Lower Targets & Futures Update

This week has been rough, which you can probably tell by my lack of posts. I wouldn't really say it was because of the markets but rather just other life obligations getting in the way of committing chart time.

This really showed in my Topstep Combine performance. I'm surprised I'm no longer hitting $1K days after making the reset. In fact, my equity has just been oscillating. I would be up a bit one day and then down another the next day.

Topstep Account Overview

Now, I don't think I'm trading differently. I reverted my chart back to the 3,000-contracts increment for NQ.

Instead, it's more so the lack of clean price action. This could be because the markets are a bit more fundamentally driven right now. Traders are remaining quiet, anticipating various central bank speeches. I've been taking losses with grace so I do think I'll be able to recover this Combine next week now that we've rolled over to the December contracts.

On the FX side, I think there are a couple of developments. My win rate is slightly higher now as I'm utilizing the 4-hour timeframe a bit more for structural analysis. When I entered my trades, I had further targets. However, none of them hit. So, this got me thinking. Maybe I should go for income generation rather than trying to catch large moves? After all, larger moves are more infrequent so I would be scratching a lot of trades. Time for trade reviews.

USDCAD 1-Hour 

I was able to time this short trade rather well. I was watching the DXY and sensed weakness on the US dollar. It was more so seeing quite a bit of strength over on the Canadian dollar, which translates to another trade as well.

I tried targeting 1.2523, but that didn't work out. The trade went in my favor and then failed to push below 1.2588. I got out just a bit above that. I could've trailed this by moving my stop loss to 1.2623, but could I have optimized the trade by just setting a tighter take profit? This is what I'm trying to find out.

CADJPY 1-Hour

I took this Breakout Continuation trade that reversed well before my profit target. Once again, I definitely could've just moved my stop loss higher to the 87.085 level. Either it hits or price stalls and continues higher. In this case, price stalled and then reversed. It's another one of those trades where I really wonder if I'm better off just setting a lower take profit so that I can "lock in" the income. Considering that I'm down quite a bit this year, setting lower take profits so that they actually hit is rather tempting. The downside is that I would have to sustain a higher win rate in order to achieve positive expectancy.

Another way to look at this is by the daily ATR. If daily ATR is already very "high," it might indicate that volatility will likely die down. On the other hand, a lower daily ATR might indicate that a particular pair is quiet and should be due for an explosive move. My agenda for the time being would be to try and plot an ATR crossover. I think this could tell me if volatility is on the rise, which would allow me to target a much farther take profit.

Another consideration is the holding period. I pay quite a bit in holding costs so it's entirely possible that taking profits faster could save me money because I would be paying less in holding costs. There is definitely an opportunity cost to consider.

I'll try to provide an update regarding my ATR configurations. It would be interesting to see if I can further optimize this. If I set closer take profits, then this may impact my ability to scale in and add size. More opportunities will come in Q4 as volatility begins to pick up.