Quit Job to Watch DOM.

[TheNegotiator 13]

I would reckon start out by learning to swing trade. That way, you keep your income and you can learn over time. Longer timeframe trading has parallels with day trading and when you are ready, if that's still what you want to do, move to day trading.

[Lornz 10]

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

 

BTW how long have you been trading?

 

I was stating that I have evidence to the contrary. If you fail to believe me, that's your problem -- not mine.

 

I've been trading for about 9 years. I both position, swing and daytrade. I've been profitable since year one.

 

I don't want to waste my time arguing. It is factually incorrect to state that it "will take years".

If some can't comprehend that it's impossible to make such a claim, then I wish them all the best.

[SunTrader 10]

I was stating that I have evidence ....

Well I can state I have evidence too without providing any.

 

As I said, I just providing my opinion for what its worth. Obvious not much to you.

 

Most all adults in this country can get behind the wheel of a car. Most don't truly know "how to drive" though. Even less are qualified to drive in the Indy or Daytona 500. Those who can didn't learn in days/weeks or months.

 

All skilled occupations are the same.

 

Good trading. I've said enough.

[joshdance 10]

Most all adults in this country can get behind the wheel of a car. Most don't truly know "how to drive" though. Even less are qualified to drive in the Indy or Daytona 500. Those who can didn't learn in days/weeks or months.

 

All skilled occupations are the same.

 

Agree in principle that skilled occupations take time and training to learn. But funny that you mention driving. I can guarantee you that most people simply cannot be trained to be a race car driver. From the first moment I got into a car, I have just known how to drive; at least, after the initial newness of it kind of sunk in, maybe a month or so. I have always driven manual trannys, and have always taken an aggressive approach to driving. I'm no race car driver and would need to be trained as such. But I am intuitively a good driver. Much more so than other stuff I have tried. So, I think it's possible that some people simply are more naturally attuned to certain activities. Doesn't mean we don't need some kind of training, of course.

[SunTrader 10]

Agree in principle that skilled occupations take time and training to learn. But funny that you mention driving. I can guarantee you that most people simply cannot be trained to be a race car driver. From the first moment I got into a car, I have just known how to drive; at least, after the initial newness of it kind of sunk in, maybe a month or so. I have always driven manual trannys, and have always taken an aggressive approach to driving. I'm no race car driver and would need to be trained as such. But I am intuitively a good driver. Much more so than other stuff I have tried. So, I think it's possible that some people simply are more naturally attuned to certain activities. Doesn't mean we don't need some kind of training, of course.

Agree I am similar. There are also exceptions - a few that could teach others not long after they have learned something themselves.

 

But the vast majority (which I include myself) take time to truly do something well.

 

Anyone can click a buy/sell button. And after not too long a time become proficient. But I didn't get into trading to be proficient. I did to become the best I could be which means continuing to learn, learn, learn and not downplay the journey to others.

 

Many take that as being negative. So be it.

[BlueHorseshoe 10]

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.

 

I thought it was about time that I did what I’m asking others to do, and put forward some actual figures to support my claims about the inadequacies of profitable scale-out strategies. So here are the results of testing a simple stop-and-reverse day-trading system, with various dollar profit exit methods.

 

The system sells when a 3 period moving average crosses above a 30 period moving average, and buys when a 3 period moving average crosses below a 30 period moving average (ie it ‘fades’ the MA crossover). It always trades 2 contracts, and it always uses a 4 point per contract stop-loss. The back-tests all use the @ES e-mini futures contract over a 5 year period. 30 minute bars were used. No commission or slippage has been deducted.

 

IMPORTANT: The profitability of this system is almost entirely due to the fact that the MA length parameters have been heavily optimised. It is used here as an example. Unless you want your broker to fall in love with you, please do not attempt to use it in live trading or you will most likely lose money. In the 4 months following the back-test period this system has consistently lost money.

 

Here is the performance when we scale out of one contract for a 2 point profit, and the other for a 4 point profit:

 

Total Net Profit: $60,925

Profit Factor: 1.17

Percentage Profitable: 58.7%

 

If anyone wants to see equity curves etc then let me know and I will upload them.

 

Next are the results of scaling out of the first contract for a 4 point profit, and the second contract for a 6 point profit:

 

Total Net Profit: $79,812

Profit Factor: 1.16

Percentage Profitable: 57.93%

 

Finally, we have the results of simply exiting both contracts for a 4 point profit – in other words, not scaling out at all:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

I would like to point out that the ‘un-scaled’ 4 points per contract profit target is not the optimum target (this would have been 7 points per contract, which goes some way to explaining why the 6 point late scale-out fared better than the 2 point early scale out).

 

This is why I think Tim Racette's advice in this thread to scale out is poor - I believe that you will find that what you see above repeats itself in pretty similar form for any strategy. And before anybody starts quoting Karl Popper’s falsification principle at me, I am fully aware that I can produce dozens of examples to support my argument, but that it only takes one counter example to discredit it. . .

[steve46 12]

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.

 

I have had significant experience both trading and training....what I find is that each individual takes their own time to learn based on background, education, temperment, available capital and limitations on the time they can devote to the project. Iironically those who don't "need" the money, and do not wish to become professionals....are doing very well...while those who say they are interested in achieving professional status and believe that the potential to make money is very important are by and large doing less well (breakeven or slightly better)....for those who are doing less well, I attribute this to an inability to manage emotions, and more specifically an inability to manage the idea of periodic loss...in fact at the end of this time period all of them will be asked to stop and trade on their own....in my opinion, whether they "make it" or not, will depend on their own motivation to succeed and to break through their own psychological barriers....and before anyone posts comments, I have nothing to sell....

 

Good luck

Steve

[TimRacette 11]

I would reckon start out by learning to swing trade. That way, you keep your income and you can learn over time. Longer timeframe trading has parallels with day trading and when you are ready, if that's still what you want to do, move to day trading.

 

Couldn't agree more. There's so much that swing trading teaches you when it comes to designing a system and being able to follow it exclusively. Plus, it's a great alternative to sitting in from of the screen all day and can be integrated much easier into your current lifestyle, that is, if you work a job.

[DionysusToast 10]

Couldn't agree more. There's so much that swing trading teaches you when it comes to designing a system and being able to follow it exclusively. Plus, it's a great alternative to sitting in from of the screen all day and can be integrated much easier into your current lifestyle, that is, if you work a job.

 

My opinion is totally the opposite. I have long, long, long term holdings and I also day trade. I do not swing trade,

 

I trade discretionary, I use a chart for context and I use the ladder for entry for the ES. For US treasuries, I do not use a chart, there is no need in these markets, it tells you so little as there are so few swings. The volume profile tells you where the action was and that is enough. On more swingy markets, the volume profile is less relevant and the intraday swings more relevant.

 

The skills I use to trade this are not transferrable to swing trading. Day Trading is a very specific set of skills. I cannot day trade all markets, I focus on the ES and US Treasuries.

 

At the moment, I wouldn't even know where to start on the CL. Even between different markets the skills of Day Trading are not easily transferrable.

 

As I said, my opinion is the opposite. Swing trading will not really help you to become a profitable day trader. Systems won't help you to become a profitable day trader either. The OP is on the right track. He's learning how to read the market. This is ultimately what you need to do if you want to make money intra-day. This does not mean you trade at random and it does not mean you are without rules or guidelins. It's just not systematic.

 

It's not easy BUT learning how to read the market is a lot easier embarking on a never ending quest for a mechanical day trading system which is what a lot of traders get hung up on.

 

In terms of sitting in front of the screen. I've never met a trader that made money in 15 minutes a day. It requires time & attention. I think the "sitting in front of a screen all day" argument against day trading isn't valid. Trading is hard work.

 

DT

Edited January 27, 2012 by DionysusToast

[robster970 10]

Swing trading will not really help you to become a profitable day trader.

 

I agree but I do think the converse is true - that once you've got on top of intraday swing/position trading is more obvious. Once you understand the auction, you understand the auction.

[pbylina 10]

I would reckon start out by learning to swing trade. That way, you keep your income and you can learn over time. Longer timeframe trading has parallels with day trading and when you are ready, if that's still what you want to do, move to day trading.

 

A little off topic but, what is swing trading and how do you do it?

[pbylina 10]

FWIW the best two pieces of advice I can give to any aspiring Futures Trader would be to

a) Enable trade sounds (bleeps) on MD_Trader if you use it [really get immersed in the action]

 

Thanks for the advice.

Do you hear the beeps even when your computer is off?

[onesmith 10]

Thank you lastninja2.

 

lastninja2, or anyone else who might know the answer to this,

 

What do these sound bleeps identify? Does the sound intensify as volume increases? Is this a direct result of the volume increase or a separate algorithm within the dom that increases simultaneously with volume? What I'm trying to determine is which components I would need to declare as variables? ...to create the sounds? ....or convert the sounds to a visual representation of what they are measuing?

 

Enable trade sounds (bleeps) on MD_Trader if you use it [really get immersed in the action]

[rluc99 10]

Hi BlueHorseshoe

 

Thanks for the simulation example. It appears to be a good illustration of your point, but I am slightly worried about the third case ie:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

Why is the "percentage profitable" higher in this case than in the first case. I would have thought there should be a higher percentage of targets met with the first contract at 2 points target than at 4 points, so wouldn't the overall percentage be higher in the first case than the third case? Or perhaps I am just mis-understanding the meaning of "percentage profitable"

[uexkuell 10]

I thought it was about time that I did what

I’m asking others to do, and put forward some actual figures to support

my claims about the inadequacies of profitable scale-out strategies. So

here are the results of testing a simple stop-and-reverse day-trading

system, with various dollar profit exit methods.

 

The system sells when a 3 period moving average crosses above a 30

period moving average, and buys when a 3 period moving average crosses

below a 30 period moving average (ie it ‘fades’ the MA crossover). It

always trades 2 contracts, and it always uses a 4 point per contract

stop-loss. The back-tests all use the @ES e-mini futures contract over a

5 year period. 30 minute bars were used. No commission or slippage has

been deducted.

 

IMPORTANT: The profitability of this system is almost entirely due to

the fact that the MA length parameters have been heavily optimised. It

is used here as an example. Unless you want your broker to fall in love

with you, please do not attempt to use it in live trading or you will

most likely lose money. In the 4 months following the back-test period

this system has consistently lost money.

 

Here is the performance when we scale out of one contract for a 2 point

profit, and the other for a 4 point profit:

 

Total Net Profit: $60,925

Profit Factor: 1.17

Percentage Profitable: 58.7%

 

If anyone wants to see equity curves etc then let me know and I will

upload them.

 

Next are the results of scaling out of the first contract for a 4 point

profit, and the second contract for a 6 point profit:

 

Total Net Profit: $79,812

Profit Factor: 1.16

Percentage Profitable: 57.93%

 

Finally, we have the results of simply exiting both contracts for a 4

point profit – in other words, not scaling out at all:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

I would like to point out that the ‘un-scaled’ 4 points per contract

profit target is not the optimum target (this would have been 7 points

per contract, which goes some way to explaining why the 6 point late

scale-out fared better than the 2 point early scale out).

 

This is why I think Tim Racette's advice in this thread to scale out is

poor - I believe that you will find that what you see above repeats

itself in pretty similar form for any strategy. And before anybody

starts quoting Karl Popper’s falsification principle at me, I am fully

aware that I can produce dozens of examples to support my argument, but

that it only takes one counter example to discredit it. . .

 

 

First this is not a mathematical proof (as you requested it from

others), just showing some numbers from an example.

 

 

The result of the example is in favor of the "exit all" strategy.

This is simply achieved by the parameters chosen (far from showing a

general rule or giving a proof):

 

I would like to point out that the

‘un-scaled’ 4 points per contract profit target is not the optimum

target (this would have been 7 points per contract.

 

So it is just logical that in an example where the optimum target is 7

points "scaling out" before target 7 points is inferior to "exit all" (as rluc99 understood).

 

In other words: An example was chosen where the parameters were in favor of the strategy proposed (exit all).

 

 

If one is not trading (or producing an example) in hindsight it's more like this:

1. The probality of finding a strategy that is good for just a few points is much higher than to find a strategy that is good for many points.

2. Trader enters (say with 3 contracts) when such a small target strategy that he found gives a signal

3. Trader exits 1 contract when small target reached, leaves 2 contracts, moves stop loss to break even

4. Trader lets the remaining contracts run and exits by some discretionary rules (e.g. exit 1 contract at noon, exit remaining last contract previous to close of the day....). He doesn't know where price will be by this time but once in a while he will hit a homerun.

 

That's trading without assuming one can "predict" something.

[Lornz 10]

Well I can state I have evidence too without providing any.

 

As I said, I just providing my opinion for what its worth. Obvious not much to you.

 

Most all adults in this country can get behind the wheel of a car. Most don't truly know "how to drive" though. Even less are qualified to drive in the Indy or Daytona 500. Those who can didn't learn in days/weeks or months.

 

All skilled occupations are the same.

 

Good trading. I've said enough.

 

I did not claim one could achieve mastery in such a short period of time, but I made the claim that it is possible to reach a level of proficiency where one could live off it.

 

The discussion is rather futile, at least with regard to most kinds of trading. Some have relevant degrees, others have not. Some are mathematically inclined, others detest math.

 

Just like in sports, the sciences, music, etc it is possible to be naturally suited for trading. It is probably a prerequisite for achieving mastery. For some reason most claim that trading is exempt from needing talent to excel, but it's pretty evident that they are wrong.

 

The lowest common denominator for trading is, of course, price action and/or scalping. It requires no formal education, but I would argue that it requires talent. It should not take more than a year to be able to make a living from it, if one is suited for that particular style of trading.

 

If you haven't gotten any viable ideas after watching price action for about 6 months, you are probably better off spending time pursuing other styles of trading.

 

Agree I am similar. There are also exceptions - a few that could teach others not long after they have learned something themselves.

 

But the vast majority (which I include myself) take time to truly do something well.

 

Anyone can click a buy/sell button. And after not too long a time become proficient. But I didn't get into trading to be proficient. I did to become the best I could be which means continuing to learn, learn, learn and not downplay the journey to others.

 

Many take that as being negative. So be it.

 

That is not true; most never even become proficient.

 

The few make a lot of money, while the rest are just losing money at various paces.

 

You are right about constantly adapting/learning, of course. I was not the one downplaying the journey of others...

[TheDude 10]

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?

 

LOL.

 

Not quite.

 

If you'd have walked on to the CBOT floor and asked anyone how to trade - even after a few months, the only thing you'd have learnt is that you're considered a mug. You'd have been raped. Trust me. I used to be a local.

 

Just like if you walk into any prop firm today and ask the top traders how to trade you'll probably be told to go where the sun dont shine.

 

Remember its a zero sum game less costs. Thats why no one is going to tell you sh!t unless they have a share in you're p&l. If they did tell you anything for free, you'd be taking a piece of their business/edge.

[TheDude 10]

I thought it was about time that I did what I’m asking others to do, and put forward some actual figures to support my claims about the inadequacies of profitable scale-out strategies. So here are the results of testing a simple stop-and-reverse day-trading system, with various dollar profit exit methods.

 

The system sells when a 3 period moving average crosses above a 30 period moving average, and buys when a 3 period moving average crosses below a 30 period moving average (ie it ‘fades’ the MA crossover). It always trades 2 contracts, and it always uses a 4 point per contract stop-loss. The back-tests all use the @ES e-mini futures contract over a 5 year period. 30 minute bars were used. No commission or slippage has been deducted.

 

IMPORTANT: The profitability of this system is almost entirely due to the fact that the MA length parameters have been heavily optimised. It is used here as an example. Unless you want your broker to fall in love with you, please do not attempt to use it in live trading or you will most likely lose money. In the 4 months following the back-test period this system has consistently lost money.

 

Here is the performance when we scale out of one contract for a 2 point profit, and the other for a 4 point profit:

 

Total Net Profit: $60,925

Profit Factor: 1.17

Percentage Profitable: 58.7%

 

If anyone wants to see equity curves etc then let me know and I will upload them.

 

Next are the results of scaling out of the first contract for a 4 point profit, and the second contract for a 6 point profit:

 

Total Net Profit: $79,812

Profit Factor: 1.16

Percentage Profitable: 57.93%

 

Finally, we have the results of simply exiting both contracts for a 4 point profit – in other words, not scaling out at all:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

I would like to point out that the ‘un-scaled’ 4 points per contract profit target is not the optimum target (this would have been 7 points per contract, which goes some way to explaining why the 6 point late scale-out fared better than the 2 point early scale out).

 

This is why I think Tim Racette's advice in this thread to scale out is poor - I believe that you will find that what you see above repeats itself in pretty similar form for any strategy. And before anybody starts quoting Karl Popper’s falsification principle at me, I am fully aware that I can produce dozens of examples to support my argument, but that it only takes one counter example to discredit it. . .

 

Hello again,

 

sorry, i think you've missed the point.

 

Tim R was talking about eliminating price risk quickly, leaving the trader with execution risk only. I didnt read his post as the merits scaling out or not (or am I mistaken??).

 

The quicker a new trader eliminates as much risk as possible, the easier (IMO) he/she will be able to view the market objectively.

[Whidbey Island 10]

"thedude" I couldn't agree more....

[BlueHorseshoe 10]

LOL.

 

Not quite.

 

If you'd have walked on to the CBOT floor and asked anyone how to trade - even after a few months, the only thing you'd have learnt is that you're considered a mug. You'd have been raped. Trust me. I used to be a local.

 

Just like if you walk into any prop firm today and ask the top traders how to trade you'll probably be told to go where the sun dont shine.

 

Remember its a zero sum game less costs. Thats why no one is going to tell you sh!t unless they have a share in you're p&l. If they did tell you anything for free, you'd be taking a piece of their business/edge.

 

I wasn't suggesting that you could sidle up to any local and they'd reveal exactly how they trade. I simply said that you had access to them. Are you trying to tell me that watching one of the best traders on the floor of the CBOT and trying to model them wouldn't be beneficial to most newbies?

 

If I came and stood next to you in the pits, then you wouldn't even speak to me, sure, but maybe I'd stand and watch you lose, watch how you responded to that loss, and think to myself "hmm, look at this guy, he just dealt with it calmly and now five minutes later he's got a profitable position on; last time I had a losing trade like that I just let it go indefinitely against me and hoped it would come back, maybe that wasn't the right thing to do . . ." Sounds like a learning experience to me.

[BlueHorseshoe 10]

The quicker a new trader eliminates as much risk as possible, the easier (IMO) he/she will be able to view the market objectively.

 

I think you (and plenty of others on here) are confusing 'eliminating risk' with 'eliminating the opportunity for profit'. No risk means no reward guys, there's no two ways about it. If you start jamming your stop in at break even all the time then you're not doing yourself any favours, however good it feels.

 

If you're trading systematically, then there's no need to worry about 'viewing the market objectively'. Your views of the market will become irrelevant.

[BlueHorseshoe 10]

First this is not a mathematical proof (as you requested it from

others), just showing some numbers from an example.

The result of the example is in favor of the "exit all" strategy.

This is simply achieved by the parameters chosen (far from showing a

general rule or giving a proof):

 

Of course it's not a 'proof'. No matter how many examples I provide in favour of a generalising statement of this kind, then it will still take only one single counter example to disprove it. It's called the 'falsification principle'. I made it abundantly clear in my post that I was aware of this fact. I studied the philosophy of science for three years at one of the best universities in the world, so you'll excuse my being a little short tempered with your patronising and unnecessary need to point this out.

 

So I can't provide a proof for my claim, but what I am requesting from others, a proof of the incorrectness of my claim, could be very easily provided.

 

While I can assure you that I didn't sit down and deliberately search for a set of parameters that supported my claim, it may be that I have inadvertently done so. But where are the posts from any of you giving a concrete example of where scaling out does work? You can optimise away all you want, it doesn't matter - one concrete example and I have to shut up and go away.

[BlueHorseshoe 10]

Hi BlueHorseshoe

 

Thanks for the simulation example. It appears to be a good illustration of your point, but I am slightly worried about the third case ie:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

Why is the "percentage profitable" higher in this case than in the first case. I would have thought there should be a higher percentage of targets met with the first contract at 2 points target than at 4 points, so wouldn't the overall percentage be higher in the first case than the third case? Or perhaps I am just mis-understanding the meaning of "percentage profitable"

 

Hello,

 

You're not misunderstanding 'percentage profitable' at all, so it's a very good question. It highlights something un-stated in how I backtested to get these results . . .

 

In addition to exiting positions according to the relevant scaleout rules, the strategy also exited positions when an opposing entry signal was given. In other words, to enter long, the strategy did not require that you were flat (and similarly for shorts).

 

So while there might have been a higher percentage of 2 point targets met than there were 4 point targets met, a proportion of the positions entered with a 4 point target would have closed out for a profit without that 4 point target ever having been met.

 

Please bear in mind that although I tried to choose something really simple with which to demonstrate my point, the way in which the different elements of even a very simple system interact with different parameters can be complex. You could quite reasonably complain that my example is far from ideal in that respect.

[onesmith 10]

I've asked the moderator to delete your post in which you claim you are NOT a vendor. You ARE a vendor claiming you are not a vendor.

 

If it is permissible for you to notify thread participants you are NOT a vendor then it is permissable to notify thread participants you ARE a vendor.

 

 

 

I have had significant experience both trading and training....what I find is that each individual takes their own time to learn based on background, education, temperment, available capital and limitations on the time they can devote to the project. In my own classes ironically those who don't "need" the money, and do not wish to become professionals....are doing very well...while those who say they are interested in achieving professional status and believe that the potential to make money is very important are by and large doing less well (breakeven or slightly better)....for those who are doing less well, I attribute this to an inability to manage emotions, and more specifically an inability to manage the idea of periodic loss...my class is scheduled to run for 12 more months, however several of my students are making good money now and in my opinion, could go off on their own if they chose to do so....in fact at the end of this time period all of them will be asked to stop and trade on their own....in my opinion, whether they "make it" or not, will depend on their own motivation to succeed and to break through their own psychological barriers....and before anyone posts snippy ignorant comments , my class is closed, I have nothing to sell....no website only a blog (google blogspot) and on that blog I state clearly that I am not accepting new students....

Good luck

Steve

[onesmith 10]

blue, I can easily write a strategy in which scaling out beats exiting the entire position, via an inappropriate choice of the levels at which the exits occur.