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FreakofNature
Registered: Jun 2011
Posts: 1060 |
04-26-12 09:43 PM
For a long time I tried to daytrade successfully by using buy stops to obtain price confirmation or short stops when wanting to short and didnt accomplish positive expectancy. Based on things I read it seems that those suggesting it only used examples in hindsight, in reality many times I found myself buying the top or shorting the low of a swing.
On the other hand, I've begun buying red, when something is rangy or uptrending and shorting green when it's doing the opposite, with quite good results. In fact I have prohibited myself from buying green candles. Mostly tips I received via PMs from members willing to lend a hand, sadly, can no longer find them in ET, so searching for more help from current ones.
I remember that for the longest time I would get bullish when something went up fast, and always ended with a loser in my hand, I said, this is strength, trend is up, then got slammed. Well after losing money doing this I decided it was time to stop and started looking for different strategies.
Now when I see that feeling I fade it, never adding to decrease my average position, only to improve it, but respecting the trend at hand. I think adding to a winning position is horrible, only works when you are in a very strong move, if i had known from the start it would be strong I would go all in from the beginning, but you never know that, most of the time everything is wavery and reversive.
I wonder if I'm on the right track here, and if there's anyone else doing something similar, I would love to keep improving this from a short term perspective which is where I tend to need more help.
Thanks for any insights, trying to get a discussion going if you are interested.
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bwolinsky
Registered: Jul 2008
Posts: 4560 |
04-27-12 12:51 AM
Quote from FreakofNature:
For a long time I tried to daytrade successfully by using buy stops to obtain price confirmation or short stops when wanting to short and didnt accomplish positive expectancy. Based on things I read it seems that those suggesting it only used examples in hindsight, in reality many times I found myself buying the top or shorting the low of a swing.
On the other hand, I've begun buying red, when something is rangy or uptrending and shorting green when it's doing the opposite, with quite good results. In fact I have prohibited myself from buying green candles. Mostly tips I received via PMs from members willing to lend a hand, sadly, can no longer find them in ET, so searching for more help from current ones.
I remember that for the longest time I would get bullish when something went up fast, and always ended with a loser in my hand, I said, this is strength, trend is up, then got slammed. Well after losing money doing this I decided it was time to stop and started looking for different strategies.
Now when I see that feeling I fade it, never adding to decrease my average position, only to improve it, but respecting the trend at hand. I think adding to a winning position is horrible, only works when you are in a very strong move, if i had known from the start it would be strong I would go all in from the beginning, but you never know that, most of the time everything is wavery and reversive.
I wonder if I'm on the right track here, and if there's anyone else doing something similar, I would love to keep improving this from a short term perspective which is where I tend to need more help.
Thanks for any insights, trying to get a discussion going if you are interested.
If you're buying when everyone's selling and selling when everyone's buying your strategy would do well. Also, from a trading system developers perspective any cursory backtest of the breakouts you were looking for would have revealed that it had a negative edge and no advantage entry wise in nearly every case.
Run some backtests the next time before you listen to people in hindisight. The first sentence is the only way to make money.
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volente_00
Registered: Nov 2002
Posts: 13711 |
04-27-12 12:57 AM
If you are trying this in es it will rarely work due to chasing price in a mean reversion instrument. You have to buy when everyone is selling and vice versa. If you can't get past the emotional issue of fading the herd then you must learn to semi automate your strategy. Never chase price in ES if you want to be successful long term.
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AAAintheBeltway
Registered: Oct 2001
Posts: 14532 |
04-27-12 01:02 AM
Buying breakouts is a low percentage play, except maybe in extreme bull markets. At the same time, it is easy as a daytrader to fall into the trap of fading everything, which can also be a problem. You want to fade moves that are at the point of exhaustion and overextension, not just because they moved a lot.
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RedTankEra
Registered: Feb 2012
Posts: 252 |
04-27-12 01:06 AM
Until you learn how to buy before an uptrend develops or short before a downtrend develops entering on established trends during retracements is perfectly fine but you must do it right, with one very specific rule, I suggest a combination of concepts.
For instance...
Do use buy stops when buying but buy stops on the top of RED candles. Likewise, same concept when shorting, short stop on the break of a GREEN candle.
Just don't do the buy stop on the green, as chances are the instrument will revert on you, and you take unnecessary heat and/or higher risks. Same with short stops, don't place them at the bottom of the red.
Try it, you will be pleased, just make sure you learn which are the potential key areas where a retracements could end, and demand action from them, no action,no trade; when these areas fail, the retracement becomes reversal and on it goes to the next key area, where will you be repeating the same process.
Don't think where price will go, go with price, zero prediction, learn to be like water, and adapt to the price action at hand, demand action, forget the illusions in your head.
People fail in this business because they predict where price will go too much, don't, let price take you wherever it wants to go.
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ChkitOut
Registered: Dec 2005
Posts: 2927 |
04-27-12 01:22 AM
This entire discussion is beyond over simplified, there are so many factors that go into trading on stops or limits, with trend, reversals, trading ranges.. it just depends.
As you can see, buying above strong "green" bars today worked just fine and you would have gotten your ass kicked doing the opposite.
 stopwithtrend.png
This has been downloaded 326 time(s).
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