Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.
DbPhoenix
-
Content Count
3789 -
Joined
-
Last visited
-
Days Won
1
Everything posted by DbPhoenix
-
I know nothing about your psychological makeup, but the fact that you view the markets as you do affects the approach you take to trading. Whether or not this view results in profits that are sufficient to provide oneself (and his family) with a reasonably high standard of living is a matter for conjecture. As for the number of posts, note that I joined TL four years ago. You've racked up 685 in nine months, so it'll all wind up about the same. In any case, comments about emotional problems and the denizens of message boards do not necessarily apply to any one person in particular. But it is nonetheless common that someone who has at last been able to eke out a profit of any kind after years of trying by at least discovering the ultimate MACD setting, for example, will insist that this is the true course, and that all beginners must also follow this course if they are to reach the promised land. Likewise, those who have found a way to beat their id into submission in order to complete a trade will most likely come to believe that everybody endures this same struggle and must treat their ids likewise. Db
-
The evidence is in whatever chart one uses to illustrate a particular trade. As for research, that's all well and good, but the profits are in the trading. Just the opposite, actually. It has everything to do with risk management. One won't be in the game for long if he holds to the position that catching falling knives has nothing to do with risk management. Depends on your entry. If you're CAFK, the price first has to come back to your entry before you make any profit at all. Depending on the entry, the trader who waits for the shift will be in profit long before price ever gets to your entry level. As for risk, that's not just a matter of points but of probability, i.e., the likelihood that one's stop level will be reached, as well as one's profit target. As for what I will find "over a large enough sample size", that would depend entirely on the parameters of the strategy and tactics employed. I may find just the opposite. OTOH, if you can, then it is. The profit, after all, is not in points but in size. Anyone who wants to do so is welcome to do so, but I won't be posting many more charts there, if any, not because I can't prove some point about the ES but because I've posted more than enough already. At this stage, it's up to the participants and the lurkers to develop plans and post charts and trades. If they don't, then the thread will more or less end. In any case, the key word in what you've posted above is "effective". What is effective for one trader will be a waste of time for another. Scalping, for example, is a complete waste of time for me, but others just love it. Some may have strategies that don't call for much follow-through, much less range extension. They might just clutch the ES to their bosoms. I prefer something that moves quickly and decisively so that I can quit early and do something more interesting. That's probably true. Message boards are practically defined by theory, with few plans and even fewer RT trades to provide the practice. Unfortunately, many beginners take these theories to represent fact, when more often than not they are little more than wishful thinking. Not that any of this will amount to a hill of beans in a week (or tomorrow), when everyone has forgotten about this thread and it's back to business as usual. Db
-
You make a number of unsupported statements here. One could also advance the case that catching falling knives, even on occasion, will lead to an emptied account . Ignoring the adverse excursion is fine if one is just playing at this, but not if one is trading real money in order to make a living. As to the example itself, this guy uses a reasonably decent example but trades it poorly and explains the trade even worse. Your hyperbole about confirmation aside, the inst. hits the support level that's been tested repeatedly pre-market and buyers enthusiastically come rushing in. That's the first buying op, 1pt above the low on a 5m chart (less using a smaller interval). "Confirmation" comes a point later (also less using a smaller interval). Waiting for this small confirmation that sentiment has shifted and is being translated into transactions ameliorates the risk considerably. Catching a falling knife is hardly responsible risk management for anyone, at least anyone trading his own money, and most definitely for a beginner, a class characteristically emotionally incapable of managing such a tactic. If that message alone gets through, well done. Db
-
In what way, exactly? Db
-
Wyckoff hardly ignores risk. Risk management is a key element of his approach. From page 1 of his course: This is a method of judging the stock market by its own action. It is intended for investors as well as for traders. It has been planned and prepared for those who desire to safeguard their investment capital against, and to make money from, the fluctuations in the priced of stocks dealt in on the New York Stock Exchange or any other organized exchange. It is applicable as well to bonds, preferred stocks and the leading commodity markets. Anyone who buys or sells a stock, a bond or a commodity for profit is speculating if he employs intelligent foresight. If he does not, he is gambling. Your purpose should be to become an intelligent, scientific and successful investor and trader. This Method is for those who have had either little or no experience operating in the stock market, or for those who have had much experience but who have never been shown the real rules of the game. Out of the very limited number who really understand the inner workings of the stock market, practically no one has been willing to show the public the real inside. I believe it is time for someone to step forward and do this. The appalling losses, in securities, suffered annually by millions of people, are enough to make the angels weep. These losses are the direct result of stock market plunging by people, most of whom do not realize what they are risking, and who have an amazingly small knowledge of the market. [Emphasis mine] (Richard Wyckoff) Those who suffer from emotional problems will insist that one cannot trade without emotion. Emotion must be controlled. Emotion must be directed. Emotion must be managed. None of this is true. Those who don't understand the nature of buying and selling will insist that quantification is necessary, that one must apply statistical analysis and maintain spreadsheets and address "algos" and "HFTs" and so forth. But none of this is true, either (unless one is scalping for ticks). Then there are those who insist that the market is a battlefield and that one must know and prepare for and fight one's enemies. But this is a misdirection as well, since it necessitates forcing one's ego into the matter, and we all know how helpful ego is when trading. Or there's the one about the market being shark-infested waters. Nothing like inviting that old fear response, is there? I can't help but wonder why message board habitues fill beginners' heads with this stuff. Db
-
Sounds colorful, but you're missing the point. Wyckoff is about determining the flow of price and riding that flow until it reverses. If you don't like the auto metaphor, great. One could also use surfing and sailing, but surfers wipe out and sailboats founder. But the metaphor is not the thing. Markets are about demand and supply and have been since at least the Sumerians. Sellers want the highest price. Buyers want the lowest. If one looks at this as nothing more than numbers, he will spend his trading life chasing shadows, which may be why beginners spend so many years learning how to make more than lunch money, if they ever do. Db
-
Sounds like an epiphany. But why so long? Perhaps the Forum was too disorganized four years ago. This is a fine start (see the notes I made in the body of the quote above). You'll learn a lot by going through the process. Don't be as concerned about nailing everything down as learning to see these movements in a new or different way. No. People will avoid creating trading plans at all costs. You and 40 are the only participants now, and there weren't much more than that four years ago. That's why I decided to view all this as a resource this time and let it go at that. It really isn't my problem if people choose to do it the hard way, if they choose to do it at all. So thank you for setting an example. Now see how all of this works via replay. Fiddle and tweak and adjust as much as you like. Db
-
You keep saying all these smart things, Siuya. But at least you're not alone: Figuratively speaking, the small trader should imagine himself as a hitch-hiker in the market. For the ordinary hitch-hiker, someone else supplies the car, chauffeur, oil and gas. When he thinks the car is about to go in his direction, he jumps aboard and rides as far as he thinks the car will go. When he notices the machine has been stopped by a red light, or is about to turn a corner and go in some other direction, or that the car is running out of gas, or the brakes failing to work properly, he steps off and figures he has secured about as long a ride as he may expect. All he has supplied in this transaction is a modest commission and whatever brains were necessary to observe and recognize the opportunity when to get on and off. (Richard Wyckoff) Here's an idea for an edge: learn how to draw a box and a straight line. No complex mathematical gyrations, no quantitative whatever, no statistics, no spreadsheets. Just a box and a line. Db
-
No foresight required as trading hinges is essentially a drill. In these cases, the hinges took too long to resolve, so the "breakouts" segued into trading ranges. Db
-
And, of course...
-
No one has pointed this out so far, so...
-
The waves become equivalent by 1000EST. The buying wave following is longer and as fast than the previous selling wave. However, though the subsequent selling wave is abbreviated, it cuts deeply into the previous buying wave, suggesting a trading range, which is what you get. There's nothing wrong with taking that RET as long as one understands what's going on and exits the trade when the continuation doesn't materialize. One can also take the RET at 1030. Db
-
There's no law that says one can't enter within a trading range. Teresa Lo called it a "stealth" entry (if and when the BO comes, you're propelled by the wave). However, one absolutely must acknowledge the risks involved. You show quite clearly that price can be expected to return to the LSL, unlike a trend move. If this sort of "adverse excursion" freaks one out, best to wait for the BO or the subsequent RET. Db
-
An embarrassment of riches. Db
-
There's an entire thread on it, but it's not used much. Db
-
Nothing like monitoring the leaders for clues as to market direction. Db
-
It depends partly on whether or not the beginner can tell up from down (there are people who've been struggling for years and still can't tell up from down) and partly on whether or not the beginner is willing to forego trading for studying price action. If the beginner cannot tell up from down, he will not likely trade RETs profitably since he won't know how to tell the difference between a RET and a REV. If the beginner will not forego trading in order to study price action as a subject in itself, he will be focusing on setups and not the behaviors of other traders, thus getting it wrong most of the time, or settling for small profits when he could be aiming much higher. If the trader spends some time studying price action without obsessing over how he can profit from it, then it probably doesn't matter whether he trades RETs or REVs. If he doesn't, he will probably give up before it makes any difference, or run out of money. Db
-
Given the parabolic open, I'd wait for the trend to establish itself, at the first RET. Regardless, you'd still enter at the same place, 1417, and exit at 1428/27. Unless you wanted to hang around for another two hours for an extra couple of points. Db
-
Okay, I think I understand what you're confused about, and you may want to re-read the S/R thread. Determining S/R in advance is only a guess on the trader's part. As I explain in the S/R thread, S/R can be a line or a point or a zone. But S/R is not what the trader says it is; it's what the market says it is. If buyers come rushing in ahead of wherever the trader has pegged S, then he needs to re-assess his S levels PDQ. That's one of the reasons why trading in RT is so different from "trading" in hindsight. What matters here is not the level of S that's been drawn in advance but the violent reaction of buyers when price gets anywhere near it. Note how far they can propel price after that first approach. That "test" carries more information for the trader than whether or not price touches a level that may not even be accurate. Price reverses at what the trader has pegged as S or R only occasionally, and rarely to the tick. But it does happen. Unfortunately, while those occasions are great fodder for message board boasting, they are only coincidental to the trade. Watch what traders do as S or R are approached. Watch the level of activity. Watch whether they move price with confidence or they "jitter". If you're watching volume, see how violent these value disagreements are, if at all. And when the second or perhaps third tests come along, watch how sharply buyers recoil from those levels. This is a far better indication of a reversal than whether or not the trader's S line has been touched. But when all is said and done, it doesn't matter. One can wait for the next op a couple of points higher. He'd be in the clear, and everybody else would be pushing him along. As long as he's "available", there should be no problem in determining just who's in charge here. Db
-
Before I get into your questions, are we talking about the same thing? The second test is lower than the first, and the third is lower than both. Correct? Db
-
Here's an example of what I'm referring to, from this morning. The best entry of course was the open (S is from pre-market), but it's unlikely that you would have tried it or that you would have been filled if you had tried. But it doesn't matter. There's plenty for everybody. So, you might enter at the first op. If so, you'd be stopped out almost immediately. But if you didn't enter, there might not be another op. So you take it, understanding and accepting the risk so that you don't get thrown by it. When you do get stopped out (and I say "stopped out" bec in this case you might not have time to exit, so it's okay to place a tight stop just in case; you're not relinquishing responsibility for the trade to the market, you're actively managing it), you keep watching to see what traders have in mind. Here, the RET is relatively trivial, so you decide to re-enter on this RET. Or, you're not sure, so you wait for the next one, knowing and understanding and accepting that there might not be another one. But those are the risks inherent in waiting. Remember price risk vs information risk? Assuming that you're in by now, one way or another, you can draw your demand line. Notice that it's "broken" at around 2808. If you want to be rigid about your exits, take it. Otherwise, note how price "hugs" the line (this says more about the trader's drawing than it does about the price movement, which is why some flexibility in judgement is called for). However, around 2812, the break is more definite and more decisive, making an exit more justifiable. And even if you notice that the RET is hardly noticeable, the change in activity is much more noticeable, or would be if you were watching this in RT. Trading in fact practically comes to a standstill, a strong indication of changes in the offing. By the time price gets to about 2814, momentum and stride are clearly changing, and, if you had re-entered, you would have picked up only a couple extra points anyway. So you figure out how many points you would have made if you had bought late and sold early. Then decide whether or not it was all worth it. Db
-
There are several things going on here, which is why I went back and explained that these are neither plans nor templates. But all that aside, the first thing to remember is that RT is not the same as hindsight. There are behavior patterns that can be evident when watching the trades take place that are not always evident in hindsight (though they should be evident in replay). OTOH, if one has "issues", there are rules to be followed, without exception. Once those issues are put in perspective, there can be more flexibility. In this case, you're right. Someone having exit issues and/or stop issues would exit. I didn't because the selling waves were still longer than the buying waves and because S had been tested only once (hence I had no way of knowing whether it was in fact S). When S was tested again and traders huddled around that level, it seemed prudent to bail at the break and reverse. I should also point out or remind that exiting at a break of the SL is only one option. One might also wait for a violation of the last swing high, which would suggest that the buying waves might be becoming longer than the selling waves. But this is primarily an option for someone who thoroughly understands trading by price, which is practically nobody. It's also for someone who isn't going to freak when price retreats to that extent, which is also practically nobody, at least anybody who's a relative beginner. And by exercising such an option, the trader is practically daring those old emotions to grab hold again. This is not wise. What, after all, is the downside of exiting a little early? What's the old axiom? Buy too late and sell too soon? And more options are available to those who are trading more than one contract. But that can come later. Not to be insulting, but these are baby steps. Db
-
If you find it necessary to go through the same day several times until you've got through the negative vibe, go right ahead. There's a five-dollar word for this, but no need to go into that. However, once those feelings have been defanged, move on to another day. Then another. As for the exits, though, yes, they should be that simple. I suggest a break of the SL or DL line. (see the charts at the beginning of the Trading By Price thread). Then go through the process I suggested earlier. BTW, you needn't replay in real time. If it feels like it's taking forever, double or triple the speed. See how it goes. If that's still too slow, we'll talk. Db
-
None of this concerns you, Steve. I haven't made any comments on your threads. Please extend me the same courtesy. Db
-
You might also consider paper-trading just to keep your hand in and maintain your rhythm. It's a little soon to be taking that kind of time off. Db
