bootstrap

i never mentioned it in any of my other posts, but i funded my comeback after last and final blow-up (knock on wood) from poker. used a cut and run, made my $$ goal and hit the door...small but consistent profits. but that will be off the table this time.

i had the pleasure (if you want to call it that) of giving a presentation at one of the local universities on real world trading last week. it was during the q&a that i was asked, "If you lost it all, could you make it back?" given the recent mayhem on wall street, i thought it was an interesting question. even some of the brightest can get greedy and go down the wrong path. of course my answer was a resounding "Yes, I could." and of course there was a discussion of the course of action i would take. unfortunately, one of my business partners was present. at lunch he brought up the "Chris Ferguson experiment". for those unfamaliar with it, just google "Chris Ferguson Challenge." so here we go. i am going to act as if i lost it all due to greed and stupidity. i am going to start from ground zero. it is all going to be on paper, but should be a fun experiment. here are the rules: * i have returned to work and am making $50k a year, paid twice a month. * i am free to take a second job if i wish to do so. * i work during US day time hours, and can check the market only at lunch. * the opening account balance is $5k. but i am free to trade any market i choose. * i can only add to the account on pay day. * i must pay living expenses. (rent, food, utilities, gas and insurance). * (handicap) buys will be filled at the high, and sells will be filled at the low. *since i have no money to start with, other than the opening balance, i have to use free software and data until i can afford something better. * i have a single monitor PC. * i start at ground zero, Nov 1. in case you haven't figured it out yet, i am not handicapped by a specific strategy. which means i am going to use what i already know. do you guys want to watch? or do i keep this between me and my partners? i am guessing the answer is yes.

When we talk about goals outside of trading they tend to be concrete. For example, " By Dec 2009, I want to buy a new Mercedes "CL550". and then you list the color and specs you want, and you work towards that goal. ...Which by the way is a smoking ride...... But within trading, a hard goal will limit the amount you make. But when you are first starting out, you need to learn to trade. you need to learn to enter and exit the market consistently and in a disciplined manner. And using a profit target will do this. trading is an income generating activity. as everyone has said, your goal is not being right, but to make money. your goal should not be to hit it out of the park each and every time. there is nothing wrong with hitting a slew of singles. once you can make "X" on a consistent basis and in a discplined manner, increasing "X" is just a matter of adding size. but be wary of the market that you trade. you do not want to be trading a size that will not easuly be absorbed by the market. when you want in, you want in. when you want out, you want out. and you want it quickly. when i first started out, (well after losing $30k trying) my goal was $300 a day. when i hit my $300, i exited. did i leave money on the table, yep. but i also got out of some trades with a profit that would have been losers if i followed the " let the profit run " and used a trailing stop to get out. and to this day, once the market trades within my target range i ask myself the question " would i get in now? " and if the answer is "No", its give me my money time.

i don't trade the S&P, but did trade the Ags before and got caught in a limit move. its a circuit breaker...in this case the market can trade up, but nobody can offer below the limit move....it locks down until the market opens and then we are in a whole new ball game. if the futures stay limit down at the open, it will open lower. but historically there is usually a bounce off the limit. but that does not mean the bounce will change the direction... gonna be a rough ride for the equity guys..

i don't trade it, but just heard that the S&P is limit down

gonna be a fun day....wooooooooooooooooooooooooooooo son!!!!

with only 3 weeks under your belt and in this market, i would suggest that you just buckle in and give it a little longer. the market is gonna change, it always does. besides i am sure all along your journey to live trading your heard "this ain't rocket science" plenty of times.

two things i do not discuss....politics and religion...because i am so far right i am left. mostly because everyone tends to get their "little" feelings hurt.

in the frame of the question i would put it last. you can't build the discipline until you have an approach to the market to be fearful of. but would you be as fearful if you built your strategy around risk management? what if you put as much thought into this piece as you do trying to find that set-up you are so desperately seeking? if you start with risk management, would you just go with the standard: " i am going to risk 2% of my account on any one trade. " probably not, you might add some things like: " i am going to adjust my position size throughout the trade based on the current risk level. " " due to commissions, slippage, and spread resulting in a position starting out in the red, i am going to work these into my risk management. " " to build my bankroll, i will use a scaled risk model based on my weekending balance. " " i can only trade "X" and maintain my risk level." if you spend quality time determining how you are going to protect and grow your capital (notice the order i put those two words in), why would you be fearful in trading the end result? once you have your risk strategy down, move onto exits. what kind of exits support the risk being taken and still generate a profit? you are now asking: "but how do i know where to put the exits, i do not know if i am long or short the market?" remember that you are in the development stage. so you are going to look at both. running a long and short trade at the same time. "but i don't have an entry?" sure you do....its NOW. you are going to run this little madness test until you have 100 profitable long and 100 profitable shorts. now design an entry that captures the profitable trades and limits the losers. you may have one entry for longs and another for shorts. or maybe not. and finally the set-up. is there a common factor that is present in each of the profitable trades? what is it? " but all this is making my head hurt! ". yeah, but now you know how to build a strategy the right way. through every step you were thinking about risk. and that is what you shoudl be doing now. set-up: find something that occurs regularly in the market. the set-up is nothing more than a set of conditions that are necessary to be in place. nothing more... entry: entries should confirm the direction you are wanting to trade, and guarantee that you capture every price move it is designed for. nothing more, nothing less. exits: how do i maximize my profit, and get out quick when i am wrong. risk management: stretch the strategy to the limits imposed by your capital and risk profile. good trading to you all....

i know that i am gonna get all kinds of hate mail, but don't confuse the method with the madness. money management is not psychology. money management is risk management. psychology is dealing with the fear and inability to follow the strategy that you determine to trade.

The idea for this post came out of an email I recently sent to a struggling trader. And with the loonies still running amuk in the street, there is no time like the present. So here goes. Are you struggling with your strategy development? Have you hit that wall where no matter what you do, you just can't quite make it work? Well take a step back and look at what you are doing from a different perspective. If you accept the often quoted stat that 95% of all traders fail and eventually give up, the the secret is to do the exact opposite of what the herd is doing. Sounds simple enough. When a newbie first starts out, he jumps from one strategy/indicator to the next. Looking for that secret. Well if the indicator is truly an integral part of the secret, why in the hell do I have a library full of them? They spend countless hours on testing, back-testing, and tweaking. Then just use simple exits and risk management. But you have to have a way to get in the market. So I am going to break that cardinal trader rule and fast track you over to the path. Currently you are on the path of: Setup - Entry - Exits - Position Size - Money Management. Well, the real traders have been telling you that Money is key. You have to protect your capital. You have to be adequately funded. That you need follow the KISS principle. They have been giving you the path, but you haven't been listening. There is nothing wrong with the Set-up to Money path, but you better have the capital to trade what you find. As you move from Set-up to Risk Management you need to put as much if not more thought into each step. The 95% spend months on set-up and entry, and then less and less time as they move through the steps. But what you really need is to find that strategy that will work with the capital you do have. And build around the premise that you will live to fight another day. So reverse the development steps. Start with Money/Risk Management and work backwards to the Set-up. Take the strategy that you are currently working on right now. Dissect into the individual parts. Then start with Risk management and develop that first. While doing this ignore what you have done on the next step down. Just concentrate on managing your risk. Work back through your strategy to the Set-up. Are your exits the same? Is the position size the same? What about entry? Do you really need all those indicators now? You may just be surprsied at what you find.

believe it or not this is really close to the first profitable strategy that i traded. it was the one i was using when the marriage went to hell in a hand basket, and my mind just was not in it. at the time here is what i was using. i used a 21-EMA instead of a 20. then i plotted a short-term support/resistance channel. Support = 3- SMA (Highs) - ATR(5) Resistance = 3-SMA (Lows) + ATR(5) wait for a period that trades inside the channel. Resistance line below 21-EMA, sell Support Support line above 21-EMA, buy Resistance you guys can figure out/play with the rest of it.

i have alot of family stuff that occurs in Aug/Sept and usually step back from any board that i am on at the time. but man has it been busy in the markets. everyday a new chicken is hatched. one good thing is that in my long-term holdings i have been buying the babies that were thrown out with the water all the way down. and am loaded like a cargo ship at the moment.

i am like Kiwi, a loss is a loss and a win a win. but i do keep track of the scratch trades. they are used to determine when my entry/exit plan is starting to falter. too many scratches in a row, and the market is changing and i need to either wait for it to settle back into its rhythm or change the current plan being used.

its been a while since i have been to the board. lots of stuff going the last few months. gonna take me a while to read the 4593 posts. :rofl:

i was not referencing the big funds, but i stand corrected. i was referring to the stock traders/brokers/hedge fund guys that i personally know. they use the funnymentals to find companies that the big boys are most likely to go after and wait for the move to start.

stock fundies fall into two distinct camps, Growth and Value. Depending on which camp you fall in will determine how you interpret information and what you will want to focus on. but the fundamentals only get you so for. don't listen to CNBC and think that the few who know what is going on are only trading the fundamentals. the fundamentals are used as a filter and the trade is technical. if you want a quick easy read on analyzing stocks check out Harry Domash's book.

Dead On!! This is the very reason that you hear that you can give a good trader a bad system and they will still make money. They will look at the strategy determine the strengths and weaknesses and trade accordingly. Day in and Day out.

i don't trade just patterns. so i don't base my decsions on the occurence of a single pattern. i take everything into consideration. which is what was the conditions before the pattern occured, what occured within the pattern and what is occuring on the other frames of reference. before anyone asks, i use 3 frames of reference. so based on just the single pattern with no other frame of reference, both are signs of volatility. is it currently occurring, no but it will in the near future. but that is just me.

i am going to agree to disagree with most on how the mind works. i respect everyone's opinion, i just don't agree. if using Guppy's Rainbow or VMAR bands help you identify the market conditions, then by all means do so. i will never tell anyone to not use something. just because i do not use it does not mean it is not a valid approach. the one thing that i will tell you is that you need to understand how it is calucated and what it was developed for. So what do I mean by Trending, Trading, and Volatile? The simplest explanation is: Trending and Trading market conditions both move in an overall orderly fashion. Trending markets are moving in an upward/downward direction Trading market conditions are moving between S/R Volatile market conditions are the hardest to identify as they can occur by themselves, but mostly occur within both the Trending and Trading conditions. They are usually short lived compared to Trending/Trading markets. These are those times where the market has lost its way, there is little order and it is trying to find a direction. You can have large moves up and down, small moves, gaps, multiple outside bars followed by inside bars, etc....

Do we learn complex things through exposure or through actively seeking them? Why we learn things? These are the very debates that rage throughout academia. Yeah, I know a sliver about the subject. I just don't agree with passive learning. I see repetition as an active process. Just because the light bulb suddenly goes off, doesn't mean we didn't actively try to understand what was occuring. While I was staring at that screen day in and day out, I was not just sitting there. I was actively trying to understand what was going on. So was it a passive or an active learning process?

I knew this would get a little lively, and feel free to take the topic of screen time in any direction you please. I do not delve into the psychology of trading much. I am just a simple country boy. But since you have brought up the good doctors, I will wade into the pool for a little while. I have nothing against them, I just don't agree with them most of the time. Do I have more expertise than I know I have? Hell no. That is just psycho babble for experience that has become second nature. Things I do without having to think about. But I still know that I have that expertise. It is this second nature that makes it difficult for one trader to teach his strategy to another. There are things that he does that he no longer has to think about. So you are learning from this trader. He has given you his rules. You are watching him trade, and he suddenly does something he didn't explain. If you ask as soon as you see what appears to be something new, the trader can not only tell you what he did, but why. And then he goes into an hour long conversation of additional information. He knows what he knows. I understand body torque, club head speed, loft, shoulder alignment, tee height, stance, and swing planes when playing golf. But do I have to think about all of that each time I pick up a club? I better not. All I need to do is make a quick check and swing the club based on my combined expierence. And based on the ball flight, I know what I did right or wrong.

Here is something that should get pretty lively.. Since everyone keeps telling you that screen time is important, there has to be something to it. But nobody is telling you what you should be looking for. What is it going to teach you? There has to be something that those who do this for a living see that you don’t. Well there is. And just like the magician that exposed the secrets to magic tricks on national TV, I am going to tell you what we see. But before I do remember one thing. Take everything you read in a forum or book, or hear from a guru or in a seminar with a grain of salt. Question everything. Only when you prove it to yourself, does it become the rule. What I am about to share can be found on thousands of sites and in countless books. If you have done any research at all, you have come across Dr. Elder’s triple screen, or some permutation of it. You understand the principles behind using multiple frames of reference. What has most likely not been explained to you is why it works or how to apply it correctly. In most cases you are only given a single example. Single example you say? Yes, when most first stumble across using multiple time frames, they follow the rules of: Use the upper time frame to identify the trend, the middle time frame for the set-up, and the lowest time frame to enter. If by chance you are not familiar with the triple screen just goggle “triple screen +elder”. Trading instruments exhibt three different types of market action in any given frame of reference. You use multiple frames of reference (i.e. Time or ticks) to identify the current market environment. These markets are: Trending, Trading, and Volatile. Why screen time is so important is that all instruments do not exhibit the characteristics of Trending in the upper time frame, Trading in the middle, and Volatile in the lower at all times. They can be in any one of the following combinations at any given time: Trending/Trading/Volatile Trending/Volatile/Trading Trading/Volatile/Trending Trading/Trending/Volatile Volatile/Trending/Trading Volatile/Trading/Trending Or any one of 84 possible market combinations if you consider Volatile/Volatile/Volatile. Like the major pairs in Forex, the combinations I listed are what I consider the major market combinations. The elusive secret that you are looking for, and what screen time teaches you, is to identify which market combination you are in and then how to trade what you see. Or better yet, when to stay on the sidelines. Each combination requires a different strategy, and some may not be tradeable at all. If you are trading across a broad range of instruments, you only need to master one. The fewer instruments you trade, the more market combinations you may have to learn. But you have to learn them one at a time and only add the next one once the first is mastered. But you ask what about Trending/Trending/Trading? Or how about Volatile/Volatile/Volatile? Or if I use Weekly/Daily/Hourly I get Trending/Trading/Volatile but if I use Daily/Hourly/Min I get Trading/Volatile/Trending. One step at a time grasshopper. One step at a time. As I mentioned there are 84 possible combinations. Multiply this across thousands of instruments and countless frames of reference, and I hope you get the picture. You do not have to learn them all. You only have to learn the few that fit you, your chosen instrument and frames of reference. Find the market combinations that are most prevalent and learn to trade only those. This is why it takes screen time to learn to do this, and why each trader is different. It is also why three traders in the same instrument will be doing something different. Trader A will scalp, trader B will be a buyer, and trader C will be seller, and they all make money. They are using different frames of reference and therefore see a different market

Yes pretty much everything was going up. In 1999, I was and still am trading currency futures exclusively. I have not had a losing month since. Yes, I still have down days and even weeks on occasion. It is not the method. It's the trader that makes the difference. As for long term investments, yes this portion will show a loss. But the strategt is designed to take advantage of falling markets. The hardest investment rule is: If 95% of traders/investors lose money, then do exactly the opposite of what they are doing when they are losing.

Attached is the perfect setup for confirming the Pivot Low. Basically you want the market to trade back towards the Pivot high, where the low is above the High of the Pivot Low. Entry points are: 1) touching/penetrating support. 2) most recent high if market retraces a little but never reaches support level3) at resistance if market continues to move without a retracement towards support. All of this is just the opposite for a short bias.