BlowFish

The 3 strikes and you are out rule is a another life preserver. As is the limit to daily drawdown. If you executed flawlessly and stuck to the plan then those trades where great trades (learn to love your losers is an adage that many bandy about). I have to admit that usually I can identify errors that contribute to trades that get stopped. Normally its simply wrong bias. If after taking a break and clearing my head I feel 'OK' I'll get back to it and often find I am more focused and more importantly 'in tune' having been proved 'out of tune' on the 3 failed trades. Some of my best trading often ensues. Having said that I'm striving for 'lazy' trading at the moment - 1 decent trade shortly into the session and done for the day. One of the points of trading is the freedom it provides right? Actually it is proving hard as I love watching the market. I have got it down to Europe open - lazy time - US open - lazy time - US close (sometimes) - lazy time. There are also psych issues right there as we are taught from an early age that generating 'wealth' and more broadly 'success' goes hand in hand with 'hard work'. I have a bit of a leg up being intrinsically a work shy layabout but there is something that gnaws away at the subconscious maybe guilt.

Great advice however to adopt this sort of approach you need to evaluate your high odds trades separately from low odds trades and size appropriately. They should still be evaluated and sized appropriately for the trades characteristics. The OP is suggesting that size somehow will determine the outcome. The one sure thing is too large size will greatly increase the chance of ruin. The other thing to perhaps concider is 'streakiness' of your trading. For example if you are a discretionary trader and finding you are 'out of tune' Thats another good time to reduce size (or take a break!). A similar idea, how about this reduce size on lower odds trades. This is kind of a corollary to what lrushing is saying. If you are more mechanical you can test to see if some sort of filter might reduce losing streaks. Heres another thought - you can always add to your trade on a pullback once the market has tipped its hand. Btw those first two '*' points in the above post for me are the golden ones I prefer to trade tiny and just not sweat number 3. If the market makes the right moves you can always add. Cheers. P.S. I found this kind of interesting (and strangely hypnotic). Its a video of a guy scalping the DAX. Now for all I know it may be some lonely guy making videos of himself paper trading but having watched a few there is some consistency (though he seems to flip between two approaches).What I found interesting was how he scales up to 20 and back out. He explains the rationale in another vid. Oh its 4x speed I think. .

I should of searched the web first. This was one of the first hits that says it far better than I managed! TradersCALM - risk of ruin menu Please give it a read it will honestly only take 10 minutes. Absolutely guaranteed to make a positive difference to how you approach your experiment. btw I have nothing to do with the website above. I don't even know what they do as I googled past there home page into the above.

I have to be devils advocate here. However "good" your system you should absolutely expect 2 consecutive losses, hell its quite likely in the first two trades. If your experiment is gonna be over after that personally I wouldn't bother doing it. If you are going to stop under those circumstances you are gambling. (Incidentally it can be shown that if your system has not got a positive expectancy you are far better of staking everything on one spin of the wheel) This is all just a function of probability and statistics. Read about 'risk of ruin' - my favourite account is in "The futures game, who wins, who loses, and why" by Tewles. Van Tharp must covers it too. There are probably free sources on the internet. Risk of ruin is subtley different to blowing out. It covers the probability for depleting any chunk of margin depending on trade statistics. It need not be all your margin (blow out). Even with a method that generates 80% winners (such as momentoms) you will get strings of losers!! I guess if you are risking 2% equity or less (stop * size) on each trade you should be safe for a while but even if you are a completely discretionary trader you should have a good grasp of the (simple) stats behind the scenes. How else do you determine size? Determining size on a whim is far more dangerous than determining entries randomly! Personally I am so under leveraged it would make your granny blush. (saves me having to keep revisiting the maths!) Also I get the impression you are trading without really adhering to a method. In your first post I kinda got the impression that you where hoping larger size would help you find better entries rather than stick to your already well established method for entering. Honestly trading larger size to find better entries is a recipe for disaster. Sorry to be the one to put it so bluntly. Cheers.

Momentom thats a far far more comfortable way of trading imho also. It must be very hard to use 'traditional' trend following methods (the turtles method springs to mind). I believe that though profitable (in large due to fairly aggresively adding contracts to winning trades) it had somethin close to 70% losing trades. Sounds like you would not have made a very good turtle I am pretty sure I woud have strugled. As an aside the youngest (and apparently most succesful of the turtles) has written a book. Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders. I hear its a good read if you like acounts of traders and trading (rather than looking for some 'secret' trading method). Of course "whatever works for you" is the sound bite of the day. If you do try Bfbusa it would be interesting to hear how you got on. Just be careful out there . Having got the cliche paragraph out the way, might I ask Momentom roughly what your risk reward ratio tends to pan out at? Cheers.

Momentum sounds like you have found a trade that has a much higher chance of winning and so increased size acordingly. I wonder how much you put at risk on each trade is that 5 times as much? If you can get up above 65% even towards 70% the risk of ruin starts to drop fast. That one of the reasons I would perconaly prefer a 70% method that uses a 1:1 RR. The OP is saying (if I read it right) that if he trades larger size he will find higher percentage trades. You have found a higher percentage trade and so are trading larger. There is a subtle (and imho important ) difference. Cheers, Nick.

The point is you should be pulling the trigger to get in and get out almost without thinking. The more you have on the line the less likely you are to be able to do this. Whether your base unit it is one lot or one hundred lots you should folow the system in the exact same way if you do not you should probably stop until you figure out why not. Think of the largest drawdown you have had recently. It is quite likely to be 5 or maybe more losers in a row (depending on what sort of % winners : %losers your aproach has). If that string of losers produced 3 times the drawdown how would you feel? Confident and ready to pull the trigger unemotionaly on the next trade? I recently opened a spread bet account (essentialy allowes you to bet on the underlying market) this allows me to bet $1 a tic essentialy. Funily enough I still make the same emotional errors (closing way too soon) even though the amount is fairly negligible. I know this perhaps lends wieght to your argument However I think the real problem is my fear is of being wrong rather than loosing cash! Try the oposite bet small size on a low value instrument until you can get in and out without any emotional pangs at all! And as was said before really know and understand the risk of ruin. I always am surprised how likely it is even with a reasonably positive system if you use too great a size. Its a risky gambit - literally!! Cheers, Nick.

OK i think I understand so for junior you look at the delta filtered for trades between 10 & 50 if it's positive you plot a x below and negative a cross above? The bars with no cross presumeably had zero delta possibly due to no trades between 10 & 50 contracts. The dot I guess does the same things for trades greater than 50. Cheers.

Weiwei, Intresting chart.How are you determining 'buyer' or 'seller'? Is it something to do with volume@bid/ask?

Here's a chart showing where I would consider entries. Apologies for the clunky annotation MSpaint is not that great for the job! The yellow lines are S/R zones they are more or less where I see supply and demand entering though most are clearly confirmed within a couple of bars as the level is 'proved' by the level holding against attack. A quick aside - as I have mentioned before I have a bit of an issue with using WRB's (and wicks alone for that matter). I certainly do not want to take away from PP's excellent work here so I'll put that in a paragraph at the end so those who wish to can ignore it. The first black bar on the left is the first correction in the move the high and low represent the start and end of that correction. The first visit back there I would for sure have taken a long (probably:) ). You would have had to jumped in pretty much on faith but getting in on a test is a very rewarding entry when it comes through. The first cyan dot is a pretty perfect entry I'd probably have had a crack if my longer term bias was short. Second pair of dots would be a good entry also though it would have been nicer a bit later so it was at the trend line or a bit higher with an upward test type bar. Toward the end things are starting to look iffy for shorts (again depending on longer term context). I would be a little wary as the trend line is broken. I have no issue with re-drawing a trend line though. Who needs momentum indicators!! you can see we are still moving down but the momentum has slowed. OK a quick bit on WRB's - the open and close that define a WRB are single 'ticks in time' they don't really represent any consensus or behaviour. They are simply a function of how you sample time to draw the candles. They are determined at an arbitrary single point in time. Now to take a point in time (the open of a bar) and another point in time (the close) and say they are far apart does have value to me however the specific price at those split seconds in time don't. Further more there is no shift in the over all dynamic if a bar opens it low and closes on it high even though supply must have been present it has not caused the price rise to abate. You may well get 1 2 3 or more of these candles. I believe there is are candlestick patterns (not near my books now) maybe called 3 black crows & 3 white soldiers. They are in essence 3 WRB's in a row. Now using highs and lows is altogether different they represent where supply has overcome demand and caused the price direction to change. While this occurrs at a point in time it is significant over a range of time. More over every time price bumps against that level and is repelled it adds confidence to that level. From the attached chart you can see that happens often. Finally WRB's are often caused by stops cascading, people jumping on to breakouts or the 'smart money' moving price through a level. If you go behind the WRB you will usually See the true S/R in the case of the chart here the congestion bottom left and the congestion up top after price has been run up. This I guess Wycoff's basic accumulation mark up distribution 'model'. Finally don't listen to me listen to PP! Seriously. This thread is gold dust and I really don't want to detract from that. Actually I feel like an interloper coming in once every few pages with my paltry offerings. Cheers, Nick.

Hi PP a Couple of observtions. There is a nice failed test on the bar before the one you have marked selling pressure. I am a bit of a WRB sceptic (though understand why they 'work'). Maybe thats more apropriate in another thread. Anyway for me the key area is the area that was tested by the two dojis and failed (at the start of the chart). Price has now returned there to see if there is any demand. In my book WRB's are often the result of price being driven through areas of S/R (supply/demand). Theres a subtle difernece there though the results are often the same. identifying the underlying S/R area often gives a more focused range. I was interested in the squat. In a 'pure Williams' respect, he wants to see climatic (ultra high) volume on narrow spread. He also stipulates it should be in new territory i.e. no resistance to the left. This makes them pretty rare. You obviously use a more liberal definition? I do also but still like to see a bit more volume than that. Incidentaly I was thinking of starting another thread that dealt with VSA 'definitions' e.g. what constitutes 'ultra high volume' when is a test likely to be a failed test etc. Wonder if you might participate? I know you view things as much art as science but its good to have consistant definitions (especialy if starting out). On a similar subject how do you set your yellow lines? Do you prefer them to the bands that TG use? (I suggested those to Roy many moons ago). These would be good discussions for a definitions thread if here is not apropriate Cheers. Cheers. Nick

Well I guess I am sold then I am also considering Joel's course. One of the reasons for my reticence is that my 'technical' skills are more than adequate to extract money from the markets. My problems are clearly 'emotional/psych'. In the past I have buried myself in bettering my technicals and deceived myself that I am trying to improve my trading. I guess its like the CEO of a business putting all its resources into R&D when they need to improve there operations. Could you expand a little where the boot camp goes that the book dosen't? Cheers, Nick.

Maybe I am confused about the 5 at a time...I often am. For some reason the chart didnt attach oh well.

Some DAX "action". Consolidating and narrowing from the open and then obviously some news hit. Not sure if the gap is real or data issues (I use IB that tick aggregates when a market is fast). However that is close to 1000 euro per contract there. I must say you must have cast iron Cahones to trade 5 at a time notouch

PP my question is about 2. Does it really add anything that is not in the book? I have no issue splurging $500 but to be honest the book (especially the MM one over the paper one) seems pretty much complete from a point of view of analysis. What does the boot camp have that the book dosen't? Does it talk about actual trading (as oposed to analysis)? One nuance or subtlty learn't makes it worthwhile but I am a bit sceptical. Without being disrespectful not sure about 4. Seems mainly a mechanism to sell the software.I understand that Todd was a trader but Gavin was an entrepeneur (outside the business) that bought into Tradeguider with a view to marketing it better. Again without being disrespectful it shows in his presentations. Repeating 5 seems the most value (with a re read of 1 now and then). Cheers.

Ok forgive me for being contrary here but I can't see the reason for exiting on a WRB. Quite the revere - price has just made a move and its at the highest/lowest point in that move (give or take a tick or two). If the momentum is still there why not stick with it? If the move is ending the chances are he next bar will be a hammer or doji. BTW I dont look at candles per se (just the price action behind them) but it is fairly rare to get a long white candle followed by a long black one. (A sliding window is it called? or maybe scissors, too lazy to look it up). Essentialy its an upthrust but over the course of two bars. I can see where you are coming from from a discipline point of view. Also I know some people trade from quite high time frame charts compared to there holding period i.e. they look to enter and exit within the course of one or two bars. (actually I am prone to do that but that is an emotional issue in my case!) Actually maybe I should try exiting on a WRB I tend to exit just before the big move bar which of course is even worse!!! Holding on to winners is stil something I often have issues with, Cheers, Nick.

I have used multicharts for a while on and off. It has great promise but ultimately it ends up with me tearing my hair out. Basically there are a bunch of irritating little bugs and it just feels 'clunky'. I hope it works out for you but I'd try and give it a good long trial. I hope that they get there eventually but it seems to take an awful long time to fix the most basic things. I actually bought it when it was $295 so no great shakes but I have wasted an awful lot of time (which is far more valuable). Cheers, Nick.

What momentom said, I's second all of that. I prefer to trade it in the am when it is doing its own thing. Sometimes in the pm it diverges a bit from the US but depending on your timeframe it tends to get yanked around by the US indexes. Dax is 12.5 euro a tick and there are two ticks to a point. I have seen it move 20 points in a heartbeat. Volatility can go to the other extreme also. So basicaly it is a high value, extreme moving market so lots of oportunity but of course more potential risk also. You dont realy get a feel for the speed it can take off at unless you are waching it live. I would say its ER2 on steroids. Sometimes despite the volatilty it moves with breathtaking 'order' other times it looks like someone has thrown a handful of random bars at the chart. (Dosen't everythig?). I think an experienced trader could do very well once they learnt its character. Cheers, Nick.

On those days it will often chop around the PP itself. Halfway points are often respected too. The problem often comes after a wide range day - the lines for the next day are going to be spread out (due to the geomatory behind the maths). After such a day you may get a narrow consolidating day (or 2) in which case you may not hit much. Really there is no substitute for eyballing the charts yourself and seeing what works (or not) for your favourite instrument. Cheers.

You could do worse than look at Joe Ross' law of charts he has an unambiguous definition. Basically if you get a swing high, swing low, lower swing high you have changed from up to down. He calls this a 1-2-3. Joe has a rigerous definition for congestion too. Gann with his 2 bar swing suff is similar. Both are available free on the internet. I like Dunnigans stuff too. Again all based around swing highs and swing lows. If you want quick and diry for longer term intraday how about above the floor pivot trend up below the floor pivot trend down? You could use the market profile point of control for that too. Not a bad quick and dirty definition. Trend lines are great too as long as you draw them consistantly. When the 'inside' line is broken the trend is over. The nice thing about these is they can give you stops and targets. These are all just based simply on price. It is pretty important to have some consistant frame of reference but it dosent really matter what it is - after studying enough charts you will be ale to see what price is doing in a heartbeat. Incidentay price seldom just reverses unless you include sideways as a direction. Up -> Sideways and Down -> Sideways are more common than up -> down. Finally to start with I would focus on what price is doing now rather than trying to anticipate whether it may reverse or not. Hope that helps a bit. Cheers.

What Tin Gull said traditional ones 'work' just fine. Sometimes on the DAX they are almost magical. Of course at other times when business is slow they are chopped from side to side as stops are run and traders lured in. Actually this can be the case with any well known line or formation, if there is no underlying order flow the fakirs come out in force Cheers, Nick.

Hi PP, In reply to this a couple of posts ago. I had a bit of trouble seeing this. Agree its ultra wide ultra high however it is only a wee bit up (could make an argument that it is fairly neutral). The price was run down and attracted buyers and run up where it attracted sellers. Without seeing "inside the bar" (lower time frame) I have trouble seeing this as the smart money buying. I wondered if there is anything esle that gave that clue? Thanks for your excelent contributions btw, first class! Actualy this was the first thing I could not see with clarity Cheers, Nick.

Great analysis PP looks right on the money to me. Failed tests are interesting, I personally dont find them too reliable. Thurs and Fri are interesting narrowing range and somewhat reduced volume. (daily indexes and there futures seem to not have the huge volume swings that you see intraday and on stocks). Looks like the bulls are losing interest (no demand). Europe has just opened more or less at the same level. It will be interesting to see where she goes from here. Of course we may test supply higher or they may re establish control or or or but what is going on now is pretty clear to me (PP has hit the nail on the head). Oh btw PP you mentioned one more 'clue' that was not in your post, mind if I ask what? You aren't a closet indicator user Have a great week every one. Cheers.

I just got master the markets and read it this weekend. I have the original Williams 'paper' book too and prefer the new version. Clearer and less errata, the original had several charts mis labeled and 'supply' where it should have read 'demand' etc. In some ways that was good as it really made you study the charts to see what on earth he was talking about. I think there is maybe too much information rather than not enough! In odd places things can become a wee bit confused. I would look at the main principles and then study hundreds (actually probably thousands) of charts until you really 'get it'. Most of what you need in MM. Another thing, it helped me to think less about predicting what was going to happen and just concentrate on what was happening now. For example you may get a down move ending in a high volume wide(ish) bar that closes high. Price should go up right? Actually all we can say is they have stopped going down (for now). Often it'll drift sideways to up and then crash on down with a wider higher volume bar. A classic 'stair' down. By focusing on the now you can get better at identifying a small correction over a bounce over entering congestion (accumulation/distribution). Cheers.

Hi, Nice site. Particularly good to see several 'no indicator' threads. I am a fairly long time student of price action and of course good ole volume. Particularly interested in the VSA thread and the delta talk. Kinda busy but hope to post a few charts and observations in due course. I predominantly trade indexes, DAX & ER2 for there morning sessions (Im currently in the UK). Cheers, Nick