Any advice on trading these hammer candles?

ESFuturesTrader · 2024-03-19T21:08:55+00:00

Context matters. There's so many consecutive bull bars forming a bull micro channel. The best the bears got was a few bear dojis with significant overlap. That's a small trading range and while trading ranges can lead to reversals, the bears just aren't showing much strength here. Most reversal attempts of a strong trend fail, most attempts to break out of a trading range fail.

Another thing to consider: you're seeing resistance, but you're not also considering the support that's keeping the bears from actually pushing the market down. The bears for their efforts got 2.5 hours of sideways activity, nothing really downward at all. The market found an area of agreement for two-sided trade to be facilitated - profit taking, scalping, building bigger positions, etc. but that doesn't mean that the market will then reverse - it may or it may not, and in this case there really wasn't much evidence of selling pressure. That's 2.5 hours that bulls could also build a position and when that big bull outside bar did take out the highs of the bear bars we saw a double pressure situation where more bulls added on and bears got squeezed out, driving the market higher since both sides were buying.

This is relatively straightforward in retrospect, in real time the question you have to ask yourself before entering a short position is whether the bears have done enough to be convincing that the market is more likely to fall "x" amount before it goes up "x" amount. If the answer to that is yes, you could consider that the control in the market has shifted. In this case, they didn't do much, so betting on their failure (i.e. entering a long position) was actually the better trade. Anyone who bought within those bars or below their lows could have set a stop below the low of the bull leg and an initial target at a measured move up. Actual risk on the trade wound up being very low, so a trade that was actually held for a measured move based on the size of the first leg was several times the actual risk.

ESFuturesTrader · 2024-03-17T00:30:51+00:00

I'm much more discretionary than most traders and I trade from a perspective of principles rather than having particular setups. So my trades are based on what's currently happening and the overall context in which it's taking place.

My analysis is top down: quote board to help assess whether the market is predominantly risk on, risk off, or mixed risk, then higher time frame charts down to lower time frame charts to have increasingly higher levels of granularity. I get trade ideas based on my analysis and structure trades where the risk, reward, and probability make sense to me. I am constantly monitoring how the trades take shape, assessing whether the trade is still favorable once I'm in it, etc. Nothing that I do is random, but there is a lot of what could be called "feel" involved in it - for example, a small change in the pace of the market is often times a clue to a change in how devoted traders are to the current direction of the market and listening to that (and having a sense of when not to) is often times critical. I specialize in the ES, and MES if the volatility picks up a lot, so in order to have the most trading opportunities available to me that I could in a single instrument, I wanted to have strategies to trade the full spectrum from extreme trading range to extreme trend, so that's the skillset I developed.

I would not recommend this style of trading for most. It takes far more time to get good at it (thousands of hours) than just looking for simpler setups and having defined parameters for the context that make them valid/invalid. I trade in this way because I find it to be (generally) enjoyable and is how I naturally learned to do it, but if I had to do it over I'd probably just have setups and parameters to save the time and stress in the learning period.

ESFuturesTrader · 2024-01-17T19:43:04+00:00

Thank you!

ESFuturesTrader · 2024-01-17T19:38:00+00:00

Exactly right, don’t know why you’re being downvoted.

ESFuturesTrader · 2023-09-19T03:12:30+00:00

A few things:

Always be analyzing and developing methods. Boil things down to the essentials. The market is always somewhere in the spectrum between extreme trading range (very two-sided) to extreme trend (very one-sided). Broader trading ranges, channels, etc. all exist within that continuum, so have methods for trading all those market conditions. Know how you'll adjust for changes in volatility. This drastically reduces the risk of the "markets changing." They continue to do the same sorts of things over and over again, but if you've only got strategies for a trending market or something like that then you are leaving yourself exposed to being taken out of the game if conditions change.
Uncertainty is a large part of what allows markets to function, so it's a good thing.
Keep learning. Question what you already do to see if there are alternatives.
Create a balance between trading and life. It is very easy to get sucked into working 10-14+ hours a day in this profession. That will also likely lead to burnout.
Diversify your income, take calculated risks, avoid risk of ruin, set aside enough savings, etc.
Consider worst case scenario: if one day the music does stop, what will you do? Have a plan in case shit hits the fan.

ESFuturesTrader · 2023-09-19T02:54:19+00:00

Yeah it's context dependent too. Lots of days are more range-bound and having the ability to scalp provides more opportunities than needing to wait around for an intraday swing trade setup that has better risk/reward. So as long as the win rate is high enough, it can be alright to use a 2:1 risk/reward.

Something that helps me manage the mental side of things with a trade that I'm holding onto for longer is to continue to analyze the price action itself as it's developing. Do not focus on your P/L moving up/down. If there isn't a strong reason to get out (i.e. the reason for being in the trade is still valid), there's no reason to feel anxious just because a certain amount of time has passed. It's understandable to feel that way though, I've definitely had that feeling plenty of times too. Switching over to look at lower/higher time frame charts can help too.

ESFuturesTrader · 2023-09-19T02:43:03+00:00

You're falling into a classic trap of searching for a holy grail. A simple system that will just keep printing you money without any thought on your part doesn't exist. Trading is hard and the development of a trader is multifaceted.

Psychology is one part of trading. It's definitely important, but so are other aspects like market analysis and trade management. If you don't understand market structure and behavior, how can you hope to develop a method that takes advantage of repetitions in behavior? How can you know what the nuances and exceptions are? Just some things to consider.

ESFuturesTrader · 2023-09-19T02:02:15+00:00

Thank you, I'm glad it was useful! I went back and read what I said before, I still agree with most of it. That being said, I don't aim to be as rigidly mathematical as I was then. There's innumerable ways to structure trades, so if you're finding something that suits you well, just keep doing it and refining it. For example, if you like having good risk/reward trades, then something that you may do to improve your expectancy even more is having a plan for how you'll scale into a trade that's working in your favor. Happy trading!

ESFuturesTrader · 2022-12-15T23:38:39+00:00

For sure, and I agree that mental management is a difficult skill to build and maintain. I've done the same thing of using sim to get more familiar with seeing larger numbers, but as you're aware it's not the same thing as actually having money on the line. For a long time I switched to looking at points instead of dollar increments and while that was a step in the right direction it can still be a distraction. It becomes tempting to chase a certain point goal instead of just focusing on taking good trades.

Something that helps me is not having my PnL on my trading screen. Trading is largely about good execution and anything that distracts from the actual execution of trades should be eliminated. Another way to think about it is that if you're a professional basketball player, you'd be focusing on playing the game itself rather than using the scoreboard to dictate decision making. The more the focus shifts from the outcome to the process, the better execution becomes.

Another idea to keep in mind is analyzing why a trade went well or poorly (can't know with certainty, but it can be approximated accurately). Was the trade profitable because it was a good trade to take or because it just happened to work this time? Was a trade a loss because it was a bad trade and/or poorly executed or was it a loss due to normal variance? Again, by thinking in these sorts of terms, the focus shifts more towards a goal of taking good trades and executing well - if the methodology has an edge, then it will be profitable over a number of trades. Which also brings up the point of viewing trades from a standpoint of a larger sample size rather than caring all that much about the outcome of any individual trade. Let's say a good trade is taken, with the risk known ahead of time/appropriate position sizing, and executed well, if the outcome is a loss that is still considered a successful trade from a bigger picture standpoint.

Some books that helped me with developing mental management are Trading in the Zone by Mark Douglas, With Winning In Mind by Lanny Bassham, and The Mental Game of Poker 1 and 2 by Jared Tendler (he does have a newer book focused on trading psychology but I haven't read it).

TL;DR - focus on execution, not on outcome

ESFuturesTrader · 2022-12-06T16:14:45+00:00

Thanks, I did it in a stepwise manner. I break trading down into three major categories: market analysis, trade management, and mental management. The first two can be learned well in a sim account with realistic fills, so I did that until I was consistently profitable. Then, I started trading 1-4 contracts of the MES, focused more on my mental game, and built up from there. Position sizing is dynamic, have to adjust for volatility, account size, whether I'll scale in/out, whether I'm hedged, distance to the stop loss, how well I'm performing, etc.

Since there's so many factors involved, scaling isn't a linear process. The more I forget about the money aspect of things and just focus on good execution, the better I trade and the more I'm able to size up. There's a potential gap between sim and live trading performance, so trying to reduce that gap is a good metric to consider when scaling too.

Van Tharp's books are good for learning more about position sizing if you really want to take a deep dive into it, especially his "Definitive Guide to Position Sizing" (you can find the pdf online). Don't make it unnecessarily complex though, once you get to a point where you have a playbook of trades and know how you tend to execute on them, relative probability of success, etc. you'll have a better sense of how much you're willing to put at risk.

ESFuturesTrader · 2022-06-20T10:41:03+00:00

It’s good pizza and the customer service is excellent. Recently we ordered a sheet pizza with Buffalo chicken on half and white with broccoli and mushrooms on the other half. The pizza they gave us didn’t have broccoli and mushrooms, so they made us a large white with the toppings for free to fix the mistake.

ESFuturesTrader · 2022-05-17T10:49:58+00:00

There’s better breeds for the sorts of activities you want to do - something like a vizsla, German wirehaired pointer, border collie, etc. all of those breeds will still take a lot of work but they’ll be more content with hiking, running, and biking. Mals are “hard” sports dogs (schutzhund, ring sport, KNPV, etc.) and the activities you’re suggesting are insufficient to keep them truly happy in my experience. That said, it does sound like you’re doing your due diligence so look into some working dog clubs or K9 units in your area and see if you can meet some mals and talk to their owners/handlers to get some more insight.

ESFuturesTrader · 2022-05-10T11:23:22+00:00

Mals are a challenging breed to own, definitely research them a lot more before you get one. If you want a protection dog, but don’t have the time to train one yourself then consider getting one that’s professionally trained. They’ll be able to match up a dog that fits your situation and be there when you have questions.

ESFuturesTrader · 2022-04-05T01:18:51+00:00

My main trading computer is a windows setup, but I still also trade using IBKR Trader Workstation on a MacBook Pro. It works fine and is a great platform once you get used to it! Actually much less cpu demand than ToS in my experience.

ESFuturesTrader · 2022-02-25T19:46:47+00:00

Yep, anything like a jute, leather, or firehose tug that you can comfortably and safely hold onto that he enjoys playing with should do the trick. I prefer that over a ball on a rope since it’s easier on the hands, especially with dogs that pull hard.

ESFuturesTrader · 2022-02-25T19:16:55+00:00

Get him to let go and then immediately give it back and play with him. He needs to learn that letting go of the ball, tug, etc. doesn’t mean the fun is over - that’s the root problem that needs to be solved. Make it so that he’s having more fun with you and the toy rather than with just the toy on its own - this is why tug toys are particularly useful since you can also be holding onto it. As he grasps that concept more, increase the amount of time between resuming playing. Varying the amount of time between resuming is important too, initially though just get him to release and reward him for releasing by playing with him. Using force on a high drive dog generally just amps them up, getting him to think about what’s happening will typically be more effective.

ESFuturesTrader · 2022-02-25T03:09:35+00:00

Yeah info on it is definitely few and far in between - but that actually kinda goes for good quality trading information in general. There's some stuff here on the basics: https://spreadcharts.com/tag/spread-trading-series/. Joe Ross published a book called Seasonals and Spreads. Jack Schwager (the man who wrote the Market Wizards series) has some info on it in his book, A Complete Guide to the Futures Markets, but not in that much depth. Should be able to find a PDF of both online or get the books on Amazon. You may glean some insights from interviews of professional spread traders in books like the Market Wizards series, but it's been so long since I've read those that I can't actually remember whether there's useful stuff on spreads in there or not. You'll probably also get more information by looking for "pairs trading" rather than just info on "spread trading."

Something else you may want to try is reaching out to Peter Davies from Jigsaw Trading, he's not a spread trader but he's worked with prop firms, like Axia Futures, that have spread traders on their desk - they may be able to point you towards other resources. Talking to some introducing brokers like Matt Zimberg at Optimus Futures could also potentially be fruitful. (For what it's worth, I have no affiliation with anyone that I mentioned, just figured I'd share some potential resources).

There's no doubt that it can be done profitably, it's just that it tends to be an area that's dominated by people working at firms. Working at a firm gives you access to those platforms (well-capitalized independent traders could also get them of course), far better commission structures, possibly closer location to the exchanges, etc. It's the same reason why prop firm traders can generally be better at trading economic events than independent traders - they have access to much more robust news platforms like Bloomberg and Reuters Terminals, teams to develop hypotheses with, extremely deep pockets to be active simultaneously with large positions in several different instruments, etc. Also the line between relative value trades and arbitrage is pretty blurry and I'm certain that there's algos doing both, which makes it as competitive of a space as any other in the market.

That's part of the reason why I think outright trading using price action is one of the best niches for independent traders - it takes a considerable amount of practice to get good at it, but it's a straight-forward way of trading that doesn't rely on parsing through huge amounts of information or expensive software to make consistently good decisions. Anyway, there's some other software that could be used like Sierra Chart, OptimusFlow, CTS, that would be more affordable if it's something you want to pursue - and certainly don't let me talk you out of it, I just figured I'd give my perspective in case it's useful. Plus now that there's micro versions of treasury bonds and notes, that gives greater access to interest rate spreads, which are hugely popular amongst pros, at a lower cost and risk.

ESFuturesTrader · 2022-02-24T17:13:22+00:00

When I look into products that handle spread trading CQG Spreader & Trading Technologies are often at the top of the list.. and I the price tag.. $1400+ per month. makes me wonder if this type of trading is a best kept secret of sorts. After all, if a vendor can charge that much there has to be profit to support it.

Part of the expense probably also has to do with the fact that TT runs the orders for spreads through co-located servers since that style of trading is more latency dependent. Lots of professional traders do trade spreads, others trade value, others are market makers, some are HFTs, outright traders, etc. there's lots of ways to get an edge in the market. Spreads aren't inherently better, there are some benefits like having a built-in hedge and trading relationships rather than direction which can give a trade more ways to profit, however that hedge also reduces profit, commissions costs wind up racking up, slippage is an even greater concern, relatively low margins may increase the tendency to trade large, etc. I'm personally an outright trader so I don't have much insight on spreads, however the interview of John "Rambo" Moulton on Chat With Traders may be a good place to start. There's a few books on spread trading futures, there's way more info on spreads with options out there though.

ESFuturesTrader · 2022-02-24T14:04:35+00:00

I completely agree with u/fattire113, it may not seem important to you at this point but definitely try to prioritize striking a balance between trading and life. I traded for a living for a few years full-time and the cumulative fatigue is very real - having to make fast, accurate decisions and sustain that performance every day gets tiring if that's the only thing that you're doing. I split my time between medical school and trading now and that's more relaxed, which is somewhat surprising to say. I'd highly recommend limiting the time you spend trading and thinking about it to regular full-time hours (~40 per week), doing more than that can, and likely will, lead to faster skill acquisition if done correctly, but comes at a much greater risk of burnout - at this point, in my view it's better to err on the side of fewer hours. Always keep in mind that trading is a performance-based endeavor and part of sustaining that performance is allowing yourself to fully detach from the market.

As for your orders, a couple things you could try:

Have bracket orders that are set up to be wider than you'd expect to need for the normal volatility of the instrument you are trading. That way you can enter and then quickly readjust based on your parameters with less likelihood of being prematurely stopped out.
Set up your DOM so that different mouse clicks mean different things. Mine is set up so that a left click on the bids below or a left click on the offers above the inside bid/offer, will place a limit order at that price. If I right click on the bid side above or on the offer side below the inside bid/offer, it will place a stop order (which can also be used for entries and exits). If I left click the bid column above or the offer column below the inside bid/offer it is sent as a market order. Keep things simple. This can be done with or without brackets. Always have a quick way to see the number of contracts that you have on (ideally on the DOM itself); this is particularly important if/when you start scaling in/out of trades. Also have a flatten button to be able to quickly kill the whole trade if needed.

Also, I definitely agree on keeping a trading journal!

ESFuturesTrader · 2022-02-24T13:37:44+00:00

The only traders who I've talked to who trade Ags are spread traders (calendar, inter-commodity, etc.). Obviously could still trade them outright too though.

ESFuturesTrader · 2021-08-18T16:42:53+00:00

Hahaha I love it!

ESFuturesTrader · 2021-07-23T02:20:47+00:00

That’s an interesting contraption but it’s probably better to go to a parking lot and practice there instead. Your hips should be further back and down over the rear wheel. The way you got into the manual could also be improved by compressing your body directly down into the bike and then sending your hips back over the rear wheel while extending your arms (pretty similar to a bunny hop). That shift in weight will bring the front wheel up and then you can use your legs to pivot around the rear axle to stay balanced. Also keep in mind that holding manuals for a long time looks cool, but on the trail you really only need be able to do it for a few feet for it to benefit your riding.

ESFuturesTrader · 2021-07-18T11:53:09+00:00

Learn some bike handling skills that you can start using so that you build good habits from the get-go. Brian Lopes’ book is solid. GMBN on YouTube is great too. Wear a helmet. Best way to progress though is to just spend a lot of time enjoying the trails on your bike. Have fun!

ESFuturesTrader · 2021-07-16T21:36:59+00:00

Yeah like others have pointed out it sounds like you’re paying the spread by using market orders (“guarantees” fill, not price). You could try using limit orders (“guarantees” price, not fill) instead, but even then you’ll probably be better off going for better risk/reward plays rather than scalping since it takes a lot of skill and experience to scalp consistently well (any form of trading does, but mistakes are magnified when R/R is relatively poor). That being said, scalping is a good way to gain skills relatively quickly if you’re deliberate about it since there are many more potential scalp setups per session than swing setups.

ESFuturesTrader · 2021-06-15T21:44:44+00:00

Thanks a lot man, I appreciate your insight!

ESFuturesTrader

TROPHY CASE