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Dear Group,
I replied privately to a member and since have received several follow
ups from others. To simplify, I'll post on the list a modified version
of my reply, as follows:
I see many advantages to day-trading the E-mini (now, specifically ES)
during the day session if what I want to do is simply to trade:
efficient + liquid market, outstanding and prompt executions, low costs
(fixed & slippage), tradeable probably 35-50% of the day session,
immediate feedback, etc.
Another, simpler idea: Forget altogether about making profit for a while
and concentrate solely on execution --- use a 2 pt stop and a 2 pt
profit objective (no matter what). (Or another alternative, for later,
to follow a Joe Ross idea: Trade 2 cars at once, pull one off at 2 pts
profit and let the other ride, using a trailing stop or other
profit-exit technique.) Trying to make $100 (2 pts) with fixed expenses
of around $10-15/trade and slippage of a tick = $12.50 on market
orders. So the idea is simply to crank off say 2 trades daily for each
of 10 days, the results of each such trade will be either
(approximately) a 2 pt stop loss or a 2 pt limit profit, and the
question will be: How good can I get in identifying that potential,
answered by my % of total winning trades. I'd hope to see something
like 60-70%, and at least staying roughly even in equity (profits paying
for expenses and slippage etc.), particularly if I'm shooting for only 2
trades a day, so I can really exercise my discretion in looking for that
needle in the haystack. In that case, I'd likely simply wait for a move
to develop, wait for a pullback, and go with the trend --- ES usually
has a couple of those 10-20 pt moves per day, and all I'm looking for is
2. And I would certainly forget about any desire to play Godzilla and
buy bottoms or sell tops --- I'd look to buy high and sell higher or
vice versa. If I really get on with it, maintain my patience and
attention, know what I'm looking for, and take it when it comes, the 4
points in 2 trades should be possible in a span of 15-30 minutes --- the
problem is: Just which 15-30 minutes? And when it comes: Can I identify
& execute on it? Now, we're getting into serious trading. And, hey,
once that comes, and I learn how to walk without tripping all over my
feet, maybe I can turn my attention to exit techniques and sizing, and
who says I gotta limit my trading to 2 pts and a single car?
I mentioned that ES is tradeable for perhaps 50% of the day session, and
by that I mean within the first and last couple of hours, the interim
between which is usually pretty choppy and unpredictable as the bigmoney
(where the money is and whose coat-tails I want to ride) is already in
and holding, maybe to see how bonds will or have closed. My bet is that
by doing this for say 4 successive weeks, I'd have a pretty good idea
about the game and myself as a player in it (not necessarily as a money
maker --- simply as a guy who can play the game and keep on playing, and
in my book that's a major hurdle and significant mark of success in
itself --- it's just a whole lot easier to concentrate on increasing my
profit after I have already proved to myself that I can play and keep on
playing and survive --- no matter what I'm fed).
Divide and conquer --- semper fi.
In my book, trading is really not all that hard, I just make it so --- I
am truly my own worst trading enemy. It's not the market, the guys on
the floor, or anybody or anything else --- it's the guy in my mirror,
trying to make things far more complicated than they really are. To be
successful in my opinion requires mastering a lot of little steps, just
like a baby learning how to crawl, stand up, & eventually walk, and then
run, and maybe even become a sprinter/hurdler/etc. The problem is that
unless I've got the great majority of those little steps down pretty
cold, I'm not much use to myself as a trader, as evidenced by the notion
that 90% of the $ is made by 10% of the traders. What this means to me
is that learning 50% of what one needs to learn to be a successful
trader hardly leaves me among the top 50% of traders. I'd be interested
in hearing others' thoughts on this or any of the above.
OK, OK, I'll hang up my soapbox now. Thanks for your indulgence.
My best to all of you.
Sincerely,
Richard
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