joshdance

Let's say a trader has a 100K account. If they can't make more than $1200 a month, then they suck, just plain and simple. Hell, I can make that much in a month trading 1 contract, which I only need $3K (CL) to trade. I'm sure good ES traders (for example) can make that much a month trading 1 contract, with a margin of only $500 to trade. My point is that one is not better off having a large account than a small account, if they can't trade worth a damn. They'll just lose more money, though it will take longer. Being capitalized protects one from drawdown, but good traders don't really have huge drawdown relative to account size from what I've seen. A good trader may have drawdown, but their risk will be such that it will not significantly affect their account balance. It's when risk is out of control that account size becomes a problem.

Excellent advice negotiator -- as someone said to me, "if you don't experience this kind of thing, you will never improve and get better" -- a level-headed approach I think. It's not that we want to mess up, but I think any seasoned trader has his fair share of stories involving mini-meltdowns and blowups and days that he'd like to forget. I think we just have to survive while improving. Blowing up and blowing an account is no good, but taking a few bonehead trades and learning from it while not losing much money can be valuable in the long run, if we change for the better from it.

The funny thing is, I took a long on a pullback to .21, but got out for a relatively small profit (20 ticks I think) because I expected a deeper retrace... nope, the market had other ideas! Even though I missed the first entry, getting in 50 ticks higher and holding a bit would have yielded a nice trade. At any rate, just now I have a nice +41 tick trade, and calling it a day, so I'm considering myself fortunate that I live to see another day after trading so poorly.

The resulting movement (that I longed once and tried to fade more than once, unfortunately).

Found good support at yesterday's VPOC, VWAP, close. I held a long briefly 2 ticks from the low at .76 but was shaken out... did not execute well, great premise, should still be long at this point.

CL traded above yesterday's VA in globex, and is now searching for buyers inside the VA, at yesterday's POC, and VWAP. Just found support, will see if it's strong enough to hold (does not look like it to me at the moment but will wait to see. I will look to buy somewhere in that area if it dips again.

Nope, I can read it, I just have to strain to do so Thanks buddy.

I'd say if a trader can't make more than 10% per year, then it would be best just to buy an index fund in an IRA and be done with it! 10% per year, an average stock market return, doesn't seem like trading to me. The question is, regardless of capital, CAN YOU TRADE? If you can, a large base capital will help you grow. If you can't, it will only prolong the inevitable failure. To the OP, I agree as well that you should be doing something else for money when you begin. If you lose your money, at least you have something coming in, even if it's not a lot.

The #1 question is, how did you do on sim? Not that it's the same as real money, but if you did well in sim for 6 months, then you at least have consistency going. If you can be consistently profitable almost every day, and most every week, then the amount of capital is not that important--if you trade well, which is why I'm curious as to your sim results. If you were profitable every week, or almost every week, then go for it.

Thanks for the helpful charts N -- even though I don't trade the s&p, I learn from looking at your chart. I do have one small request--the font that you type on the chart with is a little hard to read.. could you use something more commonly readable like arial?

Investor RT for charting, and NT for order routing to my broker (using the DOM).

I did not watch all of this video, or the subsequent ones, but this explanation on the first part of the video where the software vendor offers "proof" is laughable. Sure, one example where heavy selling leads to price moving down--hardly a proof. If it were this simple, you sell when you see lots of red, and you will always win, right? The quote should be altered to, "volume always leads price, you just don't know which direction price will go." Sure, volume is required to move price. A transaction must occur for the last traded price to update. But it's not that simple. This is basic stuff here, but in the first attached chart you will see first an example of heavy selling (that's the delta on the volume at the bottom) led to an immediate move up, and second where heavy buying led to an immediate move down. In fact, these were great trade opportunities. The other chart shows just one example in many that occur every day where selling is heavier over a period of time (in this case 1 minute), yet price was higher at the end of that period than at the beginning of that period. If someone reading this wants really good and logical volume information, see Wyckoff. He was the man, and still is.

Open up a time and sales window, and look at the preferences for that window. You should see the option to color transactions executed at the bid and at the ask separately. Most people will color the transaction executed at the ask green, as this represents a market buy, and at the bid red, as this represents a market sell. This window will show every transactions. The time and sales window is "the tape." This is what people are looking at when they talk about tape reading. What software do you use?

By the way VTK, I enjoy having this discussion, please don't think I'm being argumentative or picking an argument here ;-) What you seem to be missing is this--while demand being greater than supply is the underlying reason for prices rising, WHY was demand higher? In other words, why did buyers want to buy there? Was it because of a news report? Was it because enough buyers saw the same fib retracement level, or had the same MA on their chart? Was it because of a previous price level that had held before? Was it because enough big traders got together in a secret room and decided to move the market? Did an algo go nuts and buy more than it was supposed to? We have no idea, and never will, WHY demand was greater. All we know is that the resulting movement in price indicates that demand was greater. But saying that "price rose because demand was greater" does not describe WHY traders bought at that level. Perhaps some bought because they looked left and saw prior support, but perhaps many who bought do not even use charts to trade, and are trading off of a news item. Or perhaps enough traders liked the 200MA and used it. Neither you nor I can say that an EMA, or that a fib level, or any other measure where traders place value, was or was not the CAUSE for the demand. Keep in mind that you're identifying PRIOR supply and demand, and this may or may not affect current supply or demand, at that same price. Support and resistance levels (or call them supply and demand levels) only "work" for one reason--traders pay attention to them. Prior supply and demand at a price is only significant if enough traders TODAY put significance on that price and want to buy or sell it. Simple as that. S/R, or S/D, is not magic, and is no different than a pivot, EMA, phase of the moon, or news item--it only works because people pay attention to it.

I'm not trying to discourage you, but big institutions hire very smart, highly educated people and pay them well to write complex algorithms that are designed solely for the purpose of hiding their intentions. It's not as simple as "a bunch of 1 lots means someone's buying big." Now, we may see large volume come into the market and base a trade decision on that information--I do this a lot. However, it is pretty safe to say that it's impossible for you to write a program that will discern the intention of a large buyer or seller, whether it be accumulation or whatever you want to call it. Some algos operate on a sub-second time frame; others on a minute, or hourly basis. There are simply too many variables, and the orders far too complex, for you to "figure out" what's going on. And this has nothing to do with reading the tape by the way.

I think carlton is talking about transactions that have been executed, not orders in the book. Ditto the above.

I've never heard anybody call a fib retracement, MA, or pivot point "support" or "resistance." A moving average is a measure of value--it's the mean price over the last X bars, whether that be closing price, typical price, or whatever. A pivot point, if you mean a pivot calculated using something like (H+L+C)/3 or any other formula, is again a measure of value. Nowhere is there implied that there's some type of support or resistance associated with either of those. We're really just parsing words--"support" means buyers bought and "supported" price. There was enough demand at that level to cause prices to rise from there. It's just terminology, and Sam does a very good job at making "supply and demand" sound unique, but it's all different terms for the same thing. I actually like the terms supply and demand better, but to say that they are fundamentally different from support and resistance is a mistake, IMO. If you disagree I'd like to know exactly how they are different.

Why not use the day trader's staple chart -- the 5 minute? Unfortunately even if you use a smaller time frame chart, much of trading is about being patient and waiting, and you may find that it helps your trading to be in front of the screen longer. Also, 1 or 2 trades in a day, well executed, with good profits and small losses, is nothing to be ashamed of!

Thank you for your chart Negotiator. Particularly with all of the volatility in August in oil, with a lot of that being in the globex session, why do you prefer to use the RTH chart?

Good idea, as IB as a data feed pretty much sucks. I had Kinetick, which is identical to IQFeed, just rebranded and for NT only. I had a few issues but I think these were localized. If you would ever need the data to be used in two different programs, then IQFeed should be your choice. If you'll only need it for NT and want IQFeed minus $30 a month, then go with Kinetick. Really, there's no reason with the relatively inexpensive options of Kinetick for $50 and IQFeed for $80 that you should even consider anything else, they have pretty much set the bar for retail data, and no one else can beat it.

Here is the profile--basically, we have the area centered around 91.60 to the north, 85s to the south, and currently just south of the 88.80-89.00 balance.

I looked back and just saw this question at the bottom of your post that I somehow missed the first time around. Well, we bounced off of support-turned-resistance yet again, and there is a beautiful bear flag (well, more like a wedge) on the daily that really wants to break to the down side. If I had to guess, I would guess down. But perhaps that's too obvious, so maybe up is the direction But from a day-to-day trading perspective, I've found that it only serves to mess me up when I develop a bias longer than the current day's action. So many factors at play, the best bet for me personally is to get up in the morning, see how the market acted overnight, see where price is trading relative to yesterday's or last week's or some other period of time's value (whether it be the VA, VWAP, etc), and work off of that information. In times past I have thought "market needs to go down from here.." and sometimes I'd be right, but even when I was right, it didn't help me really make a good trading decision in the "now" moment during the day; and when I was wrong, I would simply trade the wrong direction. So currently I try to just evaluate what's going on today, and take each trade one trade at a time!

N, what time period does your long term green profile cover?

Wait a minute--so this isn't even live market simulated--it's a BACK TEST? Do you know how many strategies have positive back test results, and then lose money in real time?

So true. One of the things I remember reading from Wyckoff that he said is essentially that despite the crafty nature of specialists, for example, markup and markdown, accumulation and distribution (in other words, they are hiding their intentions), that they cannot hide their transactions, their volume, their footprint. It is there for all to see, and while their intentions may not be open, their activity is. (I am not a real Wyckoffian a la "smart money" etc. but I use the principles) So while algos execute differently than humans, they still all leave a trail for all to see, and it's called volume.