Wednesday, November 23, 2011

A +40 ES trade - it's only SIM, but let me dream...

A brief interruption to the holiday madness...

My "fluke" ES short trade from early yesterday morning seems to be doing quite well.  This turned out to be one of those < 5% of my trades that ended up running, and running, and running... 

So far, it's up almost +40 points (still open, so it could change) from my 1198.00 entry price around 6:50 AM on 11/22.  One trade, 1 contract, 1 1/2 days, not too bad.  I checked up on this trade throughout the day via my phone today while running errands, and saw no reason why I should have exited.  Too bad it's a SIM trade and not real!

Even though I'm not counting this trade as legit (it was slightly rogue based on my trading plan in effect at the time), there was something about this trade that made me take it AND continue to hold it.  I could also say the same thing about countless other trades that LOST money.  But at a minimum, it is a bit of a confidence booster and shows my strength of being able to hold a runner through ups and downs for the big move.

Although my primary goal in the near future will continue to be capturing +2 point scalps, this example also identifies the power of identifying a trend and sticking around for a nice ride.  This is further incentive for me to get up to trading 4 contracts so that I can have more opportunities to let a kicker contract run.

Maybe there's something more to this trade than I'm giving myself credit, so as a reminder of what a big win looks like, I'll post this as a reminder of what's possible.


Anonymous said...

Hi Grove,

You are a prolific writer and I am still trying to digest all your posts. Thanks for your detail explanation about switching over from trader x. About your commission accounting for most of your losses, did you select the flat fee trading instead of per share? I am just trying to figure out how you could become profitable using trader x method.

I saw your post about renato system the night before the price went up, and so I just passed on it. How is it working out for you? I read some of your comments where he tells you when to get in and out. So are you dependent on him telling you what to do are does he teach you how to trade?

As for me, I have been paper trading for longest of time. I think I could do a little better if I traded real money, but I continue to practice. I have been thinking about switching over to renato system because he trades futures, but I hate to start over learning how to trade another way.

well, take care, and Happy Thanksgiving.

Tomross58 said...

Hey Grove,,

Lots of really good points in your post and even though its on sim its getting your mind working as how you can in the future manage a trade that has this sort of potiential. I will do the same as you and start out small with the goal of 4 contracts at some point. We see Rena do it time and time again ( even though I am only in my 3rd week ) he lets one "Ride the wave until it hits the beach". Managing the winning trades well seems to be one of the keys in trading.
If I may respond to Hector , I will say that I got into Rena's trade room just before the increase in price and (FOR ME) would do it again. BUT ,,,I always liked using the FIBS,,,and I like having a specific set of rules to follow with specific set-ups. I too followed Trader-x's site and like what he does but for ME,,,,I became weary of looking at an endless number of charts with stocks. I gravitated to just the SPY and noticed that my concentration was improving and so the move to the ES made sense. I am only in my 3rd week and on sim so not live yet. I am sure Grove can give better insite.

Great trade Grove and keep it up


Grove Under said...

Hi Tom:
Thanks for the feedback to both me and Hector. I think we both have the same train of though with regards to why we've moved in the direction that we have.

And I love that quote, "Ride the wave until it hits the beach."

I'm still short that SIM short trade from 1198, and thought a bottom formed earlier this morning on the breakout to 1171, but wasn't near a computer and so I'm still holding on over the weekend, and until it eventually hits the beach!

Anonymous said...

Hi Tom,

Thanks for the feedback. I think everybody understands the weary of looking at endless number of charts.

If I may ask, stocks charts are cleaner, more linear where futures charts, like nq and es are more zig zag, lots of tails, not clean charts. With trader x, you can tell when you have a good entry, easier to judge, but with futures, charts are not as clean, more noise. Is this a problem you have, and can you tell with renato system when is a good entry and when it is not?


Grove Under said...

Hi Hector:
Thanks for the comment and feedback, much appreciated.

The commission structure I had was per share, so I tried to minimize my costs as much as possible, since I was trading only a few hundred shares toward the end of that period.

With regards to the Trader-X method, I'm confident that following his method can make money. But like anything else, the "secret" is to just wait for the best setups.

When I did the following analysis posted here, it was clear that the best setups made good money. And when I narrowed it down to which setups worked best for me, I wrote about it here.

But again, my problem was having the discipline to wait for and only taking the best setups.

* * * * *
Renato's Diamond Setups is working very well. He not only gives you alerts, but he also teaches you how to trade his system, with variations based on how conservative or aggressive you want to be.

His personal method of trading the DS system is conservative, with a very accurate winning % (70-80%+), and a goal of 10 ES points a week (it has generally been higher than that).

But I'm choosing to trade it in a more aggressive and shorter term manner, so I'm still learning and in the experimentation phase to find the sweet spot that works best for me. I continue to trade his alerts, but I also take other setups that he does not give.

And you have a good point with having to learn another way of trading. The thought can be quite daunting. But I got to the point where what I was doing wasn't working for my personality.

Therefore, I knew I had to do something different, and was/am willing to do whatever work is necessary to reach my goals of becoming a successful and consistently profitable trader.

Working with Renato has really been a confidence booster and has given me additional belief that reaching my goals are not as far away as I had previously thought.

And finally, when trading the ES futures, there's so much liquidity during regular trading hours that you can easily trade 50+ contracts via limit orders with no problems.

So if his 10 points a week goal doesn't sound like much, realize that it's $25,000/week if you trade 50 contracts. I think that's a very respectable income in the real world, LOL!

And based on daytrading margins, you can trade 50 contracts with as little as a $50k account (not advised), although I'd say $250k (or more) is utilizing more prudent risk management.

What I've learned in the past month is that the potential trading the ES is huge. And after watching Renato trade in real time, I believe more than ever that it's possible to succeed beyond my wildest dreams.

Grove Under said...

Hi Hector,
I can't speak on behalf of Tom, but I also noticed in the past the same differences between stocks and the ES/NQ futures as you have.

My primary takeaway was that candlestick patterns just don't seem to work as well for entry triggers vs many stocks, due to those reasons you noted. And in the past, I never thought SPY, ES, etc. could ever be traded or even scalped due to all that noise.

However, a key part of Renato's DS system is based on identifying specific levels, and then simply placing a limit order there for your order entry.

It's a completely different approach to initiating a position vs. the Trader-X method. But for the "noisy" ES, I'm now a believer in this approach.

In fact, until you mentioned it, I didn't realize that I don't see that particular type of noise in the ES anymore...I now see great opportunities.

Tomross58 said...

Hey Grove,,

I completely agree with what Grove said in his last comment. My attention is now focused on where to place my limit order according to one of his stratigies and not the candlestick pattern. This so far suits me very well.


Anonymous said...

Grove and Tom,

thanks for the input. Need to read more carefully what you said. thanks,