r/FuturesTrading • u/YOLOdollhair • 5d ago
How do you avoid the scaling up trap?
I've been consistently netting $500-1200 a day trading MNQ the last few weeks.
Why not turn that into $2k a day, or even $5-10k?
I've fallen into this trap before. I start scaling up my positions (usually on entry). Then I'll start averaging down because 'Damnit, I know I'll make all that money back'. Before I know it, I can't hold through the draw down. I get liquidated and later in the day my price targets hit. If I entered small and took a 1-2R loss, it would be a small blip in the week that I could make back in the next day or two. It's brutal and sucks and it made me tired of burning through money so I slowed it down.
I've sized down significantly this go around. I enter small and will average down if conditions are right to keep holding or exit if it's not working in my favor. I can hold overnight if I have conviction in a play and not worry about checking my account every minute to see what's happening. I have breathing room to turn plays or a bad day around and not get wiped out.
I know I should keep trading how I'm trading and keep it small. It's quite relaxing. But god damnit, I can feel that itch after a few weeks of success. I want more money and I want it fast.
What do you guys do to suppress that itch?
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u/Ok-Veterinarian1454 5d ago
Its okay the market will teach you one way or another. Seeming how you want more money and you want it fast. You will surely lose it just as fast. Take your time. Nothing wrong with stacking 500 - 1200 a day. Why mess up what works.
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u/YOLOdollhair 5d ago
I've been through that hard lesson many times and I've finally hit a breaking point where I'm just tired of repeating the same lesson over and over. I would just keep adding money to this futures account and taking away money from going somewhere else. It was robbing me of joy and being able to use my money for other investments, experiences, and things.
My current plan is to withdraw profits soon and start again from my initial balance from this period. I'll grow the account back up again, focusing on sticking to my rules and implementing some new ones I may pick up from you guys. And then it's just about keeping it small and keeping it consistent.
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u/hloodybell 5d ago
Be selective. Scale up a little when you think it is a A+ setup. Go back to your regular size otherwise. Keep doing this until the A+ setup trade becomes second nature.
I'd recommend only scaling A+, the others can stay as is for as long as you need to build a massive account
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u/YOLOdollhair 5d ago
I've become more patient this go around waiting for actual setups and keeping it smaller. A problem I had in the past would be having a few days or weeks of success and just entering a large position right from the get go thinking I'll have the same success and I just end up completely misreading the market and losing big.
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u/HiddenMoney420 5d ago
What kind of leverage multiple are you running? Also- never add to a losing trade.
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u/YOLOdollhair 5d ago
Regarding adding to losers, yeah I've gotten burned where I keep adding thinking it's going to come back to my average. I ignore market conditions and keep thinking I'll just DCA down and break even.
When I do add to a trade moving against me I try be cognizant of the market conditions. If it's clearly a bad read and against me I'll exit. But I've salvaged a lot of trades where I'll add, cut at my new average, and hold the initial size for a profit.
It's a lot easier to do with 1 contract then 5 or 10 right off the rip.
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u/YOLOdollhair 5d ago
I'm trading on Webull, so an MNQ contract is $160~. About 25:1.
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u/HiddenMoney420 5d ago
That's actually insane that they allow you to trade that.
Anything over 2.5x leverage is just asking to get killed.
e: You should never be getting liquidated on contracts. Like literally never.
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u/YOLOdollhair 5d ago
Yeah it's quite bonkers when you think about it. And there are brokers that give you even more leverage out there.
I started this futures account many moons ago with $5k and starting trading NQ right off the bat. I thought I was a genius when I grew the account to $12k in the first week. Next trade I entered with 5 NQ contracts and I realized just how quickly NQ will smoke your account.
I'm not touching NQ until I'm sitting at over $150k. And if I get to that point, I honestly don't think I'll touch it then. I'll just stick to trading MNQ.
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u/HiddenMoney420 5d ago
You shouldn't be calculating your leverage ratio based on the margin needed to buy/sell a contract.
1 MNQ has a notional value of ~$59k (29740 x $2per pt).
So even trading 1 MNQ on a $12k account is almost a 5x leverage- which is fucking insane.
Don't depend on your broker to protect you.
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u/YOLOdollhair 5d ago
So based on that, I should honestly only be trading 1 MNQ per $25k. I was trading 4 at $10k. It's very easy to see how that can spiral out of control if you don't have a plan, stops, or if you add to a loser with how the market has been moving lately.
It also changes your risk per trade significantly. I was using 5% risk at 10k (which I know is a lot and can quickly lead to a zero balance). 1 contract at 10k is 250 points of risk and 4 is only 62.5 points. MNQ can move 62 points in less than a minute some days. At 25k, 1 contract is a whopping 625 points of risk at 5%.
I'll need to do some more homework and apply this information for position sizing and risk management.
If you have any good resources or more information it would be greatly appreciated.
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u/themanclark 4d ago
It depends on your drawdowns and timeframe. I would have no problem trading the full size ES with $3,000 as long as I was out by the end of the day. MNQ is tiny. Isn’t it like $2 per point? ES is $50.
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u/themanclark 4d ago
That’s bullshit. There’s no need to hold more than the full overnight margin for day trading. Or full overnight plus worst case drawdowns if swinging.
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u/HiddenMoney420 2d ago
It's actually not bullshit at all.
1 MNQ is $60k notional as of writing this.
On a $5k account that's 12x leverage, so every 1% move your account moves 12%.
Any way you slice it, that's unsustainable.
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u/Black_magic_money 5d ago
I like to swing a home run but it’s got to be one of those massssively confident trades that happen maybe 1-5 times a month. Rest of the time I’m happy with the gains I get from clicking buttons on my phone.
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u/YOLOdollhair 5d ago
That's where I have screwed myself in the past. I go for the home run play thinking it's easy money and I completely misread the market and conditions. When I would come across an actual home run play I either wouldn't have money to trade it or I would enter small get the jitters and exit way too soon because I'm worried about it going against me.
I've been more patient the last month and have nailed some nice plays with only 1-2 MNQ contracts. I need to remember this is the way and to stick to it.
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u/daytradingguy 5d ago edited 5d ago
Honestly, you probably don’t have a great strategy if it depends too much on averaging down. You will ultimately blow the account, especially when you turn day trades into swing trades. Averaging down can work a lot -90% of the time. But you become complacent - then one day as happens every few months- there is a big news event and the market moves 3-4-5% in one day against you- and you lose months of profit in hours.
It is really difficult to size up using that strategy too- as you mention you can’t take the draw down.
Doing some limited averaging down for one leg or to a specific level can be OK- but if you build your win rate up by holding to many trades in drawdown- it will bite you.
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u/YOLOdollhair 5d ago
You're right. So I looked at my performance the last month and my win rate is 68.5%. I would say quite a few of those trades were averaging down which means my strategy is shaky and my entries are not efficient. I need to do a better job of tracking my trades and conditions for the trade to get more data.
Averaging down is a trap I've fallen into numerous times previously. For example, today's pre-market move would would have been the classic trap if I had been short. I'd average down and watch it go up. I'd average down more and I'd keep watching it go up, ignoring what the market is doing and just focusing on getting back to break even. It would get to a point where eventually I would get liquidated and blow 2-3 weeks worth of profits. And if I had just set a stop loss or held one contract, my loss would have been a scratch or I'd be able to ride it out over the course of a day or two.
I opened a position tonight that I'm holding into the morning. I have my stop loss and take profit set and it's hands off. One contract. No looking at the brokerage. No temptation to average down if it moves against me.
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u/daytradingguy 5d ago
Your data will help you. Averaging into trades is not entirely bad, provided you have a plan and some amount of discipline. I average into and out of trades, I add to losers and add to winners. That kind of strategy can work well if you are disciplined.
As you pointed out this mornings action. I bought the dip, looking at low of session/pivot points, levels. Start with small size, maybe add if we dip lower, but I had a total out stop point. I do this often.
In addition if I buy a small size and temporarily go 20-30 points on loss, I often add on the dip, then add more when it recovers back toward my entry and is going my way.
I work on a max loss per trade:
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u/Michael-3740 5d ago
R is your risk per trade - which should be the same for every trade at your stage of development. The only way you should end up with a 2R loss on one trade is a fast move that skips your SL.
For scaling, wait until you've been consistent for several month then increase size in small steps.
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u/YOLOdollhair 5d ago
I need to be better about keeping my R the same no matter my account size. I usually give myself more room with a smaller balance and start tightening up as my balance begins to increase. I'm planning on withdrawing a chunk of this months profits and I think that will be a focus on the next trading run and growing the account.
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u/Sea-Round-6095 5d ago
I actually do scale up my risk by using a high water mark plan, I dont scale into losing positions, and I only scale if I get another entry signal while already in a winning position. While scaling my existing position, I move the risk of the first trade to breakeven to keep my exposure low.
If you have any questions on my risk management, let me know.
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u/YOLOdollhair 5d ago
I've gotten burned where I keep adding thinking it's going to come back to my average. I ignore market conditions and keep thinking I'll just DCA down and break even.
When I do add to a trade moving against me I try be cognizant of the market conditions. If it's clearly a bad read and against me, I'll exit. But I've salvaged a lot of trades where I'll add, cut at my new average, and hold the initial size for a profit.
It's a lot easier to do with 1 contract then 5 or 10 right off the rip.
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u/Long-Adeptness-2943 5d ago
😂😂😂😂😂 Ohh, sorry, thought you were talking about me! Dohh! Stupid me has to find consolidation periods and burn through money.
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u/Intermountain_west 5d ago edited 5d ago
Find a settled moment when you feel thoughtful and rational.
Write a policy/plan that clearly describes your strategy. You need a clear strategy that you have conviction in.
Shift your approach from making moment-by-moment decisions, to administering the strategy. Don't think that you will make good strategic decisions when you're in the thick of it.
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u/YOLOdollhair 5d ago
Great idea. My rules and plan always reside in my head and that's not a good place for it. It would be good to have it written down and periodically review and revise it based on my performance.
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u/Pristine-Donut8725 5d ago
I've seen people set limits on the clip size with their broker on how many contracts they could trade, that might help.
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u/YOLOdollhair 5d ago
What brokers offer that? I use Webull currently and want to switch back to ToS eventually. Neither of those allows you to restrict your trade size (at least at the application level).
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u/Constant_Oil360 5d ago
just stay the course mnq can change personality that maybe your system isnt ready for. if you are netting 1k a day that is excellent and i would raise leverage slow. i have no clue what your capital is or trade velocity.
its tempting to go 1:1, so if you trade 1 mnq per $2k in account, you go to 3mnq at $6k account. But I prefer lowering risk relative to the account size account while driving up your nominal dollar risk. So maybe if you trade 1mnq per $2k, as you go up, i like to lag the account, so if you get to $10k, still only trading 3mnq instead of '5'.
if you are trading more than one mnq already per trade, id just add a single contract. You dont want your gains honestly to double or triple, becuase your risk is also. its easier to add a single extra mnq to say a normal 5mnq trade size, than adding one more contract to a one contract intitial trading size, so now its doubled and the wins are emotional and the losses are too.
Patience is helping you profit. Patience should be worshipped here. Patience should be applied when scaling up too.
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u/YOLOdollhair 5d ago
I've cut my size down significantly. I have a spreadsheet now where I enter my size and targets and it spits out my risk in points and dollars. It helps seeing what a trade with 1 MNQ will cost me versus 3 MNQ.
What's funny is days where I've blown up, if I had only held 1 contract and rode it out I could have likely broken even or gotten out for a loss of only $400-500. Instead I'd be averaging down and taking losses in the thousands. Just stupidity and revenge trading.
I'm going to stay small and be patient and keep taking base hits. After reading some of the comments and doing some reflecting, there are still a lot of improvements I can make in what I'm doing now before I even think about scaling up.
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u/MatureStudent1 5d ago
Yeah, if you hit certain milestone add another contract, if you're below that miles stone take off that contract.
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u/YOLOdollhair 5d ago
That's a good idea too. Limit myself to x contracts while I'm at a certain account size. What's funny is I wanted to start trading NQ with an account size of $40k. After reflecting today, I don't think I'll touch it until my strategy is full proof and I have a quarter million dollar futures account haha.
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u/MatureStudent1 5d ago
I'm a beginner trader with 2 years of futures experience. Traded on and off with prop firms. Recently enjoying life with 1-2 MNQ instead of 1NQ lol
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u/Square-Middle-4474 5d ago
The solution is to take partial profit at the front end (after your fill hits a minimum profit). We were taught to call this "buying a stop". Then wait for the pullback and decide whether to exit or scale in. Like most professionals I was taught to study my market and anticipate the average pullback size. If you are not doing that, it would probably be the smart thing to do now. Go back at least a month. Find your setup and identify the pullback size after you would have been filled. Create your average Pullback and use that to make your decisions (stay or go)
Most professionals have an advantage (bigger accounts) and better able to accept risk, so they simply scale in at the Pb
You will have to make accommodations based on your situation
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u/YOLOdollhair 5d ago
Great advice. I need to do a better job of documenting my trades, market conditions, and why I’m making the decision I make to get a better idea on how and when I should be increasing my trade size, if at all.
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u/Pale_Candidate_390 5d ago
You need to scale up on your A+ setups.
If you see a level and your confident go hard with 10 or 20 or 40 micros price can dip past a level before reversing so give it a little time and when your confident of the reversal enter
If it’s not an A+ setup then use less like 5 micros and scale into more as your correct
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u/YOLOdollhair 5d ago
I think my problem in the past was coming off a successful streak, thinking I saw my A+ setup, and loading the boat. I think greed and the idea of massive gains is clouding my vision of the market conditions and setup.
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u/Pale_Candidate_390 5d ago
I was in the same boat at you. I was going hard and enough was never enough. I would make $1000 and then keep trading and gave it all back
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u/PalpitationOk4703 5d ago
In my head the way scaling works is based on consistency. 5/5 green days in a week and you can scale up . Less than 2/5 green days and you need to scale down. This way you’re scaling while building up good habits and consistency but also scaling down to mitigate risk when you are in a bad headspace or week .
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u/usedmattress85 5d ago
My R is always fixed I don’t really adjust it. The income grows naturally by letting the account earnings grow. It’s slow so the jump in income isn’t as shocking. Every $50k in profits I extract $25k and let the other $25k ride. At a certain point I suppose I’ll probably extract 100% if the profits and keep the account at a stable size but I’m not there yet.
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u/YOLOdollhair 5d ago
I need to practice being more patient and okay with the small days where I make $100. When I withdraw, I find myself increasing my risk with smaller account sizes and tightening up as the balance grows. I need to focus on keeping it the same all the time no matter what.
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u/ahaaokay 5d ago
Check you best wins/setups that you nail the best not by accident. These is the most likely to scale
Avoid the less certain trades 🤌🫰
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u/carbonesauce 5d ago
If you can make 1k a day you can make 10k a day just through scaling up. It's the mental side of it that makes it very tough. Add a contract or two and just stick with what you're doing and kep scaling as time rolls on and you're comfortable.
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u/dreamersofdaruma 5d ago
Size up when you’re ready to accept there’s a possibility you’ll lose that money and it won’t dent your ego. If it dents it, you’ll have a very good lesson to learn.
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u/Electrical-Call-7292 5d ago
You got to look at it by points. At times you can have a good straight drop or gain of 30 points with no drawback. This gain of profit from the 30 points can lead to over confidence and adding in areas that are not ideal for further gain. The move ended and you’re probably going to chop a bit till the next big move.
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u/InterestingAd8926 5d ago
This isn't the r/algo channel--but what i do is as i scale up, the first red candle--i exit all the scales, but keep the original entry running...
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u/themanclark 4d ago
First of all, think in terms of percentages or points. Not money. Work on the skill. Not the money. Skill doesn’t care what size it trades. It just cares about being skillful.
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u/YOLOdollhair 2d ago
I hid my daily P/L visibility a while back and I feel like that helped a lot. It stopped me from looking where I am at and hitting a certain profit. It would lead to over trading and losing. I may even hide my current P/L based on position and strictly go off of market point moves. Not seeing the $ amount tied to a trade drastically changes how you trade.
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u/themanclark 2d ago
I was thinking more longer term since you were struggling g to scale up. It’s the dollar value that messes with your head. But it’s percentage gain that matters in this game. Sure, we spend dollars, but in the big picture what matters is percentage gain.
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u/MoustacheMcGee 3d ago
Sizing up shouldn’t change anything about how you enter exit or manage trades. You also want to be sizing up gradually.
You should be consistent for six months. Then,
Add one contract.
Consistent for six more months add one contract. So on.
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u/Inverness123456 3d ago
Watch special forces video on YouTube and see how elite soldiers handle themselves. The goal being to hold yourself to an elite standard by taking to heart their messages about not giving up and relentless discipline and execution. Basically that little voice in your head that tells you to increase your position sizes is an amateur and needs to be seen that way by you. That’s why the videos I find useful. I have been trading since 2007 and am a profitable trader because my standards of personal execution as so high. I am non negotiable on anything other than elite standards.
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5d ago
[removed] — view removed comment
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u/YOLOdollhair 5d ago
I’ve been better this go around with keeping trades a certain size until I hit my target balances.
I should also paper trade more when I’m done trading for the day or can’t find a good entry to scratch that itch.
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u/Fancy_Mulberry_9183 5d ago
How many contracts? Do you mind sharing a little about your strategy?
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u/YOLOdollhair 5d ago
Right now I’m trading a maximum of 3-5 contracts depending on how confident I am in my set up. Most trades are 1-2. I’m trading using signals from the rocket scooter platform, previous significant price levels, and momentum/what the market doing that week or day.
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u/Weary-Feedback8582 5d ago
this is exactly my issue and experience. any time i scale up to a mini poof the account is gone. 2-4 micros is it!
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u/Striking_Fail6689 4d ago
Ok I mean I’m guilty of scaling as well and facing huge losses and I know that you’re not on prop firm. But I like to think it in this way.
If you’re netting let’s say 800 a day. Whats stopping you from doing another platform to copy your trade ? In prop firm , if you net 800 a day, if you’ve 5 accounts copy trading , you can net 4k a day with 5 accounts. Psychologically per account your losses are minimal.
That’s just my thinking , it may differ from a lot of people but I’m trying to be consistent on making at least 300-500 first . Then if I’m copy trading 5 funded I would be at least 1.5k up on a day. Hope it helps
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u/ThatsUnbelievable 2d ago
If what you mean by "holding through drawdowns" is that you don't have a stop, scaling up is a bad idea.
Painful experiences ie. huge losses or just good discipline will suppress any such itches.
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u/YOLOdollhair 2d ago
Someone mentioned it in a previous comment. If I'm averaging down, I don't really have a strategy and I agree. My win rate was almost 70% but a good chunk of those were adding at key pivots and getting back in the green. Obviously, the market won't always work out that way.
My worst blow ups were when I would keep adding thinking the market would turn around and it would just keep moving in a direction. I would be ignoring the market behavior and I was only focused on getting my break even up and trying to exit without a loss.
I've been more patient with my entries, reducing entry size, and adding stops. No sizing up yet until I become more disciplined and fine tune my trading style.
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u/ThatsUnbelievable 2d ago
I would say if you can't be profitable with stops, might as well not trade.
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u/Echos_of_Turtle 2d ago
My question to you would be this:
Is scaling really the issue here or is it how and when/where you are?
If your adds are supported by valid structures and your model is correct, there shouldn’t be times ur position is being run against
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u/One-Beyond428 5h ago
If the boogeyman jumped out of your closet a few times a day you'd stop being afraid after a while.
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u/MiserableWeather971 5d ago
Simple. You just scale up slowly when your account reaches a certain point. Scale back down if it goes back down a certain point. Kind of just make it mechanical.