Quit Job to Watch DOM.

[SunTrader 10]

  lastninja2 said:

I could get my old job and learn on the side... if only there were 48 hours in each day instead of 24.

When, not if, your 20k GBP shrinks below a certain level you might feel differently.

[SunTrader 10]

  Lornz said:

I find it annoying when people wrongly speak in absolutes. It is not factually correct to claim that it "will take years", thus I find it to be nonsense.

 

Most will not make it even if they spend 20 years, while others will pick it up in a couple of months.

For my 15 years of trading I have often heard of a 90%+ failure rate. Ok so of course it is not possible to reach 100% but damn close to me at least to be called a kind of absolute.

 

I have also never (again an absolute) come acrross a trader who learned in a few months what they needed to know that has consistently made money from that point on for a long career. Made a sh*tpile of money and blowed up months later. Yes. Fairly typical.

 

Any job worth doing is worth doing right which means continuosly learning and getting better. It doesn't happen overnight or weeks or months.

[clmacdougall 11]

  BlueHorseshoe said:

I personally no longer use or a fixed profit target or stop-loss when trading, and I agree with you that this can be the optimal solution for many systems.

 

While I can assure you that I have thought about (and researched) this point thoroughly, I may of course be completely wrong! What I am looking for is someone to provide convincing proof that I am wrong - I then won't hesitate in re-evaluating my stance on scaling out.

 

I disagree with the third point you make above - you need the ability to SUBTRACT contracts when you experience a drawdown. Any trader has the option of adding contracts when increased capital justifies doing so.

 

A higher target will typically pay off more, but get hit less often, and the lesser target will pay less and get hit more frequently. Are the two equivalent in terms of their perfomance? I would argue that this seldom proves to be the case: one will always perform better than the other, and this is the target that would ideally be used.

 

 

I am dabbling with a non fixed price target structure when trading. Could you please tell me just a little bit about how you discovered this, if it's not too much to ask, Thank you. Cory

[Lornz 10]

  SunTrader said:

For my 15 years of trading I have often heard of a 90%+ failure rate. Ok so of course it is not possible to reach 100% but damn close to me at least to be called a kind of absolute.

 

I have also never (again an absolute) come acrross a trader who learned in a few months what they needed to know that has consistently made money from that point on for a long career. Made a sh*tpile of money and blowed up months later. Yes. Fairly typical.

 

Any job worth doing is worth doing right which means continuosly learning and getting better. It doesn't happen overnight or weeks or months.

 

Your personal experiences are irrelevant. There are examples of traders being consistently profitable after a few months. If you'd ever been in the vicinity of a reputable trading desk or prop firm, you would've gotten that confirmed. I am in no way claiming that they know "everything", but they manage to make enough money to avoid keeping a job on the side.

 

The OP had a already been at it for 6 months, so I don't think it would be outrageous for him to be close to becoming profitable by now. I find it more outrageous that someone would emphatically claim that it will take years. There's no reason to assume that. In fact, I would rather claim (based on anecdotal evidence) that most traders, whom are actually suited for this profession, become profitable within a year. But that's the truth no one wants to hear, I guess...

 

Your last sentence is dead on, of course.

[raul 10]

Lastninja,

Your post did not ask for advice but I think you can save yourself a lot of heartache and financial losses if you concentrate on reading price action on charts, forget the DOM, your brain does not work like a computer, storing and remembering numbers, a chart gives you a bigger picture of where prices have been and where they may be headed.

 

If you could trade the US market, concentrate on the hours between 8:30AM and 10AM (Central Time-Chicago) you could start at 7:30 also but that period of time has a better defined trend and cleaner reversals. Learn as much as you can about the Opening Range and trade against the support and resistance of the Opening Range. Learn your candles also, mainly reversal patterns: doji, engulfing candles, hammers, you only need a few.

[Tams 20]

  Lornz said:

I find it annoying when people wrongly speak in absolutes. It is not factually correct to claim that it "will take years", thus I find it to be nonsense.

 

Most will not make it even if they spend 20 years, while others will pick it up in a couple of months.

 

your ignorance is just as annoying.

Your personal experiences are irrelevant.

[clmacdougall 11]

  Lornz said:

Your personal experiences are irrelevant. There are examples of traders being consistently profitable after a few months. If you'd ever been in the vicinity of a reputable trading desk or prop firm, you would've gotten that confirmed. I am in no way claiming that they know "everything", but they manage to make enough money to avoid keeping a job on the side.

 

The OP had a already been at it for 6 months, so I don't think it would be outrageous for him to be close to becoming profitable by now. I find it more outrageous that someone would emphatically claim that it will take years. There's no reason to assume that. In fact, I would rather claim (based on anecdotal evidence) that most traders, whom are actually suited for this profession, become profitable within a year. But that's the truth no one wants to hear, I guess...

 

Your last sentence is dead on, of course.

 

Your examples and anecdotal evidence are irrelevant. You are speaking from an experience that is also merely your own.

I don't think it is outrageous to assume that a profession takes a number of years to properly train oneself for. It is happening at universities and colleges all around you. To keep the gentleman who began this thread from risking too much in order to attempt to make quick work of his education as a trader is responsible/good advice.

The exception may indeed be true as you say, but chances are that he, like most of us, may not be the exception, but he may in fact be the rule.

Armed with this he may, like many of us, not give up when his aspirations don't quickly manifest. Your advice was much to the contrary, you said if he couldn't attain his goal in a year he was probably not suited for the challenge, not very encouraging and who knows you might be putting down someone who with a little bit more time might learn what is necessary to be a full time trader.

[Lornz 10]

  Tams said:

your ignorance is just as annoying.

Your personal experiences are irrelevant.

 

Yes, I was deliberately contradicting myself; it was a joke. I'm glad it went over your head.

 

It is your ignorance that is showing. People read a couple of TA books and think they know anything about the trading world. What I have said is absolutely correct, but most does not have the opportunity to meet any true traders.

[Lornz 10]

  clmacdougall said:

Your examples and anecdotal evidence are irrelevant. You are speaking from an experience that is also merely your own.

I don't think it is outrageous to assume that a profession takes a number of years to properly train oneself for. It is happening at universities and colleges all around you. To keep the gentleman who began this thread from risking too much in order to attempt to make quick work of his education as a trader is responsible/good advice.

The exception may indeed be true as you say, but chances are that he, like most of us, may not be the exception, but he may in fact be the rule.

Armed with this he may, like many of us, not give up when his aspirations don't quickly manifest. Your advice was much to the contrary, you said if he couldn't attain his goal in a year he was probably not suited for the challenge, not very encouraging and who knows you might be putting down someone who with a little bit more time might learn what is necessary to be a full time trader.

 

I largely agree. My only grievance was that you said that it will take years, that's all.

 

I do stand by my assertion that most capable traders figure it out rather quickly. This is only pertaining to PA trading and/or scalping, of course. Other, more complicated forms of trading, could take years of work.

 

Have a nice evening.

[clmacdougall 11]

  Lornz said:

I largely agree. My only grievance was that you said that it will take years, that's all.

 

I do stand by my assertion that most capable traders figure it out rather quickly. This is only pertaining to PA trading and/or scalping, of course. Other, more complicated forms of trading, could take years of work.

 

Have a nice evening.

 

It will take years.

 

Have a nice evening

[Lornz 10]

  clmacdougall said:

It will take years.

 

Have a nice evening

 

Only if one's a slow learner...

[BlueHorseshoe 10]

  clmacdougall said:

I am dabbling with a non fixed price target structure when trading. Could you please tell me just a little bit about how you discovered this, if it's not too much to ask, Thank you. Cory

 

Hi Cory,

 

I'm sure that you probably already know most of the common methods for doing this - basically using any kind of dynamic, adaptive indicator, such as ATR, Standard Deviation, or even a moving average to provide a target and stop.

 

Personally, I tend to rely entirely upon overbought/oversold indicators to make trading decisions. I use the same indicator that gave me an entry signal to provide an exit signal - this will give the exit signal the same regardless of whether I exit the position for a profit or a loss.

 

An example of a long position when the long term market trend was upward would be something like:

 

- Entry: On the close when the Commodity Channel Index falls below -100.

 

- Exit (for profit or loss): On the close when the CCI rises above 0.

 

Therefore I don't know my exit when I enter a position. Because the CCI is an indicator that adapts to changing market conditions, so will my exit criteria.

 

Please note that I also use a 'catastrophe' stop - an actual hard stop placed in the market in case of extreme events. This has only ever once been hit (and if it hadn't been there, I would actually have exited at a better price), when the markets came off at the end of last summer. Also note that I swing trade - this type of approach will work intraday, but with far greater volatility of returns.

 

I hope that answers your question and is some help to you in your trading.

[clmacdougall 11]

Thank you so much for your kind reply!! I see now what you were referring to in your previous post. Do you find your indicator of choice to be the CCI?

[SunTrader 10]

  Lornz said:

A) Your personal experiences are irrelevant.

 

B) There are examples of traders being consistently profitable after a few months. If you'd ever been in the vicinity of a reputable trading desk or prop firm,.........

 

In fact, I would rather claim (based on anecdotal evidence) that most traders, whom are actually suited for this profession, become profitable within a year. But that's the truth no one wants to hear, I guess...

 

A) But yours are??

 

B) That is different. When I am posting on a trading forum such as this and referring to a trader I guess I should be more plain and specify "private individual trader". Wall Street employs traders and therefore trains them their way.

 

Comparing the two is apples and oranges.

 

For many years I worked in and around Wall Street, Mid-Town Manhattan and Westchester in a related industry. This isn't an opinion I came to from reading stuff posted on the web.

 

C) The truth most want to believe is - just work hard and learn and yes you too can make a million dollars. Stats that have been thrown around since the days of Reminiscences of a Stock Operator don't bear that out.

 

Believe want you want.

[lastninja2 10]

Thanks for all replies.

 

It seems this thread has gone as it can do, for the time being.

 

I will report back later in the year when I might have some convincing results (be they good or bad) to share.

[Whidbey Island 10]

Nice video's, there are clues on your dom to where you should have managed the trade, I've studied & programmed everything you can imagine, then some plus a little (for over 12 years). That being said I've traded now for 5yrs consistent. 99.9999% of what you hear & read is B.S I've rarely read a published book that yielded good info. If you take a course ask for a p/l statement SEVERAL (broker statements). Don't trust anyone peddling their wares. Look at what the "pro's" use & I'm not talking about the so called pro's that sell their bski to retail for a buck...... What inter day traders make money? Paul rotter? Cohen? Who else? How about prop houses?? How many prop houses trade interday using price & indicators only. How about prop houses that trade with only price & levels only? Do your research.... Of the hundreds of traders I've known and workshops I've attended I've witnessed 2 traders that actually made money trading from the screen at home consistently I saw their statements & watched them trade (not including prop shop traders) . I've known many who traded on the floor profitably but that's another discussion.... Learn to deal with your emotions, Risk & management because at the end of the day there are only so many things we can control / manage.. I hope this helps I don't go into forums like I used to, I now focus on my quality of life when I'm not trading or studying.

[Lornz 10]

  SunTrader said:

A) But yours are??

 

B) That is different. When I am posting on a trading forum such as this and referring to a trader I guess I should be more plain and specify "private individual trader". Wall Street employs traders and therefore trains them their way.

 

Comparing the two is apples and oranges.

 

For many years I worked in and around Wall Street, Mid-Town Manhattan and Westchester in a related industry. This isn't an opinion I came to from reading stuff posted on the web.

 

C) The truth most want to believe is - just work hard and learn and yes you too can make a million dollars. Stats that have been thrown around since the days of Reminiscences of a Stock Operator don't bear that out.

 

Believe want you want.

 

 

No, mine are as irrelevant as yours.

 

There is nothing stopping anyone on this board from approaching a reputable prop firm and receiving decent training.

 

However, the simple fact is that if we are referring to price action trading, which is among the most popular approaches on online message boards, it all comes down to pattern recognition and intuition. It's more of an innate ability than something learned, but one, of course, needs a little time to cultivate one's predisposition.

 

It is factually incorrect to state that it "will take years", and I felt compelled to clarify that.

[DionysusToast 10]

  BlueHorseshoe said:

Hi DionysusToast,

 

I have certainly seen pretty convincing evidence for scaling into positions, even the controversial practice of 'averaging down' . . . But I have never seen any objective system that benefits in terms of overall profitability from the scaling out of profitable positions. Can you put forward a mathematical argument for this?

 

Yes, you may know people who make money scaling out - the trader in my original example made money - just less than they would if they hadn't scaled out. Are the people you know who make money scaling out able to provide any hard evidence that their performance would have been poorer if they hadn't scaled out?

 

My challenge still stands - I defy anyone on this forum to provide hard evidence of any strategy that benefits from the scaling out of profitable positions.

 

We won't agree on this because I don't think trading is either objective or mathematical.

 

I am a discretionary trader. The guy I know that scales out (Joel Parker) is a discretionary trader. It's a subjective skill. Math has no place there.

 

Like I say, different techniques suit different people.

[TimRacette 11]

Blue, I agree with small contracts scalping is absolutely not the way to go, that's not what I was eluding too, but if you have 2 contracts with the ability to take one off at a profit target of say 2:1 or 3:1 and trail the remaining contract the gains can really add up.

 

If you're trading say a 5 lot on the 6E and take 1 contract off at +4 moving your stop to -4, you significantly reduce your risk on the position. This small first target will have a much higher percentage of getting hit than your larger target and in the long run the reduced risk positions help reduce losses.

[BlueHorseshoe 10]

  clmacdougall said:

Thank you so much for your kind reply!! I see now what you were referring to in your previous post. Do you find your indicator of choice to be the CCI?

 

Hi Cory,

 

I gave the CCI as an example really (preferring to avoid revealing exactly how I trade!), and I don't use it in my own trading, but I have backtested this before and it does perform well. Basically, most overbought/oversold indicators can provide an edge in this way if their length settings are greatly reduced. I would recommend avoiding Stochastics though, as for some reason it doesn't perform as well.

 

Another thing to be aware of is that there is an asymmetry to performance. I know that many eminent traders have argued that their is no justification for a system that has an inbuilt bias towards long or short positions (either Dennis or Eckhart has a real rant about it in one of the Market Wizard books), and this is probably the case for most systems in most markets. However, in the stock indices there is a very clear and easily demonstrable tendency for long positions to outperform short positions with this type of strategy. In other words, the tops of upward corrections in long term downtrends tend to be harder to identify than the bottoms of downward corrections in long term uptrends. It isn't too hard to guess why: in stocks buyers are quick to step in when they see 'bargain' prices, whereas the indices tend to top out due to lack of buying interest more so than due to increased selling pressure.

 

This can justify asymmetrical settings for the indicator you're using (eg. Buy if the CCI falls below -100, but Sell only when the CCI rises above 130). What's more, this asymmetry applies more to the values of exits parameters than it does to entry parameters, and exits where what your original question was about . . .

 

Basically, before you try and do anything with any of the above information, please test it thoroughly for yourself!

[BlueHorseshoe 10]

  Whidbey Island said:

Nice video's, there are clues on your dom to where you should have managed the trade, I've studied & programmed everything you can imagine, then some plus a little (for over 12 years). That being said I've traded now for 5yrs consistent.

 

I totally agree with the sentiment of your post. However, finding people who are consistently profitable in their trading, who are willing to provide evidence of this, and who are willing to give any kind of mentoring or guidance to new traders, is extremely difficult.

 

I think we are at a far greater disadvantage in this respect than traders in previous decades: twenty years ago if you were really serious about becoming successful then you moved to Chicago, leased a seat at one of the exchanges for a few months, and gained instant access to some of the most profitable traders in the world.

 

What is the equivalent of that in 2012 for the screen trader?

[BlueHorseshoe 10]

  DionysusToast said:

We won't agree on this because I don't think trading is either objective or mathematical.

 

I am a discretionary trader. The guy I know that scales out (Joel Parker) is a discretionary trader. It's a subjective skill. Math has no place there.

 

Like I say, different techniques suit different people.

 

I totally agree with what you're saying here. Discretionary trading is a different matter entirely, and if you can make scaling in, out, or just about anything else work, on a discretionary basis, then that's great. Personally my own initial attempts at discretionary trading were dismal to say the least, and I have been deeply envious since of anyone with any kind of intuitive knack for trading. My suspicion that it is far harder to trade intraday without this knack was one of the reasons that I moved to longer term systems where mechanical approaches work well.

[BlueHorseshoe 10]

  TimRacette said:

Blue, I agree with small contracts scalping is absolutely not the way to go, that's not what I was eluding too, but if you have 2 contracts with the ability to take one off at a profit target of say 2:1 or 3:1 and trail the remaining contract the gains can really add up.

 

If you're trading say a 5 lot on the 6E and take 1 contract off at +4 moving your stop to -4, you significantly reduce your risk on the position. This small first target will have a much higher percentage of getting hit than your larger target and in the long run the reduced risk positions help reduce losses.

 

Hi Tim,

 

Whist I can see why this would reasonably appear to be the case (I even did it myself for a while), I am totally convinced that if you do the maths (or better still, get a computer to do the maths), over a significant number of trades you will find that it does not enhance performance.

 

Trailing a stop only reduces your risk after you have trailed it. Your initial risk is unaffected. So what you need to pay attention to is how many times the position moves against you without ever giving the opportunity to trail the stop loss and reduce the initial risk.

 

Trailing stops is another topic entirely, but once again, I would argue that they significantly reduce the performance of a trading system. Even the performance of very long term trend following systems is inhibited by the use of trailing stops, and for traders, who have to work around intraday volatility they can be lethal.

[clmacdougall 11]

  BlueHorseshoe said:

I totally agree with the sentiment of your post. However, finding people who are consistently profitable in their trading, who are willing to provide evidence of this, and who are willing to give any kind of mentoring or guidance to new traders, is extremely difficult.

 

I think we are at a far greater disadvantage in this respect than traders in previous decades: twenty years ago if you were really serious about becoming successful then you moved to Chicago, leased a seat at one of the exchanges for a few months, and gained instant access to some of the most profitable traders in the world.

 

What is the equivalent of that in 2012 for the screen trader?

 

An excellent post and question!! So far for me it has been a logical progression from reading well over 100 books on trading and thousands of articles. To an immense amount of thought about what it really is I am attempting to uncover and achieve as a trader.

I am learning to shape my education around a style of trading that removes as much subjectivity as possible, while still realizing that speculation is about risk. My studies are about approaching the markets with as much removal of that risk as is possible while still being open to opportunities that fit my make up.

[SunTrader 10]

  Lornz said:

...... I felt compelled to clarify that.

Well IMO you failed to. You just did what I did, gave an opinion.

 

BTW how long have you been trading?