I am going to stop doing live trades for quite a while. I am looking into changing my methodology, possibly looking into beginning to trade the YM. At this point I have little confidence in my system and feel that there are necessary changes that need to be made in order for me to trade well. After reading IN2WINs post about overcoming fear and greed, I have been inspired to come up with a system that fits my personality. So far from my live trading I have noticed the following: - I enjoy having a high percentage of winners, lots of losers discourages me - I enjoy trades that are quick and do not last too long - A trade that lasts longer than 30 minutes tends to test my patience and make me nervous - After going long periods (2-3 hours +) without trades I tend to get bored and will often try to make something happen even when there is nothing to be done trading wise - I have discipline issues that need to be addressed, at this point the best (and cheapest) way to do this looks to be by paper trading So for now I am looking to use some sort of scalping methodology. Currently I have been corresponding with blb078 (thanks again for your help) concerning his methodology and may adapt something similar , or the same thing for that matter. I will continue to update this journal as time goes on.
Kserra, My opinion... dont bother with futures at all. Stay away from them for a few years. U are better off learning to trade stocks... --MIKE
There may be some technical difficulties associated with trading a system that uses the crossing or angles of averages. I always had difficulty seeing when the lines had actually crossed on my screen. I'm sure by now you realize that if you are using angles as part of your trading regimen, they are dependent on the size of the chart being constant, the scaling of the chart being constant, and the bar spacing being constant. Only then will you get consistent angles on the screen. I always found it difficult to identify average crossovers, particularly if I was updating on every tick. If you do update every tick, signals will fire then disappear, so in reality you will need to base signals off closed bar signals to not get false signals. You may be way ahead of me on these issues so please bear with me if this is the case. Now that some time has passed since you initially posted these results, does your system continue to show these results: 1:1 ratio and 60-70% winners, or is the ideal performance for the system much lower? My experience is that you really need a 70%+ system if it is 1:1 because even with great discipline execution will never be perfect because of reaction time and the nature of fills in a dynamic market. The other observation is that in order to maintain a high win rate (which you need with 1:1 ratio) you will need to have profit targets, so your original premise of letting gains be pressed as much as possible is in conflict with this high winrate goal, and will result in a lower win %, which if coupled with the 1:1 ratio will end up with commissions eating you up. Now we are getting down to the main issues. You have pointed out a disconnect between your actions and the signals of the system. Let me ask if you were to go back to the original entry rules posted on the first page of your journal, and apply those rules to the market since 11-3-03 to the present, how would strict adherence to these rules have performed? How does that performance compare with your actual trading performance? What exactly is an early entry? An early entry to me is an entry that is made in anticipation of a signal, in order to capture a better price than the system can produce. When you start trading like this you run into some problems: 1) You end up entering some trades that do not have trade entry signals. The dilemma becomes, how do you then manage these trades when you have no plan for unconfirmed entries? 2) Because of 1), you end up with more costs in commissions. Trades like 1) have not got the higher 60-70% backtested probability associated with them, so the result is probably a coin toss, which combined with a 1:1 ratio and the extra costs from commission add up to a big drag on the bottom line. This is like the fat on a steak that needs to be carved off. 3) When you are attempting to enter ahead of a signal being given you put yourself in a really poor state of mind. It is a loser's state of mind. I know this from personal experience. The thing you are most afraid of is missing or being late in taking a signal, so you tend to anticipate (manufacture) signals left and right: overtrading, or in other words trading without a plan. You would have more luck by throwing darts every hour. 4) After you have anticipated entries for a while and gotten in early and been burned a few dozen times, this leads to another really poor losing state of mind. You start wanting confirmation of the anticipated entries you are making. (can you see how the whole system trading idea is now becoming convoluted beneath this poor thought pattern?) So now you only start anticipating taking trades that are more certain to work out or that are more definite. (Does anyone besides me see the irony of a "certain" anticipated trade?) What is a confirmed or definite trade according to the context of 4)? It is a trade that has already moved in the direction you wish to enter. In other words when your trades are confirmed, you are chasing the market. And as I pointed out in my journal, the stock indexes are prone to retrace, so by entering when your anticipations are confirmed you are really entering at the worst possible point. The original premise behind the anticipated entries was to improve your fill price, and yet as it turns out when anticipating entries for a system, the net result is to ensure that you get the worst possible fill on a bunch of trades that do not meet your system's entry criteria. You can learn this simple lesson from studying the results of hundreds upon hundreds of anticipated entries. You see, your ego would rather have you believe that anticipating entries is not the problem - just "the way" you are anticipating them is the problem. So rather than eliminating the problem with regards to your discipline - moving you closer to your system results, the ego gets you to do major alterations or even abandon your system altogether in a vain belief that you know what is best and you are smarter, faster, more certain than your system ever could be, even though your ego never wants to be backtested. So you may in fact be caught in a snare, a trap of your own making. The ego will blind your eyes to what has been happening, will change your priorities and will warp your perception. But all you have to do is get back to a solid set of tested rules. Just test out following the rules on a trade here and there and make note of the results. Try it out. Start gaining confidence again in following your system by making small strides. After you have made some progress, resolve to follow all the rules literally for one entire trading day - just to see how it works out. Then work your way up to a week. Only YOU can improve your trading. Good trading to you!
BAM... that is the sound of you hitting the nail right on the head, because this sums up the problems I have been having as of late like you would not believe. However even after last week when I did not enter any trades early, and traded with my plan pretty well, I still had a pretty lousy week. The problem I am persistenly running into with my trading is that nearly all of my trades are trades that are being taken against the trend or trying to call tops and bottoms. So far I am apparently not very good at calling tops and bottoms as can be seen from my trading record. So right now I am working torwards aleviating this problem, by working on method to trade with the trend. Although this will not get rid of my problems with discipline, it should help with my confidence with my system.
Right now my goal in my trading is to creat a clear and concise plan. This plan must address the following: - Create a STRICT (no discretion involved) plan that gives clear rules for entering and exiting the market - Paper trade using these rules and adhering to the rules as best as possible, use conditioning to enforce these rules - Once a profitable month has been achieved paper trading slowly move into live trading using these rules, paying strict attention to all aspects of the plan and noting and violations in discipline. Any violations must be dealt with immediately At this point I think I am looking at using the same system I had, but with some alterations to help me from taking trades outside of the plan as well as trading with the trend and quiting trying to fade the trend.
Discretionary trading and counter trend trading should go in the garbage can.....Messes with the mind....GO WITH THE FLOW...BEFRIEND THE TREND...BUY LOW. SELL HIGH..BREAKEVEN AIN'T BAD........AFTER THE LAUGHING STOPS, THINK ABOUT IT...YOU CAN TRADE IF YOU ARE WILLING TO SACRIFICE ENORMOUS EFFORT AND MANY HOURS BY YOURSELF....OTHER PEOPLE WILL ONLY CLOUD YOUR THINKING........GET SOMETHING LIKE THE 10 MINUTE CHART AND THE 18 BAR SMA FOR LONG TERM TREND AND TRADE WITH IT AND SEE WHAT HAPPENS......I AM NOT QUALIFIED TO ADVISE, ONLY VENTING LONELY THOUGHTS AFTER LOSING MONEY TOO OFTEN.....START OVER WITH A FRESH MINDSET....IF YOU HAVE TO BE RIGHT, YOU ARE TRADING THE WRONG MARKET. BEST WISHES...PORGIE....
I have been fiddling around with the idea of creating some sort of trend system with strict rules for opening and closing trades. Today was my first attempt at trading the system. At this point it is still very unrefined, however it works as follows 3 min and 5 min charts 3 and 10 WMAs on both charts 35 SMA Instrument: ES Entry (Longs, shorts are reversed): Use the 35 SMA on the 5 minute to determine trend. When the trend is up (Price trading above the 35 SMA), take trades on a crossover in the direction of the trend only (buy the dips) AFTER the bar of the crossover closes on the 3 minute chart (this ensures no early entry). When price is trading around the 35 SMA on the 5 min, direction is unclear so stay out of trades (needs to be more strictly defined). Trading multiple contracts is very helpful for a method like this as it allows you to trail a stop to hold on for more gains. I will not be trading multiple contracts however until I can profitably trade 1 contract on this system Do not trade after 12:30!!!! The majority of trend trades after 12:30 pacific time, do not work out. Things that still need to be worked on: - What to base profit target on ? - WHat to base stop point on ? - How do I trail a stop, move stops ? - What is defined as trading around the 35 SMA ? I have been going though old charts and looking at MAE, MFE, it appears at this point that a pretty tight stop is very possible because the majority of winners retrace very little of their past moves. Up to this point in my testing I have found the following: Avg MAE: .54 Avg MFE: 3.1 This indicates a very favorable risk to reward scenario where stops can be trailed very tight. These are all trades taken from the month of January. I have the system set to trade from 10:00 -12:30 Pacific time, trades are only taken before eleven if there has been a range it is now broken. Anyways using this very unrefined system today I made three trades. 2 of which were valid trades, the other was a false signal that was entered before the bar closed and was also entered during a period where there appeared to be no discernable trend. All trades are on paper Trade #1: Short @ 1153.75, cover @ 1152.75 + 1 pt 9:24: This trade was taken as a test , will not take another signal during this hour until the system is proven to work during this time period. Trade #2: Short @ 1151.75, cover @ 1152.25 -.5 pts 9:57: Same deal as above, was beginning to be unclear about the trend at this point Trade #3: Long @ 1153.00, cover @ 1152 -1 pt 11:36: This is a situation where the trend was questionable at this point. I took the trade thinking we were beginning an upward movement, however a look at the 5 minute shows this was not the case. Was stopped out. -.5 pt on the day Will work on the system extensively this weekend. I am not trading tomorrow or monday. Hopefully by tuesday I will have come up with a set of rules that clearly defines how to enter and exit with no discretion involved. Chart attached, 3 min on the left, 5 min on the right
Im still bouncing around between methods. Have noticed that MA crosses are difficult to trade because of the lag time associated with them. I think I have stumbled onto something using candlesticks, picked it up from an article by Kevin Ho from the lbrgroup website. The methodology I am looking at uses candlestick formations, I have modified it slightly to fit my timeframe. I paper traded the method in a very unrefined state today, had 6 round turns, with a total of .5 ES pts profit. I am still working on my trading plan, and attempting to create a very rigid set of rules along with the prescribed discipline needed for me to trade properly. It's just a matter of putting it all together.
notes from seminar, 8,21,65 ema, below 65 ema think short, above think long, after entry use 21 ema for trailing stop, get out when 8 ema cross 21 ema, hope this spark light in your head