How Do You Decide the Next Move Will Be Big or Small

[horace 10]

Trading the ES I find that I wind up with a lot of small trades and only two or three decent trades most days.

The signals for the decent trades quite often are weak and some of the small trades have strong signals.

 

Do you Guys find the same thing and how do you filter out the potentially small trades

[BlueHorseshoe 10]

Trading the ES I find that I wind up with a lot of small trades and only two or three decent trades most days.

The signals for the decent trades quite often are weak and some of the small trades have strong signals.

 

Hi Horace,

 

There are people here who are far better qualified to answer your question, but here are a few thoughts . . .

 

Rather than trying to decide whether the next move will be big or small (i.e. anticipate the quality of a signal), it might be easier to try and decide whether the current move (when holding a position) will be big or small. In other words, enter with the signals but then begin immediately to assess the probabilities of a favorable continuation of the move. Ask "what is happening now?" rather than "what is going to happen in the future after I enter a position?"

 

What is the nature of the small trades? If you can scratch three or four trades and then make a decent profit from one or two good trades, then that's actually pretty good going in my book.

 

Finally, remember that the ES is a mean-reverting market, so hoping for lots of movement on a typical day is always likely to disappoint.

 

Hope that helps!

 

BlueHorseshoe

[jpennybags 11]

Trading the ES I find that I wind up with a lot of small trades and only two or three decent trades most days.

The signals for the decent trades quite often are weak and some of the small trades have strong signals.

 

Do you Guys find the same thing and how do you filter out the potentially small trades

 

Horace,

 

I trade the TF... kind of a different animal. The words "small" and "decent" are not very clear. I can assemble a very good day taking 7 to 10 ticks. If I manage to add a 30 tick move... well, I'm one happy clam.

 

Unless you need to have the liquidity that ES provides, give TF a try.

 

As far as filtering for large moves, it seems to me that a market is an ever changing equation. It's not extremely difficult to observe price action to see weakness or strength building. How far that move will evolve is largely a product of the ever changing equation.

 

S/R is of some help to gauge what's possible.

[86834 10]

If you're looking at the depth of market then you can judge how far the market is likely to move based on how many contracts are trapped on the wrong side of the market. So if the market has been selling off, lets use es as an example, you'll be looking for everyone to get stuck selling the bottom. One you have an area with over 100,000 contracts absorbed then you know that will be a much bigger move.

 

You also want to look at the market relationships and understand how they work. For example if the dollar is up 0.40% on the day, crude down 0.70% on the day and ES is down 0.30% on the day then you know that ES has to be positive at some point during the session , so any longs in es you have you will be looking to hold them

 

Hope that helps

[Axiom 10]

Your signal dilemma....from what indicators? What form of analysis do you use?

 

I would look at that, and then wonder why I'm using a tool like that. But then I might say to myself, if every strong signal leads to no move while every weak signal leads to a big move...why don't I simply view the weak signal as my trigger?

 

A CONSISTENTLY bad signal is just as good as a CONSISTENTLY good signal.

 

What is an indicator? It's nothing more than a symbol.

A symbol of what? More than likely, it's symbolic of a trend change.

 

If your indicators are not CONSISTENT, then they're not indicating anything. It because a maybe it will or maybe it won't. I do analysis on all three axis' as well as run three different oscillators(which can change if my some things become blurry)

 

Having a complete form of analysis is extremely important...if what you're doing does not clearly define a point to pull the trigger, what use is it really? Studying the markets can become a very time consuming and exhaustive endeavor, though very beneficial. Knowledge is power in this instance, and that can only be gained one way.

 

I wish you success in finding truth.

 

Axiom