Looking for specific instrument behavior, suggestions?

#1

Hi DM,

I’m looking to find more specific instruments that suit my strategy. What suits me best is slow instruments with very, very clear APEX patterns, minimal chop. I don’t need much movement at all, just a clear and steady direction.

I’m working on a focus/strategy of trend trading deep ITM premium collection binaries throughout the day, and am only looking to collect $5 per trade (buying in multiples of 4 each time at the moment according to the 5% rule). I prefer to be in and out, safely inching my way towards my 5% profit goal, instead of looking for a only a few larger trends to develop using something like spreads. More of a focus on time decay as much as movement. This has been working well for me for the past few weeks. My thinking is that I am not “asking too much” from the market which makes my orders are very easy to fill. Naturally this has me placing many trades, but I don’t mind paying more commission as my profit is gained in volume, finding safety in numbers of trades. Also it is a bit easier on the lifestyle as I find I can close out more frequently and walk away for lunch/bathroom/coffee/sunshine rather than being glued to the screen all day.

The trouble with this approach is that chop effects me pretty greatly at the times when I am unable to find rather deep ITM possibilities. Currently I am focusing on NQ, YM, and TF. When they tend to mirror each other a bit it can be great, but when they are choppy I find myself treading water. I like the patterning of corn and soy, oil and gold can be nice, but all of them either pace faster than I care to expose myself too, or are subject to sudden movements due to news.

Again, I’m looking for instruments that hold steady and clear trend/APEX patterns, and I don’t mind them moving mind-numbingly slow. I have not explored FX yet, though I am under the impression they can be as volatile as gold/oil/corn/soy. Not sure, looking for feedback. If you see any holes for improvement in my approach, I would love to hear what you think as well if you have the time.

As always thank you for you help, and I hope this post can help others as well.

Rob

#2

Collecting $5.00 each time is a great way to get wiped out as you need to count on loosing occasionally. I would not suggest this at all. Then deduct another 1.80 a round turn if profitable - so you are making $3.20 risk reward is way to overbalanced. So one loss would wipe out nearly 15-20 wins. This strategy will work well till it doesn’t and you will be wiped out. Your safety is not in your number of trades. Actually better traders take less trades not more of them and use better risk/reward management etc… If you are closing out and walking away on a trade like that you are really asking for it as you could have a 95 loss on a 3.20 return trade wiping out almost 30 profitable trades. More than anything not the instrument but the risk/reward is the problem with this approach. If you want more time then do expiration premium collection as it only take 5-15 minutes.

Your orders are not filled because you are not asking much they are filled as they are far ITM so far that probability of loosing is low but that probability = net loss

95% ie at 95 3.8 * 95 = $361 Profit 95.90 * 5 = $479.50 Loss Net Loss = -$118.50

Note the losses will increase if you exit say if price hits strike at the same time. So will the loss amount per trade, so the end result is the losses will come and they will wipe out the profits made as the risk reward is to far off.

Now i am assuming you mean a $5.00 max profit - you may be simply meaning a $5.00 scalp profit - again i would not suggest this unless you are going to balance it out with a $5.00 risk (which with bid/ask and commission sis going to be pretty tough)

All markets have cycles, all markets are exposed to news - all markets will move slow than fast, off and on etc… . There is no market that does the exact same thing every day. This is just part of trading. Indices are more prone to more choppy, volatile moves though they have awesome trends. Gold and oil have big trends and lots of chop. Ags have lots of trends and little chop. FX varies completely by instrument. ie usd/cad and usd/chf are generally less choppy and volatile than say eur/jpy or gbp/jpy - putting things like aud/usd eur/usd gbp/usd in the middle

Nadex only has 22 markets- honestly open up the charts and start scrolling through them to try to make it match the above though i don’ t believe over say a course of 3 months you will be ahead

The other tip i would give you is to not try to take every single expiration - focus on times of day where the market consistently moves at the speed you are comfortable with (this may vary by market) and focus on trading that market at that time everyday.

You’re better off just choosing a ITM strike around where the 5 ticks from the P are (30 minutes to maybe 4 hours) from expiration, closer the better, but you want the distance and the strike and ideally $15-$30 premium - with the rules to exit if the strike is hit (see the how to trade apex on elite video under elite - section - step 3 - nadex videos)

OR i would look at $70 binaries - looking to exit at $90 with a stop loss at $50

On short side this would be $30 binary exit at $10 stop loss at $50

Put in say 60 to 80 in the risk cells on the binary scanner

Hope this helps

#3

Thank you DM - Yes, it is exciting to win many in a row, but very discouraging to give it all back in the blink of an eye. My thinking was that if I needed a minimal amount of price movement I would be able to “scalp” in a way that seemed safer, not necessarily the case over the course of my averages. As suggested, by not focusing on very deep ITM trades I finally see that I’m risking less, making a turn-around if it happens less severe. I’ve adjusted accordingly, and can see how your suggestions will be an improvement, though the past few days have been a bit “unique” with what is happening in DC. I’ve even been chopped out of regular elite spread trading indexes the past couple days!

Man, overall all I need and am looking for is to hammer down a regular, predictable, approach to generate a consistent income. I don’t care what or when it is, just for it to be relatively steady income.

I think its just a matter of looking at my approach from a macro perspective in order to apply the right method to the right instrument that fits my comprehension level/speed. Every time I get chopped out of the market for a few days in a row I sit back, re-evaluate, try something else, only to have it happen again. I’m patient, I don’t let my binaries expire if I trade them, I have the elite rules basically tattooed to the backs of my hands and feel I know them well, I’m fast enough with my drawing to take advantage of two and sometimes three trades simultaneously, I’m at the computer and trading for pre-market to close, I stick to the 5% rule, and I’m not afraid to get in there and make it happen with my account which large enough to get my to my daily profit goals. I’m just not seeing the kind of growth I need to see happen and I think it’s due to a larger picture problem, probably along the lines of my methods matching my instruments, but I’m just not sure. There is so much to do, so many approaches to take here at APEX, so many instruments to trade at different times of day. This is a good problem to have, but I’m juggling a lot here given my level of experience.

I like your suggestion of ITM binaries and taking profit at $90/$10, small and regular profit taking. This has worked for me a bit before, but I’ve been chopped out quite a bit on NQ, YM, TF. My response to the chop on the indexes was to take less profit in order to fill more quickly. The deeper ITM aspect was my mistake as I ended up loosing more than taking when the market turned against me. Now I’ll strike and exit as suggested.

If anything comes to mind in my story (sorry its a long post), please do let me know as I’m as dedicated as it gets and am willing to try anything, I just want to hit my goals.

Thanks!

Rob

#4

Post your charts and I can help more

you can’t give it back in the blink of an eye unless your risking to much

Beginning to end of day of what you trade

Note the more instruments you trade the faster you hit 5%

You also need the account size to do this

And the more you will divide the 5% by per trade /6 rule is if trading only one market the goal is that you would hace to lose 6 trades on one market to stop trading that market not 2 trades on 3 markets

If you know the system the next step is to master style

BMI, choppy market, multiple indices, volume spikes on deviations etc

You don’t need 10 instruments or 20 systems

Changing your approach every few days is a loosing strategy

Follow the rules, money management 5%/6 if trading one instrument, 5%/12 if trading two etc, and implement the easy to use style techniques I teach

Chances are you are doing to many systems w/ to many instruments w/ to many changes w/ to much risk o’er instrument and this is causing you to verify chopped before you even get started

#5

Hi DM,

Very good advice DM, thank you. Your suggestion of focusing on a single instrument is probably the most fitting as my attempting to draw on multiple charts was spreading my account and attention a bit too thin.

That said, I’m interested in the ongoing search for the “best” instrument. To date I am fond of CL but have not explored FX pairs due to the added cost of the data feed, though I can’t help but wonder if that is a short sighted perspective as I hear the opportunity is rather exciting. “…usd/cad and usd/chf are generally less choppy and volatile…”, compared to the other FX pairs you’ve said recently. I’m comfortable with the personality of CL, but am attracted to the more opportunities FX has to trade “after hours”.

I’m running a bit tight in my funds. Would you suggest it be worth paying the data feed to focus on either usd/cad or usd/chf, or should I keep my focus on CL. I have no experience or impression of FX at this point, I can afford the data feed assuming it be worth the cost. What do you say, is FX worth diving into?

Thanks, and have a great weekend!

Rob

#6

There really is no “best instrument”

Instruments go in cycles to being great to being flat. Some days fx rocks, others ags, others metals, other indices others a combination thereof

The longer you trade a instrument (so long as you note things in your journal through doing the Monday morning quarterback you can see what caused the difference - holiday, fed announcement, news, etc… - and learn from this to help you find the better days for what instruments over time. but there is not a 1 instrument perfect all the time thing -

The bottom line is it’s the risk management that has to be right on to get you through the bad days so you are not damaged and ready to rock for the good ones. Even if you had perfection in instrument system etc… risk management would make it all fall apart - this is paramount that you have good risk management so you can have the sanity to correctly follow the system. As simple as this sounds it is literally the foundation to professional trading for consistent income. Note income does not mean everyday it means your average income over the course of a month/quarter/year etc…

I love trading fx - If funds are tight you can use GAIN for FX but its not near as good as IQFeed on speed and reliability.

Even with that trading CL you will need to use the Oil Choppy Market warning - which you get with the data feed - they give you BMI free, and fx free with base iqfeed subscription if you use our linke Welcome Apex Investing Customer to DTN IQFeed! - Fast, Reliable, Affordable. Market Data and API’s.

  • cboe volatility indices are only $5.00 more

One thing i would caution you on is to not “get fond” of a specific instrument - trading to make money - means not caring about the symbol :slight_smile:

Everything works the same in the sense of the system is the same across all instruments

FX affords many opportunities as it is often more volatile.

JPY and AUD can often move some in the evening - but usually more after Europe opens is when fx really picks up - all depends on news how early that starts.

Make sure you are watching the fx calendar to know when market moving events are happening. (ie like on oil knowing when inventories will be released etc…)