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Head2k
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Everything posted by Head2k
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Couldn't paper trading serve this purpose to a large extent?
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Reading your response, januson, I realize I didn't delve into the system development enough. And I am also glad I shifted to discretionary approach.
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Hi, when I was first attracted to trading I started with mechanical systems. Programming, backtesting, optimizing etc. Then I started trading live one of the systems I developed. It took me about one week to find out that this was not the way. I couldn't be confident with my system, no matter what results it showed in backtest, because I simply didn't understand the market. I think confidence comes from understanding, knowing why you are doing what you are doing. And then from testing. Some people are probably OK with testing only to be able to gain confidence, but that wasn't my case.To your second question: I don't think one system will work in all markets or market phases. Surely you will adapt your systems for different vehicles. Also there are ways of detection the phase of the market (sideways / trending) to some extent. There are also ways of detection of volatility. Hence you can make your system adaptive to some extent (so it is at least not losing much during an unfavorable phase). And to smooth your equity curve you can run more uncorrelated systems at the same time.
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No. You know that I am a beginner. I don't trade live. I occasionally paper trade, but since I don't have a sound plan yet, the paper trading serves more as feedback on my ideas and concepts (and to find out how I am stupid and undisciplined... ). Today I was only watching. I already have an idea how to enter a breakout out of a hinge and where to place my initial stop. But that's it so far. In this particular hinge I would enter at the breakout above 1050 which occured at 12:31. My stop would be at 1046.
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Today's hinge on the NQ. In the morning we broke through 1055-1056 zone which I had marked as potential R but then found R at 1065, another important level. From there we started to trend down. From 1025 we sharply recovered and returned into today's value area, finding R at 1055. On the screenshot the yellow line is daily VWAP (the midpoint of VA) and the red and green dashed lines are VAL and VAH, respectively. In the VA we weren't quite sure where to go next and we started to form a hinge around VWAP, which coincided with opening low, too. The hinge was then broken to the upside, suggesting another attack at 1055-56 area. We breached it but weren't able to hold above. Price then dropped below the midpoint of the hinge (VWAP) and then successfuly tested it from below. Then we broke today's VAL, confirming that the downtrend is resumed.
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Trading with Market Statistics. IV Standard Deviation
Head2k replied to jperl's topic in Market Profile
Darth, you don't have to assume any distribution. You simply know it. You know the data so you know the distribution. And statistical quantities such as mean, mode or standard deviation are defined and can be calculated for any distribution, without any assumptions about its character. I quite studied Jerry's threads and I came to the following conclusions: Organising data with VWAP and SDs is simply a way to find potential S/R and to define trend. Hence it is a tool which imposes structure on price/volume data. It is not a method (took me a while to realize it). A method needs to be built on understanding PA within this structure. -
I guess it depends on logic of your entries and levels of confidence (if you are able to define them). Maybe the reason why this approach is not popular is that people tend to keep their stops tight and there is no room for scaling out? Maybe they rather exit their full position and then re-enter full again? But if somebody likes wider stops then this approach could be applied. For example, if you buy 3 contracts at an upside breakout from a narrow range, you could place one stop below range resistance, one below midpoint and one below support. This would have some logic. As price would drop after your entry you would decrease size with decreasing confidence in the upward continuation. Just ideas of a beginner. But to find out whether this approach is beneficial for your type of entries there is only one way: to test it.
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I was not watching NQ on Friday, so I had no thoughts about it in real time. If I look at the chart now I have a bulish outlook seeing that narrow range, but if I were in a long trade I would definitely tighten my stop under lows of it. Because this range seems to me a bit like an apex forming. But you are right that it is hard to say if I could see this in real time, too, so I will be more careful next time when annotating with hindsight. Thank you for notice.
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To the expectancy of upside breakout: Just my observation that if price stops under resistance but fails to bounce back and forms a narrow range instead, the breakout is quite likely. But I haven't done any research on that. However, even Vadym Graifer mentions this phenomenon in his book (not that breakout was likely or not, but he actually has a setup where he would buy such a breakout). To the difference between test: Not sure, maybe nothing significant? I guess there doesn't need to be any difference. And I guess that it doesn't matter if volume on the second test is slightly higher than on the first one. It is just a matter of the moment when one side realizes that the other side gave up. However, if you look closely, the second test is W, so contains two test, actually. And on the second trough volume is really very low, showing that those who wanted to sold there are pretty much done.
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You didn't offend at all. I just wrote what I thought.I think in the beginning you will not be able to recognize "false" information anyway, because you have nothing to base your judgement on, so just don't bother with that and read everything you can. But always think about what you read and take everything with a grain of salt. As you gain experience you will be able to distinguish more what seems logical to you and what not.
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Thanks for your input. I guess it would need a sophisticated approach and change in psychology or perception of the trade. To implement this strategy I would need to consider this sequence of exiting and re-entering as one trade (that would be important psychologically) and manage stops just like if I was scaling out and trailing stops for remaining contracts. This is not the first time I got this idea, but kind of wondered why scaling out is common and this is not. I somewhat feel that this approach could be more emotionally exhausting, and then one is unable to use it effectively.
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To return to the original subject of this thread, I have one question for you, atto. Looking back at your example in this post http://www.traderslaboratory.com/forums/f131/exits-and-scale-outs-4805.html#post51694 I think you could as well use all in / all out approach. All out at your marked scale-out points and all in at virtually any better price. You could consider it as one trade still, just exiting and re-entering. You already said that you eventually add to your position on some occasions. This would be similar, just you wouldn't take anything through those pullbacks. To comply with your decreasing edge theory you could use smaller size for re-entries. The advantage of this approach would be that you should squeeze more money from the price movement, the disadvantage would be that you could miss the re-entry altogether (without chasing) if your exit was premature. Maybe that is the reason why you keep some contracts in? So what is your opinion on this all in / all out approach as compared to your scaling out? Have you tested it during your trade management development? Are there any other disadvantages which I don't see?
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Why dont you try Wikipedia or Google for this basic stuff? Or some book? I dont think that many people here would like to write pages of posts about something which you can easily find yourself. Especially when it is a topic for a whole book.
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I am afraid nobody can help you much with this. You can recieve some general guidelines from experienced traders, but such specific question that you ask require your own engagement. You must develop your setup(s) and trade management and then back- and forward test it. No advice should prevent you from doing this.
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It is AmiBroker with DTN IQfeed. If you are interested in it we can have a conversation about it via PM. I hope Db or anybody else does not mind when I try to answer questions directed to him. If it is a problem please just let me know. I do it because I shape my own thoughts better when I write about them and I can also recieve some feedback to what I think. But if somebody finds it inappropriate (I kind of feel it is, at least a bit) I will hold back and let Db or somebody else with more experience answer.
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There is a chart to what I said. You have a successful test but buyers are reluctant then, which leads to retest. If you bought the first test maybe you would like to get out when you notice the action marked with the two arrows. Or elsewhere, it is up to you. And still keep in mind that I am a beginner and these are just general annotations I made right now, looking at Friday afternoon NQ action with hindsight.
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No. Sorry for not being clear enough. Actually you dont get tick data in 0.2-0.3 second snapshots, but you get 0.2-0.3 second bars (or candles or whatever).
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IB does not send tick data. The data it sends are 0.2 - 0.3 second snapshots. So they aggregate ticks in 0.2 - 0.3 second intervals and this is the greatest detail you can get.
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Please keep in mind that I am a beginner in Wyckoff approach and in trading generaly, so what DbPhoenix says has much greater value than what I say.Without doubt if you enter on a test you have a better price than if you enter after confirmation (possible breakout of some sort in the opposite direction). It also allows you to maintain a tighter stop. But as atto points out in this thread, then you should use Rule 1 from Phantom of the Pits. That is, get out if the trade does not develop in accordance with your expectations (if the interest in the reversal direction does not kick in). Simply if you want better price and tighter stop you must be more flexible. EDIT: Or to say it even more clearly: You can either wait for confirmation to enter, or you can enter and then look for confirmation to stay in the trade.
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I will try to answer this point. Climactic action tells you that there was heavy activity or pressure which hit a wall (or simply ran out of steam as the "panic" buying or selling has finished). FOR THE TIME BEING. Successful test then shows that the former pressure has not renewed when price got to the levels of former panic. So the test tells you there is no more interest in continuation. FOR THE TIME BEING. For price to reverse this is not enough. To reverse, you need an interest in the opposite direction. If this interest doesn't show up, price simply cannot reverse, and eventually it will test the area of the climax again.Now that market participants saw that there was no effort made (or confidence) to drive price in the direction of reversal, they might reassess their interest in continuation. Or not
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Interesting. I found it to be the other way around in my case. I generally do not like rules and only follow them if I find them necessary or if I thoroughly understand the fundamental core of the rule and find it good for me. So I only follow rules which I accept on an inner level. In trading I cannot be disciplined until I see a true necessity of it. To read about it doen't seem to be enough. But recently I started to accept the need for discipline deep inside me. The impulse for this was development of my trading plan. The more I delve into it and the more I can define the edge it gives me (or the edge I want it to give me) the more I want (internally) to trade only when that edge is present.So I didn't (couldn't) start with discipline and then improve my rules. I needed to improve my rules to see the need for discipline. To internally begin to want to be disciplined. But I guess your approach makes things much faster
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I wonder where would you exit if you traded one contract. At A?
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Thank you for this topic. As a beginner building his first strategy, I find exits more challenging than entries. The reason is that while you can limit your entry to one known market situation or setup, once you are in a trade you must deal with whatever the market presents. Which might be much less familiar or obvious. That is also a reason I agree with the idea that the exit does not have to be a good place for entry in the opposite direction. Rather I think of exits as of changes in confidence. I am looking forward to see this thread developing. Hopefully I will have something to contribute with soon
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I guess it is not a TL restriction, rather the pictures are linked from torero's server which he passworded, maybe even not realizing the pictures in this old article are linked from there. But it is just my guess.
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How Much You Risk Your Account Per Week?
Head2k replied to Yacob Hassan's topic in Risk & Money Management
He didnt say that he risks 50% of his capital. He said he risks 50% of a sum he can afford to lose. What he can afford to lose might mean his entire trading capital or it might mean $100, if "afford" means to afford emotionally, i.e. which sum can he afford to lose so he can handle it emotionally without difficulties. I guess that when deciding how much to risk one must consider both aspects: statistical and psychological. Statistical aspect tells him that he needs to risk only that much so he preserves enough capital to stay in the game. Psychological aspect tells him to risk only that much so he can handle the drawdown emotionally.