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Howdy, party peeps! Welcome to the new year. As far as trading is concerned, 2023 was a blah/slightly red year for me, but a very big year for learning. I focused mainly on ES (aside from the few times I derailed myself with SPX options and the occasional one-off stock) and threw myself into Adam Mancini’s substack/Twitter (obvi).  It’s difficult to quantify exactly how much I’ve grown since I’m 1) not green YET and 2) haven’t passed a prop firm eval YET, but it “feels” (yes, much scientific, I know) like I’m getting better. Maybe at a snail’s pace, but it’s getting better. Here is my anecdotal evidence:

  • I’m only trading MES these days. (Granted, it’s because TopStep won’t let me trade ES contracts with the account type I’m on, but hey, I’m true to my word on this one.) So the massive losses incurred by ES (and the subsequent mental drain) have been avoided as of late.
  • The Reverse Position button is the devil, and I have successfully stayed away from it for a while now.
  • I’ve been good with ~$100/day gains.  Really, lately, I’ve been good with any green; it all brings me closer to the eval goal of $3k, so I’m thankful for any steps forward (no matter how small).
  • Been a bit better about not randomly/impulsively entering a trade. This tweet by Mancini has been living rent-free in my brain:

I have a rule where if I have to look at price for more than 1 min confused if its a buy or a sell, the answer is neither, don’t trade. I trade only when I have high conviction: An A+, obvious, heavily practiced setup, occurs in a preplanned area. Settling for less kills win rate

— Adam Mancini (@AdamMancini4), November 19, 2023

Over the last year, Mancini has even more clearly defined his main 3 setups as 1) Fake Break Downs (or break outs), 2) Backtests, and 3) Breakdown/Breakouts. (I highly encourage you to cough up the measly $23/mo and sub to his substack — it has everything you need to know. It is absolutely the best bang for your buck if you’re looking for a transparent, well-taught system to daytrade ES/MES). I’ve been dabbling in all three, but the last few months have helped me clarify what works for me at this point.  Mancini makes no secret that #3 is the toughest trade to pull off (failure rate is high but when it does work, it really works), so I think it’s better for me to stick to 1 and 2. But mostly 1.

With all of the above in mind, here’s where I’m currently at with my trading:

I’ve got 3 accounts currently open:

  1. $50k TopStep eval account – allows me to trade 5 MES contracts. The goal is to reach $3k in profits without going under the $2k trailing stop that follows you each EOD. (For instance, if the account balance is at $50k, and I make $200 profit, the next day I can’t let the account go below $48,200. They want to see consistent profitability.)
  2. $50k TopStep practice account – so for a short while, I was losing my mind and blew through two evals in the span of about a month, and I thought WHOA NELLIE, you need to calm down and prove you can hit $3k on the PRACTICE account. So I’ve been actively trading on that one, too…but more on this in a sec.
  3. my REAL money account – I now trade through AMP (Tradovate was acting sketch for a while) via TradingView which has very small MES margin requirements. I recently re-funded my account to $200 (mostly so I could get live data again since I like their charting features) and I very occasionally practice with 1 MES contract at a time.

My ultimate goal and focus is to pass the Eval Account.  I still think I could stand to reinforce good habits within myself, so I’ve been trading with just a core position size (3 contracts) and taking profit at the first level.  Because if I want to pass this eval, I’m more concerned with making safe, small, and consistent steps forward than anything else. And mentally, I can do better with a 3 contract loss than a 5 contract loss. (This is key for me right now; more on THIS in a sec.)

However, I know Mancini has his runner system in place for a reason: he takes the core position off at the first target, some more off at the second target, and then lets his last portion (the risk-free “long-distance runner” as I like to call it) go as far as it can. Obvi, the extra profit from the second target helps pad the account and improves overall profitability. So I’m doing THIS on the Practice Account.  It’s kind of an interesting experiment to see if I will hit $3k on the Practice Account or the Eval Account first. But this is all a very rosy-eyed picture of how I manage WINNING trades; the other side of this coin is the REAL issue, my Achilles’ heel:

How I manage LOSING trades. And not just how I manage them, but what do I do AFTER I close out for a loss.

This has been the crux of the matter for me.

I have noticed a gross pattern of small, consistent green days, but when I hit a red day, it is a BIG red day. Why is this? Because often I will take a small, manageable loss (maybe a day’s worth of gains), and then feel the deep need to GO BACK AND TRY TO FIX IT AND GET GREEN. Which is something I’ve done in the past to some success, which is terrible because it’s a very bad habit that I’ve affirmed in my trading.

I think there must be some deep-seated need inside of me to “make amends” for the “wrong” I’ve done (which is silly, because sometimes losses are just the cost of doing business and are not necessarily because I made a mistake). But in life, I really try to be a person that is quick to own up to my transgressions and immediately make things right. Which is a good thing in life…but probably less helpful in trading. I think I need to make some sort of mental shift of thinking of “trading amends” as NOT trading from a place of making up for previous red, and that each trade is a NEW trade. If I can’t mentally do that, I won’t make good, objective decisions.

So that’s my concern these days…how will I react when my trade goes red. I don’t have a great solution for this other than to practice NOT TRADING for the rest of the day after I take a loss.

Also, this is all very fine to type out right now, but it’s a whole other thing when I’m in the moment. But this is the plan I will aspire to and do my best to execute. So that’s that!

Other concepts I’m implementing in my trading these days:

Trading in the morning. Mancini has said this in the past, but only recently my thick skull has felt like there’s better action in the mornings than in the afternoons. I am trying to take ONE, PRE-PLANNED entry in the morning and then let it do it’s thing, getting on the sidelines as quickly as possible.

Emphasis on the PRE-PLANNED. This is so dumb, but there have been many mornings that I quickly rush to skim Mancini’s newsletter, throw on a couple of levels, and then try to trade. Dumb dumb dumb. And lazy. The man drops his newsletter at 4 pm-ish the DAY BEFORE, so I have plenty of time to read it and get the levels charted waaay before the morning of. So a new rule for me is that if I don’t have a game plan ahead of time, NO TRADING. (Also, so much can unfold overnight! Sometimes plans are invalidated with overnight action. But if I’m not clued into the plan, I’m trying to make something happen that might have already happened.)

Trade with high-conviction. This is a callback to the Mancini tweet I quote earlier. If I’ve only got a single shot to shoot, it better be an A+ setup that has been pre-planned and I have reasonable evidence/confidence to support it. This helps me to cut down on impulse trading, too.

Trade with the trend. Another very basic tenet of trading, but the trend really is my friend. Sometimes I find myself wanting to catch a top which is really quite silly, because who can know these things?! Mancini’s method is to wait for a support (or resistance) to fail, and then trade according to the way the tide turns. (For example, if a big bull trend finally loses a support, we might be more apt to see bounces sold.) I’m trying to think more about the larger direction and help that inform my process.

Well, this has been a jumbled conglomeration of thoughts, so congratulations if you’ve made it this far! Here’s to a new year.