I woke up this morning still curled around my Daughter’s toddler bed. Neither me, my wife or our girl got any sleep as we spent the night helping her through a nasty chest infection. Eager to get something out of the trading day, I decided that live trading probably wasn’t a great idea, instead I thought it a perfect opportunity to try out the 1 Tick Target Drill.
In case you are wondering what the drill is, it’s something I learned about from Jigsaw Trading’s Youtube page. It’s a prop shop training drill where you use entries ideally on a thicker market and get out with a one tick profit. The basics are that you use entries like you would normally, leaves stop loss strategy open to discussion and the drill is complete when you win or loose $300 or if, like me you run out of time to trade.
If you haven’t seen it I’d definitely check out Jigsaw’s Youtube page as there is some priceless stuff on there. Check out the video below of the drill I did today.
As I sat down to trade I laid a few ground rules for the session. Firstly I would look to take normal entries for these trades, although it is a drill it’s designed to improve your trading so having a sense of realism to the trade ideas is key. Secondly it was clear from the strategy of stop loss that after a few trades any losers were going to do real damage to any winning streak, so I decided not to worry about this and instead apply normal stop loss rules. Thirdly I tried to take my head out of things and not worry if I ended up hitting the $300 loss limit, the objective was to get out of this drill what it can offer.
I’ll get straight to the results. In a little over 2 hours I took 12 entries, had 8 winners and 4 losers. The average loser was about 3 ticks although I had one that was 5 and I had a stupid error where I accidentally averaged in and bought 2 contracts which netted me an extra 2 ticks loss on that particular trade. All in I finished the day 8 ticks down which was around the $100 mark.
I love this drill. I’ve been meaning to do the cut and reverse drill for some time but haven’t done so yet, you are supposed to do that before attacking this drill but I must say I got a lot out of it today. Market direction seemed uncertain and after a strong day yesterday it looked initially as if sellers had the market. Things would then shift and give me a feel that buyers were taking it and I got the impression of inherent strength in the Treasuries when it failed to drop on the ES gaining higher. What was constant throughout was fairly quick action in and around a tight 3-5 tick range.
All my trades were in the ZN as usual and in case you were wondering yes this was on sim. My first learning point was that I was probably in the market a bit too keenly. I saw an opportunity which I probably wouldn’t have taken live but it got me my first win of the day, up one tick. In about 10 minutes I’d done a further 2 trades, up a total of 3 ticks.
Learning points from this so far? 10 minutes and 4 trades would imply strong momentum and decent action which I’d probably say wasn’t the case, so I was definitely over trading and already was taking entries I probably wouldn’t take. Then came the first loss. All trades up to and including the 5th were shorts, the 5th didn’t work out and I ended up selling the bottom of a range, bad idea. Looking back on the recording it was clear it was a mistake but I was married to the sell side I think, another good learning point.
This first loser ended up losing me 5 ticks which put me at -2 for the day. I’d put the stop a place I thought was sensible but I’d usually never be comfortable with a 5 tick stop and so in real life would have skipped the trade. This again proves how hard it is to be real when it isn’t real money on the line. The other thing I picked up on about this trade was the issue of risk to reward. You will notice in the youtube video Peter doesn’t lay down a rule for stop loss, he simply say’s do what you feel is best pretty much. I took that to mean apply normal stop rules as thats how you would for real, but in hindsight if you are looking at a 1 tick win you need to adjust it. You need to be looking at a 1 stop loss to make the risk viable and I think this might be what he is driving at.
Yes in real life some of the trades you take for your 1 tick profit might have yielded more I think what the objective here is trying to get you to do is zone in on those good, perfect price entries where 1 tick risk is viable. I certainly wasn’t doing this properly I don’t think so it’s something I’ll look to do next time I run the drill.
I then had another winner which brought me back a tick, then I lost 3 putting me at -4 total. A couple more winners had me back at -2 before I bungled an entry which I was hesitant about and managed to buy 2 contracts instead of buy one and liquidate quickly, this gave me a total of a 5 tick loser between the 2 which then had me at -7 ticks. Classic revenge trading set in as I was running out of time and as I knew I was on sim was a bit careless. I was just purely firing entries at this point as my take on direction or order flow was off, I’d tired pretty early due to no sleep so was looking at calling it a day.
I finished up losing another 3 ticks taking my max drawdown for the day to 10 ticks before I got 2 more winners leaving at -8 for the day. An 8 tick loss for the day I would say is a bad day with this methodology but given that I had a decent number of winners compared to losers, that these winners were limited to a maximum win of 1 tick means that in the real case the total ticks might have looked better. On the flip side as we are only shooting for one tick its easy to take when price goes one tick in your favour, in the real case if you are shooting for 4 you might not take the one, might not get out at break even and may end up taking a loss, so there is equal chance total ticks could have been worse.
What I have learned from this trade for certain however is that on entries my take on direction is improving. I am spotting good points to enter and price does move in my favour often times. I’m looking forward to running this drill tomorrow concentrating more on taking less trades at more professional entry points and in limiting risk per trade as much as possible.
Another point that is worth mentioning is what the metrics Peter suggests we use to judge our success at this drill, specifically Limit v Market orders. I usually Limit everything but did Market one or two today, I’m still figuring out when you might want to take a Market and it is pretty clear when you won’t get a fill on the Limit and if you will if it still prudent to do so, after all if price blows through a big stack of orders to get you at the back of the line do you want to be against it, maybe if you have good faith back up is on its way, maybe not if the line behind you is nothing but tumbleweed.
Hopefully with increased practice in this drill I can start to get a good degree of probability in trade direction, build on that with good risk to reward management and not allowing trades that go in your favour to end us as losers and there is light at the end of this very long tunnel.
Over all a great drill I’m really pleased Peter shared it on the youtube page, I’ll certainly make time for this and other drills in the future as I feel I not only learned a lot but had that sense that being in the market added to my experience today.
As always, thanks for reading.