Thanks KDA! Seeing as I'm right in the middle of Trading in the Zone again, I'm enjoying quoting Douglas as well. It truly is amazing how us traders have to freaks of nature, going completely against rational thought. In Lescor's journal was a guy names anesthesiaman... an actual Anesthesiologist who was looking to quit and go trading full time. I think he was just barely profitable at this point, but stopped posting back in 2010. I do wonder how he made out given that as Douglas said, the guys who are very successful in other facets of their life and intellectual pursuits tend to struggle. Anyway... back to me, yes, being able to act on it is a whole different ball game. Rule are a wonderful thing though and I did enjoy my backtesting. I clearly saw that it doesn't matter what I think about a trade, especially once its on because I have to let it either hit my stop or go to target. Each trade would have always turned out much better if after the trade I stopped thinking but made to set up my OCO orders properly. I'm absolutely sure that one day I will be able to completely remove myself from the whole process, and I don't think I'm that far, just stumbled a bit today.
LOL... Oh Blotto.. I love how you dug up your two quotes... and I'm happy to say that came back to report my loss just as you requested! When you first started this message, I actually thought that you were giving me something useful. When you said to "fade a loser", I started to think you were talking about the idea where traders scale into a losing position to lower their average price. This of course often goes horribly wrong as the losing trade just keeps getting worse... but now when I read this again... when you say to fade a loser... do you mean to fade me??? hahahaha... So you want to take the opposite of my trade and pay a bit for my trades? LOL... I love it. You know, what I'm doing is so simple that you could figure it yourself and just take the opposite of that trade anyway. There might be a bit ambiguity to how I draw the trendlines, but often they form a wedge that closes in as we hit the opening. Then just wait for the line to break, wait for the RET, go long or short above or below that RET and that's it! You're an interesting character. You have posted to much to my journal before, and have sent me so many PM's that I can't help but think that you actually care. But everything you say is always negative. Only one of two things can happen. Either I will make it, and I hope you're still around to congratulate me, or I will give up, in which case, I hope you will help me because perhaps you do actually know how to trade. I of course won't have any money to pay you at that point since I would have naturally blown out my account as you're forecasting, but perhaps you will give me a freebie. You still never told me why you're so invested in watching me give up by the way. Can it really be just because you believe that price action trading doesn't work and you get off on seeing someone else fail at it??? I just can't figure out why you put so much effort into this crusade of yours.
Ah.. I think I figured out how I messed up the trade today. So I kept thinking how choppy the morning was.. and even those price broke higher, I just expected that it would come down again. How I think I'm smart enough to make this call I'm not sure! LOL Anyway, so I saw the legit entry, and of course it went right against me. Then I think what happened was that I began to doubt that I could reach 1:1. Since the stop was 6 points away, this would require price to rise over 8 points from where it was now to reach the 1:1. (I even remember looking at my P&L and seeing it was down about 40, so I was down 2 points right in the middle of the 2nd bar after entry). So I think in my head.... god you guys are gonna love this.... but I think I just made my own 1:1 stop and target, a new one that I pulled out of thin air! I think I thought ok... lets just let it go down a few points more, but because I'm only gonna risk a few more points, I'm gonna take a profit if it just goes up a few points above my entry. Since I think going up so many points is not realistic for what the actual target and stop is given what I'm seeing right now, I just made up my own numbers going forward while already in the trade. Can you believe it? Its like me telling the market, not listening to what the market is telling me. Anyway, this is perhaps the best account I can come up with. I have read so much on how unable we are to think properly once in the middle of a trade, so this clearly hit me as well. I'm still excited that this trade would have worked beautifully if I just set it up properly and left it alone, so this is at least a good stat to add my data.
Ok.. more full disclosure just before I have to go for the day. I did actually trade Tuesday and Wednesday. On Tuesday Nov 18, I put in the long trade trade after the RET once we broke above... as I should. The exit was made for less than 2 points, just below where the 1:1 should be. On Wednesday Nov 19, I put on 2 trades. First is a short based on missing out of the huge fall, but I quickly got out since I knew this was wrong, so I made a point there. The second trade was set up as it should be, but once again, I didn't hold it. Db mentioned in his NQ thread this same trade. I didn't hold it cause it seemed like the RET was just back up too high. It came down to 21 and went all the way back up to 31. Of course none of this matters, and rules are rules, and I followed them on the 2nd trade, I just didn't hold it. So these two days combined netted me $63... who cares about the money... I really do want to focus on trading well. Of course I felt bad for not holding the two proper trades, but I guess in a way I just wanted a tiny profit as a tip for forward testing what I got so far. I never did trade on Monday Nov 17. I did mark in these possible trades. Only the 2nd one, the second long is the legit trade I backtested. It would have been stopped out for a loss. But given that it was, the next trade, the short after price dropped would have been strongly considered. It would have been good enough for a 1:1, a tiny profit, and price did then of course come back up. So Monday was obviously not a trending day. Anyway... those are all the skeletons in the closet.
Just reading random threads tonight... but I came across this gem: "Why be afraid when you got a stop? And if you are afraid of getting stopped, wrong risk or wrong line of business." http://www.elitetrader.com/et/index...eways-price-action.283578/page-2#post-3969200 I'm not sure who Scaleout.Scalper is, but I have come across his posts before that I think sounded intelligent enough, but I read so much on here that things get all mixed in together. Anyway, this quote sums up beautifully for me all my problems. I can't remember the exact numbers that Lescor had in his journal, and it doesn't matter, but it was something like average winning day was $3000, average losing day was $2000... or something like that. So out of 250 trading day, the net was still $1000 positive give or take, hence 250k a year. Now one way to interpret this is that he needed to lose $2000 in order to make the $3000. If he didn't put on trades, he couldn't win. It he stopped putting on trades after he lost, he couldn't win. If he stopped putting on trades after winning, he couldn't win more. (The reason I bring up Lescor again is because he provides hard facts... hard numbers that show the spread of wins and losses and the stats side of trading). So now when I go to this quote above, it just reinforces that fear has no place in trading. If the stop makes me scared then there is the potential that its the wrong risk, the wrong stop, the wrong place to put it. But if its a good stop, a place that gives the trade enough room to work, but a place where an exit is prudent so as to protect from more losses, then this loss has to be accepted. The last part of course is that if I can't handle the risk, I can't be expecting to succeed in the business of trading. When I really take the money aspect away, it is so much easier to make the right decision, and if the trade doesn't work out, I'm not phased one bit, I don't even remember it when I was marking in my charts for the past few months. (The problem with what I was doing wasn't so much that I marked in good trades, but I didn't mark in where my stop would be and where my exit for profit would be) In my live trading, it is absolutely the money loss that creates the fear. The right/wrong thing I don't care about too much because producing a consistent profit is what this is all about for me. Anyway... I very much liked the simple words used to illustrate such a deep issue.
Now I do wonder if someone can comment on my data that I have compiled. I rarely come across hard stats. I've read ND say that she knows scalpers who have a 90% win rate... but that's about the only number I can reference. What out there is considered good? How many trades for successful traders are winners vs. losers, and especially in relation to risk:reward ratio? What should I be shooting for? Is it common to be stopped out 3 or 4 times a day losing 2-3 points per each trade but have this balance out at the end for catching a 15 or 20 point move? Or rather, if I'm looking to catch the big moves, will it take trying a few retracements until I finally get into one that works? If the risk:reward ratio is like 10:1, it certainly makes sense that its acceptable to have a string of small losses in a row... so do you guys out there go through this and keep hammering away? I certainly understand that these numbers all vary for the different trading strategies, time frames and instruments traded. But given all the talk about having to backtest in my journal (which is of course excellent advice), I don't have anything to compare to. I have no idea what is good and what is acceptable. Seriously, given all the talk about having to backtest, I have yet to come across anybody posting in their journals the results of their backtest. I have seen some screen captures spit out from automated strategies, but that's about it. If a win rate proved to be abysmal, would this mean that this strategy is great for taking the opposite trade? Anyway, if someone can share or point me in the right direction I would very much appreciate this as I think it would fill in some holes. Perhaps this is also why I was so reluctant to collect some stats. Everyone says to collect stats, nobody talks about this. The language is usually about what "looks good", which is what I had been saying for so long in my journal and I was called out on it, but nobody has shared stats. So as you can see.. I'm quite curious!
My suggestion is chose one of the stats (1:1 or ...), and run the trades live on a small account. and report the stats live and issues you've had.
What others consider to be good r/r scenarios should be irrelevant to you. As you surely already know there are successful scalpers with high win % and they almost assuredly have avg gain<avg loss. On the other side of the spectrum are the trend following types going for the big moves i.e. low win % and for certain avg gain>avg loss. You have to choose what fits your personality style. So given what happened yesterday (you not following your rules on trade #1) not to mention your fear of loss and unwillingness to give price "room" do you really think you are cut out for a low win %, go for the big move type of system that requires taking *every* setup even after 4-5 losers in a row? I would argue no and you should stick to something with a higher win %. Your backtesting showed 66% winners at a 1:1, that's pretty solid providing you used no hindsight and total consistency in your testing. So that was my long-winded way of agreeing with smallstops and suggesting you forge on with your tested setup and 1:1 r/r in your live account. As you already found out, you will find it a tremendous challenge to even follow your rules so make that your main goal right now. Forget the fantasy of catching that big move that's going to rescue your account from previous poor decisions.
Shocking move up overnight to tell you the truth. But lets just deal with what is now! First the stuff on my chart going into the open. A - DL from after the news spike up. B - DL including more of the overnight action from before the news spike. C - Initial SL I was tracking that broke before the open D - The legit SL, practically horizontal, which takes into account the swing high just before the open. O - We open here. If I was using the SL at "C", I've got a beautiful RET in there to go long which would fill on this opening bar, but it only pokes above the swing high just before the open and price comes down, going below where the stop would be. Oh, the other essential thing to point out is the range that forms before the open. Its a solid range, well formed for an hour before the open. Ranges are even better than my trendlines I think. Its more "in the market" because actual upper and lower price levels form where traders are unwilling to go beyond. So here just before the open, we break above the range, which makes that possible long even jucier, but we drop into the range when it fails. E - I mark in this possible short. The trouble is that we are now still within that pre-market range. It does appear we rejected going higher, but we haven't broken lower yet. The stop would be above this bar. Also, this happens at my DL, not below it. F - Here is another solid short I think. Once again, stop just above this bar. 3 bars earlier we formed a swing high here, so if price comes down to fill this entry, there might be a nice level of resistnace forming (kind of micro R in the whole grand scheme of things though.. not like an hourly R level). What I don't like about this entry is that there are 4 overlapping bars... so I'd be entering inside a range, so although the trend is down at the moment, I've got this tiny range now, and the pre-market range to the left, and it could be anybody's guess which way we break. G - So here is the perfect RET. The bar is fully below that DL and we have broken below the range. The testing I did was with my 1 tick entries, but I can't get that order in fast enough, and I do want to give it a bit more room, so I use the standard 1 point from SLA. So I mark in where the trade should be via the down arrow, but you also see the red triangle that comes from the platform of where my actual filled entry is. Today has been quite the interesting day so far. The opening volume was huge, over 6000 contracts but price moved only 4 points. All these other moves look so... methodical. Neither side is showing strong conviction. Price is coming down, but it doesn't look easy. H - So right after my entry, price does go against me, but you know what, I'm not sweating it. I've got my stop placed well, 2 ticks above the bar at G at 78, and with my entry at 74, this is a 4 point stop, so I've got a target of 4270 for my profit. I'm hell bent on price reaching either of the two, and I don't care which because the trade was entered properly. I - So price does break out lower, and it comes right down to this bottom tick of this bar above "I". This is exactly where my profit target is and it doesn't fill but jumps back up. Darnit... So I did slide my profit target up by 1 tick. I just figured if we come down again and bounce off this level one move time since we bounced off so easily I might still not get a fill and I wanted to make sure I got these profits. As it turns out, price did come down again and even lower, so I gave up $5 for nothing. But at least I did get $71 out of this trade. Its really not so much about the money... its about doing what I should and not sweating it because I'm following rules. J - Price shoots up hard after this, but it not only doesn't break the previous high at "H", it also doesn't hit the high above my entry bar above "G" which is where my stop would be, so if I was going for a 2:1 target, its still possible, and in my stats, I had often seen that before reaching the higher multiple targets, price could retrace almost all the way close to the stop and turn back down to fulfill the 2:1 or 3:1 target. This to me means that a short below this bar is completely legit. It would fill, and provide an easy 3:1 target, but this bar is only 6 ticks high so its not a whole lot of profit. In fact, every single RET on the way down today works for at least a 1:1 target. After the open, I count 5 RETs where each trade reaches 1:1 at the very least, so contracts could easily have been added. K - So this lower high is a bit of a problem for this downtrend, and I'm now starting to draw in my hinge. The trouble with hinges is that they are so easy to spot on an EOD chart, but in real time, I find I have to redraw the lines often. You might start with a tight hinge and it looks like its breaking, but then it forms a wide hinge just outside the original hinge. So taking a hinge exit right away is tricky. L - For this reason, you wanna wait for the RET, and here it is from the hinge exit. The stop would be the high of the previous bar and its good enough for a 1:1 trade. M - So we do have another higher low here, but I'm clearly not looking for another trade anymore. After about the first hour, I don't find anything good. The volume has dropped off, and I have no idea what the trend is anymore. Sure its still down from the open, but if I had to get in here, I have no idea if I'd want to go long or short. It would be a different matter if I was already in a trade from higher up and just looking to scale out of contracts, but trying to trade in here is probably just good for scalping, and you know what, the bots have that very well covered I think. SUMMARY So today was actually quite nice. There was lots of hesitation, but knowing firmly where an exit would be, the trade just takes care of itself. There really were at least half a dozen trades that worked today for at least 1:1. Its true that I could have held my contract for more profit, and even gotten in sooner as we quickly rejected the open and came down, and I will work on holding longer as I progress. Lets face it though, I can't hold for a 20 point move if I don't learn to hold for at least a 1:1 profit... correct? Drawing these charts up is kind of fun for me... and I'm so happy to have my MC working well again (Let's blame my loss yesterday on the platform not working! LOL). And it feels good to have rules to follow. I just have to figure out what I need to do after the first trade. And if the first trade fails... what I need to see to re-enter in the same direction, or what I need to see to take the opposite side. I think that eventually I will lose even these 5 min trendlines. I think the RET will be all that is needed along with the context of what happened earlier, where the rejected levels are, where the ranges are, and of course where we are in the whole grand scheme of things. I have read Db say several times that he only trades RETs. Not that I'm trying to following him religiously, but for those reading who believe he knows what he's talking about, it would be foolish to assume that he hasn't looked into so many other options. I may have a scalping system for now, but having a way to practice the critical entry and stop is necessary I think before the huge profit targets can be sought out. So this all comes down to mastering the retracement. But what do you guys think... is the retracement the holy grail or not?
Thanks for this bh. Yes, this is exactly what I was after and my hunch was that many scratches for the big moves is one way, or lots of little profits with a great win rate. That trade from yesterday still really hurts. I mean I got stopped out to the tick... the last tick of that down spike! And the next trade, the market order could have easily been a winner if I just waited for the RET. Oh well... lesson learned. I think you've got me figured out quite well. I'm fighting a bit with myself because I want the bigger moves, I see the power of just holding the damn contract for a couple of hours and perhaps just moving it to BE. But given my nerves at the moment, little wins along the way are I think my critical stepping stone. Can I ask a personal question? I don't know much about your posting history actually. What kind of trader are you? What do you trade? How long have you been at it? Your advice certainly fits well with the road I'm going down, so I'm curious what methods you follow if you don't mind me asking.