bakedbeans' learning journal

[bb01100100]

Just catching up that enormous move in the Yen overnight... 280+ tick down move in 1 minute on 6J futures.. Looks like 100 ticks covered in 5 seconds, with other 5 second intervals being smaller in magnitude.

Chart below is 5sec interval, with PD (price difference) in points, and PC (percentage change) measured with green vertical lines for the move as a whole and the larger individual 5 second bars...

2023-10-04-USDJPY-intervention-5sec.jpg (89.72 KiB) Viewed 1353 times

In that scenario how much slippage would have occurred when sell stops were firing?

[bb01100100]

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.

Thanks for this Igazi; I'm re-reading it to make sure I'm understanding it fully. I'm capitalised for a three lot business, so that's where I'll start from.

In terms of setting out with the right mindset, should I be thinking of adding only when profits / OPM covers 100% of the position risk? E.g. If I had trade#1 running with 2R and decide to add to it, then with double the position size I would half the "risk box" so that a full stop out meant none of my risk capital was lost. It sounds reasonable, but I'm not sure if that's realistic or naive?

I've contacted my futures broker to get me access to the softs discussed earlier in the thread (for some reason they weren't configured for my account) and am doing some initial study on what moves those markets over the course of the year/seasons. I've started looking at corn and will move on to wheat after that.

[IgazI]

Thanks for this Igazi; I'm re-reading it to make sure I'm understanding it fully. I'm capitalised for a three lot business, so that's where I'll start from.

In terms of setting out with the right mindset, should I be thinking of adding only when profits / OPM covers 100% of the position risk? E.g. If I had trade#1 running with 2R and decide to add to it, then with double the position size I would half the "risk box" so that a full stop out meant none of my risk capital was lost. It sounds reasonable, but I'm not sure if that's realistic or naive?

I've contacted my futures broker to get me access to the softs discussed earlier in the thread (for some reason they weren't configured for my account) and am doing some initial study on what moves those markets over the course of the year/seasons. I've started looking at corn and will move on to wheat after that.

I think that they only do that if you open a small account; just say "I'm going to be trading metals, energy, and agriculture."

You don't want to be trading FX, NQ, or T-Notes in the middle of a global financial crisis. . .
or maybe you do, but you shoudn't

I don't think of trading 2 contracts as "adding". . .
it's just a bare minimum entry.

Exchange margin for Mini Wheat (XW) is $473:

Capped Size: 3 contracts
Trade size: 1-2 contracts.
$1419 margin.
$608 risk capital <-- for trading 1-2 contracts.
$2027 total.
r: $0 <-- if your intent is to hold more than two contracts then you can only use the funds which you have allocated here.

If you run out of money then you're done, there is no need to overcomplicate it. . .

what can you afford to do, and what will remain if you are wrong? that's all that you have to ask.

You might allocate money to trading larger, continue to trade 1-2 contracts, and then have to draw on it to replace your 1-2 contract risk capital;
trading larger is something that you plan for, not something that you do automatically.

If everything works out, then you'll move money from 'r' into 'margin' to add to your maximum size.

[aliassmith]

Thanks for this Igazi; I'm re-reading it to make sure I'm understanding it fully. I'm capitalised for a three lot business, so that's where I'll start from.

In terms of setting out with the right mindset, should I be thinking of adding only when profits / OPM covers 100% of the position risk? E.g. If I had trade#1 running with 2R and decide to add to it, then with double the position size I would half the "risk box" so that a full stop out meant none of my risk capital was lost. It sounds reasonable, but I'm not sure if that's realistic or naive?

I've contacted my futures broker to get me access to the softs discussed earlier in the thread (for some reason they weren't configured for my account) and am doing some initial study on what moves those markets over the course of the year/seasons. I've started looking at corn and will move on to wheat after that.

I think that they only do that if you open a small account; just say "I'm going to be trading metals, energy, and agriculture."

You don't want to be trading FX, NQ, or T-Notes in the middle of a global financial crisis. . .
or maybe you do, but you shoudn't

I don't think of trading 2 contracts as "adding". . .
it's just a bare minimum entry.

Exchange margin for Mini Wheat (XW) is $473:

Capped Size: 3 contracts
Trade size: 1-2 contracts.
$1419 margin.
$608 risk capital <-- for trading 1-2 contracts.
$2027 total.
r: $0 <-- if your intent is to hold more than two contracts then you can only use the funds which you have allocated here.

If you run out of money then you're done, there is no need to overcomplicate it. . .

what can you afford to do, and what will remain if you are wrong? that's all that you have to ask.

You might allocate money to trading larger, continue to trade 1-2 contracts, and then have to draw on it to replace your 1-2 contract risk capital;
trading larger is something that you plan for, not something that you do automatically.

If everything works out, then you'll move money from 'r' into 'margin' to add to your maximum size.

I like this Idea. I am diversifying my portfolio. I want to have more swing trades. I can be a wheat dealer.

Need about $14,000 for the 4 contracts. Not sure of the value per tick yet but another $11,000 for risk.

$25k to be a wheat dealer. More reseach it would seem.

Edit $50/cent move
Corn and Wheat are 5000 bushels per contract. Each penny move is $50. There are 4 tick in 1 penny. $12.50 each.

Looks like I'll need at least 10 contracts to make it interesting. It really doesnt move fast.

[IgazI]

I like this Idea. I am diversifying my portfolio. I want to have more swing trades. I can be a wheat dealer.

Need about $14,000 for the 4 contracts. Not sure of the value per tick yet but another $11,000 for risk.

$25k to be a wheat dealer. More reseach it would seem.

Edit $50/cent move
Corn and Wheat are 5000 bushels per contract. Each penny move is $50. There are 4 tick in 1 penny. $12.50 each.

Looks like I'll need at least 10 contracts to make it interesting. It really doesnt move fast.

Following my formula, you'd have:
margin for 5 contracts ($17500),
risk capital of 0.428571 of margin ($7500),
for a total of $25000.

You'd trade up to 2 contracts, out of the $7500, and you would allocate funds specifically for trading a size of 3-5 contracts ('r');
with margin for 8 contracts, you could trade up to 3 contracts without using additional funds.

Margin is 70% of the total, 2.333334 times risk.

If you want to play it 1 + 1 + 2 then you would need margin for 10 contracts.

As I told Bakedbeans, you can build budget versions, it's just more difficult to minimize risk and maximize reward.

[bb01100100]

Bulenox eval update:

Net +0.215% today, +3% cumulative.. half way to target of 6%.

I had a poor session today - I'm putting too much stock in the positioning for retraces to zlines rather than working with the market.

I was initially short and wrong, got positioned for continued move upwards and marked up likely levels from the hourly, but closed out for a modest profit, thinking it looked toppy.

I eventually got my retrace, but I was circa 0.9% offside by then which was very poor trading.

As we hit 3:58pm ET I see we are right at the highs of the day.. will price push down to liquidity into the close? I doubt it today, given the persistent bid.

Update: yes it's coming off.. down from 4302 to 4293 as I write this. My high volume area was 4277ish, so no where near that.

[aliassmith]

I like this Idea. I am diversifying my portfolio. I want to have more swing trades. I can be a wheat dealer.

Need about $14,000 for the 4 contracts. Not sure of the value per tick yet but another $11,000 for risk.

$25k to be a wheat dealer. More reseach it would seem.

Edit $50/cent move
Corn and Wheat are 5000 bushels per contract. Each penny move is $50. There are 4 tick in 1 penny. $12.50 each.

Looks like I'll need at least 10 contracts to make it interesting. It really doesnt move fast.

Following my formula, you'd have:
margin for 5 contracts ($17500),
risk capital of 0.428571 of margin ($7500),
for a total of $25000.

You'd trade up to 2 contracts, out of the $7500, and you would allocate funds specifically for trading a size of 3-5 contracts ('r');
with margin for 8 contracts, you could trade up to 3 contracts without using additional funds.

Margin is 70% of the total, 2.333334 times risk.

If you want to play it 1 + 1 + 2 then you would need margin for 10 contracts.

As I told Bakedbeans, you can build budget versions, it's just more difficult to minimize risk and maximize reward.

With your formula I will want $100k to trade 20 contracts. That should make it worthwhile at about 50 cents a month.

[bb01100100]

CFD account updates...

I was filled on three small trades over the course of the last 24 hours..

First was long EUR/USD, looking for movement back up to a breakout area:

2023-10-05-EURUSD-macropip.jpg (77.16 KiB) Viewed 1214 times

The next is long EUR/JPY looking for movement back into the 157-158 range and very mindful of further yen intervention:

2023-10-05-EURJPY-macropip.jpg (117.53 KiB) Viewed 1214 times

The last was a long limit entry order for Corn, which is a technical analysis trade at this point. I've learned that Corn's seasonal lows are after harvest (July) but I need to get a better grip on the fundamentals before I get any big ideas:

2023-10-05-CORN-swing.jpg (83.41 KiB) Viewed 1214 times

I'm re-reading Keith Schap's 2005 Spread Trading book and getting an idea of new crop / old crop Corn spreads; very interesting stuff and relevant for my futures account.

All of these charts are H4.. I'll adjust stops when if I get further favourable movement.
Edit: Corn chart is H1.

[bb01100100]

Bulenox eval account update:

Net +0.31% for the day, 3.4% cumulative, 6% target. Hitting singles has got me half way to target.

I was wary today given yesterday's performance, so I traded at half size; good trading and careful approach to risk.

Today with some pnl in the bank I ran a 1 lot short on the expectation that as we went into the close price would push lower to prior high volume prices.. this worked out well with price coming off circa 6pts into the close. I netted 5.25points on my one lot.

[bb01100100]

CFD account updates:

EUR/USD closed out circa +6.2% - close enough to target zone at the end of the session.
EUR/JPY closed out circa +3.5%- call me nervous with the lack of follow-through.
CORN - pulled back and then pushed higher, with floating profit of circa 4.6%. Will move the stop below swing low during market hours.

Net banked pnl: 9.78%.