Your statement makes a lot of sense. I spent some time last night reviewing my trading records covering the past year and I found that there was a correlation between # of trades per day and my daily P&L. The higher the number of trades, the more money I lost, I discovered. I had already expected to find this result, but my statistics confirmed it. It turns out my optimum number of trades per day IS in fact around 2 each day. Actually, compiled from my winning days in 2002, it worked out to 2.3 trades per day when averaged out. My biggest losing days, on the other hand, were days when I traded 7 or more times. Plus you are right about not trading every day. For a leg trader, it is not even worth dabbling in the choppy consolidation days. Of course, sometimes it takes a stop-out before you find out that the day is a chopper. I may add the Toni Turner choppy day rule to my trading regime. Basically it is this: Take the day off, or call it a day, when the TICK keeps bouncing back and forth between positive and negative and when TRIN flat-lines in the 0.90 to 1.10 area without showing any indication of trend.
Imho you have to stick with the trend. Today the Es was down trending. Which to me you have to continuously short. There were times in the day when there was a turn around but it always backed down. Unless you are super attentive one just gets hammered going long into a down trend and not adjusting immediately. Actually a day like today is good for making profits.
If you miss an entry (#2), skip the trade altogether. It is OK to skip a system trade <b>at random</b>. A late entry ups the risk/reward ratio.
agree re using trin oscillating close around the 1.0 as a 'stay out of the market' rule.. i like to use an even more conservative .7 to 1.5 nasdaq trin "no trade" zone toni's book has the best description of how to use the nas trin I've seen in print so far, a must-read imho also a tip: i like to keep a running time and sales type ticker with the trin (which updates every 30 secs) in front of me on a monitor - helps to see a) what type of trader to be overall (long or short style) and b) when to be aggressive vs stay out .. ken
This is the sort of thing that can be easily verified by going through a few months' of old charts. You may find that it's a great forecaster, or you may find that it's not true at all. I trade every day, but since I trade opening range breakouts, I know fairly quickly whether I'm going to get anywhere that day or not. --Db
"i like to keep a running time and sales type ticker with the trin (which updates every 30 secs) in front of me on a monitor - helps to see a) what type of trader to be overall (long or short style) and b) when to be aggressive vs stay out..." A ticker?? Could you elaborate? Thanks! I
How wide are your stops on ORBs? I have been trying to develop a strategy on the first 30 min bar, but I can not seem to figure out whether to use a very tight stop or an extremely wide one. Any insights would be greatly appreciated. Thanks Cheeks
Corallus, I've got a different idea for you. You should stop trading! Your first post says alot, you have been consistently losing, yet you feel like you are right on the verge - if only you could just find the right magic formula, you can beat the market. This sounds very much like something a compulsive gambler would say. Compulsive gambling is very serious and destructive, and you should face the fact that whatever it is you are doing is not working, and trading and losing every day is very damaging. Not only to your financial well being, but mentally is very straining and painful. I have read alot of posts on this board saying things like "keep going, no matter what", and "keep trying even though you are losing". I totally disagree with this line of thinking. You may not be cut out for trading. It is very possible that psychologically you are not suited for it, and there is nothing you can do about it. Certainly you do not have an edge, which is necessary to consistently make a living trading (and very difficult to find), so there is no reasonable reason you should keep participating in something where you are losing day after day. I know this is probably not what you want to hear, but consider the damage you are doing by continuing pursuing something that is draining your bank account, and your mental well being, on a daily basis. You are looking for the right move (in the market) - the right decision. Sometimes the right move is to quit before you lose what you have now.
I am sorry to hear that. I think that there is only one solution: trading purely mechanically. It works. Some systems do not require more entries than one a day or even one every few days and still can make you money. I believe it is better to make little than to lose consistently. Let me give you an example of what can be accomplished this way. Here are all trades of my favorite mechanical ES system in January only: 1, -6, 6.5, 17, -6, 15. Not much work, and only two losses of $300 per contract this month which certainly beats your $300 every day. I believe that you can come up with your own mechanical system, although this one will be available to others when I finally find out what is its optimal stop-loss. Don't have much time to do that. I reread your posts. I see that you do use some mechanical system. Maybe you need more than one (I use three) to diversify or perhaps you are so consistent in losing because you consistently override your mechanical system. Also, I believe that for you a system that generates fewer entries can be safer.
You do need to find an edge before you continue putting money into this game. You may find it, and it may not be where you thought it would be. The main thing is, you have to be able to see some kind of reliable patterns in this seemingly random swirl of numbers. When you find it, that will be your edge. Until you find it, it's like holding stacks of dollar bills under an exhaust vent and watching them get sucked out the roof. When you find your edge, it's like having a vacuum cleaner to suck up those dollar bills.