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:
- Do i trade one setup on one market?
- Do I trade multiple setups on one market?
- Do I trade one setup on multiple markets?
- 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.