Steve's Basic System for Retail Traders

[steve46 12]

and here's our followup screen shot, as we get some breathing room on this trade (5-6 points) and now with a relatively risk free trade, our job is to manage residual risk and maximize profits..ultimately we are looking for a test of the next lower dist line...

[steve46 12]

I think this will be the final post for tonight...I really need to focus on business

 

As can be seen this one (if you entered at approx 89) gave you 10 NQ points....

 

The primary reason(s) we stayed with this one were as follows A.) we got a valid entry on retest of a distribution line followed by a strong initial move down. B) we saw that the ES market was not exhibiting strength....and C.) news out of Asia and Europe was either neutral or negative, favoring continuation of the existing trend

 

So far what we have is a partial profit of 2 points followed by a second partial profit of 7 points (based on the ES test of the next lower distribution line)...

 

We won't post a gain tonight...

 

Good luck in the markets tomorrow

Steve

[goodoboy 10]

I'd say trading 1 contract is where every trader needs to be when coming up on sim. Matter of factly you should make the balance of the the sim account what you plan to trade IRM. You should also set the sim account to take off fee's and commissions automatically then you will really know if what your doing is realistic OR NOT.

 

Trading size is earned not to mention knowing your instrument(s) inside and out. I just got a "talking to" from my mentor because I was in a trade on Thursday and took a huge spike up in what I was trading. The spike was a reaction event due to some release I had not known about before I went into the position. My bad on that. I already had 4 points of equity locked into that trade and ended up taking out15 however it could have been the other way around and I could have gotten FUBAR.(F###ed up beyond account recovery).

 

If your system/method doesn't have positive expectancy then get a new system/method. It is that simple otherwise you mine as well write your check to your broker for the full amount of your account and save yourself the pain of all those cuts. If you are trading any other way but the way you will be trading IRM then you better check yourself before you wreck yourself.

 

I have been at it since February and just now consistently profitable everyday to the point where I feel I can go in there live and trade IRM and get something done.

 

Steve did you trade those 6 arrows in the 10 minute chart above? That's a nice range and I hope you made a boat load in it. I apologize in advance for the above rant. Did not mean to have that happen. GG

 

Thanks GG.

 

What does IRM and FUBAR mean?

[goodoboy 10]

I think this will be the final post for tonight...I really need to focus on business

 

As can be seen this one (if you entered at approx 89) gave you 10 NQ points....

 

The primary reason(s) we stayed with this one were as follows A.) we got a valid entry on retest of a distribution line followed by a strong initial move down. B) we saw that the ES market was not exhibiting strength....and C.) news out of Asia and Europe was either neutral or negative, favoring continuation of the existing trend

 

So far what we have is a partial profit of 2 points followed by a second partial profit of 7 points (based on the ES test of the next lower distribution line)...

 

We won't post a gain tonight...

 

Good luck in the markets tomorrow

Steve

 

Very good trade. I caught the ES up for 3.75pts from support of 1429. I entered at 1430.25 on the way up.

 

Now, I did see the gap fill at 1434 and watched the retest, but didn't pull that trigger. I think the Giants vs Eagles game was in the way! But, now I regret not taking that short going down. 1429 to 1429.50, should provide good resistance for the nite.

 

Atleast have area of interest for tommorow. Thanks, take care, goodnite!

[greedygekko 10]

Question about that chart Steve. Was that range you showed the 6 arrows on a ES 3 min chart? Not clear on it. TIA

 

@ GOB IRM = In real money. FUBAR = F###ed up beyond account recovery!!!

[greedygekko 10]

Kept 11.25 points today. Nice.

 

Posted some charts.

 

Had a nice little EOD trade just now.

 

I hope you guys did well today also. GG

[steve46 12]

Charts are labeled at the top left hand corner......currently trading NQ futures...

 

 

Attached we have today's trades based on my first "approximation" of the distribution lines

 

Because am I uncertain as to whether the approximation process will work, all trades are small (3 contracts) scaling out at 2 and 5 and 10 points....if I still have contracts out and it comes back to the original entry I simply get out....

 

3 losers, 4 winners...got chopped up at the beginning with 2 consecutive losses, then did a good job of staying disciplined through the day until 10am sequence where price behavior changed from trend to sideways congestion...(losing trade at 10:15) ..

 

From my point of view, this worked well.....I should have put both distributions in place comparing how they would have worked side by side....simply put, I did not have the energy or the time to do both....I am going to get some sleep...in the process I am learning about trading a small account...and that is a real experience for me as well....based on what I am seeing today, a small retail trader could make this work however he/she would really have to be disciplined, and be willing to wait for tests of the distribution lines....in the current market if you start to freelance and get into the middle of congestions....you are going to pay...at best you will drift back & forth from small profit to breakeven, and then the expenses will bleed the account....if there is a lesson to be learned from this, it is that you have to wait for your entries and then hold profitable positions long enough to get a minimum profit (for the NQ, I would say at least 5 and preferrably 10 points)...per position.

Edited October 1, 2012 by steve46

[steve46 12]

Kept 11.25 points today. Nice.

 

Posted some charts.

 

Had a nice little EOD trade just now.

 

I hope you guys did well today also. GG

 

Thanks for the charts

 

Sure is a lot easier to place a trend line using Renko bars....If you have a moment, perhaps you could say something about how you determine "brick size" for the market you trade?

 

Good luck tomorrow

Steve

[steve46 12]

I have really been enjoying trading this.....the attached chart shows the London open with 10 min candles

 

Same basic rule set...you wait for price to test, and take out the dist line, with entry on retest or as close to the line as possible. Once you get a valid signal these seem to be good for about 10 NQ points (about $200 USD/contract). Using a 2 pt stop at this point...

[steve46 12]

Same entry using 3 min candles

 

As can be seen, the 3 min shows a bit more granularity, but in the end its about discipline so it shouldn't matter much...

 

Once again this approximation process seems to be working pretty well....this time I did the calcs both ways and the differences were negligible....probably came within a percent or so of the original but it only took about 20 minutes to do the simplified math...we have a ways to go yet but so far so good...

 

The vertical line is the London Open, and as can be seen they opened with a probe down, looking for sellers and couldn't find them, so up we went instead...three basic rules.... 1) entry on the first open after price takes out the dist line...OR wait for price to take out the line & retest....

 

Best of luck

Edited October 2, 2012 by steve46

[steve46 12]

Two trades off the opening bell this morning...

 

The operative rule is "trade tests of the lines, and stay out of the middle...."

 

thats what we did

 

Short entry off the morning high produced 10 NQ points

 

Long off the test of the lower dist line produced the same....

[steve46 12]

and here's a third entry, that I thought would be a loser as it came back on me and pressed my entry...I am still in this one..

[steve46 12]

and I am going to take profit and cut this one short right here....looking to the left on my chart you can see why as the DAX hits the lower distribution boundary...this is where it is likely to reverse on me, taking the NQ with it....so I missed my 10 point target, but I got close enough

 

Done for the day...As usual I need to get some sleep

 

Best of luck to everyone

[steve46 12]

Here is a full screen look at today's trades...lets see where have we seen this before....oh yeah back on the 28th Sept (post #269)....same movie different time frame (10 min vs 3 min today)

 

 

Best of luck folks

Edited October 2, 2012 by steve46

[goodoboy 10]

Two trades off the opening bell this morning...

 

The operative rule is "trade tests of the lines, and stay out of the middle...."

 

thats what we did

 

Short entry off the morning high produced 10 NQ points

 

Long off the test of the lower dist line produced the same....

 

Thanks for sharing. It doesn't get any better with that.

[goodoboy 10]

and here's a third entry, that I thought would be a loser as it came back on me and pressed my entry...I am still in this one..

 

Hello Steve,

 

You can answer this when you get free. Its a tuff question, but how do you know when to use the 3 min vs the 1 min. for the past month, I been using only the 3 min chart with some sucess. I also trade similar to this system by identifying resistance and support lines. Although, my lines are not as good as yours. Normally just price action.

[goodoboy 10]

and be willing to wait for tests of the distribution lines....in the current market if you start to freelance and get into the middle of congestions....you are going to pay...at best you will drift back & forth from small profit to breakeven, and then the expenses will bleed the account....if there is a lesson to be learned from this, it is that you have to wait for your entries and then hold profitable positions long enough to get a minimum profit.

 

I really need to take this and post it on my computer screen, ice box, steering wheel, and computer mouse. Its true, staying out the middle of the ranges is helping me. Entries, is hurting me and indecision.

[steve46 12]

Here are three charts of the same trade entry

 

showing 10, 3 and 1 min views.

 

As you can see, if you make decisions based on small time periods, you are more likely to get chopped around...

 

I prefer 3 min, and frankly I am leaning toward using the 10 min....there's always a compromise (you do miss some entries) but I think you save a lot of money on commission and losers while you wait to get on board a winning trade..

[greedygekko 10]

A nice little EOD scalp again today in the ES. I am pretty much resided to the fact I am only going to go for 2 points at a time in there from now on till the volatility comes back. Trading ZS GC AND maybe even CL till such time.

 

Finsihed the day and kept +560 less fee's. Probly around 100-150 perhaps. It was a slew of trades today working on my signal entry on the other charts.

[steve46 12]

Good for you.....any time you make money, above expenses, you are on the right track...

 

I see you are incorporating horizontal lines (of some kind) into your charts...hope that continues to work well for you..

[steve46 12]

We are fast approaching the end of my process here....I've already pointed out most of the significant elements of this system....the initial attempt to approximate the process of creating the distributions seems to be working, although after only two days I am still reserving my opinion...

 

I notice folks talking about lack of volatility and other issues that they believe are make trading markets more difficut...actually (speaking from several decades of experience) not much has changed...sure there is more automated execution, and the price behavior is a bit different but thats what we signed up for, in return for the opportunity to make a hell of a lot of money in a short time (an opportunity that in this economy, is very difficult to find anywhere else)....

 

I am experimenting with a small account to determine what the limits are for a retail trader trying to make some money..so far I have only confirmed what I thought would be true...that it takes the kind of discipline that most folks just don't have...especially when they are starting out....

 

What I will do is post tonight and perhaps another day or two and then call it quits....I'll trade using the approximated distributions for the next few months, and try to confirm that this simplifed method is consistent....for the folks who took my first class, I owe them a "first look" at how this system trades....depending on how that works out I'll make a decision as to where to go from there...

 

Although I haven't posted as many charts, the system is working equally well for the London open at Midnight PST....so I assume it can be traded in the overnight as well as RTH sessions.

[steve46 12]

I thought this was pretty cool....here is tonight's DAX open at 2300 hours

 

What I like about this is that price opens and probes down to find sellers...down to 2789.75 almost to the tick...then reverses....I don't trade this market but if I did this entry is no different than any other...price tests the distribution line, tries unsuccessfully to "take it out", then reverses, and the entry is on the open right at the line...no idea if it will prove successful however as of this moment, this setup is providing a 2 point initial profit....so in theory the trade is "risk free"...

 

As mentioned I don't trade this one (maybe I should have taken it), but I will be trading London Open in about 40 minutes

 

Best of luck

[steve46 12]

and here is the follow up to that DAX trade

 

As you can see price reversed and comes back to take out the distribution line....

 

Now depending on whether or not the trader took partial profit....he/she could have simply scratched the trade and gone on to the next one...if they didn't take partial profit, they would have been faced with a choice......get out with a very small profit, or perhaps at break even, or hold it hoping for a bounce back up...personally I would have closed the trade...

[steve46 12]

Here are today's trade entries

 

Previous posts displayed entries based on price moving within a range (congestion or "horizontal development")....here is an example of how the distribution lines work in a trending market...

[steve46 12]

In this example we have a signal from the ES market (on the far left) as it tests and then retraces to retest the distribution line at 9:03am PST. Green up arrows mark the entries in both markets.....

 

Seeing that retest, and in the context of a confirmed trending market, we enter the NQ....the result is a nice pop to the upside

 

So what we see here is an added benefit of using this system...and that is that you can use both the ES and the DAX to provide entry signals as they test their distribution lines...if you are trading the NQ (as we have been lately), this allows us to generate entries in addition to the tests of the NQ lines themselves...on a trend day, this allows the trader who may have missed an entry at the NQ lines to have a second (maybe a third) chance to get on board and make some money.

 

Best to all