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New Strategy - EScalade


#1

Hello, I have introduced a strategy I have been trading for some time now. The strategy is called EScalade. I know the name is stupid but I didn’t know what to call it. It trades the ES (future) and normally takes between 15-20 trades per month. This month has been way over that due to the volatility of the US market and months like July and August are below that average because the market tends to slow during the summer months. This system waits for a sharp move and then trades on a pullback from that move. I have a stop and target in place for each trade that changes each month based on prior months’ volatility. I also have a trailing stop for the entire system that will remove the chance of catastrophic losses.
I have been trading for several years now and became consistently profitable after about 2 years. What took me so long to learn was that there are several systems which will make money over time. The key, and the hardest thing to overcome, is the money management. Money management, for me, is the most important part of a trading plan and includes not only the target and stop on an individual trade, but also how the account as a whole trades with regards to draw downs, when to add contracts, etc.

Anyway, take a look and follow along. I am not going to promise the world but I will tell you this strategy, along with my money management, has worked for me.


#2

Love this. Refreshing honesty.

What was the key to money management that you learned?


#3

Do you have a max contract per trade?

Also every future strategy here said they have Hard STOP. they all said they won’t have a big drawdown.

Until they got hit in the face. Now most of them are busted or down 50%.

Built a good 6-8 month traxk record than you will be fine. And please stay within the rule you set, don’t break it after like 2 weeks like some other developers.


#4

6-8 track record is a bit excessive. Normally, people start subscribing after a decent track record of 3 months. Especially if, like you said, they follow their set of rules.


#5

Although it took me way longer than it should have because I was so stubborn and thought I knew everything, I did finally understand how important money management is as it relates to the goal of making money on a consistent basis. It is easy to adhere to your plan when your strategy is going up, human nature wants to interfere intensely when you go into a draw down. You become the person you swore you never would, taking dumb trades and trying to get back at the market. That gets you killed.

The same thing happens with your strategy. As soon as it falls into one of the many, many draw downs it will have if you do this long enough, the human in you comes out and you end up constantly tweaking your system to fix the problem. All you do is make it worse

Here is what I learned through years of pain. Trade your system. Dont deviate from it. When your money management tells you to trade, then trade. If it tells you to tap the breaks until things are more favorable, do it. Sounds easy, right? Anyone who thinks that sounds like a simple thing to do hasn’t been trading long. Trust me.


#6

I trade 1 contract per $5000 in the account, no more, no less. Ever.


#7

I agree, but please just follow along and dont subscribe until you feel completely comfortable. I am not here to lie to you and blow sunshine your way. I make a living trading and thought I could gain another income stream by doing this. Plus it allows me the ability to converse with people. Trading can be a pretty solitary job.

If you dont subscribe, that’s ok with me. But still feel free to ask questions and I will help however I can.


#8

I am no one’s enemy, if everyone is actually comfort in telling they make mistakes and regret them, learn from them and make a better person from them. I don’t mind if you have a losing month, I don’t mind if you have a bad trade after trade. I mind if you lose caring, which happens to at least 50-75% of the algorithms currently sitting in C2. Their builders lost care.

I know trading can close you off from the outside world, even if I haven’t been in this market for a long time. It takes time to see if your investments are doing as you plan them to do. I remember being on the stock market for like 3 months and every time I visited a friend or went out, it were the stocks that possessed me, not the moment itself.

So, especially if you feel lonely, just converse on this forum or any other trading forum. And never forget that it takes a lot of time and effort to do things right and people are aware of that, just be human and act human, people relate.


#9

Linkified


#10

win ratio - 90% - is that usual for your system? 11 trades - 1 loser.
I know from the limited sample size why you have 90% win ratio - all winners +2.25 points 1 loser - 6.75 points.
that sort of risk-reward does not augur well for future - I would love to hear your counter argument :slight_smile:


#11

Seems a little steep for my blood. But I wish you luck.

@TradeMate I’ve built systems that look good on a backtest with parameters like this( +2, -6, etc). High win rate typically makes up for it. Just have to be damn sure your strategy is sound - i.e. the out of sample and forward testing has to at least match your backtested results. Otherwise you’re backfitting and like you said, it does not bode well for the future.


#12

You are so right. You will see the personality and honesty come out in me through my posts. I am not on here trying to scam people, which a lot of strategies (and trading websites) seem to want to do. If you like the system over time, subscribe. If not, don’t. No hard feelings whatsoever. If I can just shed some light on my experience and it keeps any of you from making the same mistakes I made, then I am happy.

BTW, totally agree on the obsession with the market you talked about. While I am always aware of what is going on and when I have a trade signal out, I never sit at my screen all day. I use my phone (I trade with a VPS) quite a bit while I am doing other things. Gives me a lot more freedom as well as sanity.


#13

No problem. Over the years I have found that a larger stop per trade allows for a higher win rate (obviously). Again, my experience has shown that when you have a high win rate, your draw downs are less significant than with a tighter stop, at least with the system I run. I have tried smaller stops in the past, because that is what everyone said to do and it is less painful when you have a smaller stop, but the profitability just isn’t as good. Plus, small stops can often equal more trading, and more trades definitely does not equal more money. Unless you are the broker for the poor sap that takes 20 trades a day.


#14

The system also changes on a monthly basis depending on the current market climate. While I am not constantly tweaking the system after almost every trade, I am not naive enough to keep the same numbers in play month in and month out. The market changes, so do I.


#15

As you should, exactly like that. Because changing the system after every (bad) trade creates the same problem people are trying to eliminate with algorithms: human input (emotional input).


#16

Trading 10 future contracts on $50k?

Welcome to c2


#17

1 contract on $5000. 2 on $10,000. Much more conservative than many I have seen on here. Also, part of my money management: I trade 2 at $10,000…if the account drops below $10,000, I move to 1 contract until the account is at $10,000 again. I miss some gains in there, but I consider it paying for insurance against blowing up an account. I trade based on 1 contract with every $5,000. Doesn’t matter how many I actually am trading, I only look at the return per 1 contract, if that makes sense.

If it is too risky for you, don’t trade it. I lost ridiculous amounts of money for over 2 years and then developed this plan. Been profitable ever since. But maybe you know more than me, which, trust me, is very possible. I have a BBA in International Finance, an MBA in Finance, as well as over 20 years of experience as a money manager for the large banks. All of that education and experience means absolutely SQUAT when it comes to day trading. If anything, it made it that much harder for me to get started because I thought this would be easy.


#18

like i said welcome to c2. every strategy developer here claim to be a hedge fund manager for 10+years, all have their MBA, CFA, CPA, and CFP. and series 1-99 licensed.

also good to know you lost ridiculous amount of money, and this system has been tested greatly last 2 year. hopefully i will be a future subscriber.


#19

Funny. I actually have had my CFP since 2001. But me saying all that about my education was not to brag. I think it is a disadvantage having all of that when trying to day trade. Trading is more about human emotion and controlling it more than anything else. I was a money manager, but just stocks and bonds, no alternatives.

Also, people with my background are used to having sales goals and meeting them. Meaning you make money every month, every week, even every day. Definitely not the case with trading. Something that took me a while to learn. I think if I had just graduated from high school and went right into trading I would have been more successful more quickly.


#20

Even though the equity curve looks very nice so far, if you don’t mind, I would advise you to provide a little bit of a description on your system’s page, for example, how do you determine entry and exit points, to what extent is the system discretionary/ mechanical and do you trade the same system in your own account. You have already one subscriber and maybe that would help you to get more.