Day-Trading 2.0 for small traders

Timokrates,

In my opinion, the last 4 trades respect price analysis and are valid trades. FesX was the instrument that made me “understand” price analysis. Usually is very clear, especially in the timeframe you are using. In my experience 5 ticks target is on the max limit for a 16 tick charts, again be aware (if you are not trading live) about not getting fill with limit orders (have u seen the DOM on FesX, haven’t you? +++5000 sitting on the Bid/Ask….).

I don’t know your background or you’re trading experience, but in general trading the way you are trading, and if you don’t have a lot of screen time you may have the risk of losing perspective with price analysis and becoming dependent on your trigger (of course it wont matter if you are consistently making money). Your entries are valid but really aggressive (you took two trades in one wave) so a few bad trades can lead you to the endless vicious circle of tweaking your trigger (why not a 6 WMA or 15 HMA, etc, etc).

In any case and in my opinion, for the approach and the timeframe you are using the major shortcoming might be in execution. I would recommend you to start reading (if you don’t know) how to “translate” your trading triggers to an auto or semi auto execution platform to complete your price based trading plan.

Do you have a rule when you exit a trade in regards to time or market development?

Yes a time exit when “scalping” very fast charts and instruments. That’s one of the very few discretional variables I have in my trading plan. For example, If you have a 8 ticks charts on ER2xx and the price hasn’t move or touch a target in +/-2 bars (is discretional) I am out regardless of any price analysis. Why? I’ll post sometime later…

I hope it helps

jjrvat

 

Thanks jjrvat,

I agree with you that losing perspective and depending on the trigger could be a problem. Nevertheless at the moment I have to say that this is the setup I trade - even for the 6B.

I would like to admit that price action is everything and the trigger is a minor helper to me, so it's not from that importance. For example, if I see a springboard at a support level and price is going back up, that's something I watch out for, exhaustion in general, pullbacks of course.

Of course, this is all very discretionary and for that quite demanding I believe, but I have to say that it forces me to learn price action as much as I can.

The DOM aspect you mentioned is very interesting, I looked into this topic quite a bit over the last weeks, but at the moment I don't use it.

Do you have a special 'pattern' you watch on the DOM? Like if the ask is two times the bid or vice versa? Or big numbers like you mentioned? What about spoofs?

Here are two threads I found usefull on DOM scalping:

http://www.trade2win.com/boards/money-markets/29286-bund-bobl-schatz-thread-7.html#post401458

http://www.elitetrader.com/vb/showt...6299&highlight=DAX+Scalping+Discussion+Thread

What do you think of Time & Sales, I watch this trying to find the key.

In terms of an auto or semi auto startegie, what exactly do you mean?

I use bracket orders, but for example don't use any breakeven strategies anymore. I feel that if I trade with multiple exits, even on the 16 tick charts on FESX and 6B I'm able to manage the trade.

You think that this whole approach is to discretionary?

In regards to my background I have to say that I follow technical trading for at least five years now, read a lot of stuff, went live a couple of times, the usual story...

I absolutely appreciate what you are doing here. As mentioned I'm experimenting a lot at the moment and I'm thankful for everything you share. In general, your approach helps me to stay focussed in terms of price action - and only price action.

 

Well, here we go, jjrvat, I've taken your advice and gone with a longer time frame and after tweaking it a bit, here is my first trade that's not been paper. It's kind of like playing a game, collect 4 diamonds and a color change and place the trade. Stop goes to previous last major high (lot sizes are based on probably profit vs loss) and take profit is a standard 10 tick but should also move to give trade room. Take profit is rushed when minor move makes higher/high, lower/low as in the case on this screeny--still ended up with +10. Only 1 trade per major move and cannot trade if diamonds are too far apart (commensurate with major high/low) as jpy tends to range trade. Please let me know what you think...pkchilly

 

For me at the moment it's mostly about to find the right perspective to watch the waves.

The chart below is a comparison of the 2 Range against the 16 Tick chart.

Could be an improvement, but the complicated thing about all this - as far as I believe at the moment - is to define the right perspective for the special contract and the type of market it is in.

jjrvat, what do you do to create a basic toolbox in regards to have the right perspective? Do you have 3 or 4 setups for a contract and the mood it is in - or even you?

<img src=http://250kb.de/u/080328/p/b64b29a5.png>

 

Congrats!

You are a bit ahead of me...

 

Thanks for the congrats Timokrates, we'll see how this thing goes. For me, one of the greatest things about this pbp is its game status--I'll see if the tick chart settings are right through more trading. I do, however, think that what you said about different chart tf's for different days is correct. One thing I learned early on was that the market has a mind of its own--that's why I don't really believe in auto scripts, cause the market is always changing the way it works. I do, however, believe that on a day basis or even in a 4 hour trading period, the market works more predictably. So, if I come to the charts with several different (say 4 or 5) setups (one at 10ticks, one at 5, one at 22, etc and I'm just pulling numbers out of my head now lol)--setups that I have seen work really well in the past several times--I can come to the charts on a given morning b4 NY trading session and go through each of these separate setups to see which is the most congruent with the market today, then trade it.

Course, now, thinking about this, one could build an auto script that would constantly analyze the market and time frames and maximize on the go, but my programming skills are way under what is needed for this type of venture. But, nonetheless, it could be done, would probably take massive amounts of computing power...Oh, well, maybe when I've worked on it more I'll hire some 4 year old to put together a computer program for me...lol--and please don't report me to the child labor department....pkchilly

 

I agree with you that you always have to adapt your perspective to market action.

In terms of higher timeframe charts I'm not sure (never traded a higher TF than 1H) if they are really more predictable. Your take more risk and you give the trade more wiggle room.

I have to say that I really like trading the fast charts. jjrvat presented a way of trading which is really attractive to me, to think in waves.

Basically what I do at the moment is combining wave (price) analysis with spoting weakness (LH, DT) or strength (HH, DB).

You mentioned the game character, I think this is very true. Just did my first demo trades on the ER2...

Very good so far, but we'll see how this will be 'in the real world'...

 

Hey Timokrates,
Just a clarification, when I talked about looking at the charts from a day or a 4 hour perspective, I wasn't talking about looking at day charts or 4 hour charts. (I'm with you, I love scalping...lol, there's something about it that just appeals to my "go out and slay the dragon" mentality as a guy--call me weird, who cares, but it appeals to me and I am truly thankful to be able to do it with the great analysis tools jjrvat has made available to us.) I was, however, talking about looking back over the last hour or even the last 4 hours of trading (within my 10 tick chart) to see how the movement has been and how congruous that movement is with my trade strategy. For example, when I came to the charts this morning, I realized that from 8am until the time I took my trade, when color changed on my hma, I could have taken a trade and made bookoos of money! Of course that doesn't mean that I didn't have to do the proper price based analysis--hence the diamonds...


But each trading session is going to be different depending on the mood of the market, hence the need to have several "templates" to review the last few hours of trade within to see if they conform and then trade with that understanding. I would think that would lower our risk per trading session. But again, I should say that my knowledge of the markets is only about 2-3 years in depth...and I have skads to learn...pkchilly

 

Chilly, I agree with you absolutely.

I believe I'm on a comparable level like you in regards to trading experience.

I had two weeks off from my daily job and 'invested' them into simply learning price action - and I got the feeling that I made an important step.

When I exit a (sim) trade I take a screenshot and take notes.

I'm playing around with different charts (range charts caught my attention) and different exits (scale out or not). I'm learnin...

Of course I also love scalping and I have no problem to take a 'only' few ticks of a big move. I would also try to get a few if the move comes to a possible exhaustion point.

I tested indicators, Elliott, Gann, Fibs even Time & Sales and DOM (maybe these could be helpers, don't know yet), but at the end I believe you only need the understanding of price and a trigger - as jjrvat preaches.

Good Trading

 

Do you have a special 'pattern' you watch on the DOM? Like if the ask is two times the bid or vice versa? Or big numbers like you mentioned? What about spoofs? (Timokrates)


No, I trade from the DOM but I don’t use as an “indicator”. I tried for a while; sometimes you can find important unbalances that work but nothing sustainable in the long run at least in my case. I find nothing useful to share in this thread or to add in my trading plan… BTW, thanks for the links I’ll read them and we can talk about this later.

What do you think of Time & Sales, I watch this trying to find the key? (Timokrates)

As u said “I tested indicators, Elliott, Gann, Fibs even Time & Sales and DOM (maybe these could be helpers, don't know yet), but at the end I believe you only need the understanding of price and a trigger…”

I have a very “basic” experience with T&S so I can’t make any valuable comments; however it will be interesting to analyze the cui bono of it in the context of price analysis, you never know what you can find…

In terms of an auto or semi auto startegie, what exactly do you mean? (Timokrates)
…one could build an auto script that would constantly analyze the market and time frames and maximize on the go, but my programming skills are way under what is needed for this type of venture. (pkchilly)

I was keeping this topic for later because it would only have attracted here the “lazy” wannabe traders looking for the Holy Grail instead of discussing and exchanging opinions on the key issue when trading: price analysis.

In any case, the auto (or semi) trading is a valid option for fast timeframes and ONLY for pulling the trigger NOT FOR doing the analysis. I wish I could “translate” my trading plan to a piece of code but I don’t have the technical knowledge to do it nor I think is possible. However, activating an auto trigger when you have recognized a valid potential trade may improve efficiency in terms of execution which obviously will improve trading results.

Well, here we go, jjrvat, I've taken your advice and gone with a longer time frame and after tweaking it a bit, here is my first trade that's not been paper. (pkchilly)

I wasn’t trying to make you change your timeframe, I was only pointing out the potential limitation on live trading your previous chart. Each timeframe has its own implications for a trading plan.

Despite finding the best perspective for analyzing price, the important suggestion I told you before I think is still valid for this chart: Be aware that you may have problem with manual execution. Pls, do not change your timeframe if you have recognized a valid timeframe for you (and only for you) but be aware of the other factors that can tear down a good trading plan.

It's kind of like playing a game, collect 4 diamonds and a color change and place the trade …. Please let me know what you think.

Nice chart (look much clearer than the previous ones). Conservative and excellent valid HH/LL entry however really far away from a perfect entry.

From a strictly theoretical point of view, you oversaw macro direction (price above PP…btw what formula are u using for pivots??? It seems that you are using Tom DeMark "Pivot Points”? I am not sure, in my chart price is below PP which would have confirmed macro direction…).

Even without the 240 WMA you can recognize that was an uptrend that just broke your PP (and without doubts) adding a lot of risk for shorts. Given that conditions, your entry, valid from a HH/LL perspective, and even if your 12WMA kept you in the trade (because it didn’t make a HH) price making a Higher High (right after u enter) would have gave me, in that particular circumstances, a close immediately signal (not because of waves but macro direction + proximity of PP knowing that it wasn’t tested before…). Finally, knowing all these factors I wouldn’t have ride for so long my realistic exit would have been at the pivot.

Of course the important issue is that this was a winner (regardless of anything) but in my opinion is better to develop consistency and discipline at the beginning and flexing and adapting your trades only when you have mastered price analysis.

I guess u saw that price was below the 300 HMA instead of the WMA for confirmation on the macro direction, did u? Anyway in both cases price was under but the important issue here is your 300HMA. I don’t know if you analyzed the implications of using a 300 HMA???. There was a guy posting here (TheRumpledOne) that saw this with or without realizing, what I called double waves. I will expand on this later as part of the indicators post, but just observe if you use a very long HMA you can also see macro direction waves !!!... In your chart there were making Higher Highs and Higher Lows meaning? ….

I still have to answer some of your comments … Ill get back to you later.

Enjoy your weekend

jjrvat