I've been looking at the relatively new micro ES contract. Its volume has now reached a level where its very very liquid. If you have been reading the blog then you know that one of my trading styles is to put the position on and then scale out as the trade goes in my favour. The converse of that is that I double down, sometimes more than once, when the trade is still valid but goes against me.
With the extreme volatility we have with the ES, these scaling in and scaling out with these larger number of contracts has become more difficult as:
- Stop losses can be further away from entry price
- Higher margins
The "medicine" for these issues is the micro ES. Same as the regular ES except $5 a point instead of $50 a point.
Taking an initial position of only 1 ES contract means you cannot scale out. Doubling down twice gives you 4 contracts, still not a lot to scale out. However, an initial 10 lot of the MES (micro ES) provides the flexibility needed to trade this style.
Had you entered the trade on my multi Volume Profile orderflow chart at the break at 3233.00 with a 10 lot MES position, you were able to take half of the position off at your first usual target and still have 5 scale outs left to trade until the swing was over.
I would imagine at your level of success, you were scaling down from trading 10 ES contracts to 5 or 2, but not scaling down to MES.
ReplyDeleteI don't trade the MES but do have a couple of people I mentor who do and I think the post is useful for traders with smaller accounts.
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