bakedbeans' learning journal

[IgazI]

MightyOne talked about Macro Pips, which probably better align with these trades..
The experience has been positive, but my execution needs to improve a lot in order to maximise profit potential..

You can even trade 3-5 daily charts, small size, for 5 or so full-sized pips worth of profit, and then drop down to a minute chart with capped size:

The obvious downside is that you have to wait a number of days to make a handful of pips, only to possibly evaporate it in minutes
then again you didn't have to sit at your computer all day to earn "macro-pips".

[kiwiarian]

MightyOne talked about Macro Pips, which probably better align with these trades..
The experience has been positive, but my execution needs to improve a lot in order to maximise profit potential..

You can even trade 3-5 daily charts, small size, for 5 or so full-sized pips worth of profit, and then drop down to a minute chart with capped size:

The obvious downside is that you have to wait a number of days to make a handful of pips, only to possibly evaporate it in minutes
then again you didn't have to sit at your computer all day to earn "macro-pips".

I like the idea of a small sleeper/runner in the background idling away that might be in the money for low risk.
Been having a play over the last few days with a position or two. Alias set me straight as I was a bit confused on the definition of position, which now I understand is a SL behind an extreme. I thought entry was position.
Now I have to go and reread from page 1 all the NLA and Ideas I trade threads with the new dictionary definition update

[bb01100100]

MightyOne talked about Macro Pips, which probably better align with these trades..
The experience has been positive, but my execution needs to improve a lot in order to maximise profit potential..

You can even trade 3-5 daily charts, small size, for 5 or so full-sized pips worth of profit, and then drop down to a minute chart with capped size:

The obvious downside is that you have to wait a number of days to make a handful of pips, only to possibly evaporate it in minutes
then again you didn't have to sit at your computer all day to earn "macro-pips".

I’m still mulling over how to set myself up to treat each market as a seperate “line of business” with its own risk capital for swing trading.. I don’t have a large enough futures account to do that, and am not aware of any swing friendly futures prop firms, so may well accept the CFD swap costs and go with an FTMO swing account..

Ideal outcome is that my (scalping) bulenox eval account converts to a funded account that I can use to fund my futures (swing) account.

Igazi, when you say “wait a number of days for a handful of pips” are you referring to macro / full-size pips? Just want to make sure I understand the point you were making.

[IgazI]

MightyOne talked about Macro Pips, which probably better align with these trades..
The experience has been positive, but my execution needs to improve a lot in order to maximise profit potential..

You can even trade 3-5 daily charts, small size, for 5 or so full-sized pips worth of profit, and then drop down to a minute chart with capped size:

The obvious downside is that you have to wait a number of days to make a handful of pips, only to possibly evaporate it in minutes
then again you didn't have to sit at your computer all day to earn "macro-pips".

I like the idea of a small sleeper/runner in the background idling away that might be in the money for low risk.
Been having a play over the last few days with a position or two. Alias set me straight as I was a bit confused on the definition of position, which now I understand is a SL behind an extreme. I thought entry was position.
Now I have to go and reread from page 1 all the NLA and Ideas I trade threads with the new dictionary definition update

I am not long from my entry, I'm long from where I would no longer be long:

when you enter within range of a stop loss, then you are said to 'have position' on that chart.

[IgazI]

I’m still mulling over how to set myself up to treat each market as a seperate “line of business” with its own risk capital for swing trading.. I don’t have a large enough futures account to do that, and am not aware of any swing friendly futures prop firms, so may well accept the CFD swap costs and go with an FTMO swing account..

Ideal outcome is that my (scalping) bulenox eval account converts to a funded account that I can use to fund my futures (swing) account.

Igazi, when you say “wait a number of days for a handful of pips” are you referring to macro / full-size pips? Just want to make sure I understand the point you were making.

The idea is that you would trade something like 1 lot x 10 pips = 1 macro-pip, on 3 to 5 charts, to pull in a few pips here and there, and then move to a minute chart and trade 5 lots x 2 pips: every 'mp' gained on a large chart is 2 pips of space on the minute chart.

With the above strategy, you don't have to watch your charts until it is time to launch a 5x 'rocket'.

These are all of the sub $1k futures contracts that I would trade.

Micro Gold (MGC): $660
Mini Soybean (XK): $671
Mini Wheat (XW): $473
Mini Corn (XC): $336
Rough Rice (ZR): $853
Micro Crude (MCL): $946

When swing trading, you want to be able to afford at least 5 contracts:

Let's see how much it costs to start a corn business:

'Building' cost: $336 x 5 = $1680 (70%) = 2.333334x risk
Risk capital: $1680 x 0.428571 = $720 (30%)
Total: $2400

Margin: $1680 (we are never going to touch this).
Risk-C: $720 (funds a size of 1-2 contracts)
r: $0 (additional money is allocated here to fund 3+ contract trades / also subtracted from here to increase margin).

Notice that we are only trading 1 or 2 contracts most of the time, so let's see how we can build a budget version of a big business:
E-Mini Crude Oil (QM): $4730 exchange margin, $1000 day margin:

'Building' cost: $4730
Risk captial: $2027
Total: $6757

With the above business, you can temporarily fund 2 contracts and hold 1 interday; any profit would go directly to 'margin':

the actual cost of this business is:
Margin: $23650
Risk-C: $10135
Total: $33785

It is better to build something rather than nothing. . .
ideally, you would start at least 3 businesses and share only the 'additional money', the 3+ contract money, between them.  

If you map out where your money is going then you are less likely to throw it away doing something hairbrained.

[bb01100100]

Bulenox eval account update: net +0.43% for the session, 2.35% cumulative, target 6%.

It was good to be trading again after my holiday.

The ES session had a short bias (hourly) so I was predominantly short... but just after 3:15pm ET that bias changed to long. I saw this but, but also an opportunity to trade a deep retrace, thinking that there might be a liquidity grab prior to a push higher, or even a run of the lows (weak idea this late in the day, but you never know).
That never happened, but I did manage to bank several times, taking partials and positioning short again when we stalled at 4315ish (prior hour's midpoint) and netting about 2.9 points.

Several obvious things to note:

• If I'd taken profits more aggressively on my counter-bias trades, I would be closer to 1% net.. I'd see a retrace and look for a second push lower, which didn't happen.
• If I'd worked with the bias change I would have had much less work to do and netted 1%+
• My idea of a deep retrace wasn't bad in principle, but realising that the absence of any significant retrace meant there were real buyers present could have been a confidence boosting signal to get long and hold on.

Knowing vs doing. Still, I banked and moved the needle in a tangible way towards my 6% goal.

[bb01100100]

The idea is that you would trade something like 1 lot x 10 pips = 1 macro-pip, on 3 to 5 charts, to pull in a few pips here and there, and then move to a minute chart and trade 5 lots x 2 pips: every 'mp' gained on a large chart is 2 pips of space on the minute chart.

With the above strategy, you don't have to watch your charts until it is time to launch a 5x 'rocket'.

Ok that makes sense - I tend to think only of the first part (large chart macro pip trades) and forget about the second part (use large chart gains to trade small chart, using OPM via space).

I tend to get stopped out when I stack, so I'm likely being too aggressive with price (too close) or time (too soon).

[bb01100100]

These are all of the sub $1k futures contracts that I would trade.

Micro Gold (MGC): $660
Mini Soybean (XK): $671
Mini Wheat (XW): $473
Mini Corn (XC): $336
Rough Rice (ZR): $853
Micro Crude (MCL): $946

When swing trading, you want to be able to afford at least 5 contracts:

Let's see how much it costs to start a corn business:

'Building' cost: $336 x 5 = $1680 (70%) = 2.333334x risk
Risk capital: $1680 x 0.428571 = $720 (30%)
Total: $2400

Margin: $1680 (we are never going to touch this).
Risk-C: $720 (funds a size of 1-2 contracts)
r: $0 (additional money is allocated here to fund 3+ contract trades / also subtracted from here to increase margin).

Notice that we are only trading 1 or 2 contracts most of the time, so let's see how we can build a budget version of a big business:
E-Mini Crude Oil (QM): $4730 exchange margin, $1000 day margin:

'Building' cost: $4730
Risk captial: $2027
Total: $6757

With the above business, you can temporarily fund 2 contracts and hold 1 interday; any profit would go directly to 'margin':

the actual cost of this business is:
Margin: $23650
Risk-C: $10135
Total: $33785

It is better to build something rather than nothing. . .
ideally, you would start at least 3 businesses and share only the 'additional money', the 3+ contract money, between them.  

If you map out where your money is going then you are less likely to throw it away doing something hairbrained.

Brilliant, thank you! The margin + risk capital model you shared is very neat.

I will look at how I can apply this portfolio of potential markets to my small futures account.. I might not be able to run multiple trades initially, but I can start and grow from there.

You mentioned being able to afford at least 5 contracts when swing trading - is that so you can incorporate Space, or for more general scaling in and out?

[IgazI]

Ok that makes sense - I tend to think only of the first part (large chart macro pip trades) and forget about the second part (use large chart gains to trade small chart, using OPM via space).

I tend to get stopped out when I stack, so I'm likely being too aggressive with price (too close) or time (too soon).

How you go about stacking depends on what you are trying to do. . .

If you're swing trading, you're not trying to get rich on short-term volatility; you're trying to survive it and press your winning trades, as most of the money is made through waiting.

The first order is only 20% risk, because it is 1 of 5 contracts, so if price wants to swing wildly then it is not going to cause an issue.

If support holds then we are going to go ahead and enter into one more contract, and our risk is -2.5 points = 1 point of damage;
at a size of 2/5, your risk is 40% of the move.

To trade larger, we increase the initial size from 1 to 2 to 3 and enter in the same way as we did above:
1 + 1
2 + 2
3 + 2, or 3.

A 3-contract cap is 66% risk on your second order, a 2-contract cap is 50% risk on your first order, and entering at cap is out of the question.

A 2-contract 'budget business' is limited in its ability to maximize reward; imagine earning $5000 instead of $12500, simply because you are low on margin money but if $5000 means that you can afford to hold 1 more contract the next time then you're on your way.

Remember, it is easier to replace risk capital than it is to replace margin money:
if you built up your margin to $40000 and proceed to lose all of your risk capital then you only need to find the money for 1 more trade and with that 1 trade you can afford all of the contracts to maximize the reward and get right back into business. . .

and that is why you never ever touch your margin money.

[bb01100100]

Bulenox eval update:

Net +0.495% for the day, 2.85% cumulative, 6% target.

This session went well for me - fewer execution errors or perception mistakes. I was a mixture of long and short..
In the screenshot below I got short in a congestion zone, trading down towards the zline and also had a standing limit order to go long at the zline, with a stop 7 ticks below entry.. both worked out well.

2023-10-04-ES-fills.jpg (44.86 KiB) Viewed 1024 times

The reason that last long was 1.5 pts of profit was that I thought we might get a push up to the 4572ish wick zone from a couple of hours earlier and was positioned for a runner on that. It didn't happen and I was stopped out for a smaller profit.

Update: as we hit the close, price pushed up to 4269... the higher timeframes can provide excellent context for the smaller charts.

I have a working theory that as we move towards the close, larger participants need to square up positions and so will push price to where they can get fills, which tends to be at prices in the session that had high volume (value area / point of control if you're a market profile person). It's not always true - I've seen price sit at the same price for minutes going into the close as 10k lots trade, but it's something I need to research more...