jpennybags

As I had come to the conclusion that it would be best not to mess with the "money machine"... at least for now... I decided to ruminate on the matter... let it soak. Whenever I come across a problem that vexes me, I usually will do some study in another area... related but off topic... gain another perspective. Even if it doesn't bring about a solution, at least you've stored away some knowledge for another time and place... a good thing. I came across a book about psychology: "Thinking Fast and Slow" by Daniel Kahneman (posted a book review). A fascinating read that will cause you to consider how you make decisions, create biases, and how often your thinking can become skewed by priming and simple suggestion. How mood and the simple act of smiling or frowning effects your performance. And there's more... It's a lengthy read at over 500 pages, but well worth the time. Edit: If someone else has read the book and would like to bounce around some trading related thoughts... PM me.

Drawing on decades of research in psychology that resulted in a Nobel Prize in Economic Sciences, Daniel Kahneman takes readers on an exploration of what influences thought example by example, sometimes with unlikely word pairs like "vomit and banana." System 1 and System 2, the fast and slow types of thinking, become characters that illustrate the psychology behind things we think we understand but really don't, such as intuition. Kahneman's transparent and careful treatment of his subject has the potential to change how we think, not just about thinking, but about how we live our lives. Thinking, Fast and Slow gives deep--and sometimes frightening--insight about what goes on inside our heads: the psychological basis for reactions, judgments, recognition, choices, conclusions, and much more. --JoVon Sotak

Good food for thought... When first starting out, learning how not to lose is far more important than learning how to win. In my own experience: I was a break-even trader; successful at times, but the loses would eat up the profits eventually. I didn't turn the corner until I learned how not to lose. I think it would be fair to say that you need both, but the harder lesson to grasp is how not to lose.

That is the conclusion that I came up with too (for now). I spent a large part of my professional career working under contract, and I've been with many different companies during that time. Thriving businesses are always in flux. It's been my observation (however limited) that those companies that are adept at implementing change are far more likely to succeed than those who struggle with change. Major changes in how a company does business can be painful. I recall a company that went full bore with the implementation of SAP. This was a large company that literally ground to a halt over the span of a few days. They didn't roll out the changes a little at a time, and they paid the price for it. It was ugly... I suppose I'm guilty of a poor management decision in not making a proper assessment of the task at hand. Poor management decisions... arrogance or ignorance? I think I probably had a little of both things working.

I've heard that explanation many times, but it's not something that sits well with me (possibly that's a fault of my own). I could imagine a market where most are successful, save those unfortunate few that sell the bottom or buy the top; they were just "wrong". Then there are those who go long or short too early that get stopped out; they were "right" and "wrong" at the same time (though, who hasn't been there). I would also suppose that there are those that throw themselves in front of the "momentum" freight train… for some ill conceived reason. Though, I can't believe that happens more than a few times per individual; unless one truly is an idiot. I suppose too that there may be a lot of idiots out there. Then there is the 80/20 rule: 20% of the people in an organization cause 80% of the problems… 80% of the costs incurred for any project will be expended in that 20% which involves start up and completion… 20% of a task group does 80% of the work… and on and on. It's odd how the 80/20 rule plays out. Ha!!!… 20% of what I'm talking about at any given time is 80% bullshit (that could be reversed for some folks). Pareto principle - Wikipedia, the free encyclopedia I wonder what the actual percentage of all trades that occur during the day in any market are successful. 80% or 20%? Could it be that 20% of traders take 80% of the successful trades? I would rather prefer to think that every market participant facilitates the other in either success or failure. Someone must lose for me to win… I don't think so, but I'll take the money just the same… it makes no difference to me.

I was going to post this in "Trading Psychology" but it didn't seem to be a proper fit: Ever get the notion that goes something like this: "if I were to change a few things here and there I could be killing this market". If you've been doing something successfully for some length of time, why change it? I've also come to think that it can be far too easy to forget all the toil and struggle that brought success about, forgetting… "why we do what we do". I recently tried to make some changes to the way that I trade. What brought all this about was the notion that: "I leave a lot of potential profits on the table every day". That is a true statement; can't be denied. But really… so what? After abandoning this project, I had myself so messed up it took a couple of weeks to get my good stuff back. We all concoct, or gravitate to trading systems (methods) that are suited to our temperaments and personalities, and finding that place can be a struggle. It took me a couple of years of trying different methods before I came to that moment when I could say… "Yes, this is what I was looking for" (on second thought, possibly it took that long to understand what I was looking for). This latest excursion has brought about the realization of how fragile trading can be (for a discretionary trader). My methods work because it's the right fit for me. Think about how it's all intertwined: temperament, risk tolerance, competency, and the methods devised to act or counteract with all that. To make major changes, one needs to deconstruct the entire thing… including one's motivations, triggers, and habits… Yikes! Now, I do believe that nothing is static; you are either waxing or waning. Allowing oneself to become complacent can be the death of a career… besides, complacency is boring. It may well be that I will have to be satisfied with taking 10 ticks several times a day, because it's working… only a select few can play professional sports… maybe I'm stuck in the minor leagues (it's not a bad life). Don't know… going to have to think about it some more.

Ha... and if you do sniff glue, use "Elmer's" glue...

Being a one time boat owner, I can relate... The old saying rings true: "If it flies, f*cks, or floats rent by the hour".

Cripes!!! What is it with college students... don't you have enough on your plate? Aren't you in debt up to your ears already? If you're discouraged after 4 weeks... good, all the better. Take the $3K and travel during the summer months... get some good out of it.

Congratulations on completing your degree... it's a good step towards a successful life. You have your degree, you've proven to some extent that you are trainable... you will have to be trained. At this point in time, you have no tangible skills (as a trader or whatever). So, why mention it? The second thing... why don't you talk this move over with your parents? All that worry and toil to raise you up, and get you through to that college degree, and all you have on your brain is funding an account... they must be so proud. Seems to me you owe them that much. They love you, and you're not going to find much love (or good advice) here. You've made a good first step... don't be a knucklehead... you'll get along just fine.

My own trading style was constructed around being able to trade chop and a range bound market. It's also somewhat of a product of "me" dealing with "myself". It makes me "freaking nuts" watching 6 turn into 3 waiting on 9. Though I have begun to question my methods, as I leave a lot on the table. It seems that the earlier the entry, and the longer you are willing to hold makes a difference in what you are able to drag off at the end of the day. This also involves more risk. Risk of the early entry, and risk of giving back profits... "a bird in hand is worth two in the bush". I enjoy what I do... the methods I've assembled. Certainly, I do alright. I do question if I couldn't be enjoying a bigger cut if I held trades longer...

This may be a far too simple question, but why not enter at the yellow arrows and choose your exit somewhere in the yellow boxes? A simple MACD crossover system actually trades well on the TF most days (when there is volatility in play).

Blue, Could you explain more about the charts you are posting? What you are trading (not that it matters all that much), time frame, indicators, and such...

We are all capitalists... everyone wants your money... including me. Maybe you should try a professional money manager. He/She is going to want your money too (most are trustworthy).

Fresh Pasta... Anyone who makes fresh pasta has their own mix that they enjoy. I like semolina flour, but 100% semolina can seem a bit leathery to some tastes (mine included). I've found that a 4 to 1 mix of semolina to bread flour works well, and pleases everyone. It has a nice tooth, but the mix of bread flour provides a certain quality of softness and feel that is pleasing. Any opinions are welcome.

Mystic, I thought this was a thread: "not about trading". A few quotes from Harvey Penick about the game of golf (a few thoughts for the summer): No matter how poorly you play, there is always someone you can beat. No matter how well you play, there is always someone who can beat you. You can hook a drive into the tall grass and then turn it into a par if you dig it out with a lofted club and follow with a good pitch or chip and putt. But if you muff a pitch or chip, you have lost a stroke nearly every time. Yoga is the study of breathing. As I grow older, I reflect on how we take breathing for granted. Proper deep breathing is a joy, it calms your mind. Deep breathing is wonderful on the golf course as a provider of oxygen and strength throughout your body. I’ll bet on a deep breather any time, over a player who just breathes to stay alive. The point of the swing is to hit a spot. Harry Vardon was a master. He knew you must hit what you swing at. If you have a good grip and you can see the shot clearly in your mind and use the muscles picture of Clip The Tee or Brush The Grass, your swing will work- unless you start to doubt it. Good players have the power to think while they are competing. Most golfers are not thinking, even when they believe they are. They are only worrying. Rather than worry, be mindful of the shot at hand and go ahead and play it as if you are going to hit the best shot of your life. You really might do it. Supreme concentration is the peak experience of the golf swing. A good grip, good balance and a good attitude make you a winner. Nobody ever promised you life would be fair. To change your life you have to change the way you think. When I ask you to Take Dead Aim, I mean that for a few seconds, you should be calm but aware, putting all your best attention into the moment at hand. You make what I think of as the sweet calculations of the wind and weather and distance. See a sharp picture of your ball striking your target in your mind. Bobby Fischer, the chess champion, said that when it was his turn to play, he considered only one move- the right one. You take out the club your mind tells your muscles is the right one to swing. At this point your imagination is stronger than your willpower. Your body will do what your mind tells it to do. You have no doubt, no fear. For those few seconds you are what you think. That’s Taking Dead Aim. Trust yourself. Practicing your short game will help your long game in every way, but practicing your long game won’t help your short game at all. It seems to me that confidence is the feeling we want to have in playing golf. But we can’t dismiss the value of faith either. I think faith is in the heart, and confidence is in the mind. The ability to concentrate is good, but thinking too much about how you are doing what you are doing is disastrous. Trust your muscles and hit the ball in the hole. Keep it simple. You don’t lose your swing between the ninth green and the tenth tee, and you don’t lose your swing from one day to the next. If you think you do, something is going on that you don’t understand. A diary might help explain it to you. Golf is played in the present. If you can wash your mind clean each time while walking to your next shot, you have the makings of a champion. Unless you have a reasonably good grip and stance, anything you read about the golf swing is useless. Golf has probably kept more people sane than psychiatrists have. Life consists of a lot of minor annoyances and a few matters of real consequence. Use the swing God had blessed you with, and go play golf. Just let it happen. Don’t try and hit the ball far. Instead develop a feeling that the ball is going to go a long way without your really trying. And sure enough, it will. I call it The Feeling of Far. Don’t listen too hard to the sound of the world. If I tell you to Take Dead Aim you might think I’m being simpleminded. But Taking Dead Aim means blanking out the sounds of the world. It can be an advantage to be a little deaf. A golfer rarely needs to hit a spectacular shot unless the one that precedes it was pretty bad. A tournament champion is a winner on the golf course. A person of honor is a winner everywhere. Edit: My bad... this is about trading (ha).

(Ha) What about 3 full stop losers in a row? Taking that 4th trade can be a struggle... call it quits for the day; why dig any deeper? Pull up your big boy pants and trade out of it? I decided to edit my question, and post my take on it: I think if you are someone who is trading as a hobby, or you're a noob... go lick your wounds, take the day off. If you want to make a living at this... take the 4th trade. I can still recall the sense of accomplishment of the first time I traded out of a bad day. The confidence that you come away with is well worth the risk. In addition: if you're trading with money that you can't lose... you probably shouldn't be.

We've strayed some from the OP, but I have this framed and it's hung above my trading desk...

I understand, but I think my best answer is... "I don't know for sure". For me to make money... I must place trades. This is a fact, regardless of who is doing what. That is the bottom line for me. The whole term "HFT" probably covers a broad swath. You are talking anyone with more speed than you... most everyone creating volume in the market (this would include top end investment firms... all those fat cat dudes that are whining about HFT's). I think in a large part most of these shenanigans occur when markets are tightly range bound. I may be wrong about this but it's my perception. What profit is there in manipulating a market that is trending? I think (and it is a humble opinion), if you are patient, and wait for your opportunities HFT should have little effect on your trading.

As an update: I communicated through the support board at Sierra Chart about a work around for OCO orders. They offered up an idea, that they may eventually implement as an option. Instead of server side OCO's: If the parent order fills, a regular stop order would be sent to the server, but the target order would reside locally. If the target order is triggered, the platform would then send a cancel order for the stop residing on the server side. In this way, you would still have the stop order on the server, in case a connectivity issue arises. The target order is lost but the stop is in the queue on the server side. No word on a time line.

The other question that comes to mind is... Does it really matter? I can understand the argument that large investment firms have with HFT. I mean you're trying to transact trades on millions of shares per day, and someone is front running your trades... pisser. For me and my 3000 ms latency... price ticks up, it ticks down, and I catch it somewhere in the middle, or the high end, or the low end... for me it's a wash.

Certainly, if I find a solution that works for me, I would be more than happy to share my findings... and explain why I made the move. Certainly, there are brokers that are able to offer server side OCO's... you are limited though. In part, the problem that I've seen (gathered from my research... incomplete as it is) is that if you have a Rhithmic feed, Rhithmic has a solution, but it doesn't support third party software. R/Trader will support server side OCO orders, and R/Trader Pro will support trading from the chart, but it only supports time based charts. I place trades from a 40T chart on SC. If R/Trader Pro supported a larger variety of charting types, I could see myself making the move. As it is, it doesn't work for me. From what I've gathered from viewing the Sierra Chart forum (also to include Ninja Trader forums) there has been a plethora of requests for server side OCO capability. Both parties lay this off on Rhithmic and others. It seems to me that if Rhithmic is trying to sell their own software, server side OCO's would be a selling point (to some extent) and why give that up to third parties. I don't have a problem with that from a business perspective, but it's no help to me and what I want.

My brokerage is getting out of the retail business, so once again I'm faced with choosing another futures broker (I like self directed change… not so much when brought by circumstance). From what I've read recently, consolidation in the business may be a trend that will continue. Some of this has been prompted by Dodd-Frank regulations, and some balance of this trend is due to the economy of scale. I don't really have an opinion one-way-or-another if this is a good thing. I do think that it may eventually limit choices for small retail traders. That's not what this thread is about, and I only offer it up as an opinion of what may happen going forward (part of my thought process). I have experienced power failures, and internet connection disruptions in the past. I haven't kept records on these occurrences, but in a general sense, my recollection would be 3 - 5 times per year (If a tree falls in the forest, does it make a noise?). A little backfill is necessary… hang with me. I use Sierra Chart, and really, really like placing (entering) trades from the chart. When I first discovered this functionality, I wanted to throw rocks at my old trading platform. I also like using attached OCO orders for stop and target. My trading style is such that my average "time in trade" is < 120 seconds. In a typical trading day < 35 minutes with money at risk. For anyone who places these type of bracket orders, please understand that if the server that you route through does not support OCO orders, then these orders will be managed locally at your trading platform. So, if you lose connection for any reason you have no stop loss or target in the order que. To date, I have never had a connection disruption of any kind while in a trade. I'm not bright enough to come up with a risk profile that would actually put a number on the odds of my eventually getting pinched in a trade, but I think the odds are that it will happen eventually. How scary is that number? From a business perspective, I could get pinched once a year for $5K and it wouldn't hurt. It would be a pisser, but I could write it off (mentally) as the price of doing business. Trading the TF with (3) contracts per trade, price would have to move against me 150 ticks before I would approach that number. Could that happen? Yes… yes it could… possibly worse. Hopefully, I could get through to the order desk and get it shut down before too much damage is done. There are brokerages that route through servers that accept server side OCO orders, but your choices become limited… I like choice. I would be curious to hear thoughts or possible solutions to the problem. Honestly, I could go back to doing business without attached OCO orders, but I like them. I don't know that I would want to give up trade entry from the chart though. Thanks.

If you are still entering trades with your finger and a mouse... I wouldn't get too concerned about it. If you consider system latency, then add the amount of time it takes for light to enter your eye, get processed by the brain (make some sense of the information), and send the signal to your index finger, you are probably 3 seconds behind the curve (at best). Learning to read price action is a good thing... don't get too deep in the weeds though.

Hopefully true in all walks of life.