enlightedtrader

1) Traders trade with the flow of the market, not with their opinions. They shouldn't fall in love with either long or short. From this perspective, it is not important which way the market is heading to. Go with the market flow of the least resistance at the current moment. That's it. 2) Traders trade with volatility. The higher the volatility, the more opportunities the market are offering. Usually, down-moving markets are more volatile than up-moving markets. From this perspective, down-moving markets are preferred to up-moving markets.

We make choices in life. There is no exception in trading. Every trader will have to make an important choice(decision): Will I be a specialist or generalist as a trader? Everyone has his/her own choice. I've been flipping between specialist and generalist for quite a while. Now it is clear to me to be a specialist is the right way. To be a specialist means we must be real experts trading a particular method in a particular market. Only when we become real specialists, then should we consider expand our trading to become generalists. The key to excel in trading is to have edge. It is difficulty to have edge since trading is a very competitive game. To be focused makes it earlier to have edge and trade with edge. BTW, take a look at John Carter. Needless to say, John Carter is a veteran trader with a lot of experiences and knowledge. However, if you read his book Mastering the Trader, you will find he is far from a master trader. Frankly speaking, I don't even consider he is a good trader. The reason is simple, the majority of his trading set-up have little edge. I guess this may be attributed to the fact that he is involved in too much trading styles in too many markets. He trades everything in every style. Unfortunately, he is an expert in none of them. This is my 2 cents.

The choice of time frame is also a choice of life-style for a trader, there is no doubt about it. I prefer to use lower time frame. The reason is simple: Only lower time frame can provide many trading opportunities at any market conditions. If you trade 15 or 5-min chart, there are a lot of junk days in ES. If you trade 50 tick chart, there is no junk day at all in ES.

I do agree sometimes other markets have large moves when ES is not doing too much. However, the key word here is lower time frame. There is no junk day for ES at lower time frame. A good scalper/active daytrader can always find good trading opportunities at any market conditions. If not, that means the trader is not good enough and he/she needs to work on to make improvements. In the end, there is a trade-off. To be focused on one market can help a trader to be very good at that particular market even though there are some opportunties missed in other markets. Since there are so many opportunties offered in ES, it really doesn't matter that much.

An interesting thread indeed. There is no doubt that the choice of time frame is very important. I've made a simple comparison between ES, QM, ZN, ZI, ZG, YM, ER2, NQ at lower time frames. What I've found is that ES offers the most trading opportunities than any other instruments. I'll be content to be an ES-only trader, at least currently. Don't believe in my words blindly. The charts are there. You can easily find the answer. Really nothing is comparable with ES for scalpers/active daytraders in terms of the number of trading opportunities provided, IMO.

The recent volatility spike of the markets is a good testimony of discretionary trading vs automated trading. We heard numerous sad stories about hegde funds which trade primarily on computer-driven trading strategies. To name a few, Gold Sachs Global Alpha Fund is down 26% this year. On the other hand, we also heard a lot of discretionary day traders made a killing in the recent market turmoil. For me, this huge contrast shows clearly the edge of discretionary trading over automated trading, i.e., when the market experiences high volatility and turmoil. The more chaotic the market, the more edge will discretionary trading shows over automated trading. Of course, this comparison is based on the assumption of a good discretionary trader. I used to think that discretionary trading would be in danger with the proliferation of automated trading. Now I'm more convinced that discretionary trading can significantly outperform automated trading in the long run. As a result, I'm more determined to become a better discretionary trader.

Scalptrader, I don't want to know the rules. I just want to know the results (return, profit/loss ratio, drawdown, etc.) if you are willing to share. No matter what approach/method/system adopted, ultimately only the results can be the final judge.

scalptrader: The chart from your system looks very interesting. It seems to me you are using some simple cross average at short time frame in your automated trading system. I'm wondering how the system performs at choppy market conditions. Do you leave your system operate overnight or you just have it operated during regular trading hours? I guess sometimes the overnight spike may bring big trouble for an automated system if the system is not designed very well in this aspect. Since you said that ''...no discretionary trader can come close to duplicating these results...'', I'm curious to know what's the return/drawdown of your totally automated system during its life span. Frankly speaking, I really doubt it can beat a good discretionary trader. Thanks.

Hi torero, I'm curious on average how many trades you get daily in your intraday trading system. From my understanding, it is difficulty to get more than 3 trades a day for an automated system. This is also one of the aspect I prefer discretionary trading over automated trading. A discretionary trader has the flexibility to trade by adjusting to different market conditions. He/she can be both a scalper and a swing trader. I'm not sure whether automated system have such a flexibility. Another aspect I prefer discretionary trading over automated trading is lower drawdown. I read something about the drawdown of automated system. It usually ranges from 20% to 50% annually. It's just too high, IMO. A good discretionary trader can have much lower drawdown as long as he has a sound trading method and good money management.

1 min, 2 min, 3 min, 5 min, 10 min, 15 min, you name it. Any time frame is workable as long as you know how to make it work. Or any time frame is not workable if you don't know how to make it work. The key here is not the length of time frame, it is up to the trader to make things work. Having said that, I do think lower time frame will generate more trading opportunies. In lower time frame, you can be a scalper, a swing trader or you can be both a scapler and swing trader. On the other hand, you can't be a scalper in higher time frame, My personal experience is that since I moved from higher time frame (5 min) to lower time frame (1min/3min), my trading has become more flexible and more efficient. I realize other traders may have opposite experiences. There is nothing right or wrong. The important thing for traders is to find our own comfortable trading style and edge.

I realized that the best approach to trading is to go with the market flow. Don't fight. Don't prejudge. Just go with the flow. Then suddenly trading is become quite simple.