critique my strategy

I've finally started trading after reading ET and experimenting with systems and indicators for two years. Now I can say this is the most exciting occupation I’ve found in a long time.

I'd love to get some criticism on my strategy.

I trade 1 or 2 NQ contracts (NQM3) intraday with a $6K account on IB. I use RealTick charts with Medved QuoteTracker as a backup. My P/L has been positive every day I’ve traded, though I overtrade (about 100 trades per day) and thus spend a lot on commissions.

So far I've identified many techniques that seem to help me, at least for NQ:

1) I use tick, bid and ask charts of NQ. I use a tick chart of QQQ for confirmation.

2) I periodically adjust my moving averages to best highlight major and minor trends in a given period of time. I don’t use MA crosses for signals. Instead I look at the slope of each MA, sometimes using a MA momentum indicator.

3) I pay close attention to inflection points on the short term QQQ MAs. These are easy to see on the MA momentum indicator.

4) I always trade on the side of the major trend.

5) I use a high speed, low latency internet connection and use hotkeys for rapid entry.

6) I never hesitate to close a position if something doesn’t feel right. Better to wait and find a better entry.

7) I always keep an eye on the NQ bid/offer prices and sizes. If prices aren’t moving fast, I’ll time my entry/exit to fill at the (best) bid/offer with shrinking size, because that that makes my trade more optimal than at a bid/offer with larger size. If bid/offer size is increasing, I may wait for a better bid/offer.

8) I only use mental stops and profit targets because while price may hit the stop, a short term moving average is a more accurate indication of where prices are moving. Plus it may be in the interest of MMs to bounce prices around, triggering stops.

9) I trade unemotionally. This is money I can afford to lose. I don’t mind losing trades and overtrading if it helps me learn.

Any suggestions?

 

way too many trades.imho

 

Sounds great, now all you need to do is to define an edge and you're good to go!

Seriously though, does the strategy you are applying necessitate that you trade 100 times/day? Paying 10% of equity per day in commissions seems like an awfully tough hill to climb. I think you need to further clarify your entry signals to minimize slippage + commissions.

 

If you do 100 trades per day and are positive every day, I wouldn't worry about overtrading, commissions, or actually anything.

The way I see it, the secrets to your success are points 4), 6), and 9).

Regarding your comment in 8), I really don't think MMs have a lot of influence on NQ price developments. What DOES cause the spikes you might observe would be large hedgers and/or speculators.

 

6) I never hesitate to close a position if something doesn’t feel right. Better to wait and find a better entry.

My rule for that situation is i would sell half!

 

I’m working on that. Commissions are currently eating 50% to 100% of my daily profits.

 

I have a tools suggestion for you. Since you don't need RealTick order-entry, get rid of RealTick and get eSignal. I see both every day, and there just isn't any question. With eSignal you can program your strategy and alerts with its EFS program language (Javascript), and also backtest. Also eSignal's tick charts are 100% better than RealTick's. eSignal also has sub-minute charts (e.g. 10 seconds). RealTick charting is in the stone ages compared to eSignal.

An added bonus is that IB is a partner with eSignal, so you get a discount starting rate, and there may be more benefits. http://www.esignal.com/map/ib/default.asp

In edit, eSignal also has a real active user forum with a lot of real sharp people there willing to help with strategy programming. http://forum.esignalcentral.com/

 

That makes more sense.

The number of trades is excessive. My rational for trading so often is that I’m learning faster and experiencing a wider range of situations. I don't want to limit myself to a single edge or setup.

I do that when holding 2 contracts.

 

I also develop quantitative systems which require historical time & sales data downloaded end-of-day or end-of-week. About a year ago when I set this up RealTick/TAL offered exactly what I needed. eSignal did not. Maybe things have changed. I’ll look into switching. Thanks!

 

I have an even better solution for you...Leave now...Not even trying to be a smart ass about this, but once you start down this path of trying to "improve" or get "feedback" on your strategy, you are going to get 100+ pages of divergent opinions...You will walk out of this place with another 1000 questions that you never even contemplated in the first place...

For a newbie trader, I think they should hang a banner that says "Abandon all hope, ye who enter here"...