BlueHorseshoe

Your references to 'bots' (here and on another thread) . . . Do you mean the kind of algorithmic strategies a retail trader such as myself could produce, or do you mean the super-sophisticated, zero-latency, servers in the CME, programmed by fifteen PhDs, octagonal-arbitrage type thing that multibillion dollar HFT firms unleash? Could anyone hope to gain an inkling of what the latter are doing by looking at a price chart? Thanks Bluehorseshoe

Why would you anticipate a test of a distribution extreme to occur at a specific time of the trading day? Bluehorseshoe

Using patterns that concern price behaviour directly, rather than a technical derivative of it such as an EMA, tends to result in more robust performance, in my experience. This is not to say that the former isn't optimisable or couldn't be curve-fitted but . . . for some reason it is less suceptible to this than the latter. It is one step less 'removed', I suppose. Sadly, however, I don't know the 'best' way to enter pullbacks. Hope thats helpful. Bluehorseshoe

Hello all, Any suggestions as to how I can correctly calculate indicator values using Close of Data2, where Data2 is of a different timeframe to Data1? I've even tried introducing the Data2 reference into the EL Function, but to no avail . . . Many thanks for any help you're able to give, Bluehorseshoe

Yes, that certainly answers my question. Thanks for replying, Roztom. Bluehorseshoe

Do you have any thoughts on minimum starting capital, Roztom? Thanks Bluehorseshoe

Thanks for your reply. How similar do you find the behaviour of the Russell and the ES? Does there tend to be much correlation between the trades you take in each, or do they behave very differently on a tick-by-tick basis? I'll look forward to following your thread. Regards, Bluehorseshoe

Only if trading the grains . . .

Thanks, MightyMouse - this has been an extremely thought provoking and useful post. Cheers, Bluehorseshoe

I think what I am trying to say is "if you want to help me to develop as a trader then please give me a fuller incentive because I'm much too busy to investigate pieces when I don't know if the whole has value". I'm not lazy, I hope, but as I said before, there is a hell of a lot of information on this site. Traders need some sort of screening process to decide what they can investigate further. This screening process does not have to be backtest results - if William Eckhart started posting here he'd have my attention without any backtest results. As for your thread, Phantom, I am currently about half way through reading it, thanks. Once I get to the end I will have to make a judgement as to whether I begin trying to piece together all the pieces into the profitable whole that has enabled you to be successful. Given the general high level of opinion about you throughout the forum and the quality of your posts, I will most likely decide this is worthwhile. However, without that incentive (which is the same incentive that I feel this thread is currently lacking), I probably wouldn't attempt to do so. All I was trying to do was help the thread starter to cut through the noise and provide the kind of incentive that would cause countless others like myself to sit up and pay attention, and eagerly await every subsequent post he makes. Without this, I suspect he will quickly lose the attention of most - there's just too much other stuff going on around the forum. Regards Bluehorseshoe

Hi Blowfish, This is almost an accurate description, and it's interesting that you know that the spread bet company hedges their book (most people seem to imagine that they hedge each individual trade rather than their net exposure, which is ridiculous, not least because they allow spread-bettors to take positions that are smaller than the value of a single contract in the underlying market). One thing that is unusual, however, is for the instrument the spread betting company quotes to track the underlying instrument directly. A typical instrument would track an actual index value rather than a futures contract. They give these names like 'SPX' or 'WALL STREET'. This means that you can't reliably use charts of the ES or even the Spooz to trade the 'SPX'. Hence you have to rely on the spread betting company's own charts and this means they can restrict the information with which they provide you (they don't typically provide volume data, for instance). In short, they 'make' the market. If you're willing to pay a larger spread you can spread bet on instruments that do track an underlying futures market accurately, but the spreads make these completely unsuitable candidates for intraday trading. Hope that's useful. Bluehorseshoe

Welcome to TL! I'll look forward to following your thread, as I'm sure many others will. Would you be able to provide a brief overview of your trading style and why you focus on these specific markets? Also, what led you to trade on an intraday basis? Many thanks, Bluehorseshoe

It's not that the generosity isn't appreciated, Phantom. There's a hell of a lot of information to sift through on this forum. If somebody is presenting something that works, then it makes sense that they do this by demonstrating its effectiveness over a sustained period. If they do this then people like myself will pay attention and go away and investigate it ourselves. But a handful of trades . . . it's pretty meaningless . . . what am I meant to do with that information? Would you risk your money just because someone on a forum told you something worked and gave you a half a dozen chart examples? Of course not. You use volatility breakouts in your trading, I believe? So did Larry Williams. If I go and look at pretty much any Larry Williams book he will give backtest results spanning decades for each strategy he describes. Now that's something that I can actually use . . . Bluehorseshoe

Hi Obsidian, It looks as though your basic methodology is quite similar to mine - buying pullbacks in trends (although I don't trade intraday). Through testing, however, I found that using MAs (or any other indicator mathematically derived from price) wasn't the best way to do this. A specific MA length will always prove optimal over historical data, but less optimal in actual live trading. I therefore tend to look for pullback behaviour that can be defined without any optimised variables such as the length of an MA. I was wondering if you have any insights into these types of price patterns within the British Pound? Many thanks, Bluehorseshoe

I agree with your view that a market philosophy should form the basis of a trading system and that new traders should seek to develop the former before focussing on the latter (I've posted to make this exact point earlier in this thread). Beyond that I'm not sure that I understand what your point is, but that's probably just be me being a bit stupid. As for tweaks, good systems ought to tweak themselves, no? Bluehorseshoe

Hi Obsidian, If you can share any price patterns from your experience that are based purely on price and not upon variable derivatives of it (such as exponential averages) then that would be really interesting. Thanks Bluehorseshoe

Look, this is a serious trading forum - there's no place for gamblers here!

Don't worry about posting trade information - a handful of example trades are statistically meaningless. Show us how your approach would have performed over the last ten years. We're all interested in long-term consistency, I'm sure, and not a flash in the pan fluke that happens to have worked well over the past few months. Thanks Bluehorseshoe

Isn't it a mathematical certainty that all systems will eventually fail? But that doesn't mean that systems are unworkable. My car will eventually fail, but I still drive it around every day. If I buy a brand new car then I know the likelihood of it failing shortly after I've driven it off the forecourt is very small. Having a 'market philosophy' is all very well, but a trader needs a formalised way to turn idle perspective into an opportunity to profit. It's a bit like having the perspective that cruelty to animals is wrong. Lot's of people would tend to agree, but very few actually set about in an organised manner to actively reduce instances of cruelty to animals. A system or method, though ultimately it will fail, is the best way to go about transposing a generalised philosophy into objective action. It would be interesting to hear the market philosophies of those on this thread - how does everyone view the markets in a very general sense? Bluehorseshoe

In it's purest sense, trading off instinct alone. But many discretionary traders have a loose, underlying approach, I believe. They will make an assessment of various signals, individually and in combination to arrive at a trading decision. They may overide or reject signals if they don't feel right in some way. The signals they follow may also be subjective rather than objective - most chart patterns fall into this bracket. Their own perception of relationships between market information ultimately becomes a filter. Somebody like me, watching a discretionary trader, would probably ask questions such as 'but when you say fast, how fast do you mean?' or 'when you say 'low in the range', within what percentage from the bottom do you mean?' And I would probably be met with a bemused look (who is this tedious pedant?) and 'well now, that depends . . .' Bluehorseshoe

I am assuming that, yes - it's not an unreasonable assumption to make, although it is evidently untrue in your particular case. If my assumption is wrong then you can just ignore that part (or all) of my post. Regards, Bluehorseshoe

I don't want to detract from what is a great thread starter, but I wonder if 'funds' is a broad and perhaps misleading generalistation here? An HFT firm probably has time horizons well below those of the average day trader. They typically account for a massive chunk of market volume. Then there's a fund like RenTech - their outlook is probably pretty similar to that of the average trader in terms of timeframe and with $23 billion in AUM then they're probably moving size. Trend Following type funds are of course longer term in their outlook and equally hefty in weight . . . While consideration of OTF traders is vital, I don't think that all large traders should be regarded as OTF. In fact, some whiley HFT firm probably just flipped five ES contracts under your nose . . . Bluehorseshoe

If you want a 'market view' then consider the various replies made here and try to decide where you think your understanding of the markets may fit best. As a beginner, you may find it more useful to focus on broad generalisations (such as does the market I want to trade generally revert to its mean so that I should always take a contrarian position, or does it regularly produce strong, breakout trending moves that I want to step aboard)/ (should I trade mechanically or on a discretionary basis). Once you know what you want to do ('I want to build a wall'/'I want to take counter-trend entries in the direction of the long term trend') can you choose an appropriate tool ('I need a trowel for cement'/'I need a MARKET BREADTH INDICATOR'). In other words, indicators such as those you describe are minutiae and detail. Focus on the bigger picture first. What is your overall perspective on the market you want to trade? Can you sum it up in a short sentence? Bluehorseshoe

Hi Deusomega, Please note that my recommendation was to abandon discretionary trading, not trading altogether, if unsuccessful within a few weeks. Also, please realise that this is just my perspective on the matter and hopefully I presented it as such. My main aim was to help a new trader to become cogniscant of the distinction, not to issue learning ultimatums. In the spirit of disticntion, I would make the following point about scientists that work on things for a lifetime: such scientists only continue because they receive positive feedback. Ultimately this feedback may lead them down a blind alley, but they have reasonable grounds to continue their research nonetheless. I have worked on various mechanical approaches that have proved to be dead ends, but at the time I worked on them they gave me objective positive feedback, and so it was reasonable to continue. A discretionary approach, I would contend, offers no objective feedback besides results. If a trader isn't getting positive results within a few weeks of discretionary trading, then I would say that they may not be very good at it. A mechanical trader, on the other hand, could endure months of poor results if he knew that these were a concomitant aspect of the approach he had chosen. For a mechanical trader, positive feedback can be from historical data, which simultaneously bears the burdens of objectivity and possible irrelevancy, If I had the choice, I would much rather be a discretionary trader than a mechanical one. Maybe my posts are nothing more than a bitter manifestation of this (beware, thread starter - everyone here has their psychological baggage, even those who are making lots of money(I'm not)). Hope that's helpful. Bluehorseshoe

Hi Joshdance, Worse than purely anecdotal, my evidence is based upon a ludicrously small sample size! That's a poor show even in strategist's terms! Nevertheless, here's another anecdote: I supported myself throughout a degree by selling my paintings in art galleries. I could imitate the style of just about any artist you care to imagine with great success. I ripped off the styles of other minor artists and peddled my works to the extent that I could pay my tuition fees. About the time I finished my degree I realised that I had absolutely no artistic vision of my own. My way of seeing the world as an artist was entirely defined by others. I didn't know the first place to start in trying to create an original piece of artwork. I sucked (and I stopped painting). I would contend that 'Great Discretionary Traders', like 'Great Artists', are born not made. My understanding is based upon a few scant experiences combined with what I suppose to be analagous scenarios in other walks of life. Hence it could be completely ill-judged. If anyone feels they have developed discretionary trading skills then please feel free to correct me and offer alternative advice to the thread started. And I don't really want to be responsible for deterring anyone who is purposefully set upon this path. For the record, I have no absolutely no issue with those who are successful as discretionary traders other than jealously Bluehorseshoe