Hi DB, You indeed speak the Gospel, especially re: the overtrading and patience part. I have spent many a purple day. But properly logging trades has cured me of that. I can't stand it when I look at it afterwards and have to admit that I didn't execute well. It is true that for daily range trading it is hard to quantify the Setup based off of indicators - God, I wish I could code the 10 or so things I look at to determine if one of my three setups is valid - this is the bane of the discretionary trader I'm afraid. Thanks for response. Paul
This isn't true. Either of these traders should be able to make a living if they can really maintain those numbers. That's all I meant. g
slapshot, I didn't read every single post but are you saying you are getting an average of 6 points 75% of the time or just that you get the direction right 75% of the time? I think magna is interpreting what you wrote as the former.
Hi AAA, I wrote that I am AIMING for a 75% hit rate and a 2 to 1 RtR - I am trying to learn how to filter out the lowest probability trades of my three setups to hopefully start picking the direction 75% of time. However, my avg. winning trade (when I don't puss out and take small profits - in other words when I execute according to my plan) is about 6 points - my average loser is 3. My theory is that being right on direction 3 out of 4 and 2 to 1 RtR is a nice edge - now I'm on the journey to achieve it. Or get as close as I can, anyway. Through backtesting, IMO it is possible - I concede that real world execution is a lot harder, but not impossible IMO. As I have reviewed a recent batch of trades, had I strictly adhered to my trading plan (and not adjusted Stops to "protect" profit) I would have hit it. But because I often still don't trust my own rules (Thanks Yannis! - you are right! ) I often fail to execute. I've been trading less than 1 year so this is no suprise. But I am slowly inching towards that goal. And also I know Magna's heart was in the right place and am grateful for any challenges to my thinking - after all, if it is not sound then it won't hold up under scrutiny.. I'm convinced that it is my own execution blunders that are preventing it. Paul
"I have found it necessary to amend my trading plan: to never touch my stop" That is damn hard to do, i'm not being high and mighty here. Its like dieting, all you have to do is eat less right? When you are up and your last three trades were losers its damn tough not to take the money. I have done it many times. I also know that on the average I would have been better off just going to play golf and leaving it alone. Basically my philosophy is that only a small minority of trades will account for the majority of profits but you never really know which ones until after the fact. Second guessing causes brain damage and costs money.
Mondo, What you said is so true. Just today, I got off to a really bad start - it's 6 AM here on west coast at market open, the dog shit on the rug last night , my wife's trading software not working, missed my morning prep time....a totally off balance start. Should have gone back to bed. Made three bad, sensless trades in a row - the first one I can concede was just plain wrong (I chased the entry) then got stopped out - got frazzled and made two more bad trades - was down 8 points - BUT I honored all my stops. Then I calmed down, waited for next setup and nailed a 7 point + and then realized I'm still rattled and exhausted cause after I made a trade between setups in the chop - so scratched it for 1/4 point loss - Better to quit down - 1.25 and a little commish and start over tommorrow - this was one of the worst starts to a day in a long time for me. Several times on the winner I was tempted to take a couple points, but luckily I was calm enough to read the market better and stay in it. Moral of the story? I can make 4 bad trades and 1 good one under the worst possible circumstances (for me) and still come out near B/E but only if I follow my plan of letting winning trades run big. On the days where I don't choke in other areas of execution like I did today, I gain points when following same plan. Yes, it is a bitch and when I get good at it then I'll be permanently profitable instead of back/forth. Thanks for the input. Paul
Don't lose sight of the possibility that if your rules "stop working", the market may have changed on you, i.e., the rules and the system were fine, but the market to which they've been applied has changed. Therefore, if your rules have been working and you are beginning to trust them, don't toss that trust (and your belief in your ability to create a system) out the window just because you hit a rough patch. Analyze the charts without regard to your system and see if they've changed vs last week or last month or last quarter, e.g., intraday range, intraday movement of price by time, the lengths of each bar, the overlap amongst bars, the depth of retracements, etc. Your system may be just fine. Your task may be to do no more than wait. On the other hand, if you want to continue to trade, perhaps the task is not to fiddle with what was a winning system but to create another system to use in the meantime. --Db
Awesome ! These last few posts (pages 7 - 10'ish) have really hit home on my original question/comment for this thread. Thanks. It seems the key (yes "key" again) points are: * Picking ( AND WAITING FOR!!!!) the right set up with the RtR that you want. * Allowing some breakeveness or even a dip into the negative to really catch the whole move. * Looking at average bar and movement ranges in the timeframe being traded seems to be a great guide. * Looking for changes in all of the above to adjust the parameters should any of the above items change over time. When I started intraday trading (Dec. 02, and I trade the ESTX50 and CAC40 index futures by the way) I noticed that almost all of the set ups that I took moved at least two ticks in my favor. What they did after that varied. But I decided to take the two ticks on every trade that gave it to me. Figured this is scalping and it adds up quickly. However, the stops were about 6 or 7 ticks away. Was up about 150 ticks in two weeks and thought that this was going to be easy. Until, I guess, that "change" mentioned above came in. I am now down about 300+ ticks from that 150'ish positive point. Won't be doing any more scalping. Just waiting and waiting and waiting and........ for those great set ups.
Thanks DB for the sage advice. The setups I'm trying to trade happen very regularly in pretty much all markets - ORB/RB, Trend Continuation and Reversal. So in other words, what to do to try to catch the beginning of a trend, how to manage the middle and what to do near the end. Been playing a lot of Reversal in this market lately, that's for sure. I won't take a trade unless it fits into one of these catagories because I get into trouble trading in between them. At least this is the way my inexperienced brain has categorized them. The rules I'm referring to are more like Stop & Profit Management, times when/when not to trade, trading size etc. etc. These are the ones I still have a tough time with. And it doesn't matter what the market is like - they are damaging all around. I.E. My risk plan for each setup has a different stop-loss - since I trade ranges/trend, my Plan is to move my stop to b/e after I'm "in the money" by the same amount of points as the original risk. Then I keep looking for valid reasons to stay in or get out of the trade based on what the market is telling me. When I do this I get my fair share of 5 to 10 point winners...although I sometimes get stopped out b/e. But one thing I struggle with is to not take 2 point profits or kill the trade just because it has ticked a few points against me, or especially not to take 2 points while it is nearing my b/e stop, because usually it will keep on running. If not, then the market had reversed anyway and my reason for being in the trade was gone. Taking small profits was killing my edge. Period. And yet the whole time, for months, I was under the delusion that I was doing a good job "keeping my losers small" and "not going broke while taking a profit" - truth is I was creating small losses and killing winners way too soon. Then I would chase the same trade and sell the bottom or buy the top.... you know the rest of the story or know traders like that I'm sure. When I can in all honesty look myself in the mirror and know for a fact that I always execute by my plan rules, THEN I'll start looking at market changes. Right now I know I'm the problem. Best, Paul
slapshot, For someone who has been trading less than a year, you seem to have a darn good handle on it.