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MadMarketScientist

Anyone else Share This Problem?

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As we've been discussing silver in the other thread an interesting question was asked to me:

"Originally Posted by BlowFish

Are you anticipating $32 ? Just wondering why you would hold long through such a dump?"

 

My reply was something like

"when I am long something, I never sell all with the intention of buying more later. Instead I will sell some of the position, hold the rest, and buy more when its lower. I know mathematically this is not the 'optimal' trade but it works for me mentally. I think it has to do with the 'out of sight, out of mind' mentality I have. So if I'm out of a position I tend to not watch it anymore and move onto something else. Maybe I'm watching too many things? "

 

It appears I may be lacking focus and always jumping onto the next thing? Instead of being an expert in EUR\USD forex, emini futures, etc., I'm just trying to find trades everywhere. What does everyone here do? Are you focused in a niche and dive deep into it or are you scanning for trades everywhere?

 

MMS

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Preface: The perspective from which my response is coming = ADHD. Don’t know which type or mixture of types of ADHD it is and it’s not serious enough to require medication (which I would resist anyway), but it does result in tendencies that I have had to grow and develop. I used to ‘fight’ with it. Then I started to see the advantages and opportunities nascent in that cluster of traits. That’s how I relate to “It appears I may be lacking focus and always jumping onto the next thing” . The best thing I can say is that’s just the way some people are! Find a way to leverage it! Also, it mellows with age… instead of forgetting a mkt when I took a position off, hell I used to put positions on and then forget them - for weeks once when I had originally planned to hold it for less than 24 hours.

 

Over the years, a rough schedule evolved to accommodate these tendencies and roughly 2 hour ‘focus and energy’ limits in my trading.

Early AM – Forex ‘scanning’ (your word not mine ;) ~16 instruments on .5 to 4 hr charts

9 – 11 AM – my am daytrading session in ndxs. Only work one mkt, but sometimes add NQ trades

11 - whenever – typically ‘scanning’ / working longer term trades unless conditions are compelling to stay in the daytrading session all day… I can enjoy two or three of those a month, then it gets old.

2 - 4 PM If I’m still around, more day trading. Always seem to “jump onto” looking at financial for good setups

After 4 PM + if I open a platform, it’s usually to lift FX trades or move orders, but occasionally will trade for a while if it happens to be a particularly active asian session. Post Japan earthquake good recent example of that...

 

For most traders, the stock advice would be to focus on one niche (and maybe automate the 'scanning')

 

For you , re “Are you focused in a niche and dive deep into it or are you scanning for trades everywhere”

my answer to you is Find a way to do BOTH! Hope this is helpful...

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I started off with the intention of only day trading EUR/USD. However after spending some time doing that I realised that it wasn't working so tried switching to daily chart based trading which is more profitable and better psychologically for me. However as a result I found it very boring to just analyse one pair once a day so look at 8 pairs to keep mentally stimulated, placing trades that fulfil enough signals. The downside of this I discovered today when I managed to miss the massive moves in eur pairs because despite seeing the same move in different eur pairs, I didn't place even my "best option" trade, due to a lack of confluence in signals on individual charts. Still wondering if this was a wise move. Would the trades have been impluse trades?

 

N.b. MMS despite not being able to afford silver trades I'm still analysing it daily...

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I now almost exclusively daytrade the ES - however this doesn't mean I have to trade every day.

If nothing sets up in my trading window of 9.30am > 12.00am est, then I don't trade.(Unless I stray from my plan with an impulse trade - fortunately happens rarely) I don't look across different markets trying to "find a trade".

 

My background is in FX and running (daytrading) positions in several different ccy pairs wasn't really an option due to another trader running that book (eventhough it was often said "feel free to take a position in my ccy if you have a view" it never really happened), plus lack of focus etc.... so I've continued to focus on trading in one market.

 

Each to their own.....

 

Cheers

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I trade a lot of stocks, and a few futures and FX (trying to automate these a bit more) there is also an essential element that you have to aware of and I would say guard against.

If trying to cover a lot of instruments, you need a filter to only take the best of the best when the trade arises, and limit yourself to how many new and open positions you have. Too often I have woken up and found I have 30-40 positions on, and thats usually when you loose.

A friend (and something I should theoretically do more of) just limits himself to a maximum of 6-7. The difference in PL shows whats happens - when times are good, I make more money as I have more positions, more exposure and less individual instrument risk, when times are bad I give more of it back usually due to high correlation of stocks, while he is far more consistent.

2-3 months ago was great :).....Presently I wish I had more consistency...:(

 

(I know where this mentality for me comes from - as a market maker you might have done 100-200 trades a day of varying sizes, and other days you would struggle to stay awake....so I prefer to be either on or off - I am with Zdo - accept who or what you are and work with it)

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Think up a list of possible things and ways to trade. List the PROS and CONS. Narrow the choices down to 3 of the best possibilities. Then scrutinize the 3 best possibilities. Compare and contrast the detriments and benefits.

 

  • Effort versus Benefit
  • Opportunity Costs
  • Potential Dangers
  • Potential Opportunities
  • Personal Limitations
  • Personal Abilities

 

As with anything, there will be trial and error. Each person probably processes information differently. Trading is about processing information, and filtering for possibilities. Ultimately, I look for why the price did what it did.

 

I do not like looking for something to trade. I want to know everything I can know about what I trade. I'd rather trade a slow moving market, with little profit potential, and know what I'm doing, than trade something I know nothing about.

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To me, intraday trade 1-3 products. Swing/position trade anything given the product and it's current condition meet certain predefined criteria. There's nothing wrong with wanting to catch markets which are trading really well so long as you don't load up so your intraday trading really doesn't matter. Unless of course that's your primary style.

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MMS, Was in here Sunday morning waiting for a tee time and was thumbing through J.M.Hurst's book and thought of you when I read this…

 

THE MOST DOLLARS IN THE LEAST TIME

To maximize profits… We must measure success in investing in terms of profit per unit time over the entire time of investment activity. To maximize this we must maximize percent per year return on each trade and approach 100% time usage of our funds as closely as possible…

 

… improved timing permits shortened trades…

 

… the nature of compound interest law is such that the overwhelming contributor to capital growth by this means is… How often the compounding takes place. In short – how short the trades are…

 

 

… but how do we go about keeping funds working all the time if we’re hopping in and out of trades every time we turn around. The answer is rapid selection and analysis… maintain a number of issues ready to go at all times – so that when one trade ends there will be a minimum lapse of time before the next starts… for psychological reasons the timing techniques to be developed must be such as to provide objective signals, created by actual price action…

 

… in pulling them all together, we find that we require:

1. A profit-optimizing investment philosophy, the elements of which include:

> Trading – as opposed to investing.

> Maximization of percent per year yield on each trade.

> Maximization of percent of time invested

> Minimization of trade interval

> Optimization of transaction timing

 

2 Fast and simple issue selection.

3. Fast and simple transaction timing analysis

4. Accurate and timely… price tracking

 

nothing new… TadeWinds summarized it even better above...

just confirms… leverage up that “scanning”!

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MMS, Was in here Sunday morning waiting for a tee time and was thumbing through J.M.Hurst's book and thought of you when I read this…

 

 

nothing new… TadeWinds summarized it even better above...

just confirms… leverage up that “scanning”!

 

HA so I'm taking the right approach ... just need to refine the methods I'm using ;)

 

The take-away, at least for me, is that I need to create a better process and find better tools to help me. For example, instead of keeping money in a trade I *know* is going down (e.g. silver) so that its still in my mind, I should find a tool that helps me keep a watch on these trades. Something more robust than a simple watchlist - like a trade management system or something like that. I guess I have work to do ... its all about the process ...

 

MMS

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For example, instead of keeping money in a trade I *know* is going down (e.g. silver) so that its still in my mind, I should find a tool that helps me keep a watch on these trades.

 

MMS

 

I often have to ask my self the question - Do i need to be here, is my money better invested elsewhere - even in cash? I even sometimes just get out of a number of trades clear the mind and know that if with no positions I can very easily put them back on again (often at a better price). Clearing everything out can work wonders - I probably do it three to four times a year.

 

In your case MMS, as a suggestion the simplest tool for the silver.....exit the trade, and then enter two orders that will force you to watch it - or at least keep in on your watch page....

1st trade a buy limit below the current price at a level you would be happy with, 2nd a stop limit buy order above the current price (this can be trailed down if the market falls)

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MMS,

 

Ask your self what your method is and then create a checklist (if you can). Then no matter what number of charts you are looking at you'll have a criteria. This way if you move from Corn to Silver all you have to do is go through the checklist and see if the criteria to enter is there, if yes then enter, if no then skip and move on.

 

If you have a different method for different products (grains, fx, metals, etal) create a checklist for each one. When you're looking at Corn use the Grains Checklist, when you're looking at Silver use the Metals Checklist etc.

 

Also if I might add, if a trade is going against you it is OK to exit only if it is in your method to do so.

 

Make sure you know what market conditions your method works in. If it only works in one market condition then only trade when that condition is present (no need to dump the whole method). For example, my method doesn't work in all market conditions, so I stay out until the market condition that is optimal for me is present.

 

I hope this helps you. I wish you all the best of luck. Also, don't just consider day trading you can use 4hr or Daily charts. Remember that is where the trends are strongest.

 

V.

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