[es] What Do I Need to Learn

[goodoboy 10]

 

BTW, I do use indicators as reference points along with other tools but I execute my trades without confirmation. Confirmation is needing to be right.. there is no such thing... "confirmation" exists off to the right side of your screen... that's when you will find out..

 

Thank you kindly for the comments and advice, its a good introduction. Can you explain a bit more your comment about "confirmation"? What do you mean confirmation exits off to the right of the screen?

 

Thanks

[joshdance 10]

If you were to refocus your efforts into the, say, energies markets and coffee, for instance, YOU WOULD BE ABLE TO TRADE SUSTAINABLE SWINGS FOR MUCH LARGER RETURNS THAN THE AVERAGE ES TRADE USUALLY PRESENTS.

 

If you risk small amounts of capital until you score a big wave, the big wave WILL COME as long as you stick to the key trading times!

 

Use a trailing stop to manage your trades. Trading for 3 pts is nonsensical when you should be trying to pick up $900 and $1000 dollar per contract moves (and you will see these routinely in the energies and coffee). Its called "reward to risk." Why play Russian Roulette when you could be playing "Loaded Dice"???

 

These are all quite personal in nature; some traders find the personality of one instrument more appealing and easier to trade than others, and some will find intraday trading more to their liking.

 

The important thing is for the poster to go through the process of finding what he personally likes, not trading something because someone else says it's good.

[joshdance 10]

Just as important, after completion of designing your trading plan, make sure you then backtest it on all available futures trading instruments that you have access to

 

To provide a different point of view to the original poster...

 

I recommend exactly the opposite of this. If you are brand new to trading, do not waste your time developing a trading plan, and especially do not waste time back testing anything. Rather, open up the charts and a simulation trading account, and sit in the chair from 9 to 4 every day for a month or two. Look at different instruments and see what you like. Pick one, and play around on the simulator. It's risk free, it will get the "trading bug" out of your system a bit as you will feel like you are participating in the market, and you will see how easy it can be to both make and lose money.

 

Developing a trading plan when you are one month into trading is like deciding what you want to be when you grow up when you are 5 years old. It's pointless. "Grow up" a little in trading, and then you'll be informed enough to have a place to start. Sure, you need a plan. But no need to rush to develop a plan that will be a bad plan. People talk about how they fail because they don't follow their plan. I disagree; rather, most plans just suck. Eventually you need to decide how you want to view the market, what its model looks like to you. But you don't know enough yet to really do that. I'm not advocating not having a direction; with no target or goal, you are sure to fail. Rather, I'm advocating opening your eyes to look at the road in front of you before you try to map the whole course.

 

Lastly, I repeat my opinion that back testing is possibly the largest waste of time I can imagine. Spend that time instead learning about more useful things. I have recommendations if you are interested.

[goodoboy 10]

Hmmmmmm.

 

 

Okay, bud. So you've become interested in trading...

 

I definitely feel your pain! Most everything out there in the info sectors is dubious, at best. For the most part, if someone were successful in a potentially ridiculously lucrative field such as professional trader, and he were willing to freely pass that info on to someone else other than his/her own brothers or children, that would be unbelievable!

 

Nevertherless, from my experience, I think that the stock indices are NOT the weapon of choice for the inexperienced trading neophite...

 

In fact, even though I made a steady income for years trading NQ and ES, I discovered that there were other markets that offered much better returns on investment (in terms of both time AND dollars).

 

If you were to refocus your efforts into the, say, energies markets and coffee, for instance, YOU WOULD BE ABLE TO TRADE SUSTAINABLE SWINGS FOR MUCH LARGER RETURNS THAN THE AVERAGE ES TRADE USUALLY PRESENTS.

 

I fully realize that alot of the readers here on TL swear by the almighty ES contract. But I'm not bullstng here when I say that it is IMPERATIVE that you take every advantage in your arsenal while you are learning to spot sweet opportunities and milking them for big bucks... enough to overcome your losses and still pay the bills...

 

Also, and I cannot stress this enough, if you've been losing money on short term charts, stop looking at them! Start looking at 15-30 minute charts, especially during key times of the trading day (ie 8-10 am and 2-4 pm in New York) and trade trend continuations from consolidation breakouts (2-4 bars wide consolidations) and focus primarily on limiting losses. If you risk small amounts of capital until you score a big wave, the big wave WILL COME as long as you stick to the key trading times!

 

Use a trailing stop to manage your trades. Trading for 3 pts is nonsensical when you should be trying to pick up $900 and $1000 dollar per contract moves (and you will see these routinely in the energies and coffee). Its called "reward to risk." Why play Russian Roulette when you could be playing "Loaded Dice"???

 

I've probably given too much information...

 

Anyway, best of luck. Oh yes... and trading well does not come from a book or a mentor. It comes from confidence and experience in making winning trades pay well and limiting losing trades...

 

 

Luv,

Phantom

 

Good points and advice. I shall refer to these comments from time to time. I am still deciding on learning plan. There seems to be alot of different thoughts from traders from scalping and swing trades.

[goodoboy 10]

I recommend exactly the opposite of this. If you are brand new to trading, do not waste your time developing a trading plan, and especially do not waste time back testing anything. Rather, open up the charts and a simulation trading account, and sit in the chair from 9 to 4 every day for a month or two. Rather, I'm advocating opening your eyes to look at the road in front of you before you try to map the whole course.

 

Lastly, I repeat my opinion that back testing is possibly the largest waste of time I can imagine. Spend that time instead learning about more useful things. I have recommendations if you are interested.

 

Thanks, I like this advice. Hard to develop a plan if I have no idea what the plan details. I want to trade the ES and begin playing with on charts to see what happens and continue learning here, practice and experimenting. I am in no rush. But I do like this advice.

[wrbtrader 10]

We're actually talking about two things here...you're suggesting that he not develop a trading plan while simulating trading. In contrast, I'm suggesting when he trades with real-money...do so with a trading plan. Simply, I'm sure you're not recommending someone trade real-money without a trading plan.

 

As for the backtesting, he's already losing money while trading real-money without a completed trading plan. I'm sure he wants to "test things" before traveling on the road to futures trading again...check the tires, check the engine, check the map...be prepare and enjoy the road trip.

 

Yet, if he was an experience futures trader, veteran futures trader or already a consistently profitable futures trader...he's beyond backtesting and already knows what trading instrument is suitable. In contrast, newbies tend to follow trading instruments that's popular in discussions, recommended to them by anonymous aliases, recommended to them by their brokers or "seems" cheap to trade. Thus, their selection of what's good for them to trade will more often than not be an illusion based upon someone's else opinion instead of based upon facts that can only be discovered via comparison process I refer to as backtesting.

 

(Note: backtesting a trade method is different than backtesting to determine what to trade)

 

Regardless, most traders select their trading instruments based upon intuition, feelings, cheap trading costs instead of what their method performs the best while trading. It doesn't matter if he backtest such on simulator or test many different trading instrument with real-money trading. The issue is that he must do a comparison of the trading instruments based upon objective analysis (not subjective) to determine which is best suitable to trade via whatever trading plan he has.

 

Markets will be here tomorrow, no rush. Take his time and get things right the second time around after his initial losing effort.

 

To provide a different point of view to the original poster...

 

I recommend exactly the opposite of this. If you are brand new to trading, do not waste your time developing a trading plan, and especially do not waste time back testing anything. Rather, open up the charts and a simulation trading account, and sit in the chair from 9 to 4 every day for a month or two. Look at different instruments and see what you like. Pick one, and play around on the simulator. It's risk free, it will get the "trading bug" out of your system a bit as you will feel like you are participating in the market, and you will see how easy it can be to both make and lose money.

 

Developing a trading plan when you are one month into trading is like deciding what you want to be when you grow up when you are 5 years old. It's pointless. "Grow up" a little in trading, and then you'll be informed enough to have a place to start. Sure, you need a plan. But no need to rush to develop a plan that will be a bad plan. People talk about how they fail because they don't follow their plan. I disagree; rather, most plans just suck. Eventually you need to decide how you want to view the market, what its model looks like to you. But you don't know enough yet to really do that. I'm not advocating not having a direction; with no target or goal, you are sure to fail. Rather, I'm advocating opening your eyes to look at the road in front of you before you try to map the whole course.

 

Lastly, I repeat my opinion that back testing is possibly the largest waste of time I can imagine. Spend that time instead learning about more useful things. I have recommendations if you are interested.

[karoshiman 10]

This has developed into an interesting discussion.

 

As you can see, goodoboy, many ways lead to Rome as there are few absolutes in trading. The answer to trading success lies within you. That's why it is difficult to find or at least requires your hard work to find it.

 

 

EDIT: Also, in your quest to find the right trading method for yourself you have to consider your limitations. As you work full-time you might have difficulties watching the charts all day in real-time. Hence, an intraday discretionary trading method might be difficult to realize for you and you might try to work on a swing trading method. If you cannot find a good swing trading method for ES, look somewhere else.

Edited April 11, 2012 by karoshiman

[MightyMouse 12]

To provide a different point of view to the original poster...

 

I recommend exactly the opposite of this. If you are brand new to trading, do not waste your time developing a trading plan, and especially do not waste time back testing anything. Rather, open up the charts and a simulation trading account, and sit in the chair from 9 to 4 every day for a month or two. Look at different instruments and see what you like. Pick one, and play around on the simulator. It's risk free, it will get the "trading bug" out of your system a bit as you will feel like you are participating in the market, and you will see how easy it can be to both make and lose money.

 

Developing a trading plan when you are one month into trading is like deciding what you want to be when you grow up when you are 5 years old. It's pointless. "Grow up" a little in trading, and then you'll be informed enough to have a place to start. Sure, you need a plan. But no need to rush to develop a plan that will be a bad plan. People talk about how they fail because they don't follow their plan. I disagree; rather, most plans just suck. Eventually you need to decide how you want to view the market, what its model looks like to you. But you don't know enough yet to really do that. I'm not advocating not having a direction; with no target or goal, you are sure to fail. Rather, I'm advocating opening your eyes to look at the road in front of you before you try to map the whole course.

 

Lastly, I repeat my opinion that back testing is possibly the largest waste of time I can imagine. Spend that time instead learning about more useful things. I have recommendations if you are interested.

 

I completely agree. And will add that most times, especially starting out, the plan is flawed which then means that you have a better chance of succeeding if you do not follow the plan than if you do.

[BlueHorseshoe 10]

One of the primary divisions within this forum (or within pretty much any group of traders) is that between discretionary and mechanical traders.

 

Both can be successful . . . And both can be disastrous.

 

My advice (which others may disagree with) would be to try discretionary trading with a sim account. If you're not obviously successful at this within a few weeks then you probably don't have the knack for discretionary trading and should move on. Successful discretionary traders are an exception to the rule, and like all exceptions to a rule, there are exceptions to the exception - hence there are one or two on this forum who developed discretionary trading skills over a prolonged period from more mediocre initial results. If you don't have 'the knack', you will need to consider whether you want to devote a hell of a lot of screen time trying to develop it (a goal you may not suceed in achieving).

 

Should you decide to go down a mechanical road, then there are countless pitfalls that await you there as well. Unfortuantely pure luck is one of them, however much many refuse to acknowledge this.

 

Bluehorseshoe

[joshdance 10]

My advice (which others may disagree with) would be to try discretionary trading with a sim account. If you're not obviously successful at this within a few weeks then you probably don't have the knack for discretionary trading and should move on.

 

:shocked: .. a few weeks?? I can't imagine giving something up if not successful within a few weeks... that's a pretty minuscule period of time in the big picture!

[Deusomega 10]

Lol a few weeks consider that there are scientists that work on things for a lifetime and in the end have no reward for their actions. I think one should devote more than a few weeks to possibly one of the most lucrative professions in the known world before saying oh i suck at this i quit. But everyone is a big boy/girl here and can make that judgement call...

[goodoboy 10]

Thank you all for the time and advice. Well appreciate.

 

Do you use Market Internals (Breath, Advancers/Decliners, Ticks,etc.) as an market view before taking trades?

[karoshiman 10]

Do you use Market Internals (Breath, Advancers/Decliners, Ticks,etc.) as an market view before taking trades?

 

I recommend strongly using "Breath" before taking a trade... in particular a deep one!

 

[BlueHorseshoe 10]

:shocked: .. a few weeks?? I can't imagine giving something up if not successful within a few weeks... that's a pretty minuscule period of time in the big picture!

 

 

I have only met and observed one successful discretionary trader. She was successful from the outset, and she was unable to tell me anything whatsoever about how she traded, beyond 'I buy it if I think it's going to go up'. She knew nothing about technical analysis and didn't even watch the DOM - just watched the price whilst doing her (rather well paid dayjob) and made a few trades a day, with a very high percentage win rate and very small losses. For reasons that I am not prepared to go into here I know that she had done this for a sustained period.

 

This was obviously someone with a 'gift' (or whatever you want to call it) for understanding price action. If you don't have this innate ability, I think that although it may be possible to develop it to a lesser degree, a trader is essentially better off not trying - at least by embracing a mechanical approach the trader can have a high degree of historical confidence, even if that confidence is not justifiable going forward.

 

I fully accept that you and others may disagree with me. If so, then tell the thread author not me, as it's his future in the making (I am rubbish beyond belief at discretionary trading and abandoned it a long time ago . . . Although I occassionally wonder about opening a very expensive online trading room where I make terrible discretionary predictions and then traders get rich by fading my calls!).

 

Best wishes,

 

Bluehorseshoe

[joshdance 10]

I have only met and observed one successful discretionary trader.

...

I fully accept that you and others may disagree with me. If so, then tell the thread author not me, as it's his future in the making (I am rubbish beyond belief at discretionary trading and abandoned it a long time ago . . . Although I occassionally wonder about opening a very expensive online trading room where I make terrible discretionary predictions and then traders get rich by fading my calls!).

 

Very funny about the trading room BH

 

I respect your views. But your evidence is purely anecdotal. I do not know anyone personally who is unemployed, or who has told me so. Yet, the BLS tells me that 1 in 10 are without a job.

[BlueHorseshoe 10]

Very funny about the trading room BH

 

I respect your views. But your evidence is purely anecdotal. I do not know anyone personally who is unemployed, or who has told me so. Yet, the BLS tells me that 1 in 10 are without a job.

 

Hi Joshdance,

 

Worse than purely anecdotal, my evidence is based upon a ludicrously small sample size! That's a poor show even in strategist's terms!

 

Nevertheless, here's another anecdote:

 

I supported myself throughout a degree by selling my paintings in art galleries. I could imitate the style of just about any artist you care to imagine with great success. I ripped off the styles of other minor artists and peddled my works to the extent that I could pay my tuition fees.

 

About the time I finished my degree I realised that I had absolutely no artistic vision of my own. My way of seeing the world as an artist was entirely defined by others. I didn't know the first place to start in trying to create an original piece of artwork. I sucked (and I stopped painting).

 

I would contend that 'Great Discretionary Traders', like 'Great Artists', are born not made.

 

My understanding is based upon a few scant experiences combined with what I suppose to be analagous scenarios in other walks of life. Hence it could be completely ill-judged. If anyone feels they have developed discretionary trading skills then please feel free to correct me and offer alternative advice to the thread started. And I don't really want to be responsible for deterring anyone who is purposefully set upon this path.

 

For the record, I have no absolutely no issue with those who are successful as discretionary traders other than jealously

 

Bluehorseshoe

[BlueHorseshoe 10]

Lol a few weeks consider that there are scientists that work on things for a lifetime and in the end have no reward for their actions. I think one should devote more than a few weeks to possibly one of the most lucrative professions in the known world before saying oh i suck at this i quit. But everyone is a big boy/girl here and can make that judgement call...

 

Hi Deusomega,

 

Please note that my recommendation was to abandon discretionary trading, not trading altogether, if unsuccessful within a few weeks. Also, please realise that this is just my perspective on the matter and hopefully I presented it as such. My main aim was to help a new trader to become cogniscant of the distinction, not to issue learning ultimatums.

 

In the spirit of disticntion, I would make the following point about scientists that work on things for a lifetime: such scientists only continue because they receive positive feedback. Ultimately this feedback may lead them down a blind alley, but they have reasonable grounds to continue their research nonetheless. I have worked on various mechanical approaches that have proved to be dead ends, but at the time I worked on them they gave me objective positive feedback, and so it was reasonable to continue. A discretionary approach, I would contend, offers no objective feedback besides results. If a trader isn't getting positive results within a few weeks of discretionary trading, then I would say that they may not be very good at it. A mechanical trader, on the other hand, could endure months of poor results if he knew that these were a concomitant aspect of the approach he had chosen. For a mechanical trader, positive feedback can be from historical data, which simultaneously bears the burdens of objectivity and possible irrelevancy,

 

If I had the choice, I would much rather be a discretionary trader than a mechanical one. Maybe my posts are nothing more than a bitter manifestation of this (beware, thread starter - everyone here has their psychological baggage, even those who are making lots of money(I'm not)).

 

Hope that's helpful.

 

Bluehorseshoe

Edited April 11, 2012 by BlueHorseshoe

[gosu 10]

Trading requires Knowledge, Skill, and Experience. They are acquired through WORK, which must be distinguished from merely spending a lot of time at something.

 

Knowledge can be obtained by reading, studying, asking questions, listening to others, etc. In the past, knowledge was expensive and not easily accessible. In the internet age it is the easiest to obtain, at little or no cost. In fact there is too much of it, most of it false knowledge, or what I call folklore, which piles on top of real knowledge. The truth is not hidden but just needs to be uncovered, or separated from the chaff.

 

Skill has levels, from the most rudimentary to the highest. The various levels of skill are best obtained by doing drills. For the beginner who has no skill, only the simplest of drills is possible to do, such as entering and exiting the market without taking a hit to the account and free from the urge of jumping out of the chair or a window. Even this simplest of drills is a real challenge for the beginner to do unsupervised.

 

Experience comes in all forms and successful experience counts the most. Mistakes may be opportunities to learn but they must be recognized as mistakes and addressed as such. Repeated mistakes, especially if they go unrecognized, can easily take the beginner in the wrong direction and to a place of no return where the possibility to learn correctly is foregone permanently. Successful experience on top of successful experience is what builds the mind and assists in the acquisition of K and S.

 

Innate ability may be a factor, but so are desire, perseverance, resiliency, etc. And did I mention it takes WORK? It's worth repeating, it takes a hell of a lot of WORK, far beyond what most are willing to do.

[BlueHorseshoe 10]

Thank you all for the time and advice. Well appreciate.

 

Do you use Market Internals (Breath, Advancers/Decliners, Ticks,etc.) as an market view before taking trades?

 

If you want a 'market view' then consider the various replies made here and try to decide where you think your understanding of the markets may fit best. As a beginner, you may find it more useful to focus on broad generalisations (such as does the market I want to trade generally revert to its mean so that I should always take a contrarian position, or does it regularly produce strong, breakout trending moves that I want to step aboard)/ (should I trade mechanically or on a discretionary basis). Once you know what you want to do ('I want to build a wall'/'I want to take counter-trend entries in the direction of the long term trend') can you choose an appropriate tool ('I need a trowel for cement'/'I need a MARKET BREADTH INDICATOR').

 

In other words, indicators such as those you describe are minutiae and detail. Focus on the bigger picture first. What is your overall perspective on the market you want to trade? Can you sum it up in a short sentence?

 

Bluehorseshoe

[joshdance 10]

gosu, thanks for your always no-nonsense and to-the-point posts, I appreciate them. I can be quite outspoken and direct (tactless?) at times, and I actually value when others spare the feel-good words and get down to business.

 

BlueH, I am realizing you have quite a good sense of humor and I really enjoy reading your posts as well, they have made me chuckle out loud, which is hard to do.

 

------

 

Regarding A/D, TICK, and other measures of market breadth...

 

I recommend to the OP that you work from from the bottom up. What do you NEED? I've said this before, but consider that form should follow function. Can you define what TICK represents? How about uvol or dvol, or advance / decline?

 

I used to have mini/friendly debates with a guy who constantly was using uvol and dvol, but who did not know how it was calculated. Personally I find it to be a redundant indicator due to its calculation and useless to me, but if one were to use it, I would expect that he would know what it actually meant.

 

So consider what you need to see, and then add those things to your screen. No need to add a bunch of stuff, and then take away what you don't need.

[goodoboy 10]

 

My advice (which others may disagree with) would be to try discretionary trading with a sim account. If you're not obviously successful at this within a few weeks then you probably don't have the knack for discretionary trading and should move on.

Bluehorseshoe

 

Thanks, What do you mean by discretionary trading? Some one who just trades with no real method, just instinct?

[joshdance 10]

Thanks, What do you mean by discretionary trading? Some one who just trades with no real method, just instinct?

 

Google:

Discretionary or System Trading - Are You a Discretionary Trader or a System Trader?

[goodoboy 10]

Thank you all for the time and effort in replying. Really appreciate it and it help me.

 

My approach as of now is to learn by practicing. Right now, I am just following the ES price action, resistance, supports, trendlines, and chart patterns to make decisions to buy or sell. Along with being very patient and letting the trade come (and not chasing and rushing) to me with pre-planned stop loss and exit targets. And some moving averages to locate short trend changes. No indicators, except for looking at the SPX on the larger time frame chart. I am only trading one contract on a live simulator with real money. Also, order Al Brook new book Trading Price Action Trends.

[BlueHorseshoe 10]

Thanks, What do you mean by discretionary trading? Some one who just trades with no real method, just instinct?

 

In it's purest sense, trading off instinct alone. But many discretionary traders have a loose, underlying approach, I believe. They will make an assessment of various signals, individually and in combination to arrive at a trading decision. They may overide or reject signals if they don't feel right in some way. The signals they follow may also be subjective rather than objective - most chart patterns fall into this bracket. Their own perception of relationships between market information ultimately becomes a filter.

 

Somebody like me, watching a discretionary trader, would probably ask questions such as 'but when you say fast, how fast do you mean?' or 'when you say 'low in the range', within what percentage from the bottom do you mean?' And I would probably be met with a bemused look (who is this tedious pedant?) and 'well now, that depends . . .'

 

Bluehorseshoe

[gosu 10]

It's all in the method. Without a method, it's just gambling.

 

But not just any method. You need a good method - no, a GREAT method. Then you can trust your method completely.

 

No "mechanical" method will ever do. You will never trust a mechanical method completely.

 

Your method will always require the use of good judgment. Your method is THE way you form good judgment. Then it is not about using instinct. It is about OBEYING.