DugDug

Life of the day trader - if you read a lot of similar threads, it is a daily grind. You dont find many people day trading from the beach, living it up. They are focused on screen time and reading the markets, or researching and backtesting. By that I mean it involves a lot of patience, isolation and focus. None of these are bad, however they are also not for everyone. However, as some seem to do very well via time allocation and turning off the screens at set times, you can make it work for you in whatever way you like in terms of freedom. Good luck.

A better analogy may be golf. It costs nothing to do a practice swing and to visualise the shot, yet when you put the little white ball in front of the player, the mind goes to mush. I also think there is a big difference between SIM, trading live and visulalising (often the practive that is referred to in sports connotations) In a trading situation, I guess visualisation is like the plan; ( the setup, the trigger, the trade management) I think Thales made a good point in terms of how he trades a new instrument - he will paper trade it for a while, using various strategies that have been used before hand - then go live. Additionally - here is a question for those stuck on SIM trading. why not get a system that allows you to see an accurate market replay, and do the SIM trading in fast forward, testing, trying ideas, entering trades..... what is the difference?

On this note, a book that seems to be getting some press and covers this area. (I have not read it, and dont have the time to at present, but it might be of interest to this thread) Amazon.com: A Practical Guide to ETF Trading Systems (9781906659271): Anthony Garner: Books by AJ Garner (??) Plus - I have only had a brief look - but great site for the ETFs Frank.

Hi AgeKey - nice post, and (when I use I in this post I think it also means "many others on TL" as well) I agree with what you are saying. I actually criticized UB - not for his system or skills, but for his attitude to everyone. UB clearly has good points and it works for him, but telling people they are idiots for things that dont work is actually not helpful, if for many people they do work. TL does a great job of providing info across a broad spectrum of ideas, methods, strategies. Thats its beauty. While it could be argued that new ways of doing things are great, and that for some they believe themselves to be pointing out the emperors new clothes and telling people that they are wrong, the other side to this is that when new ideas come along and people claim this is the new economy they throw out the basics of what may actually work. (remember LTCM, CDOs, internet bubble) There are always two sides to every argument. The point is that be it the internet or face to face, for a full and frank discussion it requires all parties to want to participate in a constructive, non judgmental way (yes you can say you dont believe something but to say others who do believe are idiots means that you are wasting everyones time in the discussion. (think of some discussions between atheists and creationists as an extreme example). No one is beyond learning something knew and being reminded that there are sometimes more than one way of doing things.

1) Actually your system went back further than the "start date" you mentioned and the drawdown was nudging around the 68% mark. I was just going off your own site link and asking a legitimate question....instead I get attacked by you you answered that prior to March it was just a test system.... fair enough. I wonder if you would be able to show the actual back tested results over a meaningful period of time, as given you clearly know a lot about it then surely you would understand that a larger data set than a few months is required to adequately judge a system. 2) if you are not promoting anything, why then in your own words talk about your mentorship.... how am I lying and assuming?.... I just quoted what you wrote. You are probably right we dont deserve the abuse, the confusion, the advice that so far has just aggravated most people. I for one are happy to make the most of the resources I have available here, and welcome any new ideas and discussions that actually contribute and add to those. thanks for reaffirming this for me Randy

I'll pass on the mentorship program .... thanks Promoting a live testing account with large drawdowns over just a few months, telling people they are kids, telling them they are jealous, ..... I dont know it just does not sound like a great deal. good luck with it.

randy I am confused ... I noticed this message at the top of the screen you sent through, This account uses a custom start date - for full history analysis use the 'Custom Analysis' tool. So I changed the date. it looks like you have a very big drawdown at the end of Feb?

glad to be of help, thats why these forums can be so good. re books there are many available Amazon, google, options for dummies etc - but to really understand options and how and why they work as they do you should always go for the best book I have seen Natenberg Option Volatility and Pricing. Its a tough theoretical read and I dont recommend it for anyone unless they really like this stuff, or are actually serious about learning it. Ultimately spending time on the internet and various sites like this is the first and best option. (excuse the pun) dont get caught up in the hype of people promising big returns. Also - this strategy while it may give you consistent profits, will also give you some big losses..... its a trade off, and should first be approached from the point of view of asking yourself..... Do I want to hold the underlying instrument long term if I had to? good luck.

first - you really should learn a lot more before committing any money to such a strategy. There is a lot more to it, and any course will give you only the basics and will more than likely sell you ideas and dreams without necessarily the required knowledge. But to help you on the way..... "Apparently you buy the share and the covered call at the same time." the reason why it is called a covered call is that the stock is owned at the same time. If you sold the option without the stock it would be called a naked short sale. What you actually do is buy the stock and then sell (or write) the call at the same time....often called a buy and write strategy. " You get paid for the covered call which gives you an income. I understand that if the stock goes up you will only get the capital gain up to your strike price (You make a profit). " If profitable you will receive the difference between the original purchase price of the share and the strike price plus the premium received for the call that has been sold or written. If the share rises higher than this, you do not participate in any more of the upside. "I also undertsand if the share stays flat then your covered call will expire and you keep the premium and the shares. (make a profit). You can then write a covered call again. " Yes - you either let the call expire worthless and then write a new expiry call, OR you roll the calls, buying back the original sold call and then selling a new call in another expiry. "However I don't understand what happensif the share drops in value. I understand that your capital will go down with the share priice, but what happens to your covered call?" the price of the covered call will (or should) decrease as well. You then have the decision of what to do....either buy it back, roll it down a different strike, close both shares and calls out. This is the problem.....you have to decide what to do still as all you have is reduced the cost of the shares, however you still have the risk of further declines. (always buy back the options is they are nearly worthless, dont sell the shares and not buy them back, otherwise you can get doubly screwed) Can you sell your shares and the covered call at some point below what you paid and still make money because you collected a premium? Yes - just do the maths, any broker or person who is offering you these services should be able to provide good systems to allow you to work out your breakevens on this....if they dont, then dont touch them as a broker. They should be able to provide payoff diagrams....there are lots of books and sites around that you can search for this info. "They say a little knowledge is a dangerous thing, and that is what I have with this subject, a little knowledge. I would also be trading from the UK so I'm not sure of the restrictions and who i would use to try this strategy out with a demo account." Cant help you there regards broker advice, or regulatory restrictions - you need to seek professional advice for your own circumstances. But again any broker worth using should be able to easily answer these questions if not dont use them. Also a demo account will take a long time assess as this is a long term strategy best applied form the approach of using a portfolio. Also if you are not prepared to do the work and learn the info..... then you only have yourself to blame for losses, and yet I am sure if you make money you will pat yourself on the back and tell your self you are a genius. A few things to remember - 1) how many people are returning 3-6% per month using this strategy in a professional manner...... dont get suckered into the hype. 2) you will still need to be buying the things that go up, and in that case, why cap or limit your upside by selling the calls against your holding unless you are a long term user of this strategy, 3) this involves a fair bit of money to make serious money 4) understand that the risk profile of the buy and write strategy is exactly the same as selling a naked put....if you wont sell a naked put you should not do this strategy....

As a side note - regards portfolio testing - I am not sure how each system actually manages their portfolio backtesting - but if a system is not doing it correctly then portfolio backtesting is useless. I define correctly as "in a manner that actually replicates real life as close as possible" If you are testing a portfolio system then you need to separate the trade triggers from the portfolio construction and this needs to occur on a daily basis, everytime the system checks the triggers for stops and entries, it then needs to run through and adjust the portfolio based on separate rules. If the backtesting system does not do it in this manner, and instead uses a lazy way of just adding positions on a day by day basis, then I would suggest you dont use it as it will not give a true representation of what will occur in real life. A simple portfolio approach whereby the portfolio is not adjusted on a daily basis on separate rules, assumes too many things such as correlation risk, capital restrictions and concentration risks.....in other words not a great measure.

Q "what is better maximize the profits or hit the targets when it happens" Regardless of what you do - be consistent, otherwise you will be like a dog chasing its tail going nowhere. If you always take the profits at the target and those that keep running really really eat you up, then some suggestions are; - actually measure, all the times that the runners compare to those that reverse and if you did not take profits what it cost you - do an empirical study. - take profits on 2/3rds of the position and then let the rest run. - let everything always run - in which case you will have plenty of losers but the winners can be big - you will have to run positions over many days, months even. If you cannot sit on winning trades and ride through the feeling of giving back profits, then forget about running trades and stick to taking profits - its simpler and easier, the focus then remains just to maximise your risk reward on entry. Whereas when you run profits, entries become less important. There was another thread similar to this, about scalling, in and out and taking profits on longer term trades - Answer - it depends on you, your comfort levels, what you are trying to achieve etc; ie; there is no right or wrong answer. http://www.traderslaboratory.com/forums/f62/taking-part-profits-trend-trading-7466.html

I am with BF - MM you sounded like you were scalping. if not scalping and looking for bigger swings, then small slippage and brokerage should not be a major issue.... as I mentioned this way its sometimes easier to just wait for the one or two trades a day, or week. Once consistently profitable, you can increase the size.

I dont have a definition for a pullback, I was quoting Dinero. I also dont have a strict definition of a trendline.....I draw them freehand that was my point. Over the years I have found them to be handy to act as a visual tool in order to remind myself of what i am trying to look for in a trade. The example I have attached is a simplistic but good one .... 6A in a small downtrend, breaks the downside momentum shown by two things, the trend line penetration (any trend line drawn roughly would probably have been broken), and the breakup or the highest highs (set at 25, but any number will do, so long as its consistent). This reminds me that for me in this instance, the down trend has been broken, a good entry maybe during the pullback toward the trend line, OR if the trend line has been broken, and then uptrend resumes, after a pullback it provides a good time to get on board. (eg, the first close on a bar in the new uptrend direction, near the P) If anything I also look for the zones of a pullback to be in the 50-61% of the "trend line break" if you like. Hence I dont particularly like double bottoms. (this range was approx from 91.00 bottom to 91.60, back down to 91.19) Nothing that I could attempt to quantify in a programing sense.....more just a visual reminder, of the price action.

dinero - while I agree with Kiwi, I also think that your point is valid about context and " I look at trendlines for pullback setups"....this can give a nice visual for brain muscle memory if you like. I think they will drive you nuts looking for the perfect way to use them. As a suggestion, define a way for yourself to draw them, be it visually and free hand, or in a more structured way (TDeMark, Trader Vic), and then be consistent using them as an indicator only, and to give the general vibe....otherwise its just another holy grail chase.

hi MM - as a suggestion, if you keep a trading journal of some sort, or as you seem to be actually monitoring your trades closely, its definitely worth while really analyzing your trades and looking closely at where the money goes. If you are having numerous fat finger errors (buying or selling by mistake), slippage losses, crossing the spread, - then each has a different solution so its worth while making sure you really understand where your losses and wins are coming from.....this may be the simplest, easiest and most cost effective solution to adding to the bottom line. Also I think its important to be aware that if you are going to scalp, or take small wins and trades, then its vital to ensure you get set by buying at the bid and selling at the offer. If looking to make 8 ticks - This will increase the PL by 25% (2ticks on every 8).

I was actually searching for some more info on the OEC custom indicators on the charts. Problem was there did not seem to be much via the OEC website, and I became a little confused when they talk about easy Language, and then suddenly switch to C+ Is there a reasonable help file that I have missed - I have found some - but they are pretty poor....or as a non programmer, should I just not delve too deeply in OEC custom indicators yet? (I follow enough easy language to get by, but it seems OEC is not really a program to worry about customizing just yet) suggestions? thanks.

and then there is the alternative of trying to take just one or two trades only every two-three days in order to try and make the money. eg; which is harder to do - both strategy wise and mentally - make $1000 per week, or make $200 per day. Electronic local (on this forum and his own blog) makes to me the fantastic point of aiming to be CONSISTENTLY PROFITABLE first - after that it makes things much easier. yes, yes there is risk of ruin, underfunding issues, but these definitely become less of an issue after achieving the consistency??? On an interesting side note, a few weeks ago i was in a hotel in the US and saw the hotels menu from 1966. Not much had changed in terms of the style of food, but the prices were interesting, and why inflation and growth of the trading account is so important if you wish to make a living out of trading over the long term, and be able to do it 20 years down the track. Price examples went from coffee 20c, to $2, main meals (two courses) $4.50 to $40....iel roughly a ten fold increase.....so think how much a cup of coffee may be in 40 years, especially if you are 20-30 years old now......scary. point being - if you cannot grow the account as well as make a living on it - ultimately you end up going backward in real terms.

1 - no but it shows how the strategy may work over many different types of markets and instruments. Nothing works all the time - people want to at least gauge the drawdowns and volatility of returns. 2 - there is lots of free info on the internet yet still people look for more. 3 - one that makes money and I dont do anything......thats normally called a money manager.

also the original writer of the quoted link can be found..... I think he has a very good website/blog providing some good info. Particularly in this case the info about the sequence of trade wins v losses and how it can relate to position sizing. Breakout Bulletin - July 2003

pip thief - please read my notes - I agree with you. I know the % method is better, I have been trading for many years using a portfolio - position sizing is very important to me. Its not over my head.....on the other hand your fervor misses my possibly badly worded input. For NEW traders looking to actually mange something to help them ACTUALLY increase their position size I maintain my point is a valid one. Not everyone is abe to do it in real life...not like a theoretical model. I have seen many, many traders over time - not everyone is the same, not everyone is a machine. Many people get concerned with the $ amounts.... they think...look at me I am a genius I have made $40,000.... the first thought they get is I had better protect this. This is the value of a car, a holiday, part of my mortgage. they don't think in terms of %. Very few people are able to switch off, and just think in percentages, risk and return. What happens to many new traders after a rash of success, is that they have vastly increased their trading size too quickly... the first run of losses - their plan goes out the window, they loose their mind, discipline and usually their account. (I am sure there are many cases of experienced traders that this can happen to as well) The example shown to go from 7 contract to 13 in 24 trades..... at that rate, it wont take long for them to have problems of scale with only a $50,000 account. This does not seem a problem for most people here. I would suggest that for a NEW trader with $50,000 trading 7 contracts from the start will not have $50,000 for long. Now do you see my point? There are alternatives, they may not be the most mathematically perfect, or best, but they may work for some.

Given both of these points then shouldn't most new traders use the fixed ratio method - as it grows the number of contracts they trade more slowly? Hence they are are aiming to be more consistently profitable rather than just trying to trade larger size more quickly. given the example quoted on the link, then if after only 24 trades, a new trader is trading 13 contracts, then the stress of any big loss could be devastating.....most new traders are still thinking in absolute dollar terms not percentages This assumes that they have enough capital to actually trade most products (if you have only enough to cover the margins then you are undercapitalised) , and that you already have a strategy that works. Not to argue as I do agree the % method is the best....just that for a new trader looking to increase the position size - the fixed ratio is a slower method of doing it hence somewhat more conservative. Easier to understand and implement. Of course if going for scale scale scale with absolute returns combined with capital preservation, then % rules the roost.

except those women who look so good you just throw your cash at them in the hope they will let you into their bedroom. And then you marry them and they stop working! (i know this is very un PC - i apologise for those who are offended)

personally - it is not TT or CQG. It is also better than just a simple retail platform. To date - a part from a few small bugs (as per the threads) I have no problems with feeds etc; The system is easy to use, intuitive and so far reliable. I think a lot depends on the volumes you might do, the costs of comparable systems and the numbers of trades.....if you are only doing 5-10 a day then OEC should be fine. no comment on service levels

This one is debatable - and also a long term trading subject - and also questionable in terms of what is long term, what parameters are used, what markets are traded. The original turtle trading rules don't appear to work anymore. They worked very well from the 70s to the 90s then have been pretty poor since. Variations on the model appear to work, however the original seem to have stopped working. (weather it works again in the future is the debate)

While I am fully of the belief that the % risk is generally accepted as the best model, the fixed ratio has a valid idea for increasing a SMALL traders position size. It gives them an easy measure to do it, makes intuitive sense and achieves much the same result. If given most small day traders are generally under capitalized I can see the merit in it. At the same time if someone is being consistently profitable and growing their account one would imagine that they are looking to work out more sustainable and scalable system - which is the % risk.