The problem with some types of "indicators" is that the first thing you know is that you're playing a "system", instead of playing the "market".....if you get my distinction. The market could give a hoot what your MACD is doing. Oversold? Overbought? Right, these types of indicators will get you out of every big move that comes along. Moving averages are only good for trending markets....you'll discover them about the time the market is ready to enter a trading range and whip back and forth across the average. What you do need to know obviously the price, and volumn. With those two items you basically have enough to trade the market. Now my preference is to throw a few other items into the mix. How about news? A piece of good news is announced, the market sells off on volumn. That tells you more than all the MACD, stochastics and moving averages put together. I like to watch enough things to give me clues. For example, I watch tick. This doesn't always tell you something, but sometimes it does. Same thing with trin. I would suggest you acquaint yourself with these. I also watch stocks, sectors, etc. Never know where your next clue is going to come from. Watch the how the market acts around it's highs and lows...these can be important as to the next direction. But understand this too. The market moves a couple or three days in a direction...give or take. If you're scalping you're going to miss the big money. Scalping as a steady diet is a tough business....sounds good but tough to put into practice. Let's say you do as some say....you go for 1 point. Do you realize that the ES moves a point when a leaf drops? It moves a point when the guy plugs the Globex in. You trade 2 contracts, go for 1.5 points with one...move the stop to breakeven on the 2nd one? Most of the time that second one will get stopped out for sure....so you got all the risk, and no reward. If you're trading small money then it's something for you to think about. But sooner or later you learn the big money is made by waiting for the right trade...the one that has the potential for a big move....and then riding that position for all it's worth. You'll make more than a scalper ever thought of making. And take the stochastics off your machine....tough to sit with a position while you're watching something like that. OldTrader
OldTrader, You and I are on the same wavelength. I've ditched all the TA indicators except moving averages. I'm not experienced enough to work just off price and volume -- I need some type of crutch to get a feel for market direction until I can get to the level where I don't need MA's anymore. My goal as a beginner is to, of course, survice. After that, I'd like to nibble at the market. If I can survive off bread crumbs, then I'll build up a foundation that will allow me to swing with wider moves. As always, your posts are greatly appreciated. I'm glad you have chosen to give something back to the trading community. Thank you deeply.
ddefina, LOL. 2.5+ average points per day on a 100 lot and you call that a small living. Your modesty is admirable. Keep up the great work and if you need any tips on your golf game, PM me.
but aphie, if you agree with oldtrader so much, why do you still want to use mas when he has previously said something like....."you'll soon find out moving averages don't mean much either."?? i am not trying to crush anyone's strategy here. i'm just pointing out that you align yourself with oldtrader, but technically he disagrees with you imo.
Good stuff oldtrader! If you learn to pick out 2.5 pts per trade on a 1 lot consistently, it might not say much about what you could do with a 50 lot or more. But if you can learn to pick out 7-10 pts per trade on a 1 lot, it's very likely you could do the same with 100. Without scalability a trading method will likely lead to a dead end if not worse.
Price and volume w/ a few moving avgs is all I use... Tnt and Def, I am with both of you, I make 1-2 trades a day and go for 7-10pt. swings... PEACE and good trading, Commisso
Gordon, I think one of the biggest points you are missing on this board is the fact that systems are personalized towards everyone. You may emulate everything oldtrader does but not get the same results. I am a beginner but I need to start somewhere. My system does well on paper, but if it doesn't perform as expected in the market place, then I will be forced to adapt. That adaption process will lead me to come up with my own views and conclusions about the market place. Although Oldtrader is obviously much more experienced than I am, he had to start from ground-zero himself. Perhaps he developed his own system or maybe he took bits and pieces of other systems. However, he probably bled a little here and there until he adapted to the market through his own mind and eyes. That is exactly what you and I have to do. A lot of older traders have given us great advice and tips, but that's not the end of our quest. We need to get into the market and learn for ourselves. Perhaps we will discover a system that works better than some of the ones presented here (although it isn't a contest). My point is just this -- if you continue to fill your head up with bits and pieces of many different systems, you will become confused when trading and you won't be able to learn and adapt. Clear your mind. Your mind won't erase the basics that a lot of good traders have told us, but it will enable you to walk into the market and take some punches and bruises and adapt. You'll get knocked down, but if you are serious about becoming a good trader, you won't get knocked out. Imagine if someone told you, in intricate detail, how to swim. They showed you diagrams of how to move your arms and legs, how to tread water and how to do various manuevers like backstrokes, etc. This is all well and fine, but when you jump in that pool, you're going to find out that everything you've been taught is correct, but you still need to apply your own style and technique. You won't be able to swim right away just by having someone show you how to move your arms while you are OUT of the pool. When I was 6 or 7 years old, I remember being near the three foot section of the pool and I was so scared. I didn't know anything about how to keep from drowning and then, when they put me in the pool, I started crying. I was petrified that I would drown. Well, eventually you can't hold on to the side of the pool any longer and you HAVE TO LET GO. You'll swallow some water but I assure you -- you won't drown. Your mind and body won't let you drown -- you will adapt and you will find a way to swim. You won't be swimming laps right away, but you will first learn to tread water. Then you'll be doing the doggie paddle. Then you'll be swimming side laps. Then you'll be swimming full laps. Then, after years of experience, you'll be doing triple flips off the big diving board while a new generation of future swimmers stands in awe thinking, "wow! I'd never be able to do that." Then you'll be the one showing them how to keep their head above water at first. Keep faith in yourself. Your mind is beyond logic and your brain's ability to adapt to things is astounding. You will do fine -- but only if you let go of the side of the pool and practice treading water. Go for it Gekko.
Wow! What a bunch of great posts! I want to join in thanking OldTrader for sharing his years of experience. It's a huge help to have folks who have been down the road a-ways share some wisdom. I, for one, would love to read about the trip! Any chance you might regale us with tales from your past and how you got from there to here?