Feb 092012

The lack of volatility in ES and my poor performance in January  prompted me to modify my trading plan.  There is a big choice to make in trading:

  1. Do i trade one setup on one market?
  2. Do I trade multiple setups on one market?
  3. Do I trade one setup on multiple markets?
  4. Do I trade multiple setups on multiple markes?

I’ve switched back and forth over the years and for most of the time I’ve settled on the second one.  The first one is very difficult if you’re not scalping.  The last one is very difficult to manage.  I believed (and still do!) that context is most important and it’s really hard to have context on multiple markets.  If one focuses on one single market it’s much easier to know it well.  So #2 was my choice for a long time.

However ES has not been providing much in opportunity lately.  Last year I was quite happy to get 4-8 pts and sometimes 10 on some bigger setups like going for a gap fill.  This year I feel lucky to get 2 pts.  Going for 2 is what I’ve been doing lately but that distorts the R:R.  So for the past few weeks I’ve been watching the Euro & Bund.

In order to trade Euro & Bund, which are much more volatile than ES, I needed to adapt.  For example I need to use larger stops and to use larger stops I need larger targets and to get larger targets I need to focus on the bigger picture and trading with the bigger “move” (I avoid the “T” word). I also have to trade 1 lot because the Euro leverage is so high.

At first I just watched, then I started taking trades on sim.  And so far the results are encouraging.  I decided that I’d do this for 2 weeks and if the results are positive I’ll trade it with real money.  So the challenge is on.  I’ll report back on this as I go.

One unexpected advantage of this experiment is that I’m preoccupying myself and I do not get that urge to put on a trade that I get when I stare at ES all day.  As a result I’ve taken on average 1-2 ES trades per day and I’m averaging around 2pts for 1 contract per day.  Which is my goal and is better than I did the last two weeks of January.

All this is experimental and it’s very challenging but I’m enjoying it.  And even if I trade Euro on sim forever, if it helps improve my ES trading then that’s a good thing.



  4 Responses to “A new plan for February”

  1. Hi Michael. I have been trading the futures for 10 months now, and have been moving between too many instruments so I have decided to stick to just Oil and Gold as they both have very good daily ranges. Although I am not yet able to make a living from my trading, (having problems dealing with losing trades) I am not losing either. Maybe you should just stick to one instrument (not ES as that moves too slowly and is only for people trading with size). Anyway, I have been following you for months and always look forward to your blog updates. Also I would like to thank you greatly for creating the Volume Patterns Indicator (on BMT). It is the best indicator I have come across as it seems to identify the supply and demand areas so well on tick charts, and works very well with the Better Volume indicator (created by Fat Tails on BMT) on the time based charts. Keep up the good work


  2. Dudley – I really like watching at least 2 markets so that if one is calm I can focus on the other. if I trade just one then I’m stuck with it and get bored and do stupid trades. I’ve been very surprised that by keeping active (watching several markets) I’ve been more selective and done better.

    Initially I added several markets just to collect some data and see how they behave. Much to my surprise I’ve been profitable (on sim) on all but one. So my thinking was to pick the markets where I’m doing best and drop any that are not profitable. So this way I can narrow it down to a few. ES is paired with Stoxx for European session and NQ for US session, Bund, Euro, Crude, & Gold. I think that may be too many so I may drop one. For example crude during globex is not as good.

    Have you seen the Eminiwatch Pro Am indicator? If you like better volume you’ll like the Pro Am.

  3. Hi Michael, I always watch Barry’s videos; however, he uses too many indicators for my liking, which seem to get him out of good trades before they take off. I like to keep things simple and apart from a moving average (a visual aid for momentum), the only indicators I use is your volume patterns indicator (VPI) and Fat Tails version of Barry’s Better Volume (for Ninja 7).

    The reason for using Better Volume is that I have studied Tom Williams VSA and read his book (5 times already), and BV gives me an indication of Buying and Selling Climax when price is about to turn.

    For my trading, your VPI is better than Barry’s Pro Am – even though they may be based on the same logic – because of the way I use it to determine Supply and Demand zonesfrom the HV bars. I also use the low volume bars differently, apart from seeing exhaustion, I use it to spot Market Makers moving the market To or From, areas of large supply or demand, rather than thinking that amateurs are leading a failed breakout.

    I only concentrated on Gold today and was able to get a good trade from the 13:30 (GMT) reverse, based on climax selling using Better Volume on the 22 minute chart.


  4. hey michael,

    do you find that LVNs (composite, microcomposite) work as well in the Euro and the Bund as they do in indices like ES, YM, NQ…?
    Lately what I have been successful with is fading the IB on a retest in the bund.
    Would be interesting to hear your thoughts.

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