brownsfan019

I have one suggestion for now - find a good paper trader (simulator) and test your ideas out there. While your post was small, it's loaded with 'how do I do this' questions and you have just barely put your foot in the shallow end of the pool. It's got a tiny, tiny drop of water on it. You can choose to slowly test the water or dive into the deep end and see how it feels. This forum has good info everywhere, so click around and spend some time reading.

If that's true, then enough said about this piece of junk. Marketeer doesn't trade it. Why? B/c it doesn't work. Looks great in hindsight, but not real-time. Again, doesn't work. Save yourself the hassles.

Don't forget that you can show BR your appreciation. FOLLOW THIS LINK.

1) Post charts. This link shows you how. Use SnagIt to take screenshots and easily annotate them. 2) Post your ENTIRE trade process, not just the entry. Any idea can be an entry system, it's how you EXIT that makes or breaks it.

Check this thread. My personal favorite.

The most interesting part for me was how he starts to build a position when a retest is possible. An interesting idea although not sure I could do it. I'm one of the guys he's talking about that likes to see the confirmation before entering.

BB, I think you need to write a book or something. Very eloquent w/ your wording. :thumbs up:

If you are reading this thread, then I would suggest reading this new thread I started after reading an article in the recent SFO. Great article, much pertains to us here. I didn't want to clutter this thread up, so I kept it separate.

I thought this was a timely article considering the discussion we've had in this thread. Link to Article Don’t Get Thrashed by ’08’s Storm October 2008 By Bo Yoder The year 2008 has proven to be difficult for many in the active trader community. A quick glance at a daily chart of Standard & Poor’s Depository Receipt (SPDR), an exchange-traded fund that tracks the S&P 500 Index, shows an extremely chaotic year, characterized by extraordinary whipsaws and consistent overlapping volatility. As Figure 1 shows, 2008 started out with a precipitous decline ending in high-volume capitulation. Unlike every other capitulation event I have experienced during my trading career, the capitulation lows of 2008 formed without leaving a hammer candlestick formation on the daily chart. After capitulation, the markets rallied to test areas of moving-average resistance but utterly failed to react to the moving averages themselves. Instead, traders hacked and gasped their way through a zone of overlapping price action that gave many false signals of bullish or bearish intent. These pattern failures caused me a great deal of stress as I was forced to continually reposition myself as the line of least resistance wavered from bull to bear and back again. The market then rolled lower out of that congestion phase and retested the lows to form the double bottom that has so far delivered a sustainable bottom. For a classical pattern-recognition trader, this double bottom remains the only legitimate, classic price pattern that has formed in 2008 (as of this writing in late May). After the double bottom formed, traders experienced a rally with higher highs and higher lows. However, these pullbacks formed in a manner that generated losses for most traditional pullback trading strategies. This chaotic price action has decimated the accounts of many beginning traders and has spawned a new generation of what I term “skeptical cynics.” These traders have a shelf full of books and a mind teaming with course-taught strategies that have utterly failed to produce in 2008. Beginning traders feel frustrated and betrayed by the educational sources in the industry and, thus, have adopted a blameful attitude toward their trading programs. Perhaps it is the widespread dissemination of classical trading techniques that has eroded their edge, but in my opinion, the true culprit is the black-box trading system. I believe that much of the order flow on Wall Street is generated by statistically based trading models. As a discretionary trader, I feel again and again that I am trading against computers, not humans, as I navigate through the chaotic markets this year. Humans act and react to psychological trigger points, while computer-based trading models react to statistical anomalies, mathematically derived overbought or oversold indicators and momentum-based measures. It is this opinion that has caused me to abandon many of my core trading strategies and has put me back into the lab as I develop new ideas for the 2008 market environment. Go Deep or Go Shallow If you agree that this year has been mostly devoid of valid, classical trading patterns, then what is an active trader to do? In my experience, when one timeframe ceases to deliver a consistent edge, a trader has two choices: go deep or go shallow. If the daily charts are chaotic and prone to failure, then dropping down to a weekly level can often produce consistency. It takes much more time and liquidity for a reversal to form on a weekly chart, and this extreme depth acts as a filter during times of chaotic daily action. In a choppy and chaotic market, the weekly price patterns will be few and far between, but their reliability will not be marred. However, position trading on weekly charts, although profitable, can’t deliver the consistent stream of income that is critical to the professional trader. For the professional trader, weekly or monthly profitability is a strong focus. Therefore at present, I believe that dropping into the intraday markets is the best way to regain consistency in one’s equity curve. All active-trading strategies are based on exploitation of some market constituency. Day traders exploit the inexperience of other market participants and provide liquidity to the swing- and position-trading communities. Swing traders exploit the technical inexperience of the investing community and the lack of agility of many large market participants. No matter what style or timeframe is in focus, the profitable trader accumulates inventory so that he or she may mark and sell it to other market participants for a profit. Sometimes a trader is exploiting the mistakes other market participants make through greed or fear; sometimes a trader is exploiting the movement of large groups, sectors or market constituencies. The intraday trading style that is working best for me in today’s environment is focused directly on exploiting the predictable order flow of the technical analysis community. So many traders use traditional technical analysis as their method of trade generation. Any time the markets form a traditional buy or sell setup on a five-minute chart, it can be assured that a powerful surge of order flow is about to hit the market. Although a trading strategy targeting this near-guaranteed order flow cannot generate the large windfall profits that swing or position trading can garner, it does offer a steady “grinding” trading style that can produce results despite chaotic price action. My instrument of choice is the E-mini S&P 500 futures contract, and my three-step setup is simple, conservative and repeatable: 1. Identify the areas of support and resistance that are deemed the most significant to the trading community. 2. Accumulate inventory as close to support or resistance as possible. 3. Distribute inventory into the surge of buying that follows a traditional technical buy/sell signal. In Action The three stages of my market-making trading strategy are shown unfolding in Figure 2. During that period, the market was strongly bullish and had just finished a sustained rally. I realized that many active traders missed the move and would be looking for any test of support as a buying opportunity. Because the majority of S&P day traders use the five-minute chart as their base timeframe, I planned to focus on it as I analyzed potential areas of support. The 20-period exponential moving average is perhaps the most widely followed indicator in the technical analysis arsenal. It acts as a roving area of support or resistance, and a pullback support within the context of an uptrend known as the “Holy Grail trade.” This trend-continuation pattern is often the first one taught by the educational community, and therefore, I assumed with certainty that any pullback to the 20-period exponential moving average (green line) would trigger a strong bullish constituency to initiate buy orders. Eventually, the market pulled back toward the moving average just as I had hoped, and I executed No. 2 of my market-maker trade. By accumulating inventory as close to support as possible, I bought on the assumption that a test of the 20-period exponential moving average would provoke bullish interest. If the moving average broke, then my opinion about support would be unproven, and it would be time to take a stop loss and move on to the next trading opportunity. Experience has taught me that a two-point arbitrary stop works well when I am making a market in the E-mini S&P 500. So as soon as my buy order was filled, I initiated a stop-market sell order two points below my fill price. As the market responded to support, a reversal candlestick formed on the five-minute chart. Because I was market making, my goal for the trade was simply to distribute my inventory into the surge of buying that followed a traditional technical buy/sell signal. Most intraday traders base their buy/sell triggers on the highs or lows of the last candlestick. As the highs of the five-minute reversal candlestick broke, the “crowd” received its setup trigger, and buy orders began to flood in. As soon as the traditional five-minute setup was triggered, I began watching the time and sales window with absolute focus. Like listening to a piece of music, I watched the tape for a change in key or tempo that would let me know the surge of buying was running out of steam. As soon as I saw the short-term momentum generated by the buy signal begin to fade, I took profits and began looking for the next market-making opportunity. Distilled to its most essential principals, this market-making style delivers an edge because I am buying against support before confirmation exists. The majority of active traders wait for confirmation, and in doing so are forced to pay me a one- to four-point premium for the privilege. By choosing to trade in this manner, I am assuming risk the majority deems uncomfortable and am taking profits once others believe the market is offering “a sure thing.” Just Another Morning Figure 3 shows a fairly typical morning for my market-maker trading strategy. In this session, the market sold off, rallied, then whipsawed down violently after the release of a series of economic numbers at 10 a.m. After this period of sharp selling finally exhausted itself, the market began to bounce. At this point, I once again identified moving-average resistance as the area the active-trading community would deem most significant. I entered aggressively as resistance was tested and initiated the same two-point arbitrary stop. As the lows of the five-minute reversal candlestick broke, the active-trading community surged in to initiate short positions as the market fell on strong momentum. I was able to capture close to three points in profit on that trade, then flip my bias and begin making a market to the long side as price tested the 200-period simple moving average (blue line). Once again, I entered aggressively as support was tested and, due to the downward momentum, was able to bid one tick below the moving average for my fill. Once again, I used a two-point arbitrary stop loss, and took profits as soon as the buying frenzy (triggered by the hammer candlestick) began to wane. This trade produced two points, bringing the profit total for that morning to five points. Typically, another two to four trades are taken throughout the day, with at least one or two of those being losers as the targeted support or resistance failed without a five-minute “setup” forming. A market-making approach is not an easy way to take profits from the intraday action. This trading style takes patience and discipline, and can be extraordinarily boring if the market is not producing tests of traditional support or resistance. However with a bit of skill and experience, this type of intraday trading approach can deliver a strong, positive expectancy with extremely high win rates. This “sell-to-the-setup” strategy can be modified for use on 15- and 30-minute charts or day charts, which allows traders to shift timeframes in order to adapt to the current market environment. This market-making approach to intraday trading has been highly effective in helping my consulting clients regain their consistency in this chaotic market environment, and I hope it does the same for you! Bo Yoder (BoYoder.com) is a trader, author and consultant to the financial industry on matters of trading and risk management. Yoder is a featured speaker at international seminars and industry expos for active traders. His latest book, Optimize Your Trading Edge, was released by McGraw-Hill in early 2008. ------------------------------------------------------------------- Bo has 2 books available on Amazon for anyone interested: Optimize Your Trading Edge: Increase Profits, Reduce Draw-Downs, and Eliminate Leaks in Your Trading Strategy (Hardcover) Mastering Futures Trading : An Advanced Course for Sophisticated Strategies that Work (Hardcover)

This is interesting that some are posting building it yourself may not be what it's cracked up to be. I've been leaning towards that route myself, but maybe just getting a solid Dell is the way to go... hmmm...

My degree is in finance and business mgmt BG and that has served me well. I think seeing the different views of the market and also having some courses in managing a business has helped. The one thing that really helped me was that in the finance dept a new professor at the time got a stock trading/analyzing course together where the school gave this class $250k in real money to manage. That was the best experience I had in college by far. While we were more of a fundamental swing trading group, it really opened my eyes to what was going on. The majors I could see providing some help in some fashion would be finance, econ, business mgmt and psychology. Like you said, nothing is really going to prep you for daytrading, but those could help in some way.

J, Seems like you got a lot going on there while trading a highly leveraged instrument. IMO to make any serious money at this, you have to treat it as your job, not a hobby or something to do in between meetings. I think you'll burn through your test account rather quickly but it will only prove that trying trade leveraged instruments while working full time is not easy. It will not show you anything about your system or way of trading. This is an incredibly difficult business and I would not attempt to do it while working full time.

I disagree 100% with that. Yeah, it's nice to catch that one day every month that moves a monster and you catch it all, but as you said, more often than not, that runner will do nothing to improve your P&L; so you are in fact exiting too late. Let's look at some basic numbers: > Trade 2 ES ct's > Exit #1 at +3.00 > Exit #2 at +.25 b/c you were hoping for that monster move > End result is +3.25 / 2 = 1.625 pts NET (and that's all that matters) If you can design a system that can somehow catch the monster moves and get out when you need to, then great; but I would think that is rather difficult to do. IMO trying to catch that monster move is a loser's game over time. Yes, you might hit it but if more often than not, you don't, why bother? You have to accept that you will make regular money vs. hitting a monster now and again.

This thread took me down memory lane of when I used to trade options... finding the right option, strike price, gamma, theta.... etc... I do not miss those days.

My suggestions are: 1) Develop an ENTRY system 2) Develop an EXIT system Then do it. Until you have something that you can put faith in, you'll constantly be trading by the seat of your pants. As you've seen, the entry is one part of the equation. IMO the exits are the most difficult to master b/c you'll never be right - exiting too early, too late. But you need something to base exits off of. Some ideas: 1) A fixed target 2) Some support/resistance zone/area 3) Fib retracements/extensions The key being a mechanical exit - something you can do over and over again.

It was fun. I decided to build a short position. We'll see how the open tomorrow goes. I think it's great for the kids in high school to get a taste of the markets, even though many probably don't really get it. They might get it later. I mentioned it to my significant other who teaches high school consumer sciences and I just might help her do something like this. We'll see.

IMO the 20 EMA thread is the best thread on this entire forum. Why? B/c it provides a very manageable entry system that just about anyone can follow. There's some good threads on TL, but I'm not sure anything else is as clear and cut as the 20 EMA thread for entries.

I agree w/ zdo. At the very least, get a nice machine on tiger or wherever and do a fresh install of windows right away and off you go. Clear out all the crap on there and just put what you need.

Wish me luck! Can have up to 500 ct's out there & I am going for broke. Going to pyramid into a position and let it ride. Hopefully will teach the kids what not to do.

I am participating in a high school pit trading class, which was mentioned here at ET. If you'd like to watch, go here: Video Streaming Goes from 1130am-Noon EST; Thu & Fri. Kinda neat idea. I'm going to see how it goes and might help my significant other do something similar at her school.

After reading your above post directed to me, one thing stands out - fear of losing. The entries may be good and they may look good in hindsight. But a few comments sounded to me like - I was losing $ and needed to shut that off as quick as possible. And then - I made a little $ and had to take it before it turned against me. So the real issue may not be the entries or exits at all. If you find yourself fearful and trading in fear, the entry or exit plan will not matter at all. This is an issue all traders at some point deal with. Could be fear of losing real $, fear of being wrong, etc. Here's a few book reco's that deal with the mental part of the game: Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology The Psychology of Trading: Tools and Techniques for Minding the Markets Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude The Disciplined Trader: Developing Winning Attitudes It takes practice, but those books can help w/ this part of the game. IMO this is the most difficult part to overcome.

The 2 above replies are really good. I have one reco BG before you dive into anything new, esp candlestick patterns - you cannot JUST use candlestick patterns to trade from. There must be something else helping them, such as support/resistance, moving averages, oscillators, etc. etc. You cannot buy a hammer just b/c you see a hammer on your chart. Also, the lower the timeframe, the less reliable a candlestick pattern can be in and of itself. Again, some other confirmation is needed whatever that may be. To see an example, see this thread that was initially started by BearBull in another thread that I migrated over here to the CC.

http://www.traderslaboratory.com/forums/f52/donation-system-available-for-coders-4535.html#post49182 GOOD NEWS EVERYONE! YOU CAN NOW PAY BLURAY FOR ALL HIS TIME AND EFFORT BEING DONE HERE! James put a system in place so that you can show your appreciation for all the work he has done here. As I mentioned previously, providing a $25, $50, etc donation is not going to alter your bank account, yet it shows appreciation to what he is doing here. I'd recommend you give a donation for all the work he has done if you use it. And if that donation is asking too much, you should not be trading.

IMO that is a serious problem. I can't see any reason to average 1 trade every 2 minutes over a 10 minute timespan unless you are a true scalper, which I don't believe you are. So I would start there - more rigid rules for entries. I can only suggest taking a look at the 20 EMA thread or Steve's thread for some ideas.

Depends what you need Jean. I use Open ECry and love the entire platform. There are some things that I would like to see changed, but it works very well for me. You can download a free demo here: https://www.openecry.com/software/download1.cfm