The volatility remains within the futures markets making them great trading tools on an intra-day basis. I have continued SIM trading these past two weeks in order to grind out stats and find out more about how I trade specific contracts.
There are quite a few things I want to mention in this post, as I don’t really have time to write individual posts at the moment.
First off, a look at my stats for so far from this month.
October, not slippage inclusive
Towards the end of last week, I started to notice a pattern emerging in my trading; I was grinding out solid sessions without feeling like I was trading well. It is a good skill to be fully aware that you are not trading well but still making profits rather than being under the illusion that your skills are infallable.
The stats were mainly comprised of scalp trades in YM and NQ which had decent win rates and a positive expectancy. These were mixed in with a good win rate on TF and a few ES outliers which bolstered my bottom line.
As the month has progressed however, my win rates on the main indexes (ES NQ YM) have decayed and as have their expectancies. I began to phase in Crude and Euro trading and focused more on TF (because of it’s win rate) which has begun to reap rewards.
I seem to have a better “feel” for these contracts, but I think the key reasons I like these are because;
- Their intra-day volatility is greater
- Their volatility, ranges and tick amounts open the door to faster profits (or losses)
- When the trade goes right (or wrong) it tends to do so immediately, meaning I can focus on the trade more easily
- I am extremely quick to reduce or eliminate risk in these contracts because of their volatility. This means that I tend to have a higher win rate, reduced drawdown and a greater distribution of higher than average profits.
- I could spend an hour waiting for a 2pt ES move to make $100 per contract but the same profit levels can happen within a minute on these contracts
- I am better at understanding the order flows of these.
- I trade them more aggressively
The past few sessions I have traded CL 6E and TF exclusively and the difference in my win rate, expectancy and gross has shown straight away. These past few days I have also began to increase size to 2 contracts to see how I can mitigate risk or control the trade a little better (which I planned last week) and that too seems to be working.
There is a stark contrast in my intra-day futures and swing stock techniques and the gulf in styles grows by the day. I am very aggressive when it comes to the futures markets and I’m much quicker to take profits, move stops and downsize risk. I focus only on a small number of contracts and have a limited supply of data which I use to make decisions. My primary goals is to extract as much money as possible within each session. I trade a lot, about 40 fills a session.
I focus more on my trading statistics in swing trading, in particular how I pick, trade and manage particular setups. I am more considerate of exposure and much more methodical in my selection. I don’t chase profits aggressively and I’m much more passive when it comes to trade management because of the timeframe I trade.
Due to these factors, tracking your futures performance and your stock performance are two separate things.
Firstly, when you trade intra-day, you make a snapshot decision in an instant to enter the trade having weighed things up very quickly. Your risk and objectives are short term levels you see mentally and therefore generally don’t record stop or target orders in the spreadsheet. All I care about is the contract and gross profit. From those I work out the little stats about.
Glimpse at futures journal
I focus more on R in a swing journal, record specific entry criteria as well as initial stops, targets and observations about other things. I check the journal monthly to find interesting stats which can help me out in the future.
Although the futures method seems a bit quick and dirty, it can provide you with just as much actionable information as the swing journal. For example, my decision to ditch ES YM and NQ was a direct consequence of my statistical performance and it has worked for now. When you see a 1 tick expectancy on your most traded instrument (NQ, it accounted for 40% of my trades at one point) you know you have to change tact.
It also suggested (via slim win/loss ratios and expectancy) that I should take 2 contracts and manage them so that I can have greater flexibility on my exits.
I have some other thoughts this week about trading. Firstly although my maths class at uni is extraordinarily difficult, I still have an easy project management module. Last week the lecturer put up a slide of the pm life-cycle and it immediately related it to trading and specifically trading plans.
It was something like define, design, test, implement, control, analyse – evaluate. I’ll scan it up here later. Needless to say the rest of the lecture was spent thinking about trading rather than critical path analysis. I have also found myself inundated with acronyms lately, almost all of which are actual stock tickers so it is quite easy for me to remember them.
Lastly, my bro showed me this vid last week which has apparently been receiving a lot of hate. All of what this guy says is so true it’s not even funny. Massive market crash = money-making opportunities. If your job is to make money then of course you’re going to dream of these crashes because I know I do.
My final thought: Trade tracking spreadsheets are an essential tool
