DugDug

Suggestion: organise yourself and learn from here. Get some simple trading books - just so that the jargon is explained. Cut and paste certain threads into your own notes. Leran, Record, observe, learn more. Any course you pay for would expect you to do the same. (you should expect to do the same.) All of the resources on the web are free for other info. Just doing a course will not give you knowledge - it certainly will not give you understanding. Especially one you pay for. In fact you are more likely than not to actually get less out of a course you pay for as your expectations are that because you are paying you dont have to do the work (its the way the brain works) If I go to a restaurant and pay for a meal I certainly dont feel like doing the cooking exactly because I am paying. Here you have like 20+ people willing to offer help and advice in their own expertise for free. You are unlikely to find that anywhere else.

So far this week I have had 20 trades, 15 losses. Yet I still made money.

Hi TRO I'd like to ask a question, as some of your ideas makes sense in a glaringly obvious way, others I am slightly confused. I have taken your checklist to make sure I am not missing anything, and it would be appreciated if you could answer the one or two questions for my clarification. thanks. 1) price within 20 pips of the daily low - that is OPPORTUNITY WHERE DO YOU DETERMINE THE LOW OF THE DAY TO BE? IS IT A CONSTANTLY MOVING LOW? I guess as you say below this is largely irrelevant as it could occur anywhere. 2) red candle closes - GOT THAT EASY TO SEE 3) green candle closes - note the high price of the green candle. - 4) enter long at the green candle's high price IS THAT THE FIRST OR SECOND GREEN CANDLE? I ASSUME YOU ENTER AT THE BREAK OF THE FIRST GREEN CANDLES HIGH IN THE 2ND CANDLE? 5) STOP LOSS IS 10 PIPS - OK. 6) Take whatever profit you can. - OK. Let's clear things up: 1) To trade like a RAT is to ALWAYS trade in ONE DIRECTION - either LONG or SHORT. Once you pick a "team", you can't switch. NO PROBLEMS - CLEARLY YOU ARE LONG HERE, AS YOU ARE BUYING IN THE LOW ZONE 2) The "within 20 pips of the daily high/low" is the BEST possible entry to get the maximum run BUT the RAT REVERSAL entry works ANYWHERE on the chart. THIS MAKES SENSE, IN THAT THE REVERSAL CAN OCCUR ANYWHERE. thanks.

just per previous thoughts.... i have been busy rambling at http://www.traderslaboratory.com/forums/f62/taking-part-profits-trend-trading-7466.html#post88151 (I need to be able to be more compressed) Watching very closely 10yr - there is a GDP figure plus others out today which might change things, but I am looking to add to the short trade on either a abc rally to 117'285 With no massive spike through 118'5, and or a fall through 117'23

Also from the same above idea..... a quote from another trader "In my work I now seek two different types of setup (context factors + trigger + post trigger entry + stop and profit capture). One is "get into trends on the timeframe reasonably early and then hang on for the big one." The other is "find the high probability of an xx move for a yy stop" situation and take a quick high probability buck. They are very different. One thing to think about in the first category is a high probability non-trend liquidation point where you can take half off to create a free trade for the long run rider. Thales clearly does this effectively although hes to fast to be+ for my liking if he was going for really long holds. At ff this is advocated for some systems where the NTL has an expectancy of under one --- but I suspect the real positive for it is that it gives the holder that "free ride" feeling that lets them hold a position long enough for the few really big pay offs. Also, if you get at all mixed up about what you are doing you are likely to join the 95%." I think the key here is the last sentence...... How do you not mix them up? Are you deliberately going to cause problems when trying to do so? (I would suggest yes - as its hard to say I'm bullish and long, yet bearish and short - kind of like here is some bacon and egg flavoured ice cream - great experience but mainly as your mind is being played with.) I also think that it is precisely these types of conflicts that cause many traders to fail....ie; the 95% To separate the two ideally a broker that gives separate accounts, that allows you to either have two accounts. or allows you to take from one and place the orders that you are running into another. Tough to resist temptation. Its like saying here is the cookie jar, I am going to place it in front of you, its clear, the lid comes off easily.... now dont eat the cookie. I have opened a separate account at another broker entirely. Here I place the slow burning trades, whilst I day trade elsewhere. I open the second account systems to amend orders once a day - THEN I CLOSE IT. It seems to work.... how ever its tough mentally you keep thinking, but what if, dam it, could of.... then I use Excel to manage the overall portfolio (if you like)

This was all started from another thread....discussing taking profits and pyramiding One of the quotes were from making a point of employing a strategy of " trade 3 units, sell 1 to cover costs, sell 1 at a take profit, run the last unit. Keep pyramiding, so that by the end of a large run, you may have accumulated quite a large position with the trend." the response being..... "I've thought about this a lot for a while now but ended up thinking that the concept is in conflict. I mean if one is going to be scaling out quick and fairly quick (exits 1&2), but then later on adding to the winner (the pyramid part) - the whole thing seems in conflict to me. One is adding to the trade when the risks for continuation are diminishing. At least that is how I decided upon it" This is another area of conflict - apart from others mentioned. a) The fear of selling at the bottom, or buying at the top. Which is why I try to use context, and ask ? can this continue... is it likely to continue? if it does where could it get to? ie; what's the risk reward? Can I possibly get into this trade at a better level? In reality I usually just do the trade, and if it goes my way I let it ride. b) Are the risks of it continuing REALLY diminishing? Or is it the longer the trend lasts the higher the probability of it continuing? Again this is a context and time frame issue. If you are entering a daily trend using 5 min charts, then yes the trend will probably continue in the daily trend. If you are counter trend trading, then you are probably asking for trouble. Also you really do have to ideally try and pyramid early and fast for the best results. Longer term trend traders will say, and prove via their methods - that the trend is likely to continue, however, there are a lot of them that also have limits/rules to ensure they dont enter trends after the horse has bolted. How many times have we looked back and gone doh, an example I had of some friends in Australia.... a stock called Paladin - uranium miner. code PDN. They were all patting themselves on the back for buying at 3cents, some sold at 10 cents, a few at 20c.... one even hung on until 50c.... the stock went to $11.00 or something. Thats why I think the combination of the two styles works. capture short term volatility and also put some in the bottom draw. Again what ever works for you as an individual.... as the point of this thread is to get other ideas, tricks and tips, or help people think about things.

As a few thoughts to kick me off. Do other traders have thoughts on how best to do this? This has always been a conflict for me, and so I use a rule of thumb for most trades. I trade off patterns, using a combination of discretion, and signals around context - I have tried to formalise it, but cant seem to mange it sufficiently to be able to put it down as a set of rules.....hence I guess this thread and other forums. I also trade longer term than most day traders.... while i trade daily and may only hold positions for a few minutes to hours, I also may hold positions for months. I combine strategies - of shorts and longs on different time frames.... so I can be short 5 units whilst at the same time being long 2 units,in the same instrument.....thankyou excel. What do they do in practice? I pyramid into winners, and if I need or feel like taking profits at a level I either had in mind, or the market changes shape, I will exit. If I exit on a gut feel but know I should be running profits, I use a rule of thumb of taking off two thirds and letting the third run. I know that you never know when the big one will come, so you always need to at least give yourself the opportunity.... as they say even if the odds are against you, you will never win the lottery if you dont buy a ticket. What do they find hard and or easy about each aspect of it? The fear of missing a trade means there is the conflict, the fear of letting a profit turn into a loss is probably the hardest aspect. However I keep reminding myself - remember what works, remember what you are trying to capture. The easy part is taking losses..... just cut them and move on. After a while they are forgotten and treated like a small cost. Its hard knowing that most trades will be scratch to loosers - I tend to make most of the money out a small number of trades. you always feel that surely I can improve this. annoyingly so, a lot of the times I manage to get the general direction right, but lack of patience hurts me.... a problem I currently have. How can they trick themselves if need be? I dont look at a daily PL - I try and avoid thinking in dollars and sense - rather I think in points/pips. I am trying to develop a system of levels, so that I dont even have to think about noise in the market..... not successfully yet..... as I still actually like to be closely involved day trading, and I am a computer ning nong. I do take partial profits to make myself feel better. I am completely flexible in that I will happily reverse a trade and go from long to short. I am very tempted to give my levels to someone else to monitor and watch - they can call me,...... but where is the fun in that. plus you then have to trust them, and be bothered by them...

This thread is ideally about discussing good/interesting/profitable ways of being able to manage and combine strategies. This is both in the respect of asking the questions - how to manage and combine various strategies - how to manage and combine long term trades and short term trades - how to manage taking profits v letting them run. While I dont wish to get into arguments about what works, whats best, etc; etc; So ....I would like to start off with a few assumptions with which to begin a discussion. Assumptions. 1...Trading with the trend works - is easier, less stressful, less timing is involved. 2...The big money is made in the big moves with fewer trades. 3...Psychologically tricking ourselves is actually very important - more so than discipline 4...Discipline is important in that you have to follow what ever plan you devise 5...While a lot of ideas can be backtested, context is important, as is flexibility, hence a lot of discretionary trades, whilst having a basis that can be somewhat tested, are not binary, and hence very flexible as to what works and when to apply it - in other words dont take anything too literally if you cant profitably test it as human input is vital in trading. ......................... It has dogged me for all the years I have been trading that there is always a conflict between letting trades run, and taking profits. Mainly because, we are all told to let things run. That is were the money is made.... however its really difficult, as we always prefer to capture short term gratification We think that - by taking lots of little profits that the market offers, we can capture more PL. Example: a currency may move 15-20% over the course of the year, yet it move 1% a day (possible 255% a year). We extrapolate to think well if we can capture even only 1/3 of that we will still make 80% - We also think that the less time you spend actually exposed to the market the less risk that you have. Hence the desire to get the timing right so we make quick money and then exit waiting for the next opportunity. Problem is with this the maths. Let’s say your chances of being right are 50% (50:50) if you buy something and get it right, then sell it taking profits, looking to buy it again on a pullback etc; Are you not actually increasing your risk? I always thought the probability was that getting it right, AND getting it right AND getting it right was along the lines of 50%*50%*50%.... etc; which means that ultimately you actually made it harder foryour self to get it right over the long term. (now I know this varies, and this is possibly nonsensical …. Just go with the flow for now) Yet buy and hold also does not necessarily work either – that’s why we want to try and beat the market with ideas etc and develop trading styles, strategies and plans to better the odds in our favour. We also know that doing the same thing over and over again is boring – even if it works, and that psychologically trading is difficult. Basically our brains are not really built for it (read Your money and your brain by Zweig plus other books) So how do we combine – trading less, trading with the trend to capture the big moves, and yet still manage to satisfy our needs? One of the ways seems to be in combining systems and strategies, and being able to take profits, as well as running trades. This becomes then a question of …. Is it not then one big system? Eg; you short 3 contracts, buy one at a level that allows you to cover your costs, buy one at a level that allows you to move the stop for the remaining contract to Break even and then run the last contract. The argument is that its one system – why not just sell three contracts and let them ride. OR Is it three different systems – one for each contract. Lets just assume for simplicity sake that they are just one system, and that this system is designed to help make it psychologically easier for the trader to follow, by satisfying their base desires, and also allowing them to run it. So to the crux of the discussion. Do other traders have thoughts on how best to do this? What do they do in practice? What do they find hard and or easy about each aspect of it? How can they trick themselves if need be?

MidKnight and Kiwi - I think this is probably a good discussion for a thread on its own. So I might actually start one (I think it might me a legitimate first for me) rather than interupt the current thread whose focus is different. Needless to say I agree 100% with both of you..... to make good money trending trades are the way to go, taking part profits really only helps from a psyc point of view and if you can combine both a short and a long term style to flatten pl volatility and satisfy the mental needs as a trader then its the ideal situation. I will start another thread, throw in some of my ideas I have been working on myself, and see if it can attract some interest, ideas, thoughts and happy happy joy joy.

BF - 100% - you are better at I in explaining things and the use of a proxy is the right word. I am an old sceptic, I have seen way too many stats being fudged based on assumptions and rubbish. eg; the one that gets me all the time is when people quote that "80% of options expire out of the money - hence you should sell options as a great way to make money." Reality: What about all the options that were in the money that people rolled rather than exercised? What about the times when those 20% of options kill you? I think Fulcrum and the post are great, I just get nervous when people might take something as being gospel. - thats all

Re Ross Hooks. A friend of mine tried to really dissect his trades a few years ago (early 2000s), and came to the conclusion that seem to apply to almost every system that works really well. Its the few trades that run and run and run that make the money. His conclusions were (in a generalised format) For JR, you have to constantly trade 3 units, sell 1 to cover costs, sell 1 at a take profit, run the last unit. Keep pyramiding, so that by the end of a large run, you may have accumulated quite a large position with the trend. The hard part is managing the accumulating trades.

ZN - US 10 yr Mar 10 small short on, based on break of 5 min chart. Will look to short again near the 117'29 level. Stops above the recent highs. Targeting mid 116's but will let run if it goes, as it could find new lows below 115'20 on daily.

"I still can't believe it." I am sure you will receive many similar responses from the good people on this forum. My suggestion - if its that good, double up with as much money as possible, keep getting those returns over the next few years and soon you will be jetsetting with the other people in Davos. Otherwise you are just an advertisement.....please at least try and hide it better, or just be up front about what it is.. If you think I am being crazy, then why spend your time posting to a bunch of forums the same quote. "i'm very happy with Goggle and hope to be able to sustain the SEARCHING I'm encountering at the moment. As the SEARCH ENGINE makes sure the SPAM is compounding the increase of the ADVERTISEMENTS is quite staggering. I still can't believe it.

I am sure technology and reports have moved on from the day I was an equity option market maker. Then without being able to get information from every broker separately it was impossible even for the exchanges to tell exactly who was doing what, if they were a market maker, prop trader, actual client, facilitator etc; there were days where I know as market makers we were the market, and dominated the trading, other days no where near it, and the theories put forward as to why where so far from reality. The exchange could get info regards who sat on the bid and offer waiting to get hit, and who actually crossed the spread but that was about it. While the discussions are good, the stats interesting etc; The point being that everyone should be careful about placing too much emphasis on straw poles and measurements that are really about fudging numbers. Please take this in the manner of a surgeon generals health warning to those not of critical mind not as a criticism of the good thoughts and intentions involved.

Hi jon, it depends on what you are really looking for. If its a simple accounting for futures trading as a business then any accountant should be able to help you. They should not need much more than a broker account for the start of the year, and the end of the year. If you want to reconcile and actually double check the broker accounts then excel is good enough. (even if you get into more complicated accounts with varying currency accounts) Ifs it more about managing money for other people, then this is a bit more involved. regarding audits, proper accounts etc; dependant on your location. Given nunya is an interesting place according to goolge, you might have trouble getting anyone to help you :haha: (my view on accountants and lawyers is that you still need to do the work and know which questions to ask them, as otherwise they seem loathe to actually give advice)

Re-entered +1 @ 2767 , stop at 2965, to go at it again on a little break up of the last few bars. Really not sure why I am trying to pick the bottom, so have cut for even, at 2767. time to stop, as I am an idiot today. Let this be a lesson, of what not to do. The good thing about the trade... it was planned, idea was right as it works well in the past. Key is to make sure once you get on board is to pyramid, with the trend (if it becomes one) and let it run. loosing 20 points is nothing if you can run something for 100, and the second unit for say 80 points, the third unit 60 points. etc; Total 100+80+60=240. Bad thing of the trade. Went early, thinking I will pick the market perfectly. Usually I wait and have patience.....but lately I have been way too eager. Hats off to the guys who can post so many trades as they occur,

I have gone slightly early for a small trade, as I find it gives me focus for the plan. I bought 1 at 85, and will pyramid if it starts going my way. update: now comes the painful wait and see, as I went a touch early. ( a problem of late) two points: never add to a looser, so even if it goes down,....avoid the temptation to add to the long until it turns. cut at 2765, loosing 20 points.(probably near the lows....doh) as I did not expect it to be such a strong fall, and yesterdays low taken out. Which makes this an outside day. ( I really have no idea if that means anything other than I just dont need to be here.) Will look to renter if rally shows any promise again, as my longer term idea remains the same.

what is a DC10, DC12? Donchian channels? If so... I use a selection of a few just as a guide to show highs and lows, eg daily donchian 25, DC 12 for the 5 minute, the hourly I use 3 (for no real reason) just as I want to get a feel of the moves, rather than any exact levels. As I mentioned for me trying to focus on the exact levels just does not work..... I fall into a mind f....k. So I just look at the bigger picture, narrow it down and then look to get on board a few trade ideas. I did some testing with DC and turtle trading etc; overall I found if you use DC10, or 12 or 25 dd not make much of a difference, except to change the overall PL returns.... which was not really the point in trying to optimise returns.. In my case these are just visual guides, as to the actual highs and lows, and yet still allow me to focus on the close line which i find easier just to see clearly.

Just as a small contribution for the FESX50 - DJ Euro stoxx 50 Thought process is pretty random/non systemised as I am largely discretionary (I have tried to automate things to no real good result), but still based on price action. This is also longer term trade for me, but it does show the thoughts, the turn of when I look to start taking longs rather than shorts as trades. The intraday patterns are similar but at present selling at resistance zones as the tend is still down to flat.(To job around and buy back as the market seems to be flatter, hence running the trade further does not seem worth it), with the proviso that this bigger pattern is forming, and if it does what I think, then shorts stop and longs begin. I believe -- an ABC pattern could occur in the 5 min, and coincide with an ABC in the 1 hour chart. --- ABC patterns are corrective, hence if forming within a bearish to flat pattern, once the ABC has formed any reversal is actually bullish. --- the longer term daily pattern while bullish with bearish intermediate overtones as the pullback in equities has shown, has started to give a good support level, and hence a low risk stop level....being the recent daily lows. Aim: buy a small amount on an ABC correction, stop at lows, pyramid in at a break of the B point, and possibly again at the A point on the 5 min chart. These would have a stop around the 2780 level, confirming that the pattern has failed for me. So rough risk around 40 points. Or if the ABC fails to complete, and the C forms a higher low near here, go harder at buying a break of the B point, and a break of the A point. Take profit target....largely gut feel, but if it runs I just let it go. (the problem with this is that sometimes I get out way to early or late, but it works for me) I hope this is of some help or generator of ideas to anyone (plus I hope the picture is clear enough) if not I will chop it up and paste three separate ones)

Just wanted to say Thanks Thalestrader..... I just had for some reason an epiphany for some classic errors I found my self falling into and could not see the forest for the trees (plus after reading the rumpled ones ideas of flipping a coin and running it or cutting it --- ) You are 100% correct and it was something I forgot - by looking at a zone, the overall picture, the general "vibe" of the price action AND NOT exact levels, you get a clearer picture. By looking at exact numbers, by trying to make the chart fit what you think it should do exactly, then it can f... with the mind. Something I have recently found myself falling into. Amazing how simple it can be. thankyou.

Hmmm. reminds me of long term capital and the program traders getting blamed during the 1987 stock market crash. It seems the more things change, the more they stay the same. The best quant quote I have seen was from a quant guy who has been around and been successful for a long period (cant remember who...sorry) but he said the key is to know exactly how your model worked and when to use common sense and turn off the model. thanks, interesting article.... I think I will get the book.

didn't someone say "its like picking up pennys in front of a steamroller, its easy until you fall over and get flattened"

Interesting - any thoughts on the fact that now there are a lot more CTA/momentum/trend type traders around whereby they sell more aggressively at new lows. Whilst previous years may have seen institutional buying coming into the market, providing support on a succession of down days, now the sellers at new lows (particularly after 2008) might have more influence. (I agree - love the vol - I have closed all long term trades and looking to job, duck and weave)

I agree thalestrader, thats why in the other parts of my post points I think that the retail FX due to their growth and the fact they are off market are an easy target. Ideally by the better lobbyists to push things onto exchanges. How better to save retail traders! I thought if you were actually trading via the exchange there was a minimum requirement of the margin set by the exchange as a client, unless the broker amalgamates everyone's trades via the day and acted as the one client. - you learn something new every day. thanks. Maybe that will be the next easy target. My view is that if firms are offering excessive leverage to retail clients who cant prove themselves as competent traders first. ie; they start off with lower levels first, then its much the same as a bank continually sending out credit cards to people who can least afford it, casinos who encourage the poor to gamble knowing the odds are against them and such similar often frowned upon practices. (even if you or I don't necessarily frown upon them) Ultimately it is up to/or should be up to the individual to police themselves. Did you notice Goldmans CEO Lloyd Blankfein distance himself from being a bank in the recent hearings..... in summary I heard the gist being - we are a market maker, we are not there to act in the best interests of our clients, they were big enough and professional enough to know what they were getting themselves into. PYA seems the name of the game.... always has. Always will be.

There seems to be some confusion with a few recent discussions regards continuous contracts and rollovers. They are different things for a start. When you roll over a contract and start trading a new contact, will influence how you trade, and when you build a continuous contract - however, unless you actually understand how some one else has built a continuous contract or build your own and import the data into a charting/backtesting system then saying its just done on volume or a set date may only confuse the matter. Think about why you want a continuous contract data set, how you want it to look. Get someone elses continuous contract and compare it to the front month and past month as a chart and look at the differences. Dont just accept someone elses continuous contract - you will get different support and resistance levels. If you are just day trading focus just on when to rollover and start looking at the next month. Continuous contract building is probably not worth the effort unless you are backtesting over a long period of time.