gosu

Being an amateur myself, I too am looking forward to any "pro" out there who can respond to this newb.

Sure Tim, you could do 10 with 10K if your broker allows that and if you knew what you were doing. However, I was under the impression we were talking about someone going from sim to live for the first time. It's just my opinion that I think trading a 1 lot with a small account is better than trading an ETF which requires 25K. The nature of being a novice is such that any amount he puts into an account has to be considered at risk. You emphasize scaling out as some advantage. You have your reasons I'm sure, but there's nothing in my experience to recommend scaling out when trading index futures. Do you also recommend scaling in?

This is very poor advice to a novice. I think you missed entirely the point that ETF's are subject to the PDT rule whereas the futures counterpart is not. Therefore, to daytrade an ETF, $25,000 would be the MINIMUM required in an account at all times. I would not recommend to any novice futures trader to trade more than 1 contract, and $10,000 is plenty to do this and even $5,000 is enough with brokers that have $500 intraday margin. Moreover, your argument that one needs capital to trade index futures because it cannot be expected to make $100K on $10K is specious. A novice should not be thinking about how much money he can make. He should be thinking about how to keep the cost of learning to a minimum and survive the initial stages. The best way to do that is to trade the minimum and to participate only during low/no risk periods. The first part of that is simple - just set the trading software for 1 contract. The second part is problematic: To a novice everything is high risk because he is unable to discern the various market operating points. In a nutshell, that is the problem to be solved by a novice. To some extent it is a choice as to how much to pay to figure it out. I suggest that paying anything more than the minimum is irrational thinking and ought to be avoided. This puts into perspective your recommendation of starting capital that can withstand a worst case scenario of 25 losers in a row. A rational person ought to figure out that he does not know what he is doing way before he hits the 25th loser. A person who cannot figure that out is better served with an account that blows out before then because it will mercifully force him to stop trading and save him money.

FAIL. You think maybe I avoided using the word "price" in my entire post for a reason? I wrote that MARKETS move sideways. I also wrote that the sideways was not in a straight line. I gave you the easy to understand explanation that you were crying for, but you screwed it up. You cannot read because your mind is broken. You are in an unenviable place. Take out the ironing board and iron and freshen up the rumpled clothes. Then step out of the box from which you peddle your indicators to consider what moving sideways not in a straight line could possibly mean. Then pop open an intraday chart of the stock indicies for today after lunch and see what sideways looks like.

Hmm. OK, I'll give it a shot: Markets go up. Markets go down. Never in a straight line, however. Markets also go sideways, also not in a straight line. These movements occur simultaneously on a multitude of "fractals" but not necessarily in the same direction. On up and down moves, the market will "retrace" some part of the move and then continue. If it doesn't continue, the market will move in the other direction, which will also retrace some part of the move before continuing, or go sideways. On sideways moves, the market will continue to go sideways until it "breaks out" in an up or down move. See previous paragraph. There, that's all there is to it. Nice and easy. Now you can never say an easy to understand explanation is never given. You're welcome. Now go make a million dollars.

I am on Ensign and it is true that IB's feed will produce slightly different charts especially in fast markets. I always have another feed side by side and have been comparing IB's feed for years. An example was this morning's spike on 6:56 YM 2m, 7:00 YM 5m bar (bar end, PST). The initial IB chart did not show as deep a spike. A manual refresh updated it. Whether it makes a difference in a person's trading, that's for each person to judge for himself. For me it doesn't make a difference, but then I'm not watching every tick either.

I find IB data to be very reliable and have no problems monitoring on charts fed by IB data. I trade stock indexes intraday and the fastest chart I monitor is YM 2m. I have used many data feeds over the years and cost is not an issue for me when it comes to getting quality data. My current monitoring setup with 2 data feeds is a result of years of simplifying what I do. At one time I was subscribed to 4 data providers and running 3 different charting packages concurrently on 3 computers and another charting package for EOD that I had to use with Qcollector. None of the data feeds was IB. For how I trade, only a minimum requirement is necessary and getting a "better" data feed doesn't add to my bottom line. Reliability is the key for me and IB has proved to be very reliable over the years, so much so that I found the costly feeds redundant. I've also simplified my charting down to just one provider running on one computer with APC backup. My current cost for data and charts is under $100 per month.

IB is my primary broker and I use TWS to execute trades and have charts running IB data alongside another data feed. For me the test of reliability on executions is, am I getting the price I see on the screen? IOW, if I hit the bid or ask, do I get filled? Invariably the answer is yes. I'm on the ES most of the time, however, and the levels tend to be thick.

That is YOUR definition. I am not disagreeing with your definition but it is not what Douglas uses. Douglas's definition of "edge" is akin to an unfair coin. If the coin is rigged toward heads, there would be no concern about any individual toss and every toss ought to be bet on heads. It is a valid point. Now, if your point is that no such unfair coin exists in the market which leads you to reject his definition and insert your own, that would not be a definitional issue.

Your comments are spot on about Douglas's "anything can happen" fundamental truth. I think his motivation comes from a correct stance: to convince the reader that predicting is unnecessary. However, the statement itself overstates the case and I don't think he believes it himself. Consider how he defines "edge" - "a higher probability of ONE THING HAPPENING OVER ANOTHER." If he really believed that anything can happen at anytime, the definition would need to be altered to "a particular thing happening, period" or "one thing happening over all other things." Your recommendation of Steenbarger's book is interesting. I am one of those people you describe as wanting to continually progress in my trading, so I do put in the time to try to keep up to date with the current trading literature. What's so good about it in your opinion? I read it and was rather put off by his unending praises for Woodie's CCI Club. I find there are no books being written for expert traders nowadays. Probably there is no money in it. Of past books that are accessible, Gann's books come the closest in my opinion, with the exception perhaps of "Tunnel Through the Air."

Douglas defines the term "edge" and includes it as one of his 5 fundamental truths. As the OP quotes: 4. An edge is nothing more than an indication of a higher probability of one thing happening over another Now, if a person likes the term "set up" better and wants to substitute it in, then it's only fair that the same definition be kept: 4. [A set up] is nothing more than an indication of a higher probability of one thing happening over another The person who says Douglas's "edge" seems like a "set up" and that "there are plenty set ups which will lead your account to hell if you trade them religiously" is not following Douglas's definition. If you want to point out that discerning such an edge or set up in the market is not as simple as Douglas makes it sound, I think a lot of people can attest to that. But let's not continue the straw man fallacy. For me, the bigger issue is making up a definition of a term and then claiming it as a fundamental truth when it isn't clear to me at all that is the case. It's sort of like defining "marriage" as being between one man and one woman and proclaiming that as a truth.

TITZ is a book written for the losers in the trading game. In that regard the message is not that useful to people outside the general population of losers. The gist of the message is that people lose because of their mental orientation towards the market and trading. That's hardly a revelation. However, Douglas prescribes a remedy that has as its ingredients his 5 fundamental truths. Many people on trading sites extol the book's virtues. No doubt the message is effective in reaching its intended audience. But how useful are these "truths"? Are they even truths at all? Does it matter?

Perhaps Douglas should get more credit (or blame) for the current prominence of the "psychology" of trading as separate from other aspects. TITZ is OK. The analog in chess literature is not "Think Like a Grandmaster" by Kotov, but something akin to "Chess for Beginners" by Horowitz.

Read your reply and just a quick response: Regarding, trading through an entity, trader tax status, mark-to-market: First, you already know you don't need an entity for trader tax status. In your case, you are contemplating a partnership (you mention 1065), which will be problematic if your wife is a partner because the test will be applied at the entity level and she's getting a W-2 from her employer. Second, the actual benefits of trader tax status is overblown, at least in my case. The primary benefit is expenses are deducted on Schedule C rather than as deductions on Schedule A subject to 2% of AGI. Personally I don't deduct anything that is of mixed use - personal/trading - and that includes the home office deduction, utilities, etc. Hardware I expense under section 179 and I've been going over 5 years between replacement. This year my expenses on Schedule C are under $1200. Commissions dwarf every other cost and they are not counted as expenses but are accounted for as an adjustment to the sale price or cost basis, so trader tax status is irrelevant there. Third, for me, electing mark-to-market to treat gains and losses as ordinary rather than capital is a blunder because it would take away the benefit of 60/40 long-term capital gains treatment for section 1256 contracts. I trade index futures only. Obviously, if you contemplate large losses from trading AND you have other income to offset, then the election might make sense. Just consider that the election for all practical purposes is irrevocable. Fourth, the wash sale rule doesn't apply to index futures, but even with stocks it applies to losses and just a deferral of losses in the form of a basis adjustment on your tax return at the end of the year. For me, trading comes first, taxes come last. I never let tax considerations affect my trading decisions, which is why I said it was a non-issue. Regarding making $150 to $200 per day on $100,000: Intraday trading is a different game than what you've been playing. Why go into debt for 28K just because you believe you'll have an easier time picking up $150 to $200 per day on $100,000 versus $72,000? The reality is that is a very modest goal if you know how to extract and can be done with $25,000. If you don't know how to do it, you won't be able to do it with $200,000. Since your cost of capital is very high, you might consider putting just a small amount at risk in an account and maximizing leverage. For a retail account, to avoid the PDT rule, that would be $25,000. If you look beyond strict retail trading and into pseudo-retail firms that offer greater leverage than 4-1, the starting capital may even be smaller. Best of luck.

A lot of red flags in your post. It appears you have thought things through but on a superficial level at best. After a quick read of your post, these are some questions I would consider. Why form an LLC? I've been trading full-time for 13+ years and have heard all the arguments and still don't see how the additional compliance burden brings any benefits. If I were trading OPM, it would be different. At the end of your post you state your concern over spending a couple thousand for a decent computer and getting a backup internet connection. Yet you're willing to pay a lawyer for consultation and to set up an entity and have increased compliance costs. Makes no sense to me. The wash sale rule is a non-issue. Do you have any experience trading successfully? You say you've been investing in your IRAs and have done well the past few years. Have you been trading your IRAs? You mention something about making $150 to $200 per day which implies you want to do intraday or short-term trading. What's your experience in this area? Why $100,000 to start? You are going to get hit with a steep penalty on the early IRA withdrawal and on top of that go into debt for another 28K to fund your trading account. Either you have a lot of confidence in yourself or you are reckless. Since I don't know if you can trade or not, I can't say for certain which is the case. However, I can surmise from your comment about the difficulty of extracting $150 to $200 with a $100,000 account that you don't have much trading experience. Therefore, I am leaning toward reckless overconfidence on your part. Post more details, especially about how you intend to extract $150 to $200 per day on a $100,000.

Hi josh, thanks for adding more detail to your previous posts. Just a comment and a couple of clarifications. I've parsed your post below. I like to be precise in the timing of my actions. For me, the considerations you list do not provide any guidance for precise timing of actions. They are statements about why you think the short side is the side to play, or what I consider to be statements about a thing I call "sentiment." For the fractal that I play on, the sentiment is long at the open, even though I agree with you about all the conditions you list. Just want to clarify that I said the "sentiment" was long at the open, not the direction. I won't go into detail as to the difference but to say that just because the sentiment is long at the open doesn't mean I'll take a long trade at the open. Also want to clarify that I did not mean to imply that the short side could not be traded. Of course the strategy I laid out is my strategy and not a claim that it is the only strategy or even the best strategy. The important point is that the position of the market at the open was what is popularly known as a "trend day." Now this does not necessarily mean it will be a trend day the entire day, but I do not look past the AM until the AM is over, and the PM is informed by what goes before it which includes not just the AM but the midday. Noted about the chart. Likewise regarding your final comment.

You requested specific feedback regarding your trades. In general I do not make comments regarding specific trades of others on a message board because the posting of entries and exits on a chart falls under the heading of trade tactics, and to make any sense of them requires that I know what the trader's underlying strategy was that gave rise to them. However, for intraday trading of ES the strategy is dictated by the landscape provided by the market itself, and on a day like today the landscape is rigid and the strategy is clearcut. The day's landscape is a 300 point gap open on the Monday after a long weekend following a bearish close the prior week. At the open the sentiment is long. This is not an opinion or a subjective viewpoint dictated by personal beliefs. It is a certainty that can be relied upon to know exactly what is going on. Either a person has obtained the knowledge, skill and experience to discern that truth and trust in his judgment 100% or he is still struggling to make sense of what he is doing. To reiterate, the sentiment is long and strong on the large gap open which was a reversal from the close of last week. Thus the strategy for the AM is clear: trade the dominant; hold through the first retrace; exit on the left side; sideline and wait for reentry after the retrace to play the resumption; no reversal until the test of hod at the start of midday. The tactical execution of this strategy is where the rubber meets the road and determines what is extracted into the trading account. Tactical execution deals with the timing of actions and I use a pair of charts for this - ES 5m and YM 2m. Regarding your requested feedback, I will limit my comment to only your first trade, as it is the only trade that falls within the AM. Your first trade was a short on the 10:15 5m bar. This is a short during a dominant traverse of the long channel and would be at best an early entry to play for a retrace back to the right side of the channel. While playing the nondom short can be profitable, the strategy I laid out above is to sideline at the end of dominant moves and to reenter for the resumption after the retrace until the end of AM. The fact that your "target" was 84, which would require a reversal of the entire morning, tells me that you are either unfamiliar with the landscape or playing a much larger fractal than the use of a 1m chart implies (i.e., you're willing to hold through the long sentiment in the AM and perhaps playing for a reversal in the PM or after today).

@joshdance: Do you monitor primarily on the 1m bars? What are you looking to extract off the trades you entered? A few ticks? A few points? 20 points? You made 4 trades and as you noted they all were in profit, or would have been in profit had you held slightly longer (trade 2), but you ended up closing them all in the red. More accurately, you allowed the market to reach an arbitrary price at which you wanted the trade to end and that arbitrary price was a loss in relation to where you entered. This is not a rational trading paradigm but for some reason you think you've turned a corner today in your progress. That is very puzzling. It looks to me you've put yourself in a box labeled "Hit or Miss" and that is how it will continue for you until you break out of it. I had decided to no longer post on this board after the last PM from the owner asking me to not go around bursting people's bubbles. Your series of posts caused me to make an exception for some reason. My apologies if I'm out of line.

"It takes a man a long time to learn all the lessons of his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side." AMEN

A world-wide FTT will happen when nationalism and economic competition among nations cease to exist. In any case I see the current trend as: 1. The economy worsens, more joblessness, poverty, despair. 2. There will be increased civil unrest, demonstrations, occupations, riots, clashes with authority. 3. There is already an obvious group of villains - the "1%", GS, HFT that will be targeted. 4. There will be regulatory and legislative overreaction, just like the last time with PDT. Personally I am not alarmed at all by the chatter about a FTT as I see it as just one of many symptoms of the secular bear market in progress. Moreover, I believe there is nothing that people on a trading website, or even the entire population of traders, can do to alter that trend. I will ride it out and take advantage of the opportunities just like the last bear.

Who is "they"? Seems to me it's the same guy over and over again. I don't know if you're reading the bill correctly or incorrectly, but think of all the lost jobs and lost revenue that such a measure would cost, not to mention the loss of dominance of US financial markets in the world. There is a reason the current administration, and not just the republicans, opposes a FTT. Any sweeping FTT will not work unless ALL major economies agree to impose the same kind of tax. Very slim and none are the chances of that happening. No country is going to shoot itself in the foot by imposing a broad FTT unilaterally. You have to understand that HFT is the villain du jour, just like daytrading was 10 years ago and short-selling was way before then. The last flash crash was blamed on it and the next flash crash will bring more negativity on HFT and I would not be surprised to see some kind of regulation or legislation to curb it. It remains to be seen whether or not daytrading as we know it will be collateral damage.

That's from the ever popular TITZ. The lesson is don't be an idiot who thinks only one thing happens at S (and R). Even if price had bounced at that level he would still be an idiot. The context of the story was that he was a broke TA guy who was hired as a favor by a seasoned trader who didn't use TA.

Let me help you out there a bit. I know everything you state about trading is from things you've read or heard from others, so here are some things for you to consider as a way to "up" your talk. The trading account doesn't govern anything about trading except the number of contracts or shares to use. True, growing the account ought to be the goal, but we get there by not focusing on the account itself but on all the details to partner with the market to extract. This is the part of trading you do not grasp, or maybe care not to grasp because it won't help you make more money. Your services focus entirely on the trader and on peripheral issues related to the trader at that. Trading is a partnership between the trader and the market, and as partners they each have different and mutually exclusive roles. It is the trader's responsibility to know his role as well as the market's role so that he does not usurp any of the market's role. The market will never usurp the trader's role. All of this comes under the heading of "knowledge" and the details can be obtained by anyone who can research on the internet and can think critically to weed out the myths that obscure the truth. One of the biggest myths is that predicting or forecasting is necessary. Since you do not teach a method or sell a system you do not use those exact terms, but you have adopted the myth and spread it further with your "dealing with uncertainty" routine. A trader who understands his role in the partnership deals with uncertainty in only one way and that is to sideline. It is the trader's role to know, and not guess, the position of the market at any given time and to update that knowledge through continuous monitoring. This is the "certainty" upon which a trader relies. It is not the certainty of a profitable trade which many people assume is what certainty in trading means. There are many, many details to consider regarding the above and it is just the proverbial tip of the iceberg in thinking about how to extract. The issues that you address are just a distraction.

LOL... None of his four new buddies know anything about how markets work, how can this be anything other than bullshitting himself to think it is a good start to learning how to trade? As another poster has suggested, why not follow up on this guy in a year or two and post his progress? Then again, why bother? It will be sim and grim unless he's given up already.

This is pure entertainment. You say that the majority of traders (not everyone, but most) can produce a livable income? Since you are into "evidence based" assessments, may I ask what your evidence is for such an audacious statement?