Coming back to a market

Discussion in 'Trading' started by Joe Ross, Nov 19, 2010.

  1. Sometimes a market just seems to become untradable. You start having more losing trades than you would like to have. You find that what you have been doing just doesn't seem to work any longer. You are bored and frustrated with that market. Although you wait patiently for things to get better, they don't get any better: in fact, they may become even worse. Finally, in despair, you choose and learn how to trade elsewhere, until your newly chosen market forces you to once again make a choice for a better place to trade.

    You decide to take another look at the market you previously left. How will you know when to start trading that market again after taking a so-called "'vacation?"

    The things I look for are:

    • Normal tick size, in the event that what caused me to leave was abnormal tick size.
    • More or even less volatility, in case previous volatility was not to my liking.
    • Fewer fast market conditions, if fast market conditions were what were previously causing me problems.
    • Greater liquidity, if lack of liquidity had become a problem.
    • Decent fills with little or no slippage. In a normal market situation, positive slippage should come almost as often as negative slippage, with many fills at exactly my price.
    • Less noise, if there was too much of it in the past.

    Any of the above or a combination of any of the above will cause me to choose or to leave a market. I know that many traders "marry a market" and try to trade it through both good and bad times. But it has been my experience that looking elsewhere is often a lot better than suffering through the difficult times in any market you choose to trade.

    I can recall a time back in August of 1997 when a friend of mine, who was trading the S&P500 at the time, called me up. He was almost in despair. "What's going on with the 'snp?' he asked. There's no order flow." He was right. The CME was about to cut the contract size in half, and at the same time introduce the e-mini S&P 500. There was much confusion about what it all meant, and the order flow in the "snp" had dried up considerably.

    In my own trading I had dropped the contract entirely and was busy trading the bonds and grains. But my friend was frustrated for quite awhile because he was "married" to the S&P 500.
  2. NoDoji


    For a while I thought limiting myself to trading one instrument was for the best because you get to know it really well and can stay very focused, but eventually realized that as a day trader who has to generate a reliable weekly income, it's better to have a small diverse menu to choose from. I chose 6E, CL, ES and AAPL. I focus first on my favorite (CL), but if the setups I look for aren't materializing, I always have a backup.
  3. sumfuka


    How do you balance your funds? As you have stated you prefer to trade CL, but since there is no avail setups, so you move your money to AAPL. Right after you dump your money into AAPL, you see an awesome setup for CL, do you quickly move your money back into CL, or do you just let the AAPL trade do its thing?
  4. NoDoji


    I trade very small size, so I'd never come close to allocating all my available day trading power to any one position.
  5. sumfuka


    I see, but has that always been the case even when you were just trading CL alone?
  6. NoDoji


    I've never come close to trading the size I could based on my buying power.
  7. Lucrum


    Sound wisdom.
  8. hi there
    my 2 cents on the issue

    i designed a setup that combines various things occurring in various time-frames all packed tightly together i threw in every logical stricture i understood.
    net result was is very robust setup that i am 100 percent comfortable with but almost never happens
    so now i monitor like a hawk full time 5 index futures 3 bond futures 6 currency's 3 metal
    2 energy for a total of 19 symbols.

    i get maybe one if i am lucky 2 trades a week this way but they tend to work
    last week i came home late from a shaman guided trip. i open my computer for the hell of it and saw this trade which i took for 600 usd on 4 contracts. as usual i left a lot on the table because i only trust the initial spurt.
    in short you can become expert in one market or expert in one situation. in my case i lerned to time capitulation but one only has to find any setup they they like and study it to death. if you get bored spend you time improving your setup and always remember there are people out there who really work for a living
  9. NoDoji


    For anyone looking for the secret to trading success, this is it.