Trade Review: 7/10/23

Under “normal” circumstances (“normal” is very subjective now that I have a 7-month-old), I never would have caught this trade. But my baby woke me up around 2:30 am for a late night snack, and I was able to place a trade. But let me back up first:

Mancini has talked at length about the ES 4420-25 level — he expects it to be a strong and critical support level and to also potentially be a trappy area with fakeouts below. Given Friday’s afternoon selloff back to the 4435-40 area, I was hopeful that we might revisit 4420 in the near future and get a FBD.

Here’s the breakdown:

Low: 4419.50
Low of Undercut: 4411.25
Entry trigger: 4420
First target: 4433
Second target: 4441
Stop Loss: 4409

Factors in favor:

• 4420 is strong key level; looking for a fbd and recapture.
• Mancini thinks 4420 will be a stubborn level w lots of fakes around it
• RSI reset

Factors against:

• overnight play!
• front ran the entry – risky

(note: the entries/exits in the above chart are a very rough average across all my trades)

Sunday night futures opened and the price looked like it was accepting the 4433 level for a possible move down. I had planned on setting a limit buy order for 4420 and another one around 4413 (MES)…but I forgot and went to bed. When I got up to feed the baby, price had just punched through the 4413 level and started to recover. (Note: I belatedly realized that 4113 was no longer a level in Mancini’s latest newsletter, but it didn’t affect this particular setup anyway.)

ES hadn’t yet quite reclaimed the 4419.50 low, but price was heading that direction, and I had a strong conviction that this was a FBD in the making, so I made the fairly risky decision to front-run my entry trigger (in the middle of the night, no less!). Normally I’d wait for ~5 points above the previous low (4119.50 + ~5 so probably would’ve entered at 4224), but I wanted to keep as tight of a stop as possible given the risk involved, so my entries were as follows:

EVALUATION ACCOUNT:

• 1 ES at 4417 (my core position)
• 1 MES at 4416.75 (my runner)

REAL ACCOUNT:

• 4 MES at ~4118

With the real account, I originally only planned on getting 2 MES: 1 core position, 1 runner. In the past, I have had to create two different trades to be able to manage it so that it would only take profit on ONE contract at the next level up and let the other run (specifically for OCO orders…definitely don’t want any leftover, uncanceled buys or sells hanging out while I’m not able to monitor the trade). But it wasn’t working the way I thought it should (heck, it was 3:15 in the morning so it was probably user error), so I thought, “Huh, maybe I did it wrong. Whatever…I’ll add one more contract here and see if I can set it so THIS added contract will be the runner.” Same issue, so I tried it one more time (ok, my judgment at 3:15 am is admittedly not the best) which is how I ended up with 4 contracts. Finally, I figured out to adjust my Take Profit quantity to 3, leave my Stop Loss quantity at 4, and I would manually manage the runner once I got up again.

tl;dr: I couldn’t figure out how to place the order exactly the way I wanted, and I got 4 MES (instead of only 2 like I originally planned).

My stop loss for all the trades was 4409, and for a brief moment after entering, I thought I might immediately get stopped out (“And THAT, kids, is why we wait for ~5 pts above the recaptured low…”). But I had decided to accept the risk from the get go, and it would be what it would be. So I went back to bed.

Thankfully, it WAS a FBD! By the time I woke up, my ES contract was already sold at my 4432 target, and my 1 MES runner had a trailing stop set.

For the real account, my core position (3 contracts) sold at 4429.75. Why, you might wonder, did I not have my sell order at 4432 like my ES evaluation account order? Emotions. With my real money on the line, I decided to play it SUPER safe and just take profit at 4429.75, a few points away from a potential cluster of front-run selling before the 4433 level.  Really, though, it’s not like the evaluation account DOESN’T have real ramifications if the trade isn’t managed well; the trailing drawdown on unrealized gains is something I need to constantly keep in mind. But I do think the fact that it is a sim account probably contributed to me being comfortable enough to set the Limit Sell order to 4432. This is something I need to ponder a bit more because I need to treat my Bulenox account like my own real account (or vice versa?).

For the runners: my MES eval runner got stopped out at 4434.75. I set up the trailing stop to move to breakeven once the trade is 10 pts in profit, and then to move up one tick as price moves up. So with this trailing stop in place, I’ll never sell the top; it will exit whenever there’s a 10 pt reversal, meaning I’ll always leave at least $50 on the table. I can afford to do this in the eval account with MES; I cannot use this particular trailing stop in the eval account with ES since it would drag up my trailing drawdown number by $500 (since it’s according to unrealized gains). As much as I’d love to have an ES runner, I’ll have to wait until my eval account gets funded.

My real account MES runner didn’t have a trailing stop (I haven’t quite figured out how to set that up, honestly); I managed it manually. Mancini has mentioned that he will drag his stop loss up as price moves throughout the day by setting his stop under the most recent 15 min low:

There seemed to be a cluster of support around 4428, so I moved up my stop loss to 4427 and was stopped out there. In hindsight, I perhaps should have waited for a more definitive “most recent 15 min low,” but regardless, I was happy with how the trade went and was more than satisfied on the day.

Result:
Evaluation account: +15 points on 1 ES core position; +18 points on 1 MES runner
Real account: ~11.75 points on 3 MES core position; +9 points on 1 MES runner

16 FBDs down, 84 to go!