legout

In your example you ignore the fact that there is a bid and an ask, and which side gets filled. Each price reported always has a buyer and a seller. They agree, so there is a sale. If there is no agreement, the spread between buyers and sellers widens. Instead of 1 tick between, there may be 3 ticks. You can see this happen if you watch the DOM. You can see the orders entered, and how quickly they move. Now, if $100 was the bottom, it means there is no one else willing to sell at that price, but maybe someone has a sell limit order on the exchange at 100.01. Now, if someone sees value, and is AFRAID he will no longer be able to buy at $100.00, and DOES NOT WANT TO MISS THE MOVE, he will buy 'market' or if he's less fearful (greedy) he will put in a limit at 100.01 and hope he is the guy who buys from that seller. Let's say he buys market. Now the price is $100.01. Now all the shorts get worried, and so they start dumping market orders on the exchange, but no one is willing to sell for 100.00 anymore, or even $100.01, so the price starts heading up, and quick. Hope this helps. legout

I decided to test a 2 contract method of scaling on euroFX. I would take half at the very 1st resistance level. This might be anywhere from 4-20 ticks. My stop was never more than 12 ticks. I found this gave me a HUGE edge psychologically. Many times the trade became risk free, and I could hold onto it without a care waiting for target 2... That said, the problem is when you are wrong and you have the same stop on both contracts. Since your loser is not averaged, it stinks because you know you will be averaging your next winner... This made me start thinking about averaging my entry. But how complicated this could all get! Basically, I decided there were 3 outcomes on the two parts based on a system with a 50% win/loss ratio, 2 contracts with 2 hard stops in the same place, and two targets, one near and one further. lose-lose win-lose win-win. If this happens evenly (each scenario 1/3 of the time) and your averag win-lose trade averages to a BE, it means you are still at a 50% win/loss ratio, versus a no scale system like: lose-lose win-win Now, let's say your return to risk is 2:1 average, and you risk $200 33 times. No scale: lose-lose -$3300 (33/2x200) win-win +$6600 (33/2x200x2) vs scale: lose-lose - $2200 (33/3x200) win-lose - $0 (33/3xBE) win-win + $4400 (33/3x200x2) This is a very simple way of looking at scaling. In this case, scaling hurts your p/l on paper. However, because I only lost on 33% of the trades, rather than 50%, I felt very confident trading, and never hesitated to take my setup, like I might trading all in all out. I felt that my PERFORMANCE AS A TRADER benefited a lot. I experienced much greater confidence. So, though my math suggests my profits went down by 33%, I would say it's not true. Your ability to stay in the game is paramount, and scaling might just be the psychological edge you require to hang in there. In short, I found it lowered my AVERAGE winner versus loser, but increased my win rate, which was good for me psychologically. It just feels good taking profits. Yes, I would regret, also, that I took them, if I had a big winner. But that is an emotional issue that must be conquered. Fear and Greed. The thing I didn't like about the approach, is on a string of lose-lose, it feels bad, because your lose-lose is not averaged, while your win-win is. One day, when I was behind, I would start to break my small partial rule reasoning 'I have to get two big wins to cancel the loser-losers. That day I lost a lot, and would have lost LESS if I had stuck to my plan to take a quick partial!... Also, that day made me start thinking about a daily loss limit, and a losing trade limit - things I hadn't thought about during the first two weeks of testing. Ah... the lessons of trading never seem to end. legout

I love watching paranoid members reactions to low count posters. It provides great amusement to me. You see, I get paid a commish by this guy who runs this room, for every sucker I get to sign up...:rofl: Now, this may sound more plausible: I need 5 posts before I can PM, and am leaving them everywhere I can! About the room, and the trader: the room STUNK, and the trader NEVER posted ANY charts of his trades. It really seemed like he knew what he was doing, but he wouldn't divulge anything at all, which annoyed a lot of people (who regularly posted). He was trading NQ. Nuff said. Thanks for your reply, because now I have 5 :-D legout

I have to agree 100% with Diablo. The pricing model makes options behave unpredictably at times. You not only have to have the direction right, but the volatility, to. It's like trading in three dimensions. I did it for a year. Covered Calls, credit spreads, and some longs, as well. Covered Calls are a waste of time. To make money you have to buy the stock on a dip, then write at a peak. If you think it's the peak, just sell it! You make a lot more money. That's because when the stock falls, volatility rises, so the call you sell at the top, maybe worth nearly as much on the next dip, when you want to close it out. I just don't like options. The bid ask spread stinks on most issues, so you are a loser RIGHT OFF THE BAT. If I traded options the ONLY way it makes sense to me is to sell puts in a rising market (then delta, vega and theta ALL work for you) Or buy puts and sell calls at the same time, in a falling market (vega and theta are neutralized). Selling naked puts is the best by far. The only strategy that puts every option pricing component on your side. It only works in a rising market, and only works if you put a HARD STOP in beneath, and recommend it the most on indices (so no overnight news can wipe you out) It requires a some margin. TOS has reasonable requirements in this regard for short options. They understand the short side better than anyone. Take care. legout

I believe this to be a successful key to trading. fpinero has mastered one, maybe two setups, and sticks to it. If you trade futures, especially short timeframes, it's really easy to get 'sucked in' and start impulse trading. Of course you will be right sometimes, and that's what makes it even more dangerous! legout

Identify the range, and wait for a breakout? Trade the first pullback in new direction? Or anticipate which direction and get in at the opposite side of range? legout

I know nothing about Gann. But a fellow in a trading room I was in used it with Elliot Wave, and claimed he did very well. legout

I agree with this assessment 100%. Absent sellers in a price range, but willing buyers, price can shoot up quickly with little pressure (volume). legout