http://www.traderslaboratory.com/forums/stock-trading-laboratory/15169-breakout-gap-stocks.html
http://www.bulltrade.com/pastResults.aspx
Показ дописів із міткою nodoji. Показати всі дописи
Показ дописів із міткою nodoji. Показати всі дописи
пʼятниця, 7 березня 2014 р.
середа, 31 липня 2013 р.
Nodoji Bighog trading strategies
| bighog Registered: Aug 2005 Posts: 2228 | 07-25-13 03:31 AM Who has looked into there average daily "take" from the days range?A good well disciplined day trader with an "EDGE" defined and constructed by that individual only should be able to average approx. booking 1/2 of the daily range. That includes all whip-saw days that can be rough on the best of us. What douses the bad days are the runner (trend) days where we get more than 1/2 the intraday range.Anyone that can get a consistent 1/2 booked on average is a really good trader. The key to hitting that nut is understanding what worked yesterday is out to fool you today. There are only a very select "action" moves that work for whatever your 'edge" is. Momentum works for me while chop eats me alive if I try to outsmart anything but momentum runners. True, at times the daily range can get rather punk which must be considered. (there are other toys to work in times of slack though if desired)The days we get a bunch of handles, ticks are sweet, the days we see less workable moves are not to be discouraging because we know the average will be ok. The good news about tough days is we no longer give back profits, like in the beginning where a weeks charmed trading got trashed by being a fool.An interesting stat would be if anyone that has been showing consistent profitable trading can feel good by knowing "ON AVERAGE" their trading has improved by booking larger and larger amounts of the days range............Not the amount of money made, that can always be improved by adding cars. But real improvement.  | |
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| bighog Registered: Aug 2005 Posts: 2228 | 06-22-13 03:12 PM
Typical time spent entering and exiting orders on a daily basis: From 0930 est to about 1400 unless a fed report is coming out or I am casually watching for an afternoon reversal signal like a "DC" in ES. A DC (double cross) is a reversal where price recrosses the 20 and the previous trend.........look for a basing first and never forget the 1-2-3. Casual glances at a screen (4 toys actually) is all that is needed to glean for a prospective upcoming event. The difficult part of trading is in the beginning, then it gets SIMPLE. Simple is as simple does.  PS: Many "DC" signals come out of the blue and those are usually the ones that run for a solid 10 handles if not completely reversing the ENTIRE early trend of the day. | |
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| bighog Registered: Aug 2005 Posts: 2228 | 07-03-13 01:42 AM
PS: Intraday swinging is what works for me. ES is still number uno....... that instrument works for intraday swings because the volume is so thick that "monkey see, Monkey do" simply works. I get the runs and avoid the flatish ema and "all is good" Trendline (visualized in the head) 20 ema plotted, early run, a late reversal.......those are all that is need to seek out.......15 handles. (8 trades is es to get that amount, not two, ha) | |
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| bighog Registered: Aug 2005 Posts: 2228 | 07-21-13 04:25 PM Truth be known: Watching price moves 'within' the bars period (5min) will eliminate any need to follow volume because those movements tell you who was in control and butt spanking the other guy.....Also, if one gets a good read of price moves 'within' the 5m bar there is no sense looking at a 1min bar, peeking at a 1m bar is a distraction from the 5m. I assure you, if reading the 5m correctly, you can be AHEAD of the 1m bar.A well developed trader watching price moves taking place is innately visualizing what is "COMING NEXT" and digesting the INFORMATION being delivered in order to make his/her next trade/exit based on that and that information only (unless he/she is determined to either let the max stop get tagged and/or let it ride to targeted exit). There will be nothing printed in the 1m bars that has not already been seen as the action in the 5m unfolds in real time. Watching the dom is a joke at best, the dom has about as much relevance to profits as a commercial has to a great movie........just useless dribble until the action returns in what really matters.How the trade is finessed once filled is what makes the whole process gel. All of the proper ingredients, right temperature and watchful eye will go to waste if one does not stir correctly.PS: No, I am not picking on nodoji and her using the 1m chart,  PSS: Let us change laws so we can eliminate these flying rats once and for all http://icwdm.org/handbook/birds/Gulls.asp | |
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| bighog Registered: Aug 2005 Posts: 2228 | 07-27-13 01:05 AM I will share what I call an "EDGE" for the opening bar range breakout strategy called "My 4x4 that uses no gas"Keep in mind this is for the 0930 EST bars range. We are talking ES here. The 4x4 means 4 contracts each trade and seeking 4 handles (16 ticks) and if/when satisfied book the trade/s and move on to your regular day trade tactics for the rest of the day, or just call $800 good for the day if desired. Surprise yourself!The STOP loss can either be the other side of the bars range limit or anything in between depending on how your breakfast is feeding your brain.If the STOP is the other extreme end of the ORB, then by all means do a SAR. I like smaller STOPS and will wait to see how price acts as it nails either side........BUT SAR works best in tighter open bar range.In general, unless we get a sissy type whipsaw over and over open, a couple small stop-outs will be reversed once price takes off for a few handles.Some days, price takes out either one side or the other of the orb (open range bar) and never looks back.Extend the mechanical contest to 5 handles on 4 cars and you just nailed a grand. Depending on the action itself (subjective) I will punch out at +2 or +3 handles and reenter for the 4. The nice days are when you get 4 handles in a single trade, sweet!That is what I call an EDGE for the opening of the day.......... PS: yeah, yeah, I know, it is not wise to give away secrets in a public forum, LOL. But, what many new boys/girls only figure out later is that.........you want friends following you so you can profit from them..  | |
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| NoDoji Registered: May 2008 Posts: 8301 | 07-26-13 11:02 PM It's a mechanical strategy with specific rules. It's a with-trend entry tactic in a strong trend using a 1-min chart for intraday scalping. I've already shared a couple of simplified versions of it on ET. If you want to refine it, have at it. Since there is no bad entry in a strong trend, any similar tactic will do.Just look at a 1-min chart of CL and observe when price breaks out of a 5-min range, triangle, or HOD/LOD by at least 10 ticks. Make notes about what happens next. If you do the work, you'll find out how to easily profit from these instances when the CL becomes the poster child for Newton's First Law of Motion. | |
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| NoDoji Registered: May 2008 Posts: 8301 | 07-27-13 04:52 AM Classic setups can be found here, but you have to do the work to determine a) the context in which to trade them and b) how to manage your risk/reward.http://www.daytradingcoach.com/dayt...ysis-course.htmThis little pattern is one of the best, IMHO:http://www.dacharts.com/123.htmIt's not always lower high (off the top) or higher low (off the bottom). Sometimes it's double top (or double bottom) and sometimes it's slightly higher high or slightly lower low (failed breakout of previous high/low).Bob Volman describes some great setups in his book "Forex Price Action Scalping".If you ever took calculus in school and got at least a "B" average, then you may find Al Brooks "Reading Price Charts Bar By Bar" the holy bible of price action setups. | |
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| NoDoji Registered: May 2008 Posts: 8301 | 07-27-13 07:01 PM
I'm purely a chartist and whether I look at daily, weekly and monthly price charts over decades or I look at intraday charts over years, I can't see anything different, but I constantly see posts on this forum that markets have changed. Are these changes related to something other than price movement? | |
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| NoDoji Registered: May 2008 Posts: 8301 | 07-27-13 07:12 PM
This is my top advice for everyone who asks me for help. Choose a single setup/tactic and master it to the point that you see it and you place the order without further thought or hesitation. When I was absolute beginner with just over 3 months of trading experience (and no specific plan other than trade entry triggers), I decided I wanted to be a day trader instead of a swing trader. I found a setup that made absolute sense to me (basically a 1-2-3 setup) and I paper traded it for a few weeks very successfully. Finally I took the plunge and started trading it live and I think I made around $17K in three weeks. Then I started messing with a simple plan and commenced to lose a lot of money. It took me a long time to get back to what in essence is that same simple plan. | |
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| NoDoji Registered: May 2008 Posts: 8301 | 07-27-13 07:36 PM
There are periods of price action where the setup appears but there's no follow through. I've had strings of 6 or more small losers/break-even trades, then suddenly the game's on, you're on the stronger team because of TA, and the whole team's got your back. I once had a day with a 9% win rate and ended up with a good day's pay as a result of using TA to ensure I'm positioned with the stronger team once the scrimmages are over and the big game is underway. | |
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| NoDoji Registered: May 2008 Posts: 8301 | 07-27-13 08:22 PM
It's not randomness. TA allows me to be positioned in the right direction when price makes the big move. The trader without a plan or the one who trades based on strong opinion or the inexperienced trader would likely have misinterpreted what price was saying or been completely unaware of how to catch a runner in the first place. Such a person would be far more likely to have traded emotionally, ended up on wrong team, and instead of quickly cutting the loss and reversing sides for the big winner, would've averaged down during the breakout run and cried "Uncle!" just before the end of the trend. I've done this personally, and I've watched other traders do this many times. What they do is random, meaning they're gambling. My TA-based trading does not involve gambling (random bets). I know in advance that if I trade every valid signal and manage the trade according to the fixed rules of my plan, I will be profitable enough at the end of the month to cover living expenses, entertainment expenses, taxes, and retirement savings. | |
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| NoDoji Registered: May 2008 Posts: 8301 | 07-28-13 07:55 PM
Consistently profitable trading definitely flies in the face of human nature. Human nature wants to get in at tops and bottoms (get the best possible deal), and human nature will be imprinted with the memory of times when it succeeds in doing this because of the huge ego gratification that ensues and will sweep under the rug the failures (addiction to random rewards). Human nature finds it very easy to do what feels right at the time even if there's no statistical evidence backing up the decision (and even when statistical evidence is against it), and human nature is conditioned to believe that you must fight for what you believe in and when something feels right it's easy to believe in it, and so human nature ensures that most traders will trade their bias rather than a positive expectancy plan. When what you've been doing is wrong and you're a losing trader, doing what's right will feel wrong. Human nature finds it very difficult to do what feels wrong because that would require acting against its beliefs. Even when presented with objective statistical evidence backing up actions that produce the best possible overall result, human nature ensures that most people will act on their beliefs. | |
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| NoDoji Registered: May 2008 Posts: 8301 | 07-24-13 12:24 AM
You'll just have to trust that I trade this way, because I'm not on display, I'm trading for a living. Pull up a 5-min and 1-min chart of CL and annotate these trades. You'll see how intraday scalpers use S/R and pure price action to extract bits of moves from the active little instruments like CL: Preparation: Prior to the crude oil pit open I identify a channeling down trend in the overnight session and draw support and resistance lines, connecting the swing highs from the overnight session and placing a parallel channel line across the latest lower low (8:20am ET). I notice that the last new low came out of narrow range consolidation contained by the 7:45 bar. The low of that consolidation range is 106.24. If the down trending channel continues to hold, that price level just about coincides with the down trend line I drew connecting the overnight swing highs. That will be key resistance. Trading begins: Just before the open, I place a sell stop to trade to the short side off the 1-min chart (1-min with-trend continuation for a test of the previous low.) The pit session opens and price makes a bullish run up right through the significantly lower high that printed during the 8:40 ET bar. That was a surprise. I realize there is very key resistance overhead and since there was no pause or pullback for me to get long in that opening run, I place an offer to sell the upper trend line which happens to coincide with the narrow range consolidation low described previously. This is an anticipatory trade; I’m using technical price analysis involving confluence of two identical resistance levels to enter a low risk trade (13 tick stop loss) in the direction of the overall trend (which is still down until that channel breaks out). My offer is taken and price immediately turns. Because price ran non-stop to that upper channel, I assume the pullback to the lower channel line will be interrupted by defense at every level, so I place a hard target just above the round number for a 21-tick profit. I see a 1-min with-trend continuation pattern setting up for a long trade, but price hasn’t broken out of the down trending channel yet, so I do not trade this pattern by itself. I only trade this pattern in the context of a well-defined trend, which at this point is still down. By the close of the 9:11 bar on the 1-min chart, a 1-2-3 reversal pattern off that upper trend line is in play and I that’s my signal to get short. Price comes within 1 tick of my offer and stalls. I pay a bit extra to get in at 106.12 because the R:R still fits within my plan: My risk will be 13 ticks and my hard target will be 15 ticks, with a bid to take profit placed 1 tick above the swing high that broke out during the opening run, the break of the 8:40 bar high on the 5-min chart. My bid is lifted almost to the tick which alerts me to calculate the R:R of a 1-min long entry from that level. I see immediately that there’s congestion between camps, so I wait for clarity. Despite the strength of the run up from the open, the larger channel could still be very much in play, meaning more short setups coming. The price action of the 9:20 bar on the 1-min chart clears the congestion and I look for a long entry setup. The close of the 9:22 bar tells me further pullback will be unlikely if that bar’s high breaks, so I place a buy stop there to position long, looking for a test of, and likely break of, the upper trend line. The trend line breaks, as does the previous swing high, but price stops short of breaking through the 106.35 R from pre-market. I give price a couple chances to try again and end up taking a 10-tick scalp. Price then pulls back to my entry price during the 9:29 bar and closes with that price as the low. This level is approximately a pullback to that previous down trend line resistance (previous R becomes S), and I jump in long again at 106.21. I have no target calculated other than “a break of 106.35” in my head and I quickly draw a 1-min channel across the 106.32 high and it looks like price should hit 106.39. I place a 20-tick hard target and prepare to take a scalper’s profit if it doesn’t get there. My offer is taken and I call it a day. Now I've revealed all the price action trading secrets of the magic price action gurus. There's big edges in them there price bars. Take what you will and enjoy! | |
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| NoDoji Registered: May 2008 Posts: 8301 | 07-17-13 05:43 PM
You may understand price action, but your gambling has addicted you to random rewards, and you're not trading a plan. Willpower rarely overcomes addiction, but 12-step recovery programs have helped "hopeless" cases turn their lives around as long as the addict continues to do what works every single day. In the Foreword to Mark Douglas' Trading in the Zone, Thom Hartle writes: "The 95% failure rate makes sense when you consider how most of us experience life, using skills learned as we grow. When it comes to trading, however, it turns out that the skills we learn to earn high marks in school, advance our careers, and create relationships with other people, the skills we are taught that should carry us through life, turn out to be inappropriate for trading. Traders, we find out, must learn to think in terms of probabilities and to surrender all of the skills we have acquired to achieve virtually every other aspect of our lives." Nearly every facet of our lives revolves around the quest for something as close to certainty as possible, and success is often defined by finding oneself rated in the top percentiles. Yet successful trading depends on narrow margins of positive expectancy and the ability to accept what feels like "failure" all the time. Trading losses in a winning system are crucial to the profitability of the system because we cannot know the outcome of any individual trade, only the odds of net profitability over a series of trades. Mark Douglas captures the essence of profitable trading with what I like to call The 5 & 7: The 5 Fundamental Truths of Trading: 1. Anything can happen. 2. You don’t need to know what is going to happen next to make money. 3. There is a random distribution between wins and losses for any given set of variables that define an edge. 4. An edge is nothing more than an indication of a higher probability of one thing happening over another. 5. Every moment in the market is unique. The 7 Principles of Consistency: 1. I objectively identify my edges. 2. I predefine the risk of every trade. 3. I completely accept the risk or I am willing to let go of the trade. 4. I act on my edges without reservation or hesitation. 5. I pay myself as the market makes money available to me. 6. I continually monitor my susceptibility for making errors. 7. I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them. Douglas tells us (and the emphasis is mine), "...to whatever degree you haven’t accepted the risk, is the same degree to which you will avoid the risk. Trying to avoid something that is unavoidable will have disastrous effects on your ability to trade successfully. To operate effectively in the trading environment, we need rules and boundaries to guide our behavior. It is a simple fact of trading that the potential exists to do enormous damage to ourselves – damage that can be way out of proportion to what we may think is possible. In trading, no one (except yourself) is going to force you to decide in advance what your risk is. In fact, what we have is a limitless environment, where virtually anything can happen at any moment and only the consistent winners define their risk in advance of putting on a trade. For everyone else, defining the risk in advance would force you to confront the reality that each trade has a probable outcome, meaning that it could be a loser. Consistent losers do almost anything to avoid accepting the reality that, no matter how good a trade looks, it could lose." If you want consistent success in trading, over time and through varying market conditions, if you want to trade for a living, at the very least you have to do ample research and develop a plan based on favorable probabilities. That’s the absolute minimum requirement. Then comes the real work: learning to trade your plan or automating your plan without overriding it. Mastering one part of your plan isn't good enough. It must be mastered as a whole. Positive expectancy comes from a combination of win rate and risk:reward ratio, just as hydrogen and oxygen are required to make water. If you learn to hold trades until you're stopped out or your profit target is filled, that may be a huge step forward for you psychologically, but if you haven't mastered the ability to trade every valid setup without hesitation, your excellent trade management ability won't help much at all. Or maybe you have no problem jumping on every valid trade opportunity that presents itself, but you move stops and targets around. There goes your edge! A positive expectancy trading plan offers an environment of certainty, but it doesn't feel like certainty in real time because it requires what we refer to as "losses" and the concept of "loss" has a negative connotation for us due to a lifetime of programming. In trading, losses that occur as part of a well-research trading plan are absolutely necessary, Without embracing them, you're attempting the equivalent of trying to quench your thirst by inhaling some hydrogen and then later inhaling some oxygen. | |
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четвер, 4 липня 2013 р.
Trading system build
| NoDoji Registered: May 2008 Posts: 8176 | 06-29-13 08:20 PM
You have a clearly defined trading framework and the ability to trade it with a trader’s mindset (the ability to trade all valid signals because you realize there is a random distribution between wins and losses for any given set of variables that define an edge). After interfacing with dozens of people over the years, this combination is possessed by less than 5% of them. You’re already a member of a rare class of trader, whether you're trading manually or are able to let an automated system go without interfering with it. Your plan is simple, but a bit too simple. The ingredients you seem to be missing are: 1. Contextual filters 2. Time of Day filter 3. What kind of day trader you want to be: intraday swinger, intraday scalper, or part scalp/part swing scaler Contextual filters are what help you avoid chop and catch the stronger directional price swings. The way I developed contextual filters was to first “eyeball” the price action leading into significant directional price swings versus small range-bound directional price swings to see if I could identify any patterns that occurred more often than not. A pattern in this sense could be a price action pattern (such as an M or W formation, commonly called a 1-2-3), or a relationship of current price to the overall price environment (proximity to a previous day’s key level, or to a trend/channel line in a higher time frame, or to the range of a price bar in a higher time frame, etc). Then, I’d perform a thorough statistical analysis of favorable and adverse price excursions surrounding these patterns to determine whether or not my “eyeball analysis” had any merit. Once you’ve done this, you’ll have more ammunition for developing your profit-taking plan. You may find that by implementing certain filters, your current simple plan becomes significantly profitable without any other changes. In fact, even without doing contextual filter research, your current plan may be fine by implementing something as simple as scalping part of your position and letting the remainder run or stop out. This way, the scalped profit pays for part of the loss during choppy conditions, but you’re able to catch those nice runners when they happen. My recommendation is to evaluate your results over the past couple months applying these scenarios: 1. Scalping N ticks on every trade (no runners) 2. Scalping N ticks on half, letting the other half trade as you have been 3. Identifying contextual filters and applying them to your current plan 4. Identifying contextual filters and applying a scalp/run trade management approach. Consider adding a 20EMA to your chart to determine if it provides a useful filter (I found it very helpful on the 1min chart). I also recommend analyzing whether there's any significant relationship between time of day and net results. For example, maybe the first 2-3 hours produce solid profits and the remainder of the session produces flat or negative results over time. | |
NoDoji trading for a living
NoDoji
06-29-13 08:33 PM
Trading for a living is very routine when you do it right.
I found that profitable trading for me involves going with the market, not "taking it on". Think of yourself as a remora latching on to a big powerful-looking shark that swims by in the direction you want to go, so you quickly latch onto it. If you find that the shark suddenly changes course and is taking you in the opposite direction you wanted to go, you let go and wait for the next big powerful-looking shark to swim your way.
A well-researched trading plan with advance directives for trade entry and exit, combined with proper leverage ensures you won't lose it all.
There may be times when the shark you're attached to suddenly breaks out into high gear and you end up cruising past where you want to go toward an island paradise beyond your wildest dreams.
All right, I admit it: When that happens, it's pretty thrilling for a moment or two.
06-29-13 08:33 PM
Trading for a living is very routine when you do it right.
I found that profitable trading for me involves going with the market, not "taking it on". Think of yourself as a remora latching on to a big powerful-looking shark that swims by in the direction you want to go, so you quickly latch onto it. If you find that the shark suddenly changes course and is taking you in the opposite direction you wanted to go, you let go and wait for the next big powerful-looking shark to swim your way.
A well-researched trading plan with advance directives for trade entry and exit, combined with proper leverage ensures you won't lose it all.
There may be times when the shark you're attached to suddenly breaks out into high gear and you end up cruising past where you want to go toward an island paradise beyond your wildest dreams.
All right, I admit it: When that happens, it's pretty thrilling for a moment or two.
понеділок, 24 червня 2013 р.
NoDoji summer june 2013
06-11-13 12:16 AM
I use that term frequently; possibly I’m the trader to whom you refer. With regard to oil futures:
A defined uptrend in my given framework (a 5-min time chart) consists of a pattern where I can identify one swing low that’s higher than a previous swing low, followed by a move up that breaks the swing high between the two swing lows by at least as many ticks as the difference between the swing lows.
A well-defined uptrend consists of a move up that’s so strong the pullbacks fail to print a bar close below previous resistance levels. This usually occurs when price breaks through a high of the day by 10 ticks or more.
Reverse for downtrends.
Price can print a strong trending move without a definable trend being in play. For example, today oil prices were channeling down in pre-market on a 5-min time chart. At the start of the pit session price broke through two previous swing highs without a single pullback on the 5-min chart, then just as quickly sold all the way back to the swing low just before the pit opened. In the 5-min time frame, no trend asserted itself during those two strong moves.
As with all price action patterns, often times close is close enough, so if a value is off by a few ticks or price throws a little head fake at you then turns right back around, consider the trend intact until proven otherwise.
06-14-13 05:49 PM
I trade technical price action, here's the scoop:
1. 60-min chart, connect the Tuesday low to the Tuesday overnight low to get a lower trend line. Thursday overnight action found support there, so...
2. Place a parallel channel line across the swing high in between, the high from Wednesday.
3. The dip to the 95.00 zone in pre-market yesterday found ready buyers, so the LTL is now confirmed for a 1-2-3 long setup.
4. Yesterday's high came within a few ticks of that parallel channel line.
5. The overnight session formed a bull flag with Wednesday's resistance holding as support (well-defined trend on the 60-min chart).
6. Calculate a measured move* off the bull flag (flags generate a measured move reaction more often than not), for a new high target of 98.26.
* 96.92 - 95.08 = 1.84 and 1.84 added to 96.42 flag low is 98.26
Hope that helps!
06-14-13 06:18 PM
If I watched other markets, or paid attention to the actual news reports, I'd never put on a trade because the price action in CL so frequently marches to its own beat.
As a beginning CL trader I once watched a strong trend for over two hours run two or three points without trading. I was waiting for a reversal signal because the inventory report was very bearish.
06-16-13 05:38 AM
My experience backs this up, no doubt.
A couple ideas that helped me:
When price is consolidating or is choppy, it can reach a point where it's sooo tempting to say, "Screw this", take a break, find that you missed a fantastic move, then put on a trade without a valid signal in an attempt to somehow capture what you missed. So as soon as you have the thought of taking a break because it's been ugly for so long, tell yourself to focus 100% for just 20 more minutes and then set a timer. Most of the time you'll be present for a very tradeable move.
Take a brief active break to stretch or jog right after closing out a trade.
What do you mean by "really, really believe in"? That seems problematic to me. You should really, really believe in any setup/context situation that your statistical analyses have proven is net profitable after commission and slippage. Anything else is irrelevant and should be discarded. That's just my opinion.
I frequently really, really believe price is going to do something despite there being no setup/signal whatsoever that meets my trading plan criteria. When that happens it's generally an awesome fade.
These is the "easy money" price action environment and it's one I really, really believe in. It's my primary setup.
As a 5-min trader, if you carefully study a 1-min chart, you'll see how to get on board. Price doesn't run in a straight unbroken line; it pauses, drawing in counter-trend traders, and you'll be able to identify specific patterns in the small time frame for entering a strong trend (or a strong trending move).
Study the 1-min price action immediately following three kinds of breakouts: 1) a breakout with conviction from narrow range consolidation (flag or triangle formation), 2) a break through a previous swing high/low in a well-defined trend, and 3) a weak/failed breakout where price then makes a 2nd attempt after a shallow reaction (Al Brooks would call this a "failed failure" and although most of the ET community makes fun of this concept, it's well worth studying).
+++
06-16-13 09:32 PM
We can never be certain in real time whether a particular price bar will print what eventually becomes a swing high or low. But we can identify the price action patterns that indicate a greater likelihood of a level holding as S/R or breaking out further.
On this chart, you noted a low, followed by a high. The low is not identifiable as a swing low until two or three subsequent bars close; the high is not identifiable as a high until two or three subsequent bars close. But you can assume the risk based on positive expectancy price action patterns and reap the reward more often than not.
Once that high printed and then pulled back, I’d expect the previous range high that broke out to hold as support. If buyers stepped in there and were able to push price beyond a previous 5-min bar high (excluding inside bars), then it’s likely the previous swing high will be at least tested if not exceeded.
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There are two ways to play the pullback to the range high as new support: Anticipate that it will become support and place a limit order at the range high with a stop below the range low, or place a buy stop above a previous 5-min bar high IF the range high price is touched and appears to hold as support (again, I exclude inside bars) with a stop below the bar that breaks upside. If using a limit order, you’re filled during what looks like the 9:30 bar and take a small loss. If using a stop order, no trade is triggered.
So the limit-filled long looked promising for a moment, but the break of the inside bar produced no follow through and the range breaks downside with some conviction.
Technically, I’d now expect the range low to hold as resistance. Again, two ways to play this, either placing a limit to sell the previous range low that broke down, or sell stop just below previous 5-min bar low IF the range low price is touched. The bar where your red dot marks LH touches the range low, and either your limit is filled or your stop is triggered on the next bar. How you manage that one is up to you. I personally would bail for a scratch after the weak break of the first LL you marked, although holding with the initial stop loss in place keeps you in a fine short trade.
So that’s how, without knowing in real time whether or not a price will become a LH or HL, you can take a leap of faith that technical levels will hold and subsequent price behavior will trigger a profitable move more often than not, which is what positive expectancy is all about.
06-18-13 09:44 PM
For me the biggest advantage of day trading is no overnight surprises to wake up to (or have to hedge against). Also, I find that the most profitable moves occur during the first 3 hours of the RTH sessions, leaving me free for the rest of the day if desired.
Day trading is also the most difficult sort of trading because decisions have to be made far more quickly than with swing trading, you have to be able to clear the slate immediately upon the close of a trade and be prepared to trade again without the baggage of previous trades or current P/L, and you have to be good at staying very focused during price action that can feel like Chinese water torture at times.
Is it worth it? If you have a good trading plan and the ability to trade it, it's absolutely worth it, IMHO.
06-19-13 07:03 PM
Replace "system" with "thoroughly researched and tested business plan".
Replace "generally" with "precisely".
Read Trading in the Zone and trade your plan in a demo account until you can trade it with a trader's mindset.
Not sure what "try" means here. Do you have a disability that prevents you from seeing your setups and putting on and taking off trades in a timely manner?
With regard to playing reversals, what are your rules for trading a potential reversal?
06-19-13 07:42 PM
You're still experimenting (in the R&D phase), so avoid live trading until you have a plan, applied the rules to 500 appearances of your chosen setups and logged the results, then practiced in demo mode until you're consistently profitable and stick with your plan.
I manually backtested. I had a core setup and a method of entry and with my spreadsheet open I logged the stats surrounding every entry. The only filter during that phase was no trades withing 10 minutes of a major news release. Every appearance of the core setup had to be logged and evaluated.
Do you know the win rate % and risk:reward ratio of your pin bar strategy applied to, say, 500 appearances of the setup?
06-22-13 11:43 PM
As Took2Summit stated, "...you can draw the trend line however you want, but you have to be consistent."
You can use any framework for trading as long as it --- and your trading rules surrounding it --- are consistent.
All the ideas you list above for defining a trend do indeed define a trend. None of them, however, can predict whether the current trend --- definable at that moment in time --- will continue.
When you say you have been unable to find a trend definition that consistently works for you, what is your definition of "consistently works"?
All the ideas you list above for defining a trend work for me with excellent consistency, meaning I have rules for trading off these trend definitions that have produced net profit over series' of trades for years now.
Consistency is not certainty. All your threads seem to indicate a quest for certainty. Consistently profitable trading is based on positive expectancy, not certainty.
Your trading plan based on research and testing over a large sample size (such as applying a set of trade entry and trade management rules to 500 appearances of a particular setup and finding enough positive expectancy to produce a net profit after slippage and commissions) will provide the consistency you seek without any need for certainty in predicting the outcome of any individual trade.
Think of a well-researched and tested trading plan as a car that will take you through the streets of the Market City each day as you look for potentially profitable opportunities. If you took the car to a good mechanic and got the seal of approval (research, development & testing phase) before buying it, the chances of a breakdown are reduced. If you drive mindfully and safely, and wear a seat belt (stay focused and patient, follow your setup/entry rules, and honor your risk management plan), your chance of getting killed in an accident is quite low, and your chance of being available to take advantage of every opportunity is high.
I know several traders who have absolutely everything they need to extract ample profit from the market every week. They have well-researched and tested trade ideas with specific rules for entry and exit, yet they're unable to realize their dream because of common bad habits related to fear of uncertainty and/or a never-ending quest for certainty (usually in the forms of further testing, changing rules, adding/removing indicators, testing other markets, and so on).
There is a level of certainty in trading and if I were to express it in terms of tossing a coin for a living, it would look much like one of these scenarios:
1. You toss a fair coin. For every head you receive $130; for every tail you pay $100.
2. You toss a coin that is balanced to come up heads 60% of the time. For every head you receive $130; for every tail you pay $130.
3. You toss a coin that's balanced to come up heads 30% of the time. For every head you receive $500; for every tail you pay $180.
4. You toss a coin that is balanced to come up heads 90% of the time. For every head you receive $50; for every tail you pay $250.
If you could choose any of these coins and toss it for a living based on the risk:reward plan, would you do so?
06-23-13 10:04 PM
My mentor taught me classic TA patterns for free. These patterns are available for free (http://www.daytradingcoach.com/dayt...ysis-course.htm), and in inexpensive books.
I have an individual method of trading off these classic TA patterns. I've posted my strategies via annotated charts here on ET. I've taught my strategies to several others. None of the people I've taught them to have been able to make a living off them. It has nothing to do with their trading plans (all good plans); it has to do with their inability to trade their plans because of a desire for more certainty.
These strategies have been working for the 3 years I've been trading them and they appear to have worked for my mentor for many more years than that. Since they've been around for at least a few decades, I can see they've been working at least that long.
The only adaptation I've had to make to my core TA-based trading plan is when the volatility died down last year in the instrument I trade, I reduced my stops and targets accordingly.
Every one of these patterns are ambushes at times and always have been.
That's what risk management rules are for.
06-23-13 10:12 PM
My personal hypothesis is that all the programmed trading has made them more predictive than ever. I'm often astounded at how many times in a row a particular setup will hit my profit target before hitting my stop.
Keep in mind that the big money that moves price can't just jump in and out all at once; they have strategies for building positions and exiting positions. These strategies become apparent when you study price action and develop your own plan around it.
I don't need to trade 50, 100, 500, or 1000 oil contracts at a time, so I don't have to worry about becoming the "mark" for market makers or about outsmarting another large entity that has to trade that kind of size to scale in and out of longer term positions/hedges.
I can trade my piker size, latching onto the big bad sharks like a little remora:
"The remora benefits by using the host as transport and protection, and also feeds on materials dropped by the host."
06-23-13 10:29 PM
Surf, I'm curious about something. If you believe there's no way to predict the odds of a directional price move based on the technical analysis of what price has been doing, then why do you think certain patterns repeat so much more often than they fail?
I'm looking at a daily chart of the ES going back to June 2012 and I see price pull back down to the rising 50-day moving average on 6 consecutive occasions and result in a directional move of 50 handles or more without closing below that 50EMA, meaning very low risk for significant reward.
How is it a pattern can repeat that often without a fake-out or "ambush" or outright failure?
I use that term frequently; possibly I’m the trader to whom you refer. With regard to oil futures:
A defined uptrend in my given framework (a 5-min time chart) consists of a pattern where I can identify one swing low that’s higher than a previous swing low, followed by a move up that breaks the swing high between the two swing lows by at least as many ticks as the difference between the swing lows.
A well-defined uptrend consists of a move up that’s so strong the pullbacks fail to print a bar close below previous resistance levels. This usually occurs when price breaks through a high of the day by 10 ticks or more.
Reverse for downtrends.
Price can print a strong trending move without a definable trend being in play. For example, today oil prices were channeling down in pre-market on a 5-min time chart. At the start of the pit session price broke through two previous swing highs without a single pullback on the 5-min chart, then just as quickly sold all the way back to the swing low just before the pit opened. In the 5-min time frame, no trend asserted itself during those two strong moves.
As with all price action patterns, often times close is close enough, so if a value is off by a few ticks or price throws a little head fake at you then turns right back around, consider the trend intact until proven otherwise.
06-14-13 05:49 PM
Quote from RedSun:
i start buying SCO. No margin....
I still do not know why CL is >$98 now...
I trade technical price action, here's the scoop:
1. 60-min chart, connect the Tuesday low to the Tuesday overnight low to get a lower trend line. Thursday overnight action found support there, so...
2. Place a parallel channel line across the swing high in between, the high from Wednesday.
3. The dip to the 95.00 zone in pre-market yesterday found ready buyers, so the LTL is now confirmed for a 1-2-3 long setup.
4. Yesterday's high came within a few ticks of that parallel channel line.
5. The overnight session formed a bull flag with Wednesday's resistance holding as support (well-defined trend on the 60-min chart).
6. Calculate a measured move* off the bull flag (flags generate a measured move reaction more often than not), for a new high target of 98.26.
* 96.92 - 95.08 = 1.84 and 1.84 added to 96.42 flag low is 98.26
Hope that helps!
06-14-13 06:18 PM
Quote from RedSun:
NoDoji, thx.
Walter Zimmerman says something similar, good to explain the technical side of it.
But the correlations are broken down. CL shows the divergence from other markets....
If I watched other markets, or paid attention to the actual news reports, I'd never put on a trade because the price action in CL so frequently marches to its own beat.
As a beginning CL trader I once watched a strong trend for over two hours run two or three points without trading. I was waiting for a reversal signal because the inventory report was very bearish.
06-16-13 05:38 AM
Quote from Georgii:
To my way of thinking a statistically valid setup should always be traded even if that means you can end up down at the end of the day. The idea here is that long run you should end up more up if you take those setups.
My experience backs this up, no doubt.
Quote from Georgii:
It appears the main challenge here is to stay focused, and since I'm not a computer I'm going to be susceptible to making errors in judgement if my focus is off.
A couple ideas that helped me:
When price is consolidating or is choppy, it can reach a point where it's sooo tempting to say, "Screw this", take a break, find that you missed a fantastic move, then put on a trade without a valid signal in an attempt to somehow capture what you missed. So as soon as you have the thought of taking a break because it's been ugly for so long, tell yourself to focus 100% for just 20 more minutes and then set a timer. Most of the time you'll be present for a very tradeable move.
Take a brief active break to stretch or jog right after closing out a trade.
Quote from Georgii:
An approach I've begun experimenting with is that I take the first setup or two with size, and regardless of whether it goes well or not, I ratchet down my size, unless I see something that I really, really believe in.
What do you mean by "really, really believe in"? That seems problematic to me. You should really, really believe in any setup/context situation that your statistical analyses have proven is net profitable after commission and slippage. Anything else is irrelevant and should be discarded. That's just my opinion.
I frequently really, really believe price is going to do something despite there being no setup/signal whatsoever that meets my trading plan criteria. When that happens it's generally an awesome fade.
Quote from Georgii:
Breakout is a bit tough on me mentally. The problem though is that many trends I see in ES don't stop to give you room to get on board!
These is the "easy money" price action environment and it's one I really, really believe in. It's my primary setup.
As a 5-min trader, if you carefully study a 1-min chart, you'll see how to get on board. Price doesn't run in a straight unbroken line; it pauses, drawing in counter-trend traders, and you'll be able to identify specific patterns in the small time frame for entering a strong trend (or a strong trending move).
Study the 1-min price action immediately following three kinds of breakouts: 1) a breakout with conviction from narrow range consolidation (flag or triangle formation), 2) a break through a previous swing high/low in a well-defined trend, and 3) a weak/failed breakout where price then makes a 2nd attempt after a shallow reaction (Al Brooks would call this a "failed failure" and although most of the ET community makes fun of this concept, it's well worth studying).
Quote from austinp:
Now on the other hand if your mental approach is to capture max % of the day's range every day, you are going to eventually try and micro-manage each and every single trade to its utmost possible performance. And you will anguish over this one taken off too soon and that one left too long with too wide a stop.
In other words, you will find yourself always wrong on just about every trade. Meanwhile, target shooting for a long-term mean has you cashed out, profitable, all done and out of the office, living your life
+++
06-16-13 09:32 PM
Quote from 1a2b3cppp:
The best places to go long and short are obviously at each high and low. Since you said I could do this in hindsight, I have labeled each buy and short entry with a green and red circle.
As I said earlier, I cannot identify them in real time.
We can never be certain in real time whether a particular price bar will print what eventually becomes a swing high or low. But we can identify the price action patterns that indicate a greater likelihood of a level holding as S/R or breaking out further.
On this chart, you noted a low, followed by a high. The low is not identifiable as a swing low until two or three subsequent bars close; the high is not identifiable as a high until two or three subsequent bars close. But you can assume the risk based on positive expectancy price action patterns and reap the reward more often than not.
Once that high printed and then pulled back, I’d expect the previous range high that broke out to hold as support. If buyers stepped in there and were able to push price beyond a previous 5-min bar high (excluding inside bars), then it’s likely the previous swing high will be at least tested if not exceeded.
.
There are two ways to play the pullback to the range high as new support: Anticipate that it will become support and place a limit order at the range high with a stop below the range low, or place a buy stop above a previous 5-min bar high IF the range high price is touched and appears to hold as support (again, I exclude inside bars) with a stop below the bar that breaks upside. If using a limit order, you’re filled during what looks like the 9:30 bar and take a small loss. If using a stop order, no trade is triggered.
So the limit-filled long looked promising for a moment, but the break of the inside bar produced no follow through and the range breaks downside with some conviction.
Technically, I’d now expect the range low to hold as resistance. Again, two ways to play this, either placing a limit to sell the previous range low that broke down, or sell stop just below previous 5-min bar low IF the range low price is touched. The bar where your red dot marks LH touches the range low, and either your limit is filled or your stop is triggered on the next bar. How you manage that one is up to you. I personally would bail for a scratch after the weak break of the first LL you marked, although holding with the initial stop loss in place keeps you in a fine short trade.
So that’s how, without knowing in real time whether or not a price will become a LH or HL, you can take a leap of faith that technical levels will hold and subsequent price behavior will trigger a profitable move more often than not, which is what positive expectancy is all about.
06-18-13 09:44 PM
For me the biggest advantage of day trading is no overnight surprises to wake up to (or have to hedge against). Also, I find that the most profitable moves occur during the first 3 hours of the RTH sessions, leaving me free for the rest of the day if desired.
Day trading is also the most difficult sort of trading because decisions have to be made far more quickly than with swing trading, you have to be able to clear the slate immediately upon the close of a trade and be prepared to trade again without the baggage of previous trades or current P/L, and you have to be good at staying very focused during price action that can feel like Chinese water torture at times.
Is it worth it? If you have a good trading plan and the ability to trade it, it's absolutely worth it, IMHO.
06-19-13 07:03 PM
Quote from jeredlbb:
"system"
generally
try
play reversals
Replace "system" with "thoroughly researched and tested business plan".
Replace "generally" with "precisely".
Read Trading in the Zone and trade your plan in a demo account until you can trade it with a trader's mindset.
Not sure what "try" means here. Do you have a disability that prevents you from seeing your setups and putting on and taking off trades in a timely manner?
With regard to playing reversals, what are your rules for trading a potential reversal?
06-19-13 07:42 PM
Quote from jeredlbb:
I trade pin bars as a reversal. I have attempted to filter out the pin bars that fail from the pin bars that lead to reversals. My filter is based on ATR and surrounding bars.
I guess in a way I am trading swings intraday. My time frames range from 15min to 4hour. I have been experimenting with tick bar charts as well.
I am starting to learn C# to try to begin to back test thoroughly. As of now I manually back test three or four months. I see that even that is subjective in some ways and can lead to errors. Your recommendations? I was using Tradestation, but recently changed to MultiCharts .NET
I am currently reading Trading in the Zone per Visaria's suggestion.
You're still experimenting (in the R&D phase), so avoid live trading until you have a plan, applied the rules to 500 appearances of your chosen setups and logged the results, then practiced in demo mode until you're consistently profitable and stick with your plan.
I manually backtested. I had a core setup and a method of entry and with my spreadsheet open I logged the stats surrounding every entry. The only filter during that phase was no trades withing 10 minutes of a major news release. Every appearance of the core setup had to be logged and evaluated.
Do you know the win rate % and risk:reward ratio of your pin bar strategy applied to, say, 500 appearances of the setup?
06-22-13 11:43 PM
Quote from 1a2b3cppp:
I have heard uptrends defined in the following ways:
1) a series of HH/HLs (some people say H/HL, some people say HH/HL, some people say HL/HH/HL, some people say HH/HL/HH/HL)
2) Anchor R becoming S
3) Trendlines
4) the slope of a MA
I have been unable to fine one that consistently works for me.
What are your thoughts?
As Took2Summit stated, "...you can draw the trend line however you want, but you have to be consistent."
You can use any framework for trading as long as it --- and your trading rules surrounding it --- are consistent.
All the ideas you list above for defining a trend do indeed define a trend. None of them, however, can predict whether the current trend --- definable at that moment in time --- will continue.
When you say you have been unable to find a trend definition that consistently works for you, what is your definition of "consistently works"?
All the ideas you list above for defining a trend work for me with excellent consistency, meaning I have rules for trading off these trend definitions that have produced net profit over series' of trades for years now.
Consistency is not certainty. All your threads seem to indicate a quest for certainty. Consistently profitable trading is based on positive expectancy, not certainty.
Your trading plan based on research and testing over a large sample size (such as applying a set of trade entry and trade management rules to 500 appearances of a particular setup and finding enough positive expectancy to produce a net profit after slippage and commissions) will provide the consistency you seek without any need for certainty in predicting the outcome of any individual trade.
Think of a well-researched and tested trading plan as a car that will take you through the streets of the Market City each day as you look for potentially profitable opportunities. If you took the car to a good mechanic and got the seal of approval (research, development & testing phase) before buying it, the chances of a breakdown are reduced. If you drive mindfully and safely, and wear a seat belt (stay focused and patient, follow your setup/entry rules, and honor your risk management plan), your chance of getting killed in an accident is quite low, and your chance of being available to take advantage of every opportunity is high.
I know several traders who have absolutely everything they need to extract ample profit from the market every week. They have well-researched and tested trade ideas with specific rules for entry and exit, yet they're unable to realize their dream because of common bad habits related to fear of uncertainty and/or a never-ending quest for certainty (usually in the forms of further testing, changing rules, adding/removing indicators, testing other markets, and so on).
There is a level of certainty in trading and if I were to express it in terms of tossing a coin for a living, it would look much like one of these scenarios:
1. You toss a fair coin. For every head you receive $130; for every tail you pay $100.
2. You toss a coin that is balanced to come up heads 60% of the time. For every head you receive $130; for every tail you pay $130.
3. You toss a coin that's balanced to come up heads 30% of the time. For every head you receive $500; for every tail you pay $180.
4. You toss a coin that is balanced to come up heads 90% of the time. For every head you receive $50; for every tail you pay $250.
If you could choose any of these coins and toss it for a living based on the risk:reward plan, would you do so?
06-23-13 10:04 PM
My mentor taught me classic TA patterns for free. These patterns are available for free (http://www.daytradingcoach.com/dayt...ysis-course.htm), and in inexpensive books.
I have an individual method of trading off these classic TA patterns. I've posted my strategies via annotated charts here on ET. I've taught my strategies to several others. None of the people I've taught them to have been able to make a living off them. It has nothing to do with their trading plans (all good plans); it has to do with their inability to trade their plans because of a desire for more certainty.
These strategies have been working for the 3 years I've been trading them and they appear to have worked for my mentor for many more years than that. Since they've been around for at least a few decades, I can see they've been working at least that long.
The only adaptation I've had to make to my core TA-based trading plan is when the volatility died down last year in the instrument I trade, I reduced my stops and targets accordingly.
Every one of these patterns are ambushes at times and always have been.
That's what risk management rules are for.
06-23-13 10:12 PM
Quote from marketsurfer:
No, it's not and can not be predictive. Even the MTA disagrees with you ( to the best of my knowledge). If it was predictive, why wouldn't the super computers that search non stop for such patterns, find them, exploit them and cause them to cease being predictive?
My personal hypothesis is that all the programmed trading has made them more predictive than ever. I'm often astounded at how many times in a row a particular setup will hit my profit target before hitting my stop.
Keep in mind that the big money that moves price can't just jump in and out all at once; they have strategies for building positions and exiting positions. These strategies become apparent when you study price action and develop your own plan around it.
I don't need to trade 50, 100, 500, or 1000 oil contracts at a time, so I don't have to worry about becoming the "mark" for market makers or about outsmarting another large entity that has to trade that kind of size to scale in and out of longer term positions/hedges.
I can trade my piker size, latching onto the big bad sharks like a little remora:
"The remora benefits by using the host as transport and protection, and also feeds on materials dropped by the host."
06-23-13 10:29 PM
Surf, I'm curious about something. If you believe there's no way to predict the odds of a directional price move based on the technical analysis of what price has been doing, then why do you think certain patterns repeat so much more often than they fail?
I'm looking at a daily chart of the ES going back to June 2012 and I see price pull back down to the rising 50-day moving average on 6 consecutive occasions and result in a directional move of 50 handles or more without closing below that 50EMA, meaning very low risk for significant reward.
How is it a pattern can repeat that often without a fake-out or "ambush" or outright failure?
пʼятниця, 5 квітня 2013 р.
Plant based diet
NoDoji
Registered: May 2008
Posts: 8107
03-18-13 08:28 PM
Plant-based diets provide very high quality nutrients. B12 can be got from many fortified sources or a supplement.
Meat is not necessarily the best source of iron. Meat contains heme iron, the absorption of which the body doesn't regulate. So its possible to get more iron than is needed and this is not healthful. Non-heme iron from plant sources is absorbed as needed. If you're low on iron, you'll absorb more, if you have enough or too much iron, you'll absorb less.
Here are my favorite resources for plant-based nutrition:
http://www.drmcdougall.com/free.html
http://nutritionfacts.org/
And here's my favorite book for kids:
http://www.amazon.com/Disease-Proof...t/dp/0312338082
Registered: May 2008
Posts: 8107
03-18-13 08:28 PM
Quote from lvivihor:
Hello NoDoji! It's pleasure to read your informative posts about plant based diet. I'm also on plant based diet for year now. We have 2-years old kid, who also do not eat meat, but i faced a lot of criticism from my parents, friends, local doctors and so on. The main arguments they have is that it is very dangerous not to eat meat and fish for so little kid, because his body is forming and he needs to eat meat, as meat is the best source of iron, B12 and other amino acids. I doubt if i have right balanced diet for my kid right now, cause if i'm wrong that can be irreversible process for kid healths. I even though to gave my son meat once a week. So i need your qualified advise about this. Can you point me out for good scientific source, or book about right plant based diet for little kids?
Thank you and waiting for your answers.
Plant-based diets provide very high quality nutrients. B12 can be got from many fortified sources or a supplement.
Meat is not necessarily the best source of iron. Meat contains heme iron, the absorption of which the body doesn't regulate. So its possible to get more iron than is needed and this is not healthful. Non-heme iron from plant sources is absorbed as needed. If you're low on iron, you'll absorb more, if you have enough or too much iron, you'll absorb less.
Here are my favorite resources for plant-based nutrition:
http://www.drmcdougall.com/free.html
http://nutritionfacts.org/
And here's my favorite book for kids:
http://www.amazon.com/Disease-Proof...t/dp/0312338082
субота, 19 січня 2013 р.
Steps to become profitable
Of all the things I did on my quest for consistent profitability, there were several that were harmful (such as trading live without a well-researched and tested trading plan).
Here are the steps that contributed to consistent profitability, listed in the order they should've been taken:
1. Research trading ideas by compiling statistical data over time through varying market environments (trending, ranging, chopping, calm, and volatile).
2. Develop entry and trade management rules for the ideas that indicate the highest odds of success.
3. In a simulated real-time environment, test these mini-plans.
4. Continue to study and tweak based strictly on statistical data, not on bias or feelings.
5. Discard any ideas that are not consistently profitable after commissions and slippage.
6. Practice trading the remaining ideas in sim for a period of time sufficient to have offered all the common market environments listed above. If you have difficulty following your trading plan, code the ideas into an automated trading system.
7. Trade live with smallest size, and size up accordingly as your account grows. If size affects your ability to follow your plan, trade small again, and consider automating to avoid "Thinking While Trading".
While practicing in sim, I highly recommend reading Mark Douglas' Trading in the Zone several times with a month of trading experience between readings.
I personally found the best trading ideas come from studying price action. A thorough study of price action reveals edges that do not degrade over time. The reason is that basic human nature is unlikely to change in your lifetime; it certainly hasn't changed much at all throughout recorded history.
Here are the steps that contributed to consistent profitability, listed in the order they should've been taken:
1. Research trading ideas by compiling statistical data over time through varying market environments (trending, ranging, chopping, calm, and volatile).
2. Develop entry and trade management rules for the ideas that indicate the highest odds of success.
3. In a simulated real-time environment, test these mini-plans.
4. Continue to study and tweak based strictly on statistical data, not on bias or feelings.
5. Discard any ideas that are not consistently profitable after commissions and slippage.
6. Practice trading the remaining ideas in sim for a period of time sufficient to have offered all the common market environments listed above. If you have difficulty following your trading plan, code the ideas into an automated trading system.
7. Trade live with smallest size, and size up accordingly as your account grows. If size affects your ability to follow your plan, trade small again, and consider automating to avoid "Thinking While Trading".
While practicing in sim, I highly recommend reading Mark Douglas' Trading in the Zone several times with a month of trading experience between readings.
I personally found the best trading ideas come from studying price action. A thorough study of price action reveals edges that do not degrade over time. The reason is that basic human nature is unlikely to change in your lifetime; it certainly hasn't changed much at all throughout recorded history.
Pa setups
I'm curious what, specifically, would constitute proof to you that a trader, trading a single futures contract (to ensure there's no average-down opportunity), can in fact be consistently profitable applying one or more of the following standard technical price action concepts:
1. Entering a with-trend position on a pullback
2. Entering a with-trend position on a break of a previous high/low
3. Fading the extremes of a tradeable range
4. Entering a counter-trend position based on the old 1-2-3 reversal setup
1. Entering a with-trend position on a pullback
2. Entering a with-trend position on a break of a previous high/low
3. Fading the extremes of a tradeable range
4. Entering a counter-trend position based on the old 1-2-3 reversal setup
неділя, 13 січня 2013 р.
noDoji how to handle losers
Notes I took from a Mark Douglas interview: “There’s no way to know the sequence of wins and losses. If we want to be able to trade our methodology in an effective fashion, to be able to utilize this methodology in a way where we can extract the maximum amount of profit that it makes available to us based on the pattern that it identifies, we have to do it in certain ways. Our mind has to be free to be able to execute these trades without making trading errors and the trading errors come from believing that because the pattern is present, that it’s going to give me a winning trade on THIS one; THIS trade is going to be a winner. You can’t think that way. That’s the way the typical trader thinks. The typical trader thinks ‘I’m not gonna put on this trade on unless I think it’s gonna be a winner or why would I do it?’”
“Trading a technical methodology or a technical pattern does not have anything to do with being right or wrong. It’s just an odds game. You’ve got to be able to take every single trade because you don’t know the sequence of wins and losses. You’ve got to be able to identify what your risk is and that’s simply ‘How much am I willing to spend to find out if other traders are going to come into this market and bid it higher than my price or offer lower than my price if I sold?’”
The solution is to change your mind, to change the way you think. “[You’ve] got to eliminate the potential to think that the market’s going to disappoint you. And the way [you] eliminate the potential is by understanding that trading is not about being right or wrong. It’s a probability game.”
There are stages of development such as learning how to think in probabilities so the market doesn’t have the potential to cause us to feel emotional pain.
“When you put on a trade and it doesn’t work, all it really means is that some of the traders didn’t come into the market that had the same belief that you had, or the same conviction about this market doing whatever it is you thought it was going to do. You have to learn to walk away.”
We can’t predict collective human behavior. “The methodologies that we have access to, these mathematical formulas, do that for us. But you have to understand that there’s no possible way that these mathematical formulas can predict the outcome of these patterns on a trade by trade basis, only on a series of trades. So when I get a signal from my methodology, at the most fundamental level what this is telling me is that the odds are in my favor that somebody is going to come into the market (this is what the pattern means) and bid it higher than here if I bought or offer it lower than here if I sold. That’s all that it’s saying. Now they’re either gonna come or they’re not, and so as a result I don’t look at this as being a ‘right’ or a ‘wrong’; I look at this as How much distance am I going to give the market to move away from my entry point to tell me that they’re either going to come or they’re not, and any further is not worth the cost of finding out.”
I can't speak for Lescor, but my guess is that he learned to attain this mindset before he became a master trader.
“Trading a technical methodology or a technical pattern does not have anything to do with being right or wrong. It’s just an odds game. You’ve got to be able to take every single trade because you don’t know the sequence of wins and losses. You’ve got to be able to identify what your risk is and that’s simply ‘How much am I willing to spend to find out if other traders are going to come into this market and bid it higher than my price or offer lower than my price if I sold?’”
The solution is to change your mind, to change the way you think. “[You’ve] got to eliminate the potential to think that the market’s going to disappoint you. And the way [you] eliminate the potential is by understanding that trading is not about being right or wrong. It’s a probability game.”
There are stages of development such as learning how to think in probabilities so the market doesn’t have the potential to cause us to feel emotional pain.
“When you put on a trade and it doesn’t work, all it really means is that some of the traders didn’t come into the market that had the same belief that you had, or the same conviction about this market doing whatever it is you thought it was going to do. You have to learn to walk away.”
We can’t predict collective human behavior. “The methodologies that we have access to, these mathematical formulas, do that for us. But you have to understand that there’s no possible way that these mathematical formulas can predict the outcome of these patterns on a trade by trade basis, only on a series of trades. So when I get a signal from my methodology, at the most fundamental level what this is telling me is that the odds are in my favor that somebody is going to come into the market (this is what the pattern means) and bid it higher than here if I bought or offer it lower than here if I sold. That’s all that it’s saying. Now they’re either gonna come or they’re not, and so as a result I don’t look at this as being a ‘right’ or a ‘wrong’; I look at this as How much distance am I going to give the market to move away from my entry point to tell me that they’re either going to come or they’re not, and any further is not worth the cost of finding out.”
I can't speak for Lescor, but my guess is that he learned to attain this mindset before he became a master trader.
четвер, 20 грудня 2012 р.
NoDoji about S/R and testing
12-19-12 08:24 PM
Quote from clarodina:
how you guys deal with overshoot or undershoot of support and resistance level? How to know whether price would overshoot or undershoot?
Homework (to be done on 50 occurrences of the setup in your trading time frame):
1. Choose an S/R level (trend line, parallel channel line, previous horizontal S/R, moving average).
2. On smaller time frame chart (such as 1-min chart for 5-min traders, or an hourly chart for very short term swing traders), compare the patterns of trades where S/R holds (with or without an overshoot) to the patterns of trades where S/R fails.
3. Note if any particular price action pattern occurs more often than not.
4. Use patterns that occur more often than not as a guide to setting up rules for trading off S/R levels.
5. Repeat for each type of S/R level.
As a 5-min trader, I use the classic 1-2-3 reversal pattern on a 1-min chart. Highest probability pattern I've found so far.
http://www.dacharts.com/123.htm
The examples show the LH and HL reversals, but DT/DB's and FBO's work just as well.
I also tend to take the early entry (the "X"), because I'm cheap these days.
середа, 12 грудня 2012 р.
NoDoji trading stats
Trading for a living is not about feelings, it's about hard stats. Feelings are fine if you're taking a fixed amount of money you plan to lose to the casino to see if you can get lucky. The reason your emotions are getting in the way is because of how you feel about setups, for better or worse.
Trading for a living means combining setups and money management rules that place the odds in your favor over a large enough sample size to generate profits despite the random distribution of individual wins and losses.
I never "feel" an edge technically (except those "continuation in a very strong trend" setups). I "know" an edge technically. I "know" that based on the hard statistical data I've compiled for a given pattern in a given context that the odds are in my favor. I also know that the outcome of this individual trade will be random, but if I trade the same pattern/context over and over again, the net outcome of the randomly distributed individual outcomes will be positive.
I no longer care how the setup feels or how it feels once I'm in the trade, because feelings used to sabotage my profit potential badly. I'll never forget my friend and I taking a short trade together, both of us "feeling" that there was support at a nearby level as the trade moved in our favor, both of exiting quickly for .10 profit at the exact same moment, only to watch price immediately break and drop over 1.00 in minutes.
Wolf knows my trading well and can confirm that I am now much better at sitting with the discomfort come hell or high water until the market says loud and clear that the setup is no longer valid.
I can't emphasize enough that feelings have no place in trading. You do research, accrue knowledge, develop rules based on that knowledge, then hold your nose and buy or sell when (and only when) your rules tell you to.
Trading for a living means combining setups and money management rules that place the odds in your favor over a large enough sample size to generate profits despite the random distribution of individual wins and losses.
I never "feel" an edge technically (except those "continuation in a very strong trend" setups). I "know" an edge technically. I "know" that based on the hard statistical data I've compiled for a given pattern in a given context that the odds are in my favor. I also know that the outcome of this individual trade will be random, but if I trade the same pattern/context over and over again, the net outcome of the randomly distributed individual outcomes will be positive.
I no longer care how the setup feels or how it feels once I'm in the trade, because feelings used to sabotage my profit potential badly. I'll never forget my friend and I taking a short trade together, both of us "feeling" that there was support at a nearby level as the trade moved in our favor, both of exiting quickly for .10 profit at the exact same moment, only to watch price immediately break and drop over 1.00 in minutes.
Wolf knows my trading well and can confirm that I am now much better at sitting with the discomfort come hell or high water until the market says loud and clear that the setup is no longer valid.
I can't emphasize enough that feelings have no place in trading. You do research, accrue knowledge, develop rules based on that knowledge, then hold your nose and buy or sell when (and only when) your rules tell you to.
понеділок, 3 грудня 2012 р.
No Doji edge
NoDoji
Registered: May 2008
Posts: 7803
12-01-12 06:44 PM
When you say "good at trading technically" I'm interpreting that as "good at recognizing price behavior that leads to profit A before hitting stop loss B more often than not and B is less than or equal to A". (If you don't have rules defining positive expectancy price behaviors/patterns, you have no basis for technical trading, and should expect the same long term results as a recreational casino gambler but without the free liquor.)
Now assuming you CAN read the market technically based on a well-researched plan with fixed rules, when you say "I don't have patience and discipline" I'm interpreting that as any or all of the following:
"I jump the gun and put on trades before a valid signal appears."
"I get bored, lose focus, miss a valid trade entry and either get in late or put on 'out-of-plan' trades" to try and get back what I missed."
"When a position shows an unrealized profit, I move my stop to break even to prevent the chance of a loss, or I take a small profit instead of holding for a full minimum profit necessary to maintain the edge provided by my plan."
If my interpretations are in line with your experiences, the solution is to trade in a simulated account until you're trading your plan according to the rules and producing results in line with the profits demonstrated during the research/testing phase of plan development.
The goals of the simulated trading experience are much like the goals of a student pilot's simulated flight experiences. You're learning to follow fixed rules until it becomes second nature to do so. You're learning to focus on what needs to be done right here and right now by adhering to a process that results in safe and timely arrival at a particular destination more often than not, rather than focusing on the destination and forgetting to follow the important steps that get you there.
The first positive sign you may be ready to trade live is when you're trading all valid setups that appear and managing them according to your plan, and have a profitable net result that's close to your test result.
The second sign that you may be ready to trade live is when you find yourself immediately placing your order when a valid setup signals; when you find that the mere placing of the initiating order according to your plan brings immense satisfaction.
The sign that you're finally ready to give it a go with real money is when "in plan" losing trades that were managed properly produce no more emotional response than paying your utility bills each month, and you find yourself patiently awaiting the next valid setup.
I assure you that 95% of aspiring traders are missing one or more of these important steps to success: research demonstrating an edge; written plan based on research; regular forward testing demonstrating results very similar to research/backtest results; ability to follow the plan comfortably and confidently in a real-time simulated environment.
If you're not able to then transfer this mindset to live trading, yet still want to trade, you should seek the help of a professional trading psychologist.
Registered: May 2008
Posts: 7803
12-01-12 06:44 PM
Quote from mrnate22:
The truth is I'm good at trading technically but my biggest problem are my emotions.. I don't have patience and discipline.
When you say "good at trading technically" I'm interpreting that as "good at recognizing price behavior that leads to profit A before hitting stop loss B more often than not and B is less than or equal to A". (If you don't have rules defining positive expectancy price behaviors/patterns, you have no basis for technical trading, and should expect the same long term results as a recreational casino gambler but without the free liquor.)
Now assuming you CAN read the market technically based on a well-researched plan with fixed rules, when you say "I don't have patience and discipline" I'm interpreting that as any or all of the following:
"I jump the gun and put on trades before a valid signal appears."
"I get bored, lose focus, miss a valid trade entry and either get in late or put on 'out-of-plan' trades" to try and get back what I missed."
"When a position shows an unrealized profit, I move my stop to break even to prevent the chance of a loss, or I take a small profit instead of holding for a full minimum profit necessary to maintain the edge provided by my plan."
If my interpretations are in line with your experiences, the solution is to trade in a simulated account until you're trading your plan according to the rules and producing results in line with the profits demonstrated during the research/testing phase of plan development.
The goals of the simulated trading experience are much like the goals of a student pilot's simulated flight experiences. You're learning to follow fixed rules until it becomes second nature to do so. You're learning to focus on what needs to be done right here and right now by adhering to a process that results in safe and timely arrival at a particular destination more often than not, rather than focusing on the destination and forgetting to follow the important steps that get you there.
The first positive sign you may be ready to trade live is when you're trading all valid setups that appear and managing them according to your plan, and have a profitable net result that's close to your test result.
The second sign that you may be ready to trade live is when you find yourself immediately placing your order when a valid setup signals; when you find that the mere placing of the initiating order according to your plan brings immense satisfaction.
The sign that you're finally ready to give it a go with real money is when "in plan" losing trades that were managed properly produce no more emotional response than paying your utility bills each month, and you find yourself patiently awaiting the next valid setup.
I assure you that 95% of aspiring traders are missing one or more of these important steps to success: research demonstrating an edge; written plan based on research; regular forward testing demonstrating results very similar to research/backtest results; ability to follow the plan comfortably and confidently in a real-time simulated environment.
If you're not able to then transfer this mindset to live trading, yet still want to trade, you should seek the help of a professional trading psychologist.
Nodoji gambler mindset
NoDoji
Registered: May 2008
Posts: 7803
12-02-12 05:38 PM
You're mired in a gambler's mindset. Every trade is brand new, anything can happen, and there's a random distribution of wins and losses among the trade setups that constitute your edge. The fact that you FEEL 90% certain about the outcomes of technical setups in an environment where 90% win rates belong to professional institutional traders (HFT, iBanks, hedge funds that blow up every few years and start fresh, etc.) tells me that you suffer from confirmation bias; you remember the setups that work and conveniently forget the same setups that fail.
There was a setup where I got trapped into losing trades a couple times and I was ready to place a filter on this pattern to eliminate it from my trading plan. But I've learned that stats derived from actual research reveals the market's reality, and prove or disprove the "reality" manufactured in my mind based on a few personal experiences. When I did the research of the outcomes of every appearance of this particular setup over a period of months, I found that it had 55% success rate and when a contextual filter was added the success rate improved to 65%. Yet in my mind it FELT like a 90% failing setup.
If you really want help, do the work:
1. Do you have a trading plan based on research and hard stats (demonstrating an edge) that precisely describes the setups, what triggers a trade entry, and how the stop placement (or averaging process) and profit-taking are to be managed?
If no, do the work and put a real plan together.
If yes,
2. Have you practiced applying it in a simulated account until the simulated results approximately match the profits your edge should be producing based on your research?
If no, practice until you can follow your plan.
If yes,
3. Seek help from a professional trading psychologist, because you've made it clear that you're not trading in line with your plan.
I don't think your problem is impatience; I think it's that you believe you can predict the market based on selective after-the-fact cataloging of price action.
Registered: May 2008
Posts: 7803
12-02-12 05:38 PM
Quote from mrnate22:
I'm not saying 90% of my trades are profitable.. In fact, most of my trades are losers because of my impatience, overtrading and so forth..
What I'm saying is I can spot trades where I know 90% of the time, it's gonna work.. unfortunately, I'm so impatient that I trade other crap setups instead.. and what I'm asking for help.. I have no problem in technical stuff, it's the mental where I'm horrible at..
You're mired in a gambler's mindset. Every trade is brand new, anything can happen, and there's a random distribution of wins and losses among the trade setups that constitute your edge. The fact that you FEEL 90% certain about the outcomes of technical setups in an environment where 90% win rates belong to professional institutional traders (HFT, iBanks, hedge funds that blow up every few years and start fresh, etc.) tells me that you suffer from confirmation bias; you remember the setups that work and conveniently forget the same setups that fail.
There was a setup where I got trapped into losing trades a couple times and I was ready to place a filter on this pattern to eliminate it from my trading plan. But I've learned that stats derived from actual research reveals the market's reality, and prove or disprove the "reality" manufactured in my mind based on a few personal experiences. When I did the research of the outcomes of every appearance of this particular setup over a period of months, I found that it had 55% success rate and when a contextual filter was added the success rate improved to 65%. Yet in my mind it FELT like a 90% failing setup.
If you really want help, do the work:
1. Do you have a trading plan based on research and hard stats (demonstrating an edge) that precisely describes the setups, what triggers a trade entry, and how the stop placement (or averaging process) and profit-taking are to be managed?
If no, do the work and put a real plan together.
If yes,
2. Have you practiced applying it in a simulated account until the simulated results approximately match the profits your edge should be producing based on your research?
If no, practice until you can follow your plan.
If yes,
3. Seek help from a professional trading psychologist, because you've made it clear that you're not trading in line with your plan.
I don't think your problem is impatience; I think it's that you believe you can predict the market based on selective after-the-fact cataloging of price action.
NoDoji about consolidation
12-03-12 02:46 AM
Day trading a 5-min time frame isn't easy because it requires a lot of focus. Price might consolidate for 10 minutes or 60 minutes. You have to fight the urge to manufacture something out of nothing during these periods, yet at the same time remain focused enough to act without hesitation once price tips its hand.
What might be helpful to you is an exercise where you act as if you're teaching a class on day trading and describe what's happening with each price bar that prints. Describe the market environment to your "class". When a setup forms, identify it and describe why it's valid (or why it's not valid, if you use filters).
It will be more difficult to trade out of plan while you're doing this.
I sometimes Skype with some other traders and it helps relieve that impatient feeling where you just want the market to make a move and it refuses to do so for quite a while, and you're certain every little move means you're about to miss out on something big. There's a flat 20EMA, and price is breaking out of a narrow range by a tick in both directions, slowly destroying the morale of impatient overtraders. Thing is, most of the time the market finally tips its hand on the smaller time frame (such as a 1-min chart for 5-min traders), and you'll be able to get in on it with far better odds in your favor if you're patient and wait for those little patterns to appear.
Read Bob Volman's book for a superb and comprehensive analysis of these small time frame patterns where the market tips its hand quite reliably.
Quote from mrnate22:
Nodoji,
You're absolutely right.. I can read the market but I'm not trading based on my ability and it because of my stupid emotions.. it's always in the way of my trading. I'm grateful for many advice that was given to me here but I've done them before and my stubbornness still wins.. Maybe I'm not meant to be a trader..
I mostly trade stocks and I'm a daytrader.. I look at different timeframes but my main one is the 5 min. chart..
Day trading a 5-min time frame isn't easy because it requires a lot of focus. Price might consolidate for 10 minutes or 60 minutes. You have to fight the urge to manufacture something out of nothing during these periods, yet at the same time remain focused enough to act without hesitation once price tips its hand.
What might be helpful to you is an exercise where you act as if you're teaching a class on day trading and describe what's happening with each price bar that prints. Describe the market environment to your "class". When a setup forms, identify it and describe why it's valid (or why it's not valid, if you use filters).
It will be more difficult to trade out of plan while you're doing this.
I sometimes Skype with some other traders and it helps relieve that impatient feeling where you just want the market to make a move and it refuses to do so for quite a while, and you're certain every little move means you're about to miss out on something big. There's a flat 20EMA, and price is breaking out of a narrow range by a tick in both directions, slowly destroying the morale of impatient overtraders. Thing is, most of the time the market finally tips its hand on the smaller time frame (such as a 1-min chart for 5-min traders), and you'll be able to get in on it with far better odds in your favor if you're patient and wait for those little patterns to appear.
Read Bob Volman's book for a superb and comprehensive analysis of these small time frame patterns where the market tips its hand quite reliably.
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