Geez, First of all let me say thank you for this thread which is easily one of the best ever on this site. I love what your doing and I'm extremely intrigued to understand your style better. You have mentioned that you trade 4 different setups. I've looked back through the pages but I haven't yet seen any explanation of what those 4 setups are. Is that detailed here somewhere and I'm just missing it? Or perhaps the setups are explained but just not all in one post? I think you and I trade a lot a like especially with respect to money management. Like you I have a spreadsheet that I can glance at to see how many shares I can put on based upon the stop I'm using. One of the major quandries for me has always been when should I increase my dollar loss limit? I feel like as my account grows I should risk more, but at what point should I make that switch? I've gotten into a comfort zone and I'm still risking the same dollar amount as I did when my account was much smaller. Any thoughts on this? TIA
I'm missing it too; Geez please... Also, do you think it will be better if we create a new thread every Monday like following series? Fas/Faz - 5/11 http://www.elitetrader.com/vb/showthread.php?s=&threadid=163621
First off...thank you Mike , Ok...I promise to have the 4 patterns posted by the weekend. Work has been very busy, but I should have enough charts now to post all the patterns and have some free time saturday and sunday to explain each one. As for increasing your dollar amount: This is very touchy for me. Trading is secondary income for me, I don't NEED it for living, which makes a big difference right off the bat. I am in my 30's, not married, no kids (so no extra financial hassles)..I use my trading money for hobbies and "toys"...so I am at a huge advantage in that sense. But, because I have a fulltime job (during market hours) I don't want to feel the pressure of having big postions open while I am working on stuff for my "real" job. Sometimes I do not have time to keep track of what is going on with the market and with the max loss I have now I feel at ease "trading blind"..just setting my stop, alerting my target , and letting the trade run it's course. But I fully believe each trader needs to progress. If this means you can make money through a full market cycle (uptrend, downtrend, back to uptrend), you should be able to increase max loss size. How much depends on: what stocks you play (how liquid they are), how much time you have to follow the market, are you using trading money to live ..or, do you live to trade??? Do you have a mortage to pay? Kids to support? Dead beat mother-in-law to take care of? A fiance that makes you get off the computer and cook, clean, shop..blah blah blah......you get the point (no clue how you guys put up with that stuff)..Seriuosly though, all these little things factor into when or even IF you should increase "size". One final thought about it: If you trade ANY different when you move up...STOP! Go right back to where you were before and stay there until you feel comfortable again. Do not start taking stops early because you just want to take some profit, or exit a trade because you "felt" like it was going against you ( I felt like DIA was never going to make it to target today..but it did, and then some!). I am a firm believer in baby steps (or training bra's, if you like)...take it slow..they will grow (the position size I mean, not the...oh nevermind) Hope that helps -G
This is a very good word Mr Geez. I have had sizing issues as of late (4 star at best?). Anyhow, I have been paper trading a system somewhat like your "lower highs" to maybe work into my current 'missed' setups, and hope to bounce them off you "live" soon. I am actively working on getting a more rigid framework for LH entrys in place soonish as well. Your live teaching and joking around is much appreciated on this end.
OK...I am only posting the SKF chart here, but will discuss both the FAS long at 10:47 and the SKF long at 11:40 using this chart. These 2 trades came up alot in questions today because, in essence I was both long and short the financials at the same time. First, look at the insert I put in on the 10:45 bar of SKF. Looks alot like a lower high right there. It rallied hard into 10:10, the 10:15 and 10:20 bars move back down, and then the 10:25 and 10:30 bars move back up, only to stall out with a red bar at 10:35, setting up a lower high if SKF breaks below this bar. On the 10:45 bar it does break the low, setting up a lower high. Since I can not short SKF, the best thing to do is go long FAS (FAS has this same setup, just in reverse, but I thought it would be best to see this all on 1 chart). SKF short (my FAS long actually) works in my favor and starts moving lower.......Itsets up a small basefrom 10:50 to 11:00 and breaks below this, a sign of more weakness (and a good sign for FAS long). But it reverses in one bar (1st sign of some strength). Then the 11:20 bar makes a strong move up and takes out a prior pivot high from 10:55 (second sign of strength). From here it sets up a small higher low with the small rectracement lower of the 11:25, 11:30, 11:35 bars (third sign of strength). Factor in that the overall trend of the day on SKF to this point, a strong move upand holding (4th sign of strength) and I could find no reason at all not to take this trade. This is picture perfect per my trading plan...even though I was in FAS long, I couldn't let this go. I felt if this setup failed, FAS would have went to tgt. I was more than willing to take a loss on both trades if it happened because both were very clean setups ..setups I look for over and over. OK..now it's open for retorts (retorts..not retards, no more blonde jokes jegnyr, nodoji always seems to be lurking)-G
Here is the DIA long from today. DIA tried to break to new lows at 12:55 and the 1:00 bar reversed that. It follows that with a rally up until 1:20 that takes out the prior pivot high at 12:45. Next, it has 2 very small bars of selling (a sign of strength after making a higher high) to set up a higher low at 1:35. When I play DIA or SPY I like to use .20 stops to give some wiggle room. My Entry was 84.02 , Stop 83.82. As you can see, this thing moved all over for a while, then went to target. A good lesson in just letting your trade go. But the higher high after failed breakdown..followed by 2 small bars of selling (1:25 and 1:30) was the key to this entry.
Geez, I really appreciate you taking the time to post those charts. Looking forward to seeing all 4 patterns as well. I do trade for a living right now with a wife, kids mortgage, etc. so I'm in a little different spot than you, but I think your insight is spot on. When I was in your position I was actually more ballsy but now I'm trying to be more disciplined about risk management. Still working trying to find that magic number though. Right now mine is $500 but based on my account thats really too small. Problem is, everytime I increase it I get smacked silly. LOL! Thanks again