Qiman

Yes, and the fire I use is made by the ancient method of the bow drill, so I am not dependent on matches, which can get wet or lost, etc. The feeling of Freedom that such skills brings is very empowering, as is the ability to flexibly flow with the continual uncertainty of the wilderness environment. It is actually much like trading, you can't control what is going to show up around the next corner, but you can use your acquired skills and mental toughness/self discipline to take advantage of the opportunities. BTW, there are often so many edible plants around that you don't always have to expend energy in hunting.

In the initial portion of the Asian session, lately you will do far better with the 6A and 6E instead of the Yen in terms of volume. Since the major currency intervention in Japan, the volume and even the range in 6J can be anemic at times, even in the initial Asian session. The 6A gets plenty of volume, but usually has a two tick spread. Gold is usually around 3 ticks, except for the brief period around the Chinese markets opening when it can narrow and volume picks up. Many nights crude has poor volume in the initial Asian session, Gold often has at least double the volume. In fact, often Gold and 6A are neck and neck in volume. I agree that the ES is quite usable during this time as a general index proxy. Once in a while even the NQ has volume approaching that of Gold, but often with a 2 tick spread.

Mighty Mouse wrote: An edge is knowing if you should take the 61% pullback long or if you should short into it or if you should simply stay away. And, based on what develops after you enter, how long you should stay in. Basically, it is knowing if there are traders in the market who are willing to pay you. If they are not there and you get in or stay in, then you will likely be the one paying This is extremely important. In the mechanical stages of development for a trader, one would automatically just take the trade due to the probabilities assigned to such a situation. Is it possible to advance beyond a mere mechanical taking of trades which appear to have good probabilities? I believe it is possible, and desirable. In my mind, as one advances in skill from much experience with huge amounts of screen time, there are going to be subtle clues unique to many trading opportunities. For instance, the context may be out of the ordinary, sentiment may be very volatile, there might be an unusually low volume in the contract that day, the contract has been acting odd, something just doesn't seem right, etc. etc. And beyond this, professionals in a wide variety of fields develop a sixth sense for situations, where they simply know what to do, without being able to explain it so much by words at the moment. The decision is instant. This happens in sports, warfare, martial arts, and wilderness survival as just some examples. When i am in the wilderness alone with just a knife for a week, my senses become much more acute to subtle energies and clues about the environment. It may sound like BS to some of you, but at times I have hiked all day wearing a blindfold, and have been able to then get back to my pack or my camp. And the sensing of all kinds of dynamics and life-forms goes up dramatically as one gets into the Zone and the chattering logical mind takes a backseat. Though trading does need logic, reason, probabilities, it is not limited to those alone. My goal is to bring the kind of sensing that I do in the wilderness and martial arts more powerfully into my futures trading, where I am not just sensing probabilities with my eyes via charts, but due to years of experience I sense other more subtle energetic clues, and act instantly.

Hi Tim, As you said in your original post, this book for you at least was an important key to start thinking more in probabilities and look at a larger sample size. And that was the way I took your original post, a sharing of what helped you on your own trading journey. I started in the trading arena in 1995, but I too got some useful concepts and ideas out of that book, I actually bought it ages ago when it was just a limited issue manuscript and Douglas wasn't sure it it would even become a book. When posting here I always keep in mind that experienced traders can be some of the most independent minded, feisty and challenging personalities around. Trading attracts a lot of people who have a hard time fitting into "The System." Many have also read so much trading BS over the years, and a certain percentage wasted money on all kinds of "secrets" and "ground-breaking" systems, so grizzled veteran traders can be pretty quick on the attack. Within such an arena it is a must to keep our senses of humor, laugh off some of the more absurd comments, and not take much of anything personally--just about everybody gets beat up around here from time to time!

Order types is just about the most basic of all knowledge in trading. In most fields that I have explored, any time I see "The Secrets of ..." in the title of an article or book, I acknowledge this may just be marketing strategy, in some cases it is just a title to grab the reader's attention, and that is ok if it works. That looks to be the case here with Tim. This thread is getting reads and posts, so the title was effective in its own way! Of course, in some venues like martial arts and trading, it can instead be an attempt to draw in those who are desperately looking for some answers. And all of us have seen plenty of that in magazines and books. I am not too sure if there are many secrets in trading or in most other fields. Usually the solution to problems, and "the Secret," is exceptional Mastery of the fundamentals, but is that ever a difficult process, and something which few of us will never achieve in any field.

Interesting. Haven't run into many using a 45 second bar chart! I wonder, have you also tried using the FESX instead of the DAX, since the DAX can be such a wild dragon? Or maybe that is why you found it to be a better leading indicator.

Hi Randy, From the outset, let me state that I enjoy your contributions to the forum, and I have also read your book, which I found useful. But this latest article has a certain aspect (from the other presenter) which I disagree with, based upon my many years of actually being in the market, and it is even contradictory. The statement made by the presenter at this conference: "You have to become very comfortable with losing because if you trade, you are going to lose. And if you don't learn from losing -- then you continue losing" This statement is accurate on one hand: You are going to lose as a trader. That is an inescapable fact --for as long as one trades. On the other hand, the statement implies that if one learns from losing, one would eventually stop losing. And this is absolutely not the case. In a probability game such as trading, I can do EVERYTHING perfectly: Entry, Exit, Mechanics, Setup, Rules and yes, even Psychology--and yet still lose. And what did I learn from that trade about losing? Nothing! If one's edge enables on average a winning percentage of lets say 60%, then anything above and beyond that is usually just a lucky streak. In the same way, one might have a string of losers so that for awhile the winning percentage is far below that typical %60 percent. This doesn't mean that the trader somehow screwed up, and needs to "learn from mistakes" so that the losing gets back to the normal ratio. It just happens in the course of trading. One of the biggest myths of trading is about being " right" or "wrong", and that losing is caused by mistakes. Some losses most certainly are mistakes and might be caused because one broke the rules, lost focus, was distracted by a pretty woman, was trading while exhausted, etc. These mistakes can be learned from and rectified. But most of my losses over the years were "caused" by probability and nothing more. And when traders really surrender to losses as an inescapable and unchangable part of the great game, they stop harming their psychology with the whole right or wrong, beating themselves up, I made a mistake mindset. And instead they just move on with the next trade, and let the probabilities work out as they will, knowing that OVER TIME the probabilities work out in their favor due to their consistent application of their edge.

The dollar factor also breaks down on some trading days, where both the dollar and gold rise in tandem as "safe havens." In addition, so many Western commentators and pundits ignore the single largest factor in gold's ascent: The rapidly growing wealth in Asia, which has led to an expanding pool of people who can afford small amounts of gold here and there. This is aided by state policies in China which now encourage the accumulation of gold by the populace. The net effect is that the public demand for gold is much stronger than several years ago, to say nothing of various central banks accumulating the yellow metal. Combine this with the fact that the easiest deposits to mine are mostly long gone, and you have the classic case of growing demand and shrinking supply.

I would say that gold's ascent is fueled by the rapid increase in the printing of money by most leading economies and the declining faith in fiat currencies. I don't have time to locate them right now, but I have seen some great charts showing gold's value in terms of most of the leading currencies. Gold has been setting records in most currencies, not just the dollar. So far at least, you can't print gold!

Questions of this type are always interesting, and I am frequently amazed by some of the paradigms traders can have. Simulated trading can be helpful, but trading is mostly about emotions, and when real money is on the line it is a very different dynamic for most people. Fear tends to take over. As far as what is realistic, it really depends on how much you have mastered yourself and your emotions, and it also requires a reasonably intelligent strategy, including risking only a small slice of your capital on any one trade. As far as real world examples go, back in the mid-90s I was mostly swing and occasionally day trading stocks, mostly things like Ensco International, Diamond Offshore, and other such oil service stocks, also some tech stocks here and there. With only 18, 000 USD in capital, and with a 2 to 1 margin account, I was averaging around 2K a month net profit, with minimal drawdowns. I was patiently waiting for only the best opportunities, not hypertrading. When I hear figures like 10 or 20 percent a year, I say, why even bother!

If the Aussie moves 10 ticks in your favor, you are up $100. Same with the Canadian Dollar and New Zealand Dollar. Just be aware that you can also lose money extremely quickly, have an intelligent stop loss. If you are just starting currency futures, the British Pound is useful since it is $6.25 a tick, so if it moves 10 ticks against you that is a much smaller loss. A great time to trade the Aussie currently is from around 7-9 EST, the Australian stock market opens at 7 your time and there is usually decent liquidity. The spread will usually go back and forth from one to two ticks. Some evenings with RBA announcements the action will be pretty intense with a one tick spread.

For decades I have looked at "discipline" as compassionate caring, whether it is about a child or one's self. Ultimately, it is based on AWARENESS of what actually works in improving the quality of life, including the quality of trading. Once these aware decisions are made, the only way conflict arises is if awareness is obscured. Decades ago while in my twenties, friends would comment that in some ways I was like a Spartan, in that I didn't seem to struggle with some of the things that they did, like drinking too much. To me, it was all about awareness of how I felt when I did or did not do certain things. With food, if I ate certain foods I didn't feel so great, so with that awareness the choice was easily made to feel good and eat well. I don't need discipline around pastries or coffee, I have no desire to consume them. Same with how I use my money, impulse purchases don't make me happy and are not a temptation. With trading, having certain firm rules based on awareness is a process, for some it takes years. The layers of personality can be quite complex, but all parts of you eventually have to come to see the wisdom of the rules, all parts of you have to be on the same page. Trading is a tough enough game without internal warfare going on! Some of the best traders are those who have come back from a catastrophic loss, including bankruptcy. For these traders the lessons were permanently learned, and there is no temptation to let a loser run or become over-leveraged. In one sense, no discipline is even needed now.

I started down the road of being a speculator when I was 11 years old, buying newspapers wholesale with the HOPE of being able to sell them retail. It paid off, instead of mowing lawns for far less. One of my favorite plays is to short oil when it is poised for a correction. By adding to the downward momentum, I am helping to save the world economy and lowering the price of gas for patriotic Americans! In the big picture, I look at speculation as an integral part of enabling my overall lifestyle, a lifestyle which has allowed me to free up much time and energy to accomplish some of my ideals for the greater good of all life. If I were commuting long hours and stuck to some rigid schedule, I would never have been able to develop other talents in the realms of healing, teaching wilderness survival skills, etc. And I would instead be burnt out and exhausted like so many of my friends. The more of us who are increasingly FREE to become everything we can become, the better! In addition, by being a speculator, I have developed even more self-discipline and self-honesty, planning capacities, focus, courage, etc. And all of that bleeds into the rest of my life, and adds to what I can contribute to society.

I spent a great deal of time with a long reply to you Ingot, and then it got zapped somehow! So I will have to be briefer, I am a sole proprietor of 3 businesses and I am pretty pressed for time today. FX Girls response echoed some of what I wrote anyways. You will get no argument from me that discipline and hard work are the foundation of trading, without which there is no hope of success. I started trading in 96, and was disciplined from the beginning. A very influential book for me was The Disciplined Trader, which to me is one of the most brilliant psychology books of any kind ever written. Drawing upon some of its insights and my own background of discipline in sports and having had an air force officer father who was extremely self-disciplined, I soon was making around 2k a month consistently only using 2X margin and with a small 18 K account. Mostly swing trading oil service stocks like ESV in 2-3 day patterns. But MANY people come into trading who are extremely self-disciplined and highly educated professionals, such as lawyers, doctors, engineers. And they become perplexed, frustrated, and eventually angry because they can't make trading work, despite all their work ethic and discipline. I came to the conclusion many years ago that most people are not cut out to be traders, much of it goes against human nature and few can handle the constant losses, drawdowns, and continual uncertainty. I would not recommend it to any of my successful close friends, knowing them like I do. Even if they had a brilliant trading psychologist they would likely struggle. And I have zero doubt that unresolved issues from the past also sabotage many a trader, I've seen it happen over and over when people are trying to compensate for an inferiority complex, lack of respect, etc., etc. But IF a person has enough of the mental toughness, extreme self-honesty, and a flexible enough personality/ability to face their ego, they might be able to eventually evolve their psyches to handle the stresses of trading. And some do indeed get some needed and highly useful help on that difficult road, through the personal assistance of trading psychologists. Some of them have some extremely useful insights into trading, and probably the majority of them really do care. If you don't want their help that is fine. I personally have not used one, but I have benefited from some of their writings. Most people are also not cut out to be high-level martial artists, and that is the sport which to me is the most like trading. Extremely high levels of self and others awareness, self-control, enormous discipline, mental toughness, resourcefulness, adaptability, flexibility, ability to deal with continually shifting dynamic energy which is full of uncertainty. The psychological requirements are enormous, and martial arts Masters who do take on students are very much psychologists in addition, trust me on that one. As I have written, one of several things that I do is I train people in wilderness survival. And it is a bit like trading, so much uncertainty and the risk of loss,and the situation can turn on you instantly. And what I have seen is that most people are scared of the wilderness, and also scared of parts of themselves that the wilderness elicits in them. Trading does the same to most people and most drop out in time. Sometimes I end up having to counsel people about their fears and issues out there, there is no room for false bravado when you have peed your pants . . .

HHHMMM. Time is short with a full trading day ahead, but I will write more on this later. As a trader since 1996, and someone who has also been heavily involved in athletics my whole life, I couldn't disagree with Ingot more than I do! Psychologists definitely have an important role to play in many fields outside of "therapy for psychological pathology." For example, there is a good reason many professional athletes have sports psychologists as a key part of their training protocol, because they have a proven track record in increasing peak performance. One of the keys to the Soviet Union and East Germany winning so many medals was the early adoption of sports psychology, while other countries thought athletes should just tough it out and shake it off. An understanding of how the mind actually works is key to so many fields including trading, and just about anybody can improve the peak functioning of their mind through effective training, just like applying athletic training principles to sports can drastically improve performance. More later . . .

What strategy are you using on CL?

Yes, solo professional athletes and traders can have much in common. I was a trader back in the mid-nineties, and even then I thought that traders who succeed to a high degree must eventually acquire a certain amount in common with martial artists. But not the typical ones; the martial arts I am thinking of are the ones which flow with the incoming dynamic energy, instead of resisting it. Like Ba Gua, Tai-chi ( a very effective martial art in the right hands), Aikido, Systema, etc. All of these require enormous self discipline and self control, and emphasize the ability to sense both external and internal energy, and flow with it like water. You are alone in this warfare, and you must not let Fear get the best of you. A certain level of calm awareness, confidence, and even a lack of excessive thought. Instead, highly trained instincts take over, and the incoming energy is Mastered.

The 6E is indeed one of the best instruments out there, and at times the 6A and all of the other major currencies have excellent trends to follow as well, especially the last few months.

I don't keep a journal of how news moves the markets, because I rarely see a usable pattern, it keeps changing over time. Expectations rule, they set the table. News so often has the exact opposite impact than what "logic" would deem an appropriate response by the crowd. Just like a lot of other things in the market, it can be rather random and hard to predict. Occasionally real money can be made, if one waits until clarity appears after the frenzy. Wednesday CL dipped with the bad news of a much larger than expected inventory increase in crude oil, and then went up about 2 dollars within an hour and 15 minutes. Not exceptionally predictable or logical, but for some was very profitable!

I read that article ages ago when Austin first wrote it, and thought it was a nice summary of what I had observed. Thanks for posting it, it might help some who are struggling!

I agree, and in a way for some, this scalping activity can be an attempt at escaping the necessity of risk management, only holding a position for a minute eliminates the need for patience, which is a key part of risk management. Risk management or uncertainty management is what trading is all about, and until one totally surrenders to uncertainty and makes peace with it, the emotional and physical tension associated with holding a position is unbearable. BTW, your recent points elsewhere regarding supply and demand were much appreciated and excellent, and I personally am focusing more of my effort on patiently observing supply and demand, understanding it through observing price action as opposed to relying on market profile or any technical indicators. So many traders try to make money with such complicated charts, and I appreciate elegance and simplicity in trading.

I wonder how many hypertraders of the ES actually make money? Any here? In my experience at least, the ES seems to have more stop-running back and forth arbitrage due to how many forces use it for that purpose, at least compared to say the NQ. When I compare the two side by side the NQ is often less herky-jerky. And yet the internet is full of advice as to how to scalp the ES for a point here and there. Scalping noise is a very, very tough game, even with fast computer connections, and if some of these ES scalpers would be much more patient and wait for pullbacks and clearer entries, based on supply and demand, they might be able to ride some nice waves for several points at a time with less chance of getting stopped out. Some trade the ES 20 times a day or more, but with transaction costs and chasing random activity, no wonder so many give up in disgust. Some few out there are brilliant scalpers of the ES, and my hat is off to them. But for most traders trying to make money with this very liquid contract, it might be better to patiently trade the two or three times a day when the probabilities are more clearly in your favor.

One problem that I see is that many newer traders are trying to use scalping methods on the ES, and there is often so much back and forth arbitrage movement that they often get stopped out. It can get pretty noisy with all the program trading -- robots in a tug of war. But if trend following with a large enough wiggle room for an intelligent stop, then it can be a much more effective instrument. With that being said, I still prefer the NQ for its tick size, smoother movement and less arbitrage activity. And some days much better range as well. As someone trained in both international economics and geopolitics, I really prefer the contracts that have much to do with the world economy in a more direct way, i.e., the currencies and quasi-currencies. I too prefer the currency futures over indexes, where I can apply my education more effectively. The 6A, 6B, 6C, 6E, 6J, 6S, all of them can be very lucrative at their own times. And GC and CL have times where the trends are amazing. Nice that we futures traders have so many options. I am very grateful for this amazing market and wouldn't trade it for any other!

The whole subject of risk taking is fascinating. But I have a different tack on it than you do. One of my professions is that I teach ancient wilderness survival skills in very rugged areas, and I am often out there alone for a week or more at a time pushing my skills with little to no equipment. I am constantly engaged in risk taking, but these are very calculated, careful risks based on decades of tough experience. If I do something stupid out there I am in major trouble, and help is far away. And actually it is risk management, because uncertainty is around every corner with wild animals, violent weather, etc. Generally I usually have the skills to manage this risk, just as top traders have the skill to manage risk in their selected trading instruments. ( I am a writer as well, and have a trading magazine article in mind ). I feel that a huge problem with most traders is that they never fully EMBRACE risk and the continual uncertainty, they think that they are embracing it, but they are scared to death much of the time. Because of unresolved emotional issues not all parts of them are on the same page, and wise risk management is almost impossible in such mental/emotional chaos. Most people fail at trading, and this is a major cause. BTW, many Americans that I know are quite the opposite of active risk takers, they have settled into jobs that are boring and which they hate, but they want the "security." They are "opportunistic" as you put it, but in a very different way. And they often ask me how am I not constantly afraid in some of the areas which I explore, they would rather watch adventure on TV instead of living it.

Yes, professional gamblers have a great deal of skill, and are using their hard-won knowledge of probabilities to make money. They have some elements in common with traders. My post had nothing to do with deeply engrained social norms; as I travel the world far and wide I am an observer of what strengthens or weakens individuals and cultures. In this area where I live, there is a huge problem with gambling addiction, and I have seen it destroy many marriages and careers. And it often has led to alcoholism as well. The house is largely the only winner . . .