Jonbig04's Log

[jonbig04 10]

I'm now using the common characteristics I've found in RETs together. I've printed out around 20 charts and will note the conditions under which at least 2 (I have 5) of my characteristics come out in the chart. For example If X and Z happen, did that turn out to be a RET? What percentage of the time? What if Y and Z happen did that turn into a RET? What percentage of the time? Hopefully I can come up with some common conditions that occur before/during a RET a good percentage of the time.

 

Replay from NT was pissing me off so basically I have a chart on paper and I'm using a piece of paper to slowly uncover 1 bar at a time. Low tech I know. It will be a long night. Sad activity for a 21 year old in downtown Denver on a Saturday night huh? Oh well.

[brownsfan019 17]

Good ole pen and paper.

 

Just one suggestion ... the market is not going anywhere, so make sure you take some time to be a kid too. TRUST ME on this one as time flies by and before you know it, you'll have to be a responsible adult.

 

Your work and determination is admirable, but make sure you take some time to be a kid too.

 

Work hard AND play hard.

[jonbig04 10]

Good ole pen and paper.

 

Just one suggestion ... the market is not going anywhere, so make sure you take some time to be a kid too. TRUST ME on this one as time flies by and before you know it, you'll have to be a responsible adult.

 

Your work and determination is admirable, but make sure you take some time to be a kid too.

 

Work hard AND play hard.

 

 

Yea pen and paper. My actual journal that has the numbers and raw data in is a notebook. Old school. Takes a long ass time though.

 

 

Appreciate the advice. Unfortunately my childhood ended when I was 18 and started as a mortgage broker. It was pretty lucrative while i did it (I got out before this mess). Even if i decided to take the elevator down to 16th street and walk 2 blocks to a club and order a drink, my mind would still be here. I can't escape it, it never leaves. I used to fight it, but now I embrace it. It was like this when I was a broker, then a developer, and now a wannabe trader. Honestly though I've never attacked anything as aggressively as I am throwing my energy on trading. I don't think.

[jonbig04 10]

Wow I'm getting somewhere. It looks (LOOKS) like I am able to spot a RET pretty consistently. Not every RET by any means, but when a certain amount of my specifications are met it turns out to be a RET the VAST majority of the time. I'm far from finished though and the results could end up very different, but it looks like I'm finally gaining some ground, albeit not very much. It's a start.

[brownsfan019 17]

If you want critiques of the approaches you are considering, I'm sure a few here would be willing to critique them for you. If you'd rather keep them private, that's fine; just keep in mind that the advice some of us can provide will slow down once you start talking specifics w/o the specifics.

[beeker1121 10]

Yea pen and paper. My actual journal that has the numbers and raw data in is a notebook. Old school. Takes a long ass time though.

 

 

Appreciate the advice. Unfortunately my childhood ended when I was 18 and started as a mortgage broker. It was pretty lucrative while i did it (I got out before this mess). Even if i decided to take the elevator down to 16th street and walk 2 blocks to a club and order a drink, my mind would still be here. I can't escape it, it never leaves. I used to fight it, but now I embrace it. It was like this when I was a broker, then a developer, and now a wannabe trader. Honestly though I've never attacked anything as aggressively as I am throwing my energy on trading. I don't think.

 

Hey man I know how you feel. I'm 20 years old, been really focusing on learning how to trade the mini S&P for about a year now, and it's pretty much the only thing on my mind. I'll get out and do something maybe once every other week, but like you said, I'm always thinking about the market.

 

In my opinion, you are definitely on the right track by not using any indicators. Price and volume are the only components of the futures market that you need to pay attention to; everything else is lagging. There is an immense amount of information you can gain by simply watching the reaction of price on a candlestick chart.

 

Wow I'm getting somewhere. It looks (LOOKS) like I am able to spot a RET pretty consistently. Not every RET by any means, but when a certain amount of my specifications are met it turns out to be a RET the VAST majority of the time. I'm far from finished though and the results could end up very different, but it looks like I'm finally gaining some ground, albeit not very much. It's a start.

 

If I could give some of advice that has helped me so much in trading, it is that you must have patience. I look at the market as kind of like card counting in blackjack. When you're counting cards, do you bet heavy when the odds are against you? No, you keep playing hands until the odds are in your favor, and then you bet big. In trading, if you don't have multiple reasons for why a trade should work, i.e. you only see some quick price action pattern, then why would you want to take that trade? Now on the other hand, if you see the price action pattern, and it's breaking a trendline, and it's in the direction of the trend, and you see a level of resistance or support it's near; that puts the odds in your favor, and whether or not it works, you have to take that trade because it's a GOOD trade.

 

I'll be dropping by this thread often and I wish you the best in your trading.

[jonbig04 10]

If you want critiques of the approaches you are considering, I'm sure a few here would be willing to critique them for you. If you'd rather keep them private, that's fine; just keep in mind that the advice some of us can provide will slow down once you start talking specifics w/o the specifics.

 

 

I understand. Honestly I just feel like I have to do the work/research for myself. I'm just trying to get to the point where I can do some testing tomorrow. I don't know if I'll make it though.

[jonbig04 10]

Hey man I know how you feel. I'm 20 years old, been really focusing on learning how to trade the mini S&P for about a year now, and it's pretty much the only thing on my mind. I'll get out and do something maybe once every other week, but like you said, I'm always thinking about the market.

 

In my opinion, you are definitely on the right track by not using any indicators. Price and volume are the only components of the futures market that you need to pay attention to; everything else is lagging. There is an immense amount of information you can gain by simply watching the reaction of price on a candlestick chart.

 

 

 

If I could give some of advice that has helped me so much in trading, it is that you must have patience. I look at the market as kind of like card counting in blackjack. When you're counting cards, do you bet heavy when the odds are against you? No, you keep playing hands until the odds are in your favor, and then you bet big. In trading, if you don't have multiple reasons for why a trade should work, i.e. you only see some quick price action pattern, then why would you want to take that trade? Now on the other hand, if you see the price action pattern, and it's breaking a trendline, and it's in the direction of the trend, and you see a level of resistance or support it's near; that puts the odds in your favor, and whether or not it works, you have to take that trade because it's a GOOD trade.

 

I'll be dropping by this thread often and I wish you the best in your trading.

 

 

Thanks bro, I appreciate the kind words/ advice.

[Guest forsearch]

I understand. Honestly I just feel like I have to do the work/research for myself. I'm just trying to get to the point where I can do some testing tomorrow. I don't know if I'll make it though.

 

At least you're honest enough to realize that the only way to long-term success in this business is to put in the hard work yourself.

[jonbig04 10]

At least you're honest enough to realize that the only way to long-term success in this business is to put in the hard work yourself.

 

For sure.

 

 

I was in the shower thinking about the common factors that I am starting to get together and I had a sort of epiphany. I don't think recognizing and cataloging them is enough. Well maybe its enough, but I think I should be doing more. For example lets say I noticed that price always behaves a certain way while vol is doing this during a RET. Shouldn't I be trying to find out why? Why is price behaving this way in the context of the overall picture? Or does that matter? It seems like it should matter in that understanding the market (human behavior) is our over all goal, right? Maybe its not so important in the system of a day-trader, but honestly I hate that description of what we do (or try to do). Day trading to me should be just a stop on the way to really understanding how the market works: fear, greed and their relationship to supply and demand. Thoughts? Is the "why" important?

 

 

Another question. If you develop a method that is rigorously defined and profitable, shouldn't it, almost by its definition, be able to be automated?

[That One Guy 10]

For sure.

 

 

I was in the shower thinking about the common factors that I am starting to get together and I had a sort of epiphany. I don't think recognizing and cataloging them is enough. Well maybe its enough, but I think I should be doing more. For example lets say I noticed that price always behaves a certain way while vol is doing this during a RET. Shouldn't I be trying to find out why? Why is price behaving this way in the context of the overall picture? Or does that matter? It seems like it should matter in that understanding the market (human behavior) is our over all goal, right? Maybe its not so important in the system of a day-trader, but honestly I hate that description of what we do (or try to do). Day trading to me should be just a stop on the way to really understanding how the market works: fear, greed and their relationship to supply and demand. Thoughts? Is the "why" important?

 

 

Yes, learn what the market is telling you first. I've spent time trading live, trading sim and just watching. I, can personally say, just watching not really trying to trade what I'm seeing has been helpful. Once you gain a further understanding, of what the market is doing, knowing what to do is much easier. I am by no means an expert, but I started live and now basically just follow the market. I quit sim trading, because I never had a complete plan. This has been great though because now I am able to see whats going on in the market much better. I am hoping to eventually find ways to capitalize on all this with a consistent method.

[Head2k 10]

Another question. If you develop a method that is rigorously defined and profitable, shouldn't it, almost by its definition, be able to be automated?

No. I had actually the same thought some time ago I see one main reason:

 

While you can more or less program some simple pattern recognition or calculation based indicators to form some setup, it is imposible to fully program the context of the setup and different posible scenarios once the trade is taken.

[Guest forsearch]

 

 

Another question. If you develop a method that is rigorously defined and profitable, shouldn't it, almost by its definition, be able to be automated?

 

Yep. And the fact that many of them aren't is due to the discretionary, subjective factor of trading.

[brownsfan019 17]

Another question. If you develop a method that is rigorously defined and profitable, shouldn't it, almost by its definition, be able to be automated?

 

If the method is simply buy when XYZ happens, then sure. But that's only if you are able to program what XYZ is.

[jonbig04 10]

I certainly am not. It just seems like it should be possible.

 

 

 

The frustration is mounting! I do 40 tests and then realize something wasn't well defined enough. So now I have to go back with the definition and do them all over again. Damnit. :crap:

[Jaronimo 10]

Shouldn't I be trying to find out why? Why is price behaving this way in the context of the overall picture? Or does that matter? It seems like it should matter in that understanding the market (human behavior) is our over all goal, right? Maybe its not so important in the system of a day-trader, but honestly I hate that description of what we do (or try to do). Day trading to me should be just a stop on the way to really understanding how the market works: fear, greed and their relationship to supply and demand. Thoughts? Is the "why" important?

 

 

Another question. If you develop a method that is rigorously defined and profitable, shouldn't it, almost by its definition, be able to be automated?

 

Why? Good luck with that. You will never know why something happens. Those 2,000 NQ contracts that were just sold, were they a fund manager with a negative bias on the NQ? Another fund manager that is taking profits because his target was reached? Or maybe its 2,000 individual traders going short 1 contract because they watched Cramer on MSNBC and he said go short? Or maybe he said go long and they are fading him?

 

You also have to keep in mind that for every one of those 2,000 contracts sold short, there is someone who is buying them. There is always someone on the other side of every trade. Usually someone with the exact opposite view of the current market conditions. Why does that happen? How can two people with the same information (supposedly the same information) have two completely different views of the current conditions?

 

The markets are not rational. People do some looking, form a quick opinion, and then justify that opinion with other facts. You see what you want to see.

 

You will never figure out why the market does what it does. You can get an understanding of the overall market and understand what it will do in certain circumstances, but why is a different story. The market has emotion and greed mixed up in there and when that happens people do irrational things. Even highly paid traders and fund managers fall prey to emotions and greed. How can you possibly know what they are doing and why?

 

I can't figure out why my wife does what she does, how can I figure out the markets, when I don't know 99.999% of the people trading there? You would think I could figure out the wife, after all we have been together more than a decade and she does not have a job other than staying home to take care of the kids, and I have not left the house to work or go to an office for almost 18 years. We spend an incredible amount of time together. I know what she will do most of the time, but I don't have a clue why.

 

I say don't worry about why. Although thats just my opinion and I could be wrong.

 

ps: as far as automation goes, in theory it should be easy. In practice it is hard as hell. You need to write it out as if you were explaining it to a 3 year old kid who knows nothing. You may think something is very simple because you understand it, but when you try to explain it with absolute clarity you run into problems. Then you have to convert it into another language that the computer understands. How easy would it be to convert this paragraph into understandable Mandarin Chinese?

 

Its usually possible, but it will take some effort. These boards are filled with people that took years to automate their trades successfully. Then there are others that gave up after a few years and stick to manual execution. Don't let my thoughts discourage you from doing it, just use them as an understanding that it may not be as simple as it seems.

[brownsfan019 17]

This new thread might give you an idea or two to work with.

[jonbig04 10]

Why? Good luck with that. You will never know why something happens. Those 2,000 NQ contracts that were just sold, were they a fund manager with a negative bias on the NQ? Another fund manager that is taking profits because his target was reached? Or maybe its 2,000 individual traders going short 1 contract because they watched Cramer on MSNBC and he said go short? Or maybe he said go long and they are fading him?

 

You also have to keep in mind that for every one of those 2,000 contracts sold short, there is someone who is buying them. There is always someone on the other side of every trade. Usually someone with the exact opposite view of the current market conditions. Why does that happen? How can two people with the same information (supposedly the same information) have two completely different views of the current conditions?

 

The markets are not rational. People do some looking, form a quick opinion, and then justify that opinion with other facts. You see what you want to see.

 

You will never figure out why the market does what it does. You can get an understanding of the overall market and understand what it will do in certain circumstances, but why is a different story. The market has emotion and greed mixed up in there and when that happens people do irrational things. Even highly paid traders and fund managers fall prey to emotions and greed. How can you possibly know what they are doing and why?

 

I can't figure out why my wife does what she does, how can I figure out the markets, when I don't know 99.999% of the people trading there? You would think I could figure out the wife, after all we have been together more than a decade and she does not have a job other than staying home to take care of the kids, and I have not left the house to work or go to an office for almost 18 years. We spend an incredible amount of time together. I know what she will do most of the time, but I don't have a clue why.

 

I say don't worry about why. Although thats just my opinion and I could be wrong.

 

ps: as far as automation goes, in theory it should be easy. In practice it is hard as hell. You need to write it out as if you were explaining it to a 3 year old kid who knows nothing. You may think something is very simple because you understand it, but when you try to explain it with absolute clarity you run into problems. Then you have to convert it into another language that the computer understands. How easy would it be to convert this paragraph into understandable Mandarin Chinese?

 

Its usually possible, but it will take some effort. These boards are filled with people that took years to automate their trades successfully. Then there are others that gave up after a few years and stick to manual execution. Don't let my thoughts discourage you from doing it, just use them as an understanding that it may not be as simple as it seems.

 

 

As usual, this makes perfect sense. I suppose there is a part of me that just wants to rationalize everything. Automation seems like it would be very hard. I know I couldn't do it. It just seems to me that if your method is clearly defined, it should at least be possible. I was more curious than anything.

 

On a side note, I'm working with trendlines right now and I'm doing a little math and finding the points per hour that the particular trend yielded as a way of comparing them to each other. Does anybody else do this? I'm not sure if it will be a good way to compare yet, but it seems logical.

[jonbig04 10]

On a side note, I'm working with trendlines right now and I'm doing a little math and finding the points per hour that the particular trend yielded as a way of comparing them to each other. Does anybody else do this? I'm not sure if it will be a good way to compare yet, but it seems logical.

 

 

 

Trend lines are a little too slow for what I need them to do. I'm going to try a few other things. Maybe S&D lines, or some combo etc...

[atto 20]

Trend lines are a little too slow for what I need them to do.

Mind elaborating on this?

[jonbig04 10]

Sure. i don't want to bore you guys with the details, but this actually would be a part of step 1 in my plan. Stupid I know, because I have a lot of progress on step 2.

 

When I first did it I used a combination of HHs or LHs and it seemed to work very well in defining the prevailing trend, but when I looked back at the HH and HLs I had marked they weren't HHs or HLs per se, they were actually significant HHs or HLs. Meaning price had retraced 3 or 4 times but each consecutive HH was higher than the previous HH. If that makes sense. They were also HH's that you could connect together using a straight line without going through any other prices. What I had drawn, without knowing it, were supply and demand lines. I think. The problem was I drew what I drew in the context of the chart, when obviously in real time I don't know what the rest of the chart is going to looks like. So now I'm going back and looking at the lines I drew and I'm trying to find a connection between them that I could actually see in real time. Its just a hurdle I guess.

[jonbig04 10]

Sure. i don't want to bore you guys with the details, but this actually would be a part of step 1 in my plan. Stupid I know, because I have a lot of progress on step 2.

 

When I first did it I used a combination of HHs or LHs and it seemed to work very well in defining the prevailing trend, but when I looked back at the HH and HLs I had marked they weren't HHs or HLs per se, they were actually significant HHs or HLs. Meaning price had retraced 3 or 4 times but each consecutive HH was higher than the previous HH. If that makes sense. They were also HH's that you could connect together using a straight line without going through any other prices. What I had drawn, without knowing it, were supply and demand lines. I think. The problem was I drew what I drew in the context of the chart, when obviously in real time I don't know what the rest of the chart is going to looks like. So now I'm going back and looking at the lines I drew and I'm trying to find a connection between them that I could actually see in real time. Its just a hurdle I guess.

 

 

 

Oh sorry, about the trend lines. I was trying to identify the trend by connecting 3 or 4 HH with a straight line, without going through any other prices. Then I would use that line to make a right triangle and I would measure the trendline (hypotenuse) and come up with the points per hour that it yeilded and with that hopefully find out which trends produced the most RETs, but it didnt really work out

[daedalus 10]

you did draw great lines... now just imagine extending those lines out as trendlines... look at where they intersect in the future and you'll see they can be used to point turning points of long and short bias.

 

[jonbig04 10]

Wow thats interesting. Another factor that I will be checking for any consistency, Thanks.

[jonbig04 10]

I only spent about 2 or so hours today on my system. I was kinda burned out. My brain was fried and I was making stupid mistakes. I gave it a rest for the remainder of the day, but will be back at it tomorrow.

 

 

For some reason I can go fine with no sleep for a day, but getting 4 hours a sleep 2 days in a row messed with my head. Strange.