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DbPhoenix
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Everything posted by DbPhoenix
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See the first post in this thread. It provides links for those threads and other information sources which provide the background for participating in this thread. Db
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Accepting a margin of error of 10%, you'd have to backtest for 10 weeks, or 100 trades. For a margin of error of 5%, you'd have to backtest for 40 weeks. However, if you go back 40 weeks, it will be likely that the market is not comparable to what you are trading in the present. With replay, of course, you can do 100 trades in a weekend. Db
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Depends on how many trades per day/week your strategy generates. And if you change any controlled variable in the process, you have to start over. Db
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Whether or not you are on the right track will depend on the results of your testing. Note, however, that you have made some changes to your original strategy, introducing the 1m and tick charts, buying off swing lows, double bottoms, and so on. If your primary objective is to observe, then observe (see my Journal, below). Don't even think about entries. Or exits. Don't think about trading at all. Db
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S&R and S&R levels are hypotheses. In order to profit from them, you'll have to test them, preferably through sim. The testing will also tell you whether or not the entry -- which you have not yet defined (see my previous questions) -- is worth working on. In other words, I have no idea whether it's valid or worth working on or not. That can be determined only through hindsight – and trades can't be taken in hindsight – or through testing, though even that is not a sure thing, being only a suggestion of probabilities. Db
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I'll be damned. How's it going? Db
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Just stand still . Db
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Did you enter the trade? If so, how? Were you watching as the price hit your target? If so, how did you enter? If not, did you place a buystop? What kind? Market? Limit? Stop limit? Db
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Looks like no takers. But fortune favors the brave. Since you're interested in daytrading futures, I suggest you create your own chart using the ES or NQ or whatever it is and base your plan on that. Unless you want to do the NDX thing purely as an academic exercise, which isn't nearly as much fun. Db
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You posted just before I replied. There's no reason to believe that 2650 won't act as support if price drops down that far, and there's no reason to believe that price won't. I'm not of the "gaps are always filled" school, but there is a gap, and whether it's filled or not, you should take note of it and plan for it. Db
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I'm glad you've read it at least once, but you will likely find that once is not enough. Be that as it may, whether there are enough or too many will only become clear in hindsight, which is what one gets from vendors, and most message board inhabitants. But you don't have the luxury of hindsight; you have to decide ahead of time what you're going to do, when you're going to do it, how you're going to do it. Your lines are as correct as they need to be. The challenge is all the contingencies you're going to have to plan for trading in this zone, surrounded by all these ranges ("boxes"), i.e., what do I do if and when price does such and such. Perhaps the best exercise you can engage in now is to think about and list all those possible contingencies. If you're thorough, the market won't be able to surprise you. Those who are reading this should help you, as it wouldn't hurt them to go through the same exercise. This subject of planning and contingencies came up elsewhere yesterday or day before. I posted this. It may be helpful. Possibility Mapping Traders often hear about the potential benefits of preparing actionable trade plans prior to the next trading day. The goal of such preparation is to make yourself immune to mental edge breakdown. One of the greatest threats to your mental edge is coming across something that's unexpected during the trading day. Seeing an unexpected price move (especially one you perceive to be a big move) is likely to stress and panic you and therefore cause your psychology to shift into an emotional, reactive state. An effective way to prevent this is to prepare with possibility mapping. Possibility mapping is a process which will mentally prepare you to expect the potentially unexpected, and therefore will allow you to numb, in advance, any potential emotional responses. There are two major types of possibility mapping: Exact possibility mapping, which you would use if you tend to make your trade decisions the day before; and Price Pattern possibility mapping, which you would use if you tend to make your trade decisions while you watch price patterns forming. With exact possibility mapping, you first identify a trade you might make. You would then write out all possible scenarios of price activity following your entry. Yes, there are more scenarios than you could possibly define. However, you'll be able to identify major groups of scenarios where each of the scenarios in a given group would ultimately result in the same signal. These groups are limited and can easily be defined. Then, in your objective state of mind, you decide how you would react in each case. On the other hand, with pattern possibility mapping, you would define the several possible groups of general, overview patterns you might see and decide what actions you would take in each case. Over time, you'll find yourself mapping possibilities faster and more accurately. You can also prepare further by defining what you might think the chances are of each scenario actually occurring. With such preparation, you've already "experienced" tomorrow's markets. Therefore, you virtually eliminate the chance of mental edge breakdown due to unexpected scenarios. Possibility mapping can also drastically improve the quality of your trade decisions and your recognition of certain patterns. In addition, reviewing and comparing your possibility mapping records with your trade diary will help you find key patterns in your trading, identify areas in which you might have a lack of preparation and ones in which you have strengths. --Innerworth
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I moved your post here since my post should have been here in the first place, as I explained above. As for your question, the point of this thread is to trade "in foresight", i.e., use this display to create a trading plan for the following session. Since your question has been answered many times in this thread with many examples, I'm afraid you're just going to have to read it. Sorry Once you have your plan together, however, if you have a question that hasn't been asked already, feel free to post it. Db
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This might be of interest to you: Possibility Mapping Traders often hear about the potential benefits of preparing actionable trade plans prior to the next trading day. The goal of such preparation is to make yourself immune to mental edge breakdown. One of the greatest threats to your mental edge is coming across something that's unexpected during the trading day. Seeing an unexpected price move (especially one you perceive to be a big move) is likely to stress and panic you and therefore cause your psychology to shift into an emotional, reactive state. An effective way to prevent this is to prepare with possibility mapping. Possibility mapping is a process which will mentally prepare you to expect the potentially unexpected, and therefore will allow you to numb, in advance, any potential emotional responses. There are two major types of possibility mapping: Exact possibility mapping, which you would use if you tend to make your trade decisions the day before; and Price Pattern possibility mapping, which you would use if you tend to make your trade decisions while you watch price patterns forming. With exact possibility mapping, you first identify a trade you might make. You would then write out all possible scenarios of price activity following your entry. Yes, there are more scenarios than you could possibly define. However, you'll be able to identify major groups of scenarios where each of the scenarios in a given group would ultimately result in the same signal. These groups are limited and can easily be defined. Then, in your objective state of mind, you decide how you would react in each case. On the other hand, with pattern possibility mapping, you would define the several possible groups of general, overview patterns you might see and decide what actions you would take in each case. Over time, you'll find yourself mapping possibilities faster and more accurately. You can also prepare further by defining what you might think the chances are of each scenario actually occurring. With such preparation, you've already "experienced" tomorrow's markets. Therefore, you virtually eliminate the chance of mental edge breakdown due to unexpected scenarios. Possibility mapping can also drastically improve the quality of your trade decisions and your recognition of certain patterns. In addition, reviewing and comparing your possibility mapping records with your trade diary will help you find key patterns in your trading, identify areas in which you might have a lack of preparation and ones in which you have strengths. --Innerworth
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Note: Posts from this one through #184 ( 5/30/12) have been moved from the Trading in Foresight thread to this thread. Where We Are
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Same here. I don't plan on being around that much. How much more is there to say (witness your own thread)? But the Forum was getting pretty ragged, esp with the sales pitches, so the sheriff came back to Dodge. I've also deleted a lot of bad links and expired posts, so going through the information should be a bit easier. I hope people still visit your thread. It's the only one I know of that wasn't all hindsight crap (though there is one thread on the ES that appears to be run in real time, like a chatroom, which appears to be no longer here). Db
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I didn't forget it. Just didn't think we'd get there during the coming week . Db
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Are you guys going to start drifting back? Db
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Where We Are
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They say you never grow poor taking profits. No, you don't. But neither do you grow rich taking a four-point profit in a bull market. . . . After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine -- that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. Disregarding the big swing and trying to jump in and out was fatal to me. Nobody can catch all the fluctuations. In a bull market your game is to buy and hold until you believe that the bull market is near its end. To do this you must study general conditions and not tips or special factors affecting individual stocks. Then get out of all your stocks; get out for keeps! Wait until you see -- or if you prefer, until you think you see -- the turn of the market; the beginning of a reversal of general conditions. You have to use your brains and your vision to do this; otherwise my advice would be as idiotic as to tell you to buy cheap and sell dear. One of the most helpful things that anybody can learn is to give up trying to catch the last eighth -- or the first. These two are the most expensive eighths in the world. JL
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Fear Yourself Young Apprentice and the Chaos Within
DbPhoenix replied to TheNegotiator's topic in Trading Psychology
He's some putz who used to pretend that he could trade. But he was found out and has been bunking in a cave in Nepal with a Tibetan monk, attempting to find the enlightenment he was unable to reach trading the ES. -
Fear Yourself Young Apprentice and the Chaos Within
DbPhoenix replied to TheNegotiator's topic in Trading Psychology
You're making a lot of assumptions about our assumptions. In any case, you brought "control" into it. But I'm glad you're amused:). Db -
Well, I seem to have made that point . But another which I may not have stressed as much is that volume matters only at inflection points. If you're in a trend, for example, it is a grievous mistake -- perpetuated by certain volumecentric trading philosophies -- to conclude that you're in trouble when volume declines. Ditto if you're meandering through a range. It's at the limits of that range, or the test of the trendline, that one should be paying attention to changes in volume/participation. Otherwise, blow it off. I should also point out, however, particularly if one doesn't have a volume plot, that if one is watching the activity real-time, it's not difficult to assess the level of "excitement" as price moves toward and away from one of these points/levels. But enough chat. Back to work. Db
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Fear Yourself Young Apprentice and the Chaos Within
DbPhoenix replied to TheNegotiator's topic in Trading Psychology
It's not so much a matter of controlling fear as getting rid of it. Trading should not be a battle to control emotions. Trading should be relaxed. If one isn't relaxed, he ought not to be trading. At least not yet. But didn't we do all of this several years ago? In any case, Negotiator is doing just fine. I'll be an interested observer. Db -
Fear Yourself Young Apprentice and the Chaos Within
DbPhoenix replied to TheNegotiator's topic in Trading Psychology
It's as if I never left Db -
I don't want to be offensive, but if you have a proven system, I'm not sure why you asked the questions you asked in your last two posts. You should know on the basis of your testing where the best entries and stop placements are. If you don't, the system isn't proven. If it is proven, the answers are self-evident. But let's say your system is proven at some level and you want to make it better, which entails a whole new course of proof. Where you intend to buy and sell is in concert with W's approach. And as to your initial stop, yes. But how you trail your stop depends only partly on what the approach would suggest. Much more than that are how familiar you are with the instrument and how its traders behave, what it's most likely to do, how it moves, whether it's calm or nervous. Your own risk tolerance and how you've dealt with your fear are also important components. The risk-averse and fearful tend to have stops that are far too tight. They can't give price room to breathe. So there is no right answer as to whether to move the stop up or not. Db