neoikon

While this may not be completely what you're looking for, but... For intraday ES trading, I like the 1597T chart (a fib series number) and the 89ema as a good intraday bias indicator. Yesterday (3/7/2012), after the market broke out of the morning's sideways movement, the 89ema acted as a nice support level many times. While on the subject, I'm a fan of all the fib series ema's on the ES 1597T chart. The 21ema and 55ema showed their usefulness yesterday (3/7/2012) as well. For entries, I like the 89T chart, which is like "zooming in" to the 1597T chart. For lower volume instruments, like the NQ, then smaller fib series tick charts work well, such as the 987T. I like tick charts because it allows the visual ebbs and flows to not be distorted by period of low volume. This also helps things like moving averages to not be distorted as well. My ... Best of luck in your trading! Daniel neoToolbox.com

My quick opinion is one person's "bull trap" is another (higher time-frame) person's "short setup". From what you are describing, it seems like price is merely pulling further back than you are expecting based on the time frame you are looking at. Then, traders looking at an even higher time frame see that as a "just right" sized pullback in which to re-initiate or add to their short position. Daniel neoToolbox

In the example of 5pt target and -20pt stop, you're saying an 80% win rate. So, for every 10 trades, 8 will work, 2 will fail. This means: 8 wins x 5pts = 40 pts 2 losses x 20 pts = -40 pts Net = 0pts Still not making money, right? (losing, if you count commissions) This is why you need to have your reward greater than your risk... even if only slightly. This is how casinos make money, even if the odds are only slightly in the house's favor. You have to be the house.

All I got to say is stay away from Infinity Futures. After the MF Global thing hit, I've been fighting close to a month to try and get my money out. I keep getting lies and the run around. If you are with them, I wouldn't wait. There are better, more trustworthy brokers out there.

I second that. Most people miss this idea. It's similar to saying, "If trading worked, traders would all be rich." There is a reason most fail, but it doesn't mean trading doesn't work. Similarly, for any given system or trading method. Best of luck in your trading.

RE: Subjectivity. Generally, it's the first pullback after a major peak. Or, wave 1 and wave 2, if you are into Elliot Wave. For me, it's a logical way of drawing the other side of the channel based on a trend line. Another way to think of a trend line is through symmetry. If the next pullback is based on symmetry of the last pullback, that naturally causes a "trend line". The tricky thing about fundamental events is that any personal decision about what a fundamental event SHOULD do to the market doesn't necessarily make it so. In the end, you have to rely on what the market actually does in reaction to that fundamental event. Which means going back to reading the chart. It's amazing how technical the ES stays even when there is a major fundamental event such as the fed rate decision. Stay thirsty, my friends.

Looking at the poster's original chart (Euro, 4 hour chart), I see something interesting, using the method described in my last post. When that line was originally draw from point C, it didn't look very interesting. Ultimately, it looks like the market did care about it.

I tend to see people make trend lines fit too perfectly, which takes away valuable information from the chart. One technique that I use, that I haven't seen anyone else use, is very similar to the "geometric method" but without forcing everything to fit. In other words, let the breaking of that trend line tell you something. In a down trend, I extend a trend line from two high pivots (A and B on the chart). I then copy that line to the lowest price between those two points (point C). Most people would extend it from point D, I'd imagine, since it would fit better. However, as all the blue arrows indicate, the line extended from point C worked out better as a trend line/resistance line. (This isn't the best example, since point E occurred, breaking the high of point A. There wasn't a very good pullback after point E to make a very good drawing. But, this is live data from today, so I take what I can get. ) However, what is valuable is the fall after point E broke below the bottom trend line, which is an unsustainable rate of falling. This tells you the market wants to pullback to one of the two trend lines, which it did. The same thing happened in the above chart. I drew the line from A to B, then copied it to the lowest price between those two points, point C. The market fell below the lower trend line (point D), indicating exhaustion, then a return to one of the trend lines. Of course, there isn't any explicit trade setups using this method of trend line drawing, but the subject of this thread was more of "liars or not". I say "not". However, if you are going with the trend and are shorting a pullback, I would feel more strongly if my setup happened at one of these trend lines, than between. OR, if you are looking for a counter-trend setup, it helps if that bottom trend line was broken, because it could help a counter-trend pop to happen (as in the second chart). As an aside, I am a strong believer in tick-based charts when drawing trend lines. In these charts I am using a 1597T chart on the ES. What that means is that if there is high volume, more bars are drawn, low volume, less bars are drawn. During low-volume times, such as the overnight session, it paints the chart in a much easier to understand way compared to time-based charts (5-min, 15min, etc), IMHO. Above is a ES, weekly chart. Same thing, but a long case. Connected A to B, copied to the highest price between A and B at point C. After breaking above the top line, we traded in an unsustainable rate, leading to exhaustion, leading to a return to norm (point D). Also, note point E was nice resistance. Daniel neoToolbox.com

I hear a lot of votes for the "entry" being more important, so I will offer the opposing argument in favor of the "exit" being more important. The main problem that occurs with a "bad" entry, as multiple people point out, is your risk tolerance. I feel it is based solely on the individual trader as to what a "bad" entry is. Take for example, two traders who enter at the exact same spot. One may be scaling into a position over a 10 point range, the other has a 6T stop. If the trade goes 5T against the entry, one trader is sweating, the other isn't blinking. Was it a bad entry? The market doesn't care about your entry. Only the trader cares about the entry. As for the exit. That's where you make money. There is no opinion, as it is pretty cut and dry on whether a trade was a winner or loser. Unless you can grab the extreme low tick and exit on the extreme high tick, you can never grab an entire move. There will ALWAYS be money left on the table, almost by definition. You're only trying to grab a piece. We all know this, at least subconsciously, but we still burden ourselves with "I should've stayed in longer!" If you exit with a profit (consistently, with a higher reward to your risk), then the exit is all that matters. My 2 cents... Daniel

If you use something like the link above to get the values, you can use the tools found at neoTOOLBOX.com | eSignal EFS Scripts and Studies to draw horizontal lines and give them meaningful labels (free). There is also a "Price Zones" script that can do something similar as well.

What rules are you using for your setups? Entry, exit, etc. I tend to use pivot points heavily, so I use the average distance between pivot points (for that day) as a guideline for my target setting.

I found this interesting video (1 hour) talking about trading plans and mentality. I found it helpful (regardless of trading instrument): http://www.fxstreet.com/education/trading-strategies/how-to-create-a-trading-plan/2008-04-04.html Enjoy! Daniel

In general, I'm losing more than I'm gaining. Thus, I'm stuck in paper-trading mode and not gaining confidence to change that. As I originally mentioned, I've been at this for many months. I have dabbled using real money on and off during that time, but in general I lose more than I gain... thus I keep going back to paper-trading. I don't want to blow my account and leave myself with no choice but to quit. Perhaps I don't have a good enough plan. Perhaps I don't know the definition of "a plan". I always hear, "stick to your plan". But what's the plan? How do you create a plan? What does that really mean? A system? Pre-defined levels for the next day? A money management plan once within a trade? I feel people through around this term, but everyone has their own definition. I believe that I create "a plan" then when I see it not working, I build a new plan. This is what I was referring to with going from the "quick profit" mentality to "larger targets" etc.

I stumbled upon James' original post about "analysis paralysis" in my attempt to diagnose my own poor trading results. I'm a relatively new trader (paper trading futures (ES) for close to a year!). I'm finding myself taking small gains and big losses. So, I start thinking that I need larger stops and bigger targets. So far, that equated to even larger losses and very little gains. So, then I return to the "quicker profit" mentality... and the cycle repeats. James' situation sounds similar to mine, as I feel I am decently capitalized, however, it's tough to take a loss, since I know how big a blow mentally that would do to my already fragile trading mindset. It would show me that I was wrong, that I'm out of sync with the market, and I would lose faith in any future trades. Now that it's been a few months since James' original post, I'm curious if there are any particular revelations that have helped or fixed your problems? Have any recommendations for my problems? Perhaps you're experiencing something similar as well? Thank you! Daniel