Emini Day Trading Lessons: +6.75 Points – Missing the Move
What you may notice from today's trading results on the ES and NQ are two things. First, that I'm still not trading all that often considering the market movement. Second, that despite that I've managed to string a nice series of wins together so far this week.
To the first point, the scarcity of trades has to do with trying to be careful during volatile times. There's probably a bit of bad luck in there too.
Today in the ES I only managed to catch a couple short trades. In an ideal world I might have had four or five on the strong run down and eventually a long on the reversal. Today was just one of those days where I wasn't able to get my fill. Oh well, it happens.
It's Always Obvious After the Fact
In hindsight it's all very obvious as the bottom fell out of the market. You pretty much could have shorted anywhere and made a nice profit. The reality though is that on the far right of the chart during live markets things aren't always so clear.
There was a fair bit of chop and price uncertainty with some key levels in play before things really took off. I was willing to short into some of that but even with orders in place I just couldn't get a good price where I felt I could keep a tight stop. In this case that meant I missed out.
Chasing Price
It's tempting to look at a chart like this and feel like you should have been more aggressive and chased price. Sure, it would work out nicely here but the truth is that there's plenty of times where the algorithms and emotion don't take over this way. We don't always see stops get tripped aggressively and often price has plenty of pullbacks.
Entering very aggressively would have paid handsomely today. Most of the time however you are in for plenty of stop-outs without large stops and that bigger risk is something I want to avoid. As odd as it may sound, I'm happy to miss out on the occasional move like this if it means being a bit safer and profiting more in the long run through improved risk management.
Dealt a Good Hand
Now on to the second point about stringing together numerous wins lately with only a single loss this week. Let me be clear - this is not typical! Honestly, I don't even really care because there's nothing special going on here. It's just the way the cards are coming at the moment.
Part of trading is taking losses and it's going to happen to everyone. I'm fairly content even losing half the time as I know my average win size far exceeds my average loss so there's still going to be a trading edge there. Most of the time I do try to aim higher than that with my hit rate (it's dependent on the trading setup type, of course) but the point is that I don't need to string together loads of wins to be profitable. Even if I do go on a nice streak I know it largely comes down to chance.
Even if a trader wins 90% of the time they are sometimes going to string together a series of losses. If they are unprepared or taking too much risk per trade then this unlikely but inevitable event could be disastrous to their account.
Similarly, even if I expect I will lose a number of my trades there are going to be times like now where everything seems to come up a winner. A bit of that can be chalked up to extra patience in this current market or being more careful than usual with setup conditions but some of it is just luck.
Keep to the Path
There's not much point in getting excited about these good runs or allowing over-confidence to seep into your trading approach as things can quickly shift. If the market is good for one thing it's for teaching lessons to those who don't plan for change.
I'm just going to keep doing what I do whether the next five trades are wins or losses. I'm just focused on taking one good trade that fits my plan and trading criteria, managing it well, then moving to the next one from there.
- Strike While The Iron is Hot - March 1, 2021
- The Path to Becoming a Full Time Trader - February 22, 2021
- Looking to 2021 and Beyond - January 20, 2021
