July 19 2010 Overlay and Trades

Another trader suggested over the weekend that I start trading other contracts instead of the ES.

I have been been trading the ES almost exclusively since the old ER2 converted to the TF in 2008. The reason I have been focusing on the ES and reluctant to move into other contracts is that I feel that my feel is extremely sharp for the ES.

The way I look at structure works for anything that can be charted but each contract has it's own rhythm. My premise was the once I was acceptably proficient with the ES I would open up into other instruments.

Lately I have been in a state of gridlock with the ES. While I have many excellent reads and trades, the edge has not been anywhere close to where it needs to be.

I have been reviewing, reflecting, and evaluating almost non-stop for the past 6 months trying to figure out what my problem is.

I said out of frustration over the weekend that I believed the edge right now in the ES is extremely small. Even with premium entries and good reads. It is hard for me to say that something is just simply too difficult or in a state that is almost un-tradable.

I am not wired that way. I believe anything is possible with effort and focus. However, I think there is some relevance to my premise to the extend that there is likely very little edge in the ES for me right now.

Meaning that with my current mental state, strategy, and skill level, there may not be much I can pull out of the ES.

My premise is that the edge is extremely small due to the massive amount of strategies being executed and games being played. Meaning that I can enter at the right areas but have a reduced likely hood of a consistent (non - random) exit.

My gut tells me that to be consistently profitable on the ES, one needs to swing trade with large risk or scalp frequently taking 3-6 tick profits and constantly scratching and re entering.

The few traders that publicly speak of being profitable on the ES are scalping in sequence for small profits while constantly scratching and re entering. I think that is a good way to tackle the ES but requires an extreme amount of skill and also the ability to scale in and out which I do not want to do.

I still do not see anybody else claiming profitability showing their trades consistently so who knows what is really going on.

I was executing on a 100 tick TF chart today but plotted the trades on a 200 tick so they would fit.

It was interesting because I had virtually the same trades but the TF trades setup more clearly and traveled from point A to point B more cleanly.

The is the big advantage I see. The price traveling from point A to point B more cleanly.

There is far less liquidity and seemingly less games being played. I will try to elaborate on this more later in the week.

There is a huge amount I could say about this. More than what most will take the time to read about.