1. Can you elaborate on why you think you're not profitable yet? I could list many potential reasons, but I don't know real reasons. Guess: 1) tracking multiple markets instead of just one - I did it because I wanted my system/approach to be applicable to multiple markets 2) poor price action interpretation skills 3) luck of experience /research 4) switching systems/ approaches, although I have stayed with 1 for 2 years, but is just marginally profitable 2. Why not join a prop. firm around your area? I have just recently realized that I may want to look at other traders. Before I was relying solely on my own research. Also, (1) no prop firms in my area (2) I prefer futures trading 3. Can you tell me your current trading setup? Like # of computers, screens, software, broker, products (equities, futures, forex, etc.) you trade with. 2 laptops. ESignal. IB. I have feeds for most of US futures and forex. 4. What technical skills do you currently have? Programming? Math? Computer Science? CS Degree. I have my own backtesting software written in Java. I have also some automation code for IB. 5. What technical skill would you acquire to make your trading better? I already posses sufficient technical skills as they relate to trading. I am not PhD in Math, and will not become a quant. 6. Final question. You mention, you go through charts... What are you "objectively" trying to acquire through doing so? What's the point of doing so? (No psychological stuff... objectively) If patterns, please elaborate on what a pattern is... (I "look" at internet porn but that doesn't get me laid...) I am trying to look at how price tests certain levels. The levels could be floor pivots, daily high/low, market profile data, swing high/low. All in the context of trend as defined by MA or momentum indicator. Problem is I that I don't find stuff which is better then 50/50. Or I don't know how to look properly. As far as patterns go, I tested most of the patterns out of Toby Crabels book and have not found them useful. That got me thinking that I should try to use discretion.
1) How much time will you commit to trading? I used to swing trade, which is easy on West Coast. And easy to monitor. I took 1.5 years off work for research. I can devote a lot of time. I prefer not to stare at the screen the whole day though. 2) How much money do you have to devote to trading? I can devote 50-100K to trading. 3) What do you like to trade? Commodities? Financials? Equity Futures? Options? Equities? Why? CME Futures, CME forex futures. "Simple" My "thinking" was that system/approach should be applicable to all markets. 4) What timeframe do you like trading on? Tick? 5 minute? Daily? Weekly? Why? The system traded by me (stopped now) was a swing trading system, you would enter in the morning and exit EOD. The interval of intraday chart not that critical. 5) What are your trading goals? What kind of return are you looking for, and how quickly? Ideally 25-50K year on 50-100K. The number can be lower. I look for consistency. I can stay in software biz longer, but I want to start churning consistent profits. 6) Do you prefer discretionary trading, or automated? Automated. But knowing that market "is alive", I have also tried discretionary approach. Some of my answers are general since I am searching for something that works. While there are benefits to sticking with something, there are benefits to exploring things which were not tried before. I do appreciate, the responses and interest.
1. A good way to find a mentor is for you to provide them with computer support and in return have them teach/watch them trade. Most discretionary traders can't program. Go in as a trader assistant using your IT background. This should be a fair deal for both sides. 2. You will need to get some math background, if you are going to trade with a system. You may have a marginal model, but how did it perform under tests? It seems like you are either, not testing it correctly (realistically) or not proficient with development to start off with. Either way, systematic trading require math skills. For example, you don't need a > 50/50.... you've read Van Tharp and you should know % profitability isn't the only measure needed to assess a tradable system. 3. Opening Range Breakout (Forex becomes tricky but US futures definitely) has value. Floor value has value in Forex, and Daily New High/Low has value in both Forex and US index futures. It comes down to your experience and knowledge towards systematic trading. Or you're not testing your models correctly. 4. Basically, you can trade anyway you like. Though, you have traded with a "compromised" approach with systematic trading. Sure, your IT background is an advantage, but not all IT skills are sufficient enough to be able to trade. Your martial arts experience, too. So I have another series of questions: 1. If Futures and Forex hasn't been a giving you results, why are sticking to futures? 2. What measure do you use to assess whether your model was good? 3. What is your preferred timeframe to trade? 4. And please, comment on my assumptions.
I'll start off. 1. One of the factors of developing a trading model is to extract a certain tendency of the market. Simply/Obvious, right? Trying to find a "System of Everything" will not work. Look at Opening Range Breakout, there is a definite fundamental reasoning for it. The Equities market has a set time it opens and closes, and there a tendency in the market which market volume is high during these times. You extract this tendency and apply it using ORB as a way to be profitable. Markets change but there are specific conditions that occur all the time (like I mentioned Open/Closing Bell) and you identify, extract, apply and etc. to develop a trading system. (This is just one approach, not all systems are like this) 2. My assumption tells me that you are compromising your lack of system development skills by going into discretionary trading. 3. There is no easy way of making money. If it's better to be in front of the computer all day, you should be doing it. I have a bunch of Automated Systems but I do more work than a discretionary trader (+8 hours work). 4. You trade the market. The market doesn't care who you are. So my suggestion is to stop thinking, "I want to trade this way"... You trade and make money from what the market gives you.
Set the account Set the tools Have a very good strategy* (like sc1, sc2, sc3) Plan the trade Trade the plan Have a very good MoneyManagement Have a good psychological condition *(Scale-Out-Orders are not for dogs or cats, but for futures! There is a reason, there some place. Think about that!) see : http://www.elitetrader.com/vb/showthread.php?s=&threadid=93543&perpage=10&pagenumber=2 about Scale-Out-Orders
SunTree, You should check out VSTscalper's posts and send him a PM. He's based in the Seattle area. Good luck, MiniDowTrader
1. A good way to find a mentor is for you to provide them with computer support and in return have them teach/watch them trade. Most discretionary traders can't program. Go in as a trader assistant using your IT background. This should be a fair deal for both sides. I can certainly help with automation 2. You will need to get some math background, if you are going to trade with a system. You may have a marginal model, but how did it perform under tests? It seems like you are either, not testing it correctly (realistically) or not proficient with development to start off with. Either way, systematic trading require math skills. For example, you don't need a > 50/50.... you've read Van Tharp and you should know % profitability isn't the only measure needed to assess a tradable system. "50/50" was a poor choice of words on my part. I referred to "not better then random". I know of expectancy and interplay between W/L count and W/L size. I did run several Monte Carlo simulations (frankly I don't see the huge value in them). I also tested each system with various stops/targets and created 3D charts. The "top of the hill" should be broad - this tells you that you are not picking just one lucky combo of stop/target or other parameters you are testing for. Picked few systems. The combined portfolio curve was excellent.... Started to watch in real time - the whole portfolio (!) flatlined. 3. Opening Range Breakout (Forex becomes tricky but US futures definitely) has value. Floor value has value in Forex, and Daily New High/Low has value in both Forex and US index futures. It comes down to your experience and knowledge towards systematic trading. Or you're not testing your models correctly. Good observation and market insight. Obviously I do not have sufficient knowledge to develop winning trading system(s), otherwise I would have developed it already. 4. Basically, you can trade anyway you like. Though, you have traded with a "compromised" approach with systematic trading. Sure, your IT background is an advantage, but not all IT skills are sufficient enough to be able to trade. Your martial arts experience, too. So I have another series of questions: 1. If Futures and Forex hasn't been a giving you results, why are sticking to futures? I have started with stocks and options. Then ETFs. At the beginning I barely had a clue. The only thing which I did well is not loose money. Then proceeded to futures - smaller spreads, smaller commisions per $, do not tie up a lot of capital. They are a good instrument. Why stick with them? I adapted following train of though which I got from fairly reputable book/trader: if you are starting from zero, you may as well pick market/system/timeframe *which you like* 2. What measure do you use to assess whether your model was good? General answer: I read threads by acrary. I did a lot but probably not all of the tests mentioned there. I do not understand how to run stationarity tests. 3. What is your preferred timeframe to trade? If I would pick and choose. I would really like to enter around open and hold for the day or more. Swing trading. 4. And please, comment on my assumptions. Will do. And thanks for the questions, they make me think/take "my inventory".
I'll start off. 1. One of the factors of developing a trading model is to extract a certain tendency of the market. Simply/Obvious, right? Trying to find a "System of Everything" will not work. Look at Opening Range Breakout, there is a definite fundamental reasoning for it. The Equities market has a set time it opens and closes, and there a tendency in the market which market volume is high during these times. You extract this tendency and apply it using ORB as a way to be profitable. Markets change but there are specific conditions that occur all the time (like I mentioned Open/Closing Bell) and you identify, extract, apply and etc. to develop a trading system. (This is just one approach, not all systems are like this) I see what you are saying. Good knowledge of market structure is needed 2. My assumption tells me that you are compromising your lack of system development skills by going into discretionary trading. Yes, system development did not produce good results, and the reasons for it are lack of skills/experience/luck(?). I had to explore (semi) discretionary trading as well and not be ignorant of it. 3. There is no easy way of making money. If it's better to be in front of the computer all day, you should be doing it. I have a bunch of Automated Systems but I do more work than a discretionary trader (+8 hours work). 4. You trade the market. The market doesn't care who you are. So my suggestion is to stop thinking, "I want to trade this way"... You trade and make money from what the market gives you. Good points.