Wednesday, 11 September 2019

Making 3 ES Points a Day - Yeh Its a Business.

I have been having a discussion with a couple of students about how much money they need to make, on average, a day to earn a living and replace their current job incomes. There seem to be very few discussions about this most important topic. Looking at a methodology one needs to examine it from all angles, least of all whether it meets your own financial objectives with the capital you have available as well as the likelihood of you being able to do what is required by that methodology.

Each person has a different number of $ that they need but I have been working on something that is easily scaled so that anyone can start small and quickly scale it to their own number.

My idea was based on the number 3. If you have been a long time reader of this blog then you will know that the number 3 is an important number in my world. Many things come in threes.

The most scalable market now is the ES. It trades hundreds of thousands of contracts a day, even a million and more. Bid and Asks are deep and fills are easy. The ability to scale up in size is very important because as your skill and account size improves you need to be able to continue to trade the way you have been.

What I came up with is to just try and make 3 ES points a day and then stop. If a trader wants to make $450 a day then they trade a 3 lot. Minimum margin is less than $1500 at most brokerages, add say another $1,000 a contract for extra capital and for $5,000 they can be in business. If they follow the rules and have the discipline then on the balance of probabilities they can be CP. No guarantees as the disclaimers say but there is a structure and methodology that enables good things to happen.

Lots of traders have a goal of $1,000 a day and this can be achieved trading a 7 - 10 lot with about $20,000 capital - disclaimer applies as does having the discipline to follow the trading plan.

Doesn't sound hard at all. However, may traders, a majority,  have not been able to make this seemingly easy target a day. I have written ad nauseum about why most traders don't get to CP, read this blog.

Using some training wheels makes the job easier. I have created an algo that hybrid trades the ES with some trader rule based objective intervention.The pic below shows what a typical day could look like.

As you can see, in this live trading demo for Kiki I exceeded the $150 per contract for the day in about an hour after the open. 

More later.

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