From Max Loss Lockouts to Max Profit Lockouts :) The Coffee Fund Challenge is Complete for August!

Over a year since trading with real money, it’s August 7th, and the books are already closed for the month! I’ve hit my max profit target of 125 MNQ points, or $250, as part of the Coffee Fund Challenge! (They ran my stop so it was $263 technically, but I’m not complaining!)

I’m smugly locked out of trading on my account now, quite the opposite of about a year and a half ago, where I’d probably be sweating, swearing, and punching my desk at being locked out because of a max loss. It feels absolutely amazing. I think I won’t even watch RTH today.

For the first five days in August, in the overnight session, I’ve picked up anywhere from 100 to 200 MNQ points (for the degenerates out there: $200-$400), all in the simulator, unfortunately.

I find my patience is better than ever, and my waiting for a setup is getting better as well. I also have the patience to sit in a trade - most overnight trades have been on the order of 4-6 hours to complete. You want good 100-point moves? You need the patience to let them unfold.

As I write this part of the post, it’s early morning EST time on Wednesday, August 6th. I’m still waiting for the money to drop in my account for my Coffee Fund Challenge. But the way I’ve been trading, I expect to hit the weekly profit definitely by the end of the week. Overconfidence is dangerous in the trading world, but I know if I stick to my current cycle and rhythm, I’ll get there.

My weakness is still the volatility of openings I typically take a lot of tiny cuts trying to catch garbage moves that don’t really result in anything. For the rest of august, unless I see an A+ potential breakout setup (and have the conviction to sit through the volatility of the open!) I’ll probably sit tight for most of A & B periods (i.e. the initial balance) before making any RTH trades. I’ve had great success in all periods outside of those recently (C-E/F and one in the afternoon, i.e. post G or so).

Things that have been helping enormously:

• Historical analysis of similar configurations of the previous session and the previous previous days - how big of a range did price explore? What types of moves have never yet occurred in the current situation?

• VWAP trend and range - VWAP itself - is it climbing, sinking, or simply flat? What about range? Is 2SD VWAP acting as support? Resistance? Same for 3SD and 4SD (4SD I like to use as an emotional extreme)

• And of course, which everything this Substack is based around - the market profile. If we’re far from the VPOC, how thin is the volume? Does the market have the conviction to establish a new VPOC at where we’re at? Or is this fadable? On the 30 minute, price may be climbing for the past hour, but the market profile shows the strong VPOC is far below, and a reversion is probable, like on Tuesday:

These types of questions (and their answers) can help you set up a trade idea with a pretty decent sense of which direction the risk is. You then fade that risk. I always ask myself, “Where is the risk larger for price? To the upside or to the downside?”, I setup what the trade looks like with my standard 2:1 reward:risk trade, at various sizes, then let it rip.

This comes with caveats - I’m not saying that the entire overnight session can’t trend up (like it did last Sunday, from Globex open basically uniformly until the RTH open on Monday, nearly 200 points! Or like it is right now as I edit this on August 7th - We’re up over 250 points in total range - absolute insanity!)

If what I see unfolding in price jives well with my historical analysis, then you can bet your 2 lots I’m trading according to that historical trend, combined with the current market profile (TPO), VWAP trend(s), and time.

For the rest of August, I’ll likely keep practicing in the simulator; it’s been a fun month so far, and the first week isn’t even over yet! Moves have had great follow-through, but it’s a double-edged sword: you need to have maximum patience to have maximum effectiveness in a market like this right now.

Overall, I view the current market as a tug of war between the bearish macro folks with all the poor economic prints we’ve been having vs. the ever-present crypto / AI / tech bros. My current opinion is that another pullback is indeed in order, but who knows, maybe we just continue to grind up!

For September, the challenge jumps up to $500. On a $1000 account, this is a 50% return and there is absolutely no room for error. Though putting it in a better perspective, just 4 trades with 100:50 risk seems much more managble across a whole month. Let’s see what September brings…

-Chris