OK guys, I need some help here.... I keep having this annoying syndrome where I spend all day fighting to make a few points and when I look back at the charts at the end of the day I find that I was so busy buying/selling reversals for a few points that I missed the major trend of the day. Today, Friday being a good example. If I'd just sold at the 10.45 high in the emini S&P and followed it down on trailing stops, there was a 25 point opportunity. I don't know whether its because I've gotton so used to trading like a scalper on the choppiness over the last few months, or because I'm stuck in the 1 min chart and not looking at the 5/15 min charts? Any thoughts on how to make the mental switch (or trading approach switch) between trending and sideways days? Thanks for you thoughts.. Indie
Excellent post! I have had this exact same experience. This had led me to try and step back and see a somewhat bigger picture. As a consequence, I have quit daytrading for awhile to swing trade the ES. This swingtrading perspective allows me to put on trades with wider stops and have the patience to hold through the day and overnight. Today was a good example. I sold short when the price closed below the 34 EMA on the 30 minute chart at 838.50. At the end of the day the position was already +13 and I am holding over the weekend. At the same time, I was logged into Woodie's room on Paltalk and watched traders not getting on board because they were waiting for a retracement to let them in with a 1.5 point stop. If they had just sold the darn thing with a stop outside the noise they would have been dollars ahead. If I go back to daytrading, I hope to use support and resistance as my indicators with a wider stop and shoot for the key intraday legs. LBR has talked about the importance of thinking in terms of concepts when trading the S&P since the intraday noise is so distracting (read choppy markets where they take out tight stops all day long). Then again, maybe I'm just a lousy scalper
i know this is gonna sound like a pretty shallow response, but i think it may be a case of the "grass is greener.." in thinking that some other time frame is gonna open up the royal road to riches.. personally i always factor in the larger timeframe trend (by my definition of it) and only take trades in its direction, until i determine that the trend has changed (i don't call the change before it happens, not often anyway). looking back at my results, i have found the more often than not, my trading "around the trend" has made me more than just "buy and holding" the trend. i think experience in the "dynamics" of the security you are trading is the biggest determinant of whether doing this kind of thing will lead to greater profits or diminished profits.
Indie Cator and Jasper6: I'm glad you both posted. I thought I was the only one who had this idea. I've been watching folks in the Journals section of ET and noticed the same thing lately. Seems like everyone really struggles for 3 to 4 points a day. Maybe a good day nets 6 or 7 points. In each case they're trading 10-12 times daily. Working the market bar by bar. Struggling all day long. Glued to a computer monitor. Sitting on the edge of their chair from bell to bell. Then I step back to the 15 min or 30 min chart and notice that if someone had just used some basic EMA/SMA's (or even one basic EMA/SMA), there were tons of points to be made. In a lot of cases, a person could have averaged 15-20 points daily. Obviously there is more risk doing it this way. And you'll need to hold overnight. But the potential gains seem pretty enormous. If you work it right, the risk can be minimized. I see that Jasper6 uses a 34EMA on a 30 min chart. I'm playing around with a 50SMA on a 30 min chart. Sure seems to me that this slightly longer term approach is better than trying to pull gold off the street an inch at a time.
Talk about irony. I have argued this point endlessly with traders here who think the way to make money in the e-mini's is to trade 47 times a day with a 1 point stop. I did a lot of backtesting several years ago and found that the only way to make real money was to trade with a fairly wide stop and hold the winning trades as long as possible. Now with the advent of the e-minis and efficient globex executions, I am rethinking this position. I still think you can make serious money if you trade a longer term system with great discipline, but I have to admit that you can realistically knock down 1-2 point winners several times a day. When you had to call a pit clerk to execute the trade on the floor, that was just not feasible. Too much slippage, and the locals were not prepared to hand those kinds of trades to retail "paper." Another issue is how many time frames can you trade at once? Most people find it really hard to trade more than one.
I wouldn't say that is what you see in "each" case - for I know that in my case that isn't the case - and in a couple of others journals I've read there. And for me, struggling all day long, glued to a computer monitor and sitting on the edge of the chair are certainly not the case. Sometimes it's easier to get your gold an inch at a time and then get out of the street before you get run over. The gold will still be there after the truck blasts through.
I trade signals off the 1 minute, but always have the higher time frame trends in mind. I also watch the 5 minute and 30 minute with some simple moving averages. I even watch the E.Wave counts on the 5 and 30 minute time frames, but this is not as big a factor in my decision. Always try to go with the higher time frame flow, and get in on pullbacks in the 1 minute. So simple, right!
I have said in my posts and in the chat room that the market is giving away dollars, why be happy trading for nickles and dimes. Many traders think that during the course of a 20 point move they could do better trading every pullback and reversal....thus getting maybe 30 points. The guys doing it certainly aren't here en masse! However, scalping or daytrading vehicles other than your trend vehicles certainly makes for a more interesting day. But only if you are profitable doing so. Otherwise you really are just looking for some action. The big buck is made in the long term trade. Then why so many daytraders? Let's not forget that the fury of daytrading didn't really get going until the advent of prop firms and prop leverage. Combine 10x intraday leverage with a raging bull market and it sure seemed like you could make a heckuva lot more money daytrading than position trading. A measily{sp} $20K could trade $200K worth of paper while the position trader could buy $40K of paper. That math is fairly easy to see without doing it. But....uh oh...raging bull ends, and you have to actually know how to trade now. You have to know how to short. You have to know about stop LOSS! Check out any of the Electronic Trading books written between 1998-2000, not one discusses shorting. My new signature....
Of 2/3 of the trading days, the S&P prints a candle with a large body and small tails, the rest of the time, spinning tops, or hammer reversals. So for 2 out of every 3 days, there is a theoretical opportunity to go from the opening price to the closing price where there is good absolute range. Practically, about 1/2 that range is quite possible if you trade only intraday. But it is much harder to do than describe becuase the trading day often does not tip its hand until late, when we are tired of trading, disgusted, or not paying close enough attention, or vice versa there is a fast and furious move early on, and chop for the rest of day. Trend days are less frequent. Its a tough job, but someone has to do it.
I tend to agree with inandlong but I would think carefully about the potential for disaster if you are long index futures and holding over. I am talking about the potential for another 9/11 type disaster, not an earnings miss, which might be painful but will not destroy you. It seems to me there is an asymetrical risk here. I don't mind holding a short over, one because I am hedged by portfolio investments and two, because the catastrophic event will produce a meltdown. The type of event that might kill you on the upside is just not out there right now. I apply the same reasoning to crude oil futures. Why hold a short overnight? Even if the price is extended it's just too risky in my view. Same rationale applies to coffee futures in the winter growing season, or OJ for that matter. Rule 1 of trading is avoid the exposure that can take you out.