The market was surprisingly resilient this week even with the financial sector in complete disarray. Furthermore, with volatility fully expected heading into this week after the Silicon Valley mess, I thought I’d try my hand with futures day trading. Being highly risk averse, I opted for the micro e-mini’s instead of their older and much larger brother, e-mini. This is how it went.

Initially, my thought process was simple. Identify an entry and place my trade via bracket order to have stop loss or profit target levels set. However, while this may sound great in theory I should have expected the result. As I write this tonight, I’m guessing the only way a stop loss won’t be immediately triggered is if the stop is so far from the entry price that a market crash would have to occur to avoid the tail whip. Additionally, I’m not sure I’ve ever had a bracket order that actually reached my profit target and at this point I’ve made thousands of trades.

I suppose I’ve just developed the thought that stop loss orders are more like a market donation. Here take my money at this lower level and proceed as you were.

In any case, here is how each trade worked out. Without spoiling the ending completely, my win rate was nearly flawless at 88%, with only one loss to report. You probably see where this is going but let’s look at the trades. The first two images are the trades shown on the chart for reference.

Futures Trading Day 1
/MES Futures Day Trading Day 1
Futures Trading Day 2
/MES Futures Day Trading Day 2

Futures Trade 1

Trading /MES Trade 1
Day Trading /MES Futures Trade 1. Click to enlarge.

As you can see, that was a complete disaster. In less than two minutes the price dropped, my stop was hit, the trade was over, and my donation had been recorded. That said, it was a quick reminder that mental stops and monitoring the trade works best for me. Ah, how I adore those commissions.

Futures Trade 2

Trading /MES Trade 2
Day Trading /MES Futures Trade 2. Click to enlarge.

My second trade went considerably better. I’d abandoned the set it and forget it approach and decided to babysit each trade going forward. Babysitting duties didn’t take long as the trade was exited in less than 10 minutes.

Futures Trade 3

Trading /MES Trade 3.
Day Trading /MES Futures Trade 3. Click to enlarge.

This trade initially went in my favor by $10 but quickly reverted back so I closed it at a breakeven or a loss if you add in those commissions.

Futures Trade 4

Day Trading /MES Futures Trade 4.
Day Trading /MES Futures Trade 4. Click to enlarge.

Getting back on the correct side of the market I was able to notch another small win. The volatility of these trades was stressful. Something about knowing you could lose so much so quickly just didn’t settle well.

Futures Trade 5

Day Trading /MES Futures Trade 5.
Day Trading /MES Futures Trade 5. Click to enlarge.

Logged another small win here but this trade was about all I could handle. Additionally, if you take a closer look at the chart above you can see this trade lasted much longer and price moved dramatically against me. Fortunately however, patience paid off and I was able to scratch a small win.

Futures Trade 6

Day Trading /MES Futures Trade 6.
Day Trading /MES Futures Trade 6.

Still being down from day one I tried once more to drum up some profit.

Futures Trade 7

Day Trading /MES Futures Trade 7.
Day Trading /MES Futures Trade 7.

First, take notice of the blank where the profit or loss should stand. Next, have a look at the chart above. You should notice that if futures day trading was my forte I’d have banked some serious profit. Instead, I skipped a donation to the market and made sure TD Ameritrade was paid up.

Futures Trade 8

Day Trading /MES Futures Trade 8.
Day Trading /MES Futures Trade 8.

This was far and away the easiest trade of them all. Price bounced nicely off the 9 EMA and ran up immediately. I was out in less than a minute.

Futures Trade 9

Day Trading /MES Futures Trade 9.
Day Trading /MES Futures Trade 9.

This marked my final trade on the day. Entering power hour and the possibility for even more volatility didn’t sound all that appealing. Additionally, I knew it was time to call it when I should have banked a profit here but accidentally selected the wrong account and the trade was rejected.

Adding it all up

All together, here are the trades and their outcomes.

Trade #Profit/LossCommissionsNet

Final Thoughts

In the end, it was a great deal of fun day trading /MES futures. However, it’s definitely not something I could do with a full time job. The losses would be catastrophic. Although, it may be something I consider for the first hour of my mornings when time allows. It looks as if volume starts to increase between 5 – 6 am central time so it may be something I consider.

Unfortunately, the first losing trade was just too much to overcome given the excessive commission charges. I’m more than a little salty about losing only one trade and still being down nearly $30 after 6 winning trades, 1 breakeven trade, and 1 scratch trade. Ah well, it was quite the ride.

To wrap this up, you should know all was not lost. This foray into day trading futures did come with one great benefit that I’d never considered before. The ability to hedge my portfolio during overnight trading. Typically, when I think the market is heading lower I’d have to wait until the next day to open my put options for protection. However, with futures trading around the clock, I could log in anytime and secure some protection.

Moreover, the notional value of /MES futures is about $15,000 depending on the current price of the index. So, with just one or two contracts I could hedge the portfolio against disaster at a moments notice. And that’s certainly worth remembering.

For those that want to continue their study of day trading /MES futures. I’ve found this Youtube Channel – DayTradingMicroFutures to be very helpful.

God bless,