Best Loser Wins: ES MES Trading System
Futures traders: Be A Professional Loser!
Taking a Daily Loss Limit: A Learning Experience
Today, I hit my daily loss limit live on Zoom, and I want to share some important lessons. Losses are an inevitable part of trading—there is no such thing as a 100% foolproof system. What matters is how you take the loss and how you recover from it.
Key Takeaways on Losses and Recovery
- Losses Are Inevitable: Every trader will experience losses. It’s crucial to have your stops in place and adhere to them.
- Honor Your Daily Loss Limit: The most important rule in trading is to know and respect your daily loss limit. This principle is covered in detail in my Leverage Metrics Training, available in the free Foundations Course. If you fail to honor this rule, you risk blowing your account on volatile days and cutting short your trading career.
- Stops Are Insurance: Stops are a necessary cost of doing business. They protect your trading capital and allow you to trade another day without significant financial or emotional damage.
- Trade Like a Professional Risk Manager: A successful trader is essentially a risk manager. Accept losses gracefully, as they are part of the game. Be proud when you stick to your daily loss limit—this discipline proves your professionalism.
Lessons from Today
Today was a challenging trading day. The market dropped 50 points within the first nine minutes after hours of laddering up. While I expected an inventory adjustment and was prepared for a potential long trade at specific levels, the extreme volatility following Nvidia’s earnings made this an outlier event.
Some critical lessons I learned:
- Avoid trading within the first six minutes of the RTH (Regular Trading Hours) session. No meaningful levels are established, making it a risky time to trade.
- Be cautious about relying on overnight levels during high-volume RTH sessions. Low-volume overnight levels often cannot withstand RTH volume.
- Recognize irrational price action, such as 8-point candles, and wait for the market to stabilize before re-entering. My rule is to wait for two bounces without a new 8-point candle before trading again.
A Trader’s Role: Be a Professional Loser
If someone asks what you do for a living, consider saying, “I’m a professional loser.” This isn’t a joke—it’s the essence of trading. Your job is to manage risk and take losses at a scale that allows you to return the next day with your confidence intact.
Practical Steps to Improve
- Stick to your trading rules, especially the daily loss limit.
- Use stops as a tool to gather information about the market.
- Understand the impact of news events like earnings announcements, and adjust your strategy accordingly.
- Avoid emotional and financial damage by stepping away after hitting your loss limit.
Losses happen, but the key is learning from them. Today’s loss reinforced the importance of patience and respecting market conditions.
MORE INFORMATION:
— ### Wall Street Journal Style Summary: Today’s volatile trading session underscored the critical importance of adhering to a daily loss limit. After facing a steep 50-point drop in the market’s opening minutes, I was reminded of the dangers of early RTH trades and relying on overnight levels during high-volume sessions. Losses are an inevitable part of trading, but discipline and risk management can safeguard both your financial and emotional well-being. By treating losses as learning opportunities, traders can refine their strategies and build long-term resilience in the market.
📚 From the Trading Library — free lessons on the concepts in this briefing
Commodity Futures Trading Commission. Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
Testimonials Disclosure: Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
Risks Associated With Trading
IMPORTANT DISCLAIMER
By continuing with the Core Strategy Academy, Discord, and Zoom you also acknowledge and accept the following information:
The material in this course is general in nature. It does not constitute personal investment advice or personal trading advice. Any advice provided is general advice only and does not take into account an individual's risk profile or financial situation.
The author of this course content is not legally qualified to give personal investment or trading advice.
Although the author is an experienced and consistently profitable trader and the information offered within this course is given with the best intentions and made to be as accurate as possible, the author has no idea what your financial situation is and everyone has a different tolerance for risk and different investment goals.
The purpose of this course is to teach you how use technical analysis to assist in your trading, it is not intended to teach you how to trade even though many lessons do share practical techniques based on real-life trading experience.
The lessons in this course are provided as hypothetical trading examples, not necessarily ones that are profitable or robust. While the creator of these lessons has used some of these techniques to generate profits in the past, it is not guaranteed that you will experience the same results and past performance is not indicative of future performance.
Trading involves the risk of loss as well as the potential of profit. It is generally advised by successful traders to never risk more money than you can afford and are willing to lose - both on a trade-by-trade basis, and a portfolio basis.
You should seek independent financial advice from a qualified professional in deciding if trading is appropriate for you. Please also consider the appropriateness of that professional advice in light of your own objectives, financial situation or needs.
ALL MATERIAL HAS BEEN PREPARED BASED ON INFORMATION BELIEVED TO BE ACCURATE AT THE TIME OF PUBLICATION. SUBSEQUENT CHANGES IN CIRCUMSTANCES AND THE MARKET MAY OCCUR AT ANY TIME AND MAY IMPACT THE ACCURACY OF THIS INFORMATION.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE PERFORMANCE.
Information containing hypothetical or simulated results has limitations and may not represent actual trading. Since the trades presented in simulated backtests have not actually been executed in the market, the results may under or over-compensate for the impact (if any) of certain market factors, such as lack of liquidity, large spreads, slippage, commission costs etc.
NO REPRESENTATION IS MADE THAT ANY TRADING STRATEGY WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN HYPOTHETICAL BACKTESTING RESULTS.
You should carefully consider your objectives, financial situation, needs, psychological and emotional fortitude, and any other relevant personal circumstances when determining whether or not trading is suitable for you. Trading is not for everyone, and for some there are much easier ways to make money from a side-hustle or career more suited to their personality and situation.
Trading is exceptionally difficult to succeed at, with a remarkably high failure rate. So please do your own due diligence to protect yourself and your capital from unnecessary losses and damage. Seek advice from a qualified professional (such as a financial advisor) if you feel uncertain about your decision to begin trading.
THE RISK OF LOSS IN TRADING SECURITIES IS LIMITED TO THE AMOUNT INVESTED. HOWEVER, THE RISK OF LOSS IN TRADING DERIVATIVES (SUCH AS FUTURES, CFDS, FOREX ETC) MAY NOT BE LIMITED. THIS MEANS YOU MAY LOSE MORE THAN YOUR ACCOUNT BALANCE OR THE AMOUNT REQUIRED TO HOLD AND CONTROL THE PARTICULAR DERIVATIVE, ESPECIALLY WHEN EMPLOYING LEVERAGE.
THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINED IN FUTURES, OPTIONS, FOREX AND CONTRACTS FOR DIFFERENCE CAN WORK AGAINST YOU AS WELL AS FOR YOU. IN OTHER WORDS, THE USE OF LEVERAGE IS A TOOL THAT CAN LEAD TO LARGE LOSSES AS WELL AS LARGE GAINS. WHEN USED PROPERLY THIS CAN BE AN ADVANTAGE, BUT WHEN USED IMPROPERLY AND CARELESSLY IT CAN RESULT IN CATASTROPHIC LOSSES - OFTEN RAPIDLY.
This brief statement cannot disclose all the risks and other significant aspects of securities and derivatives markets. It also does not cover the many risks inherent in cryptocurrency trading - such as lack of regulation, potential liquidity issues, high volatility and various third-party risks. It is YOUR responsibility to research and decide whether or not to accept the risks involved in the particular market or asset you choose to trade or invest in.
IT IS YOUR RESPONSIBILITY TO CONSULT YOUR FINANCIAL ADVISOR TO DETERMINE WHETHER TRADING IN SECURITIES, CRYPTOCURRENCIES OR DERIVITIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR OWN FINANCIAL CIRCUMSTANCES.
Good luck with your wealth creation journey, and please take this information seriously. The graveyard of failed traders is large and ever-growing, and that is largely due to these warnings being ignored and the many dangers of trading not being respected.
