charts of most futures contracts due to this platform which was a thing that I was missing (was I?), maybe not missing because its a to long timeframe to care very much.

A reminder

A day that remembered me of the difficulty of this game. In the same way as I did it yesterday, today it did not worked that well. Which was a thing to be expected actually and I`m not very surprised by the result. Of course, using the same logic I could have had a day like yesterday or better. I got myself in to a quite big drawdown during the first half of the day and become careful after trying to recover. The drawdown was a result of my overconfidence that the market should not and will not do certain things and my supersized bet on the fact I`m right, I was wrong. My game after the deed was done was not enough to get above water level today and more than that it reminded me of the dangers of approaching the market not fully concentrated and careless. As I was saying in a previous post starting careless and continuing careless can get you killed.

High performance vs safety

This particular trading strategy that I`m using here is capable of using whatever risk profile the trader desires. Now, since this is a demo account sometimes I`m pushing it to high risk and disregarding the safety in favor of a high return like I did yesterday. Yesterday it worked but it might not always work and then the drawdown could get quite high. How high? it depends, yesterday for example all of this moth profits were at risk and some more which means that instead of having a winning month I could have had a losing month if things would have went wrong. However, it should be noted that I was up 17% this month before yesterday (now I`m up 30% or somewhere around it I think) and even if yesterday I would have lost 20% the month would still be in play and the end of the month could have been a decent 4-6% return which is actually  a very good return for one month. So the way I`m playing is the more I win the more I push the month. Of course what I really have to avoid is blindly pushing it just because I can, that is a mistake. Pushing in search of higher returns should be made only when certain conditions are met, not every time and not on every trade. Now in regard with what can be considered a high return and a safe return things are quite relative and depends on the man and the strategy. What is more important than a single month return is the long term result, its actually all that matters in the end and because of that it all resumes to live to trade another day. With forex I found a way to satisfy my aversion to losing and in the same time to be able to always survive (of course until I decided the game is completely over what my algos can do to achieve 30-50% per month which is what I needed with small capital- another way stated until I`ve accepted I can not make money there - I can not make 30-50% per month I mean and because I would never risk more than penny money on that market anyway trading on that market was useless from my point of view so I`ve stopped trying to bet). With futures I do not have the same tools available to do it - there is a way but that way would require twice as much capital and two accounts.  So what a man can do? Being patient is the key here, being patient and controlling the risk. As a human I am prone to lose control due to emotions which is why I will try to implement a computerized part that will control or better said will reduce risk. The way I`m trading now is manually triggering the trades based on what the algorithms that analyze the market tell me which works well up until I`m starting to disregard the warnings. Yesterday was such a day, the 15th trading day of this account and after I got a 17% return in the safeties mode possible my human behaviour overwhelm the logic, maybe you are asking why am I complaining well its because I know better, I won but I could have lost and such large fluctuations are a big danger without a safety nest. I can think of many ways to implement a safety nest but the thing is that it should also fit my personality and I can not apply the same computerized safety nest like I had with fx because I do not have exactly the same tools. However like I did on fx I will find a way to implement it and feel comfortable and accept it. I shall try different safety nests and chose the one that provides the best experience. Today I have already coded one and I will know its usefulness at the time I use it and it will start to override my actions, for now I`m still after 50-60% for this month.  Of course if really required I can trade 2 accounts in the same time and unleash the power of covered positions.      

A 10% day

Unfortunately the contract that I trade now does not offer me many days like this one and when it does I`m far by feeling at home with it, maybe because I`m not used with the way it moves yet. Anyway I did traded heavy and I did the right things. At some point I almost thought I`m screwed because we will have a flash crash day but it seems that there was not enough panic, myself being only half panicked so perhaps most market participants were feeling the same.  I remember a flash crash day, it was in March 2010 (or 2011?) I was trading FX back then and having a nice day I was out of the market when I`ve started to see twitter feeds spreading panic then read on some blogs about it. Many traders had very large drawdowns then and if today would have been a flash crash I would have had quite a drawdown also. It wasn`t so I`ve got 10% up in a single day and since I`m up 10% from yesterday I will not stop here but continue Monday to trade heavy with the solely purpose of increasing this account with at least 50% this month. I think I`m 30% up already. Anyway here is the price action for today:

 As you can see the price was in a downtrend most of the day while I was initially long then switched to short somewhere in the middle just to switch back to long positions somewhere around the point of divergence between price and indicator. Then it looked like it will fall and like I told you I got half panicked but in the end it did what it was supposed to do in my view and sharply went up, I got the profits and ended the day.




As you know if you have read previous posts I`m not very accustomed with futures yet and I`ve chosen MT5 as platform because of my long history with MT4 and FX market. MT5 requires coding to make it work your way, its a little bit more complicated than other futures platform, meaning that if you have never traded you should not pick MT5 because it will be a pain, there are platforms that are far more easy to use than this one. Personally I like CQG and Ninjatrader. To make life a little bit easier I`ve added some coding to the way I place the orders in the market so now I`m clicking to trade which is the desirable way to do it. Here`s the trading chart (the trade that you see is from yesterday)

I also coded another button today to reverse the position, most trading platforms already have these and  many more but in this platform you got to do it your way and code everything. Of course this can give you an advantage because you can chose the way you send the order. The demo on this platform is not working correctly unless you code it to properly fill the orders.  

On a more serious note

Posting these results here might be boring for any readers of this blog which is why I`m going to change the blog post with something more attractive and colored like charts with nice lines and my view on what the market is doing..in general. As for my results I think once a month is enough after all its the end of the month/year that matters. Which reminds me of updating my excel sheet with the performance and... here it is

...a beautiful 17.99% in 14 days which translates in to a net of $17990 in about 14 days, that's not bad but of course one always wants a bigger account, bigger is always better. In theory I could stop this month here but more is more...Now that I`m looking at it I`m realizing that its not the best I`ve ever had, I got 2 losing days and only 6 consecutive winning days which is not something to remember, I remember so many consecutive winning days that I can`t remember the number. At this rate of return I`m afraid I can not fall in to the category of people that expect and consider 20%/year a good investment return. But the discussion is complicated here because its true that this kind of return is only possible with small capital at least from what I`m doing now.

    And on a more serious note than yesterday and because this blog has no information on what the markets are doing while maybe some readers might be interested more in that than in my personal achievements, I`m thinking to do something I never did before and that is to take positions in the markets with a much longer view than daytrading. So I will try to build a portfolio on a 10mil account, portfolio that will be composed of multiple positions held on different contracts as my algorithms dictate. To accomplish the deed I need to make some tests first and find the best  way to place resting orders in the markets because its obvious that I will need those. It does sound simpler than it actually is but this would be the next step in to the evolution of my trading. With daytrading I`m done, there is nothing more I can improve and nothing more left to do.
The portfolio trading might work or might not work, theoretically speaking it should work just the same as daytrading but it does require patience and somewhat a different approach than what I`m currently doing (mentally speaking) and its not that I can`t adapt but I`m so used with my current mental state where I seldom hold a position for more than a few hours that I can`t imagine how its to buy today and wait for more than a day. Daytrading is fun, exciting and it can make you lots of money, more than one needs actually, even though the strategy is currently working with 100K it would work the same with 1M so I do not feel like I must do this, its not required to build a portfolio up to a few million dollars because up to then daytrading works well enough but it would be fun at least and maybe useful for having a bigger picture on what the markets are doing, for the moment if someone would ask me what the markets are doing I would say I have no clue I`m in and out in the same day and I don`t care of the bigger picture.    

Since 2 PM

Then I got hungry and later sleepy so I got to settle somewhere at +1% which isn`t a kill so to speak but then to make a kill in the markets one has to find a good trading setup in a liquid market which is also volatile enough... since its day trading what I`m doing here. To many conditions to meet all at once and to much patience required to wait so I was taking what the market offers at the time I watched which was (and is most of the times) nothing.  Besides by the time this market moves my mood to trade is only at half of what it was in the morning because more than half of the day is gone here. I`m thinking I could trade other contracts also after all this account is of a merely 100K  which means I could trade the "light cavalry" as well the thing is that I`m interested in trading the..."heavy artillery" for gaining a little experience with it, and yes learning patience (which is by far much more difficult than anything else).

I`ve just realized that one needs a little luck though, no matter the trading algorithms, no matter the edge,  everything is useless unless the market moves, so you need to be around at the time it moves...now that is a really smart thing that I said here, it should be remembered as a quote :))))
And then there is more, you also need to be in the mood...actually is so complicated it makes me dizzy, there is a whole series of events that needs to be aligned for a good trade to take place. I think I`ve discovered the reason why people lose money in the markets, its because the events are not properly aligned. You have to, you just have to wait for the proper setups then graciously enter and exit. Today I did not, yesterday I was patient but not today. Actually as you can see today I`m more like in the mood to write intelligent things in this blog than to trade.

Contemplating about what it was, what it is and what it will be (there, again, I said it in the most intelligent way it could be said) I`m just having another revelation and that is that every time I lost money in the markets it was all my fault, all the market did was to stop moving and by stop moving it has triggered a series of wtf`k`s on this side which triggered a series of trades in a nonmoving market and such loaded the barrel to much for the time when the market actually started moving, obviously in the wrong direction and the barrel exploded. And that is all for my trading lessons today, as an conclusion you should not trade a market that is not moving (like this one) - unless you are very experienced and/or have very good trading algorithms that are able to take in consideration everything that moves, flies or crawls of course.

Good morning

At the time when the market closes, here its almost midnight and for that reason sometimes, especially when glued to the screen up to the end of the day, I`m writing here the next morning. Yesterday was one of these days when I was forced to watch a non moving market up to the end due to the fact that I simply were not able to make enough (or lose enough for that matter) to stop.