Friday, August 05, 2016

Slow days are not fun but happen rather often

I don't like them, but with KING you can handle them pretty well, even if sometimes you may be forced to lower your target to 2-3 ticks, while the standard one is 5 ticks and 10 ticks is doable too on more volatile days.

I am talking about the ticks in YM, the Dow Jones e-mini futures market, my favorite futures market and the one I recommend for KING traders (at least for starters).

Trading on a slow day feels a bit like being constipated. Not exactly something you would be willing to kill for. If you prefer a faster moving market, and do better on faster days, you will probably not be trading optimally.

You will be tempted to lower your target, which sometimes may not be warranted (in hindsight!), but that's what your instinct is telling you. That's okay. Do it. It's more important to make money than to be right. Infinitely more. If you can be right too, treat this as a bonus. Don't trade to prove yourself right, but only to make money.

You may be tempted to rationalize why you lowered your target when the original one gets hit eventually and sometimes, much to your chagrin, shortly after you had adjusted that damn target. Well, I have finally come to the conclusion that this makes no sense. Rationalizing, that is.

If your instinct is telling you to act a certain way, that's about as good as you can get it in a slow market. Remember, we are talking about discretionary trading here, as KING is a discretionary trading methodology; also a day trading course based on this methodology. If you are trading in a systematic way, you follow your system to a tee, including where and how to exit your position. That may actually be even more frustrating in a "constipated" market than when trading such a market in a discretionary manner.

Sometimes, it is justified to go for a bigger target rather than a smaller one. Say, 10 ticks. This is so, for instance, when you are sure about the general market bias (long or short). Judging this bias is particularly easy on the days when George IV gives a strong signal.

Such was the case today, hence the first two trades in the screenshot below (in my tweet with trading results from today's trading session) were inspired by George IV, a very fine e-mini futures trading system for ES and YM.
However, since the second trade aimed at 10 ticks took almost 2 hours to reach the target, I was not too upbeat about holding my third position even for 5 ticks as it was taking a longer while, so I exited it with 3 ticks only and quite prematurely too. But then again: it's better to make money than being right. I was right too, but did not capitalize on it, which is fine, but gives me no bragging rights.
Well, I am rationalizing things a bit here. I don't know what the real reason for my exit was, but  I certainly was not feeling too comfortable with the market taking too long to deliver after "suffering" for almost two hours being stuck in the previous trade.

After that, I decided that was enough, and chose to run an errand that probably could have waited had the market been  more spry. That's okay too.

I don't think trading a lot on days when trading is slow makes much sense. As a rule, that I myself use for KING, if you can not make at least $200-300 with 2-4 YM contracts in the first two hours of your trading, you may as well take the rest of the day off.  On good days, you should be able to make that much even in the first 30 minutes. It makes much more sense to trade more and more aggressively on volatile days than on the days when Mr. Market is constipated.

Trading should be fun. If it is not you are probably not doing it right.