@alexspeed Predictor Discretionary and PredictorDay. You have to search for those or else I'll get in trouble for advertising. Stops I want to share a bit about stop placement because I'm struggling with it. In my tests of my systems, I've found that adding too tight stops to a good system will result in a very jagged stair stepped equity curve versus a smooth equity curve -- if the stops are too tight then the equity curve will turn negative. Price stops transfer the open equity risk to the closed drawdown (realized) risk. A trade has a MAE, max adverse excursion, and a closed profit/loss. To implement stops, one must be able to place trades without any MAE. Momentum trades tend to have lower MAE while mean reversion trades tend to have rather high MAE. Waiting for a better entry, doesn't infer that one will have reduced risk, i.e using limit orders may result in only getting filled on losers. This is why I almost always enter on market and exit on limit -- unless it is a trade I planned out in advance. What I found in testing is that the largest stop is the best stop which tends to be a stop of about 30-40 points in ES. This is a very big stop. Fortunately, I found that if I add a stop, I have a range of where I can use that stop without hurting my performance too much. In other words, if I use a 12 point, 15 point, or 20 point stop then they tend to perform to similar degree. In general, on momentum trades I will use a tighter stop and on reversal trades I use a larger stop. It may be the futures market is too efficient to use a fixed stop. I mean that whether or not one can use a stop or not depends on one knowing if one will have a trend/range day. Setting a big stop on a trend day is a disaster. Setting a tight stop on a range day doesn't work either. It may be the futures market is efficient if one doesn't take some larger risks that hing on that aspect. My methods are too complex to describe simply. But, I will set stops -- at a low, below a low, at a previous value area, and below a previous value by a certain amount. If the market trends then setting a stop near the previous value can work because we don't tend to retrace back to previous value. However, when the market ranges then we tend to test those previous values and take them out. One solution is just to risk 3% to 3.5% on every single trade. This may be the optimal solution but is hard to stomach. As again, I'm trying to trade 4 to 6 contracts on 85k. This means I have to be willing to take hits in the 3k-4k range. I'd like to keep that to a $1200 to $2200 loss which means I have to set a tighter stop.. typically below previous value but it gets hit. So I know I said I solved this problem... But I haven't committed to using a 3% to 3.5% capital stop on every trade. Maybe a mix is needed. Or maybe I need to drop my leverage to 3-4 cars. For me to hit my peak performance then I feel I can't take these bad stop hits... but maybe that's not the solution ... maybe there is another solution... such as sizing larger only on my best trades or hedging. Again hedging works during range market but not trend market.
placing stops is for loser. http://www.elitetrader.com/vb/showt...hlight=placing stop is for loser&pagenumber=1
Stops 2.0 I want to explain more about how I use stops. My goal when setting a price stop has historically been to get out without taking a stop hit but to be willing to take a stop hit to avoid a much larger loss. Historically, I have set catastrophic stops only but now that I'm trying to trade larger size then I'm having trouble trading in that style. EMG has recommended not to set stops and not to use leverage. For my style of trading, I'm typically looking to take out the movement of 1 day max. For me I am most accurate when predicting a measured move to 2 day movement and obviously that's not a lot. If I didn't use leverage then it would be hard to make it worthwhile and once we use leverage then we need to manage our risk. There are many ways to manage risk. I agree with EMG that only using a price stop to manage risk isn't effective. However, I think they do serve a useful place when combined with other risk management techniques. But before I get to that, I want to talk about how trading account and trading size matter. Trading larger size allows one to set targets that have a higher probability to be hit. Instead of waiting for the target that everyone else is waiting for then it is possible to set a target a bit before that.. The idea is that you can profit in more situations. My current goal is for me to average 1k per day on the days I'm in the market. This sounds like a lot but my account size is 85k. If I'm in the market let's say 3 out of 5 days then that's about 144k per year or let's say around 100% return. That's a very high return. ... However, it is much less then what I tried to do at NADEX. Let's look at what someone who had 10k would be shooting for, they'd be shooting for $117 per day! Not many people would be satisfied to set a goal of $100 per day for themselves.. It just wouldn't pay for itself. So you see that you need to be able to trade SIZE and have the ACCOUNT SIZE to back it up to trade for a living. I mean how many trader with 10k would feel really great about making $100 per day and feel good if they even did $80 per day. So my goals while high aren't as high as they might seem. If you don't trade size then you're essentially trying to "beat the market" which everyone knows is very difficult. The question is how much size do you need to trade and how much leverage is too much? The more leverage one uses then the higher the trade frictions. It is harder to break even. This makes it harder to psychologically dump a losing trade. I like to be able to dump my losers effortlessly.. quickly.. so I avoid taking a stop hit later. I find this harder to do when trading more leverage. I think that for my style trading some leverage is required. The question is how much? Let's say the optimal average stop is 30 points or $1500 and we want to keep daily losses below 3.5% then that gives me about 2 contracts or about 1.46x leverage. This would be the minimum leverage I'd even consider but is probably still too low to make the most returns. At only 4x leverage, I'm able to trade 4 contracts or 1 ES per 17k. Anywhere from 3 to 6 contracts seems reasonable for my trading style. Let's use the constant 3.5% risk per trade with 5 contracts and we get a stop size of 12 points which is reasonable or we get 15 points with 4 contracts which is again very reasonable. We still have the constant risk of 3.5% per day. I believe if I could just accept risking that much then my stop problems would mostly be solved. It is just hard for me to do. While I say I'm willing to risk that much per day... it is hard for me to do it. I've had more success in letting the computer manage the stops then my managing the stops. But if I'm wrong then I have to get out before taking a 3.5% hit. A big problem for me is I don't want to let the market run against me because I'm just shooting for daily wins. I'm trying to hit singles. I'm trying to hit a 1 day movement or 1/2th day movement. If I could get a constant volatility contract then I might have something better to work with. If I could manage my volatility risk then I'd be much better off.. Managing risk, methods: Price stops for catastrophic risk management Time and hypothesis based exit for stop avoidance Options Hedging in correlated markets Trade selection
What Makes a Great Trader I want to share a little about what I feel makes a great trader and for that I just basically introspect myself. Is it the ability/possession of make trading systems? No, probably not --unless you have a Phd and a brain the size of a dinosaur. Neither is the great trader defined as "flying by the seat of his pants". Typically, the great trader combines extensive market experience with some form or forms of measurable advantage. Most professionals are not great traders. Most traders fall into a few categories: The break-even indicator trader The average trader is a break even trader that tends to focus on indicators or trading methods that are promoted by others, i.e trend following or indicators. These traders are typically unable to make a living. They tend to be break even or slightly losing. They may also follow a set of rules rigidly that would historically lose money. System traders or "gimmick" traders These are traders who haven't developed a "market read" but do have profitable systems. Their track record will often consist of periods of "flying high" followed by complete crash or failure. They often peddle their systems to others. Often gimmick traders are the ones who fail because they only have 1 edge. I do believe that some gimmick traders can achieve some considerable success -- that is if they work at their craft enough. They'll have enough edges to keep going. Gimmick traders typically have a super narrow focus on the market and a one dimensional edge. They are typically prone to market regime shifts. The Intuitive Trader/The Adapter The adapter or intuitive trader is where greatness starts to develop. Some great traders can make it work without any systematic process. The intuitive trader, however, is always up against his own self. He's always his worst enemy. I feel these traders, who've became successful, are much more likely to continue to be successful then a system trader. These traders typically have developed own methods that are unique, holistic, and not narrow focused. They may have many techniques actually. The Systematic Trader Again, the great trader has to, in my mind, start as an intuitive trader but if he can go a step beyond that and become a systematic trader then he has a very powerful combination. The systematic trader combines a strong base in intuition with a ton of analysis similar to the system trader. It is the combination of both a narrow and a broad analytical framework. There is freedom for decision making but some measurable guidance. ---- At any rate, the best traders focus on their strengths and constantly evaluate themselves. The trader in optimal state is operating at a level rather close to the gambler. This is why trading is so difficult because there is a very fine line between great trading and gambling. The systematic trader always has the advantage of relying more on his systems when he feels his "market read" is unclear or doesn't have a good understanding of the current market. But again, there is a fine line between being a great intuitive trader and "flying by seat of pants" (loser) trader.
Ok we get it, stop posting and get capital. If you spent as much time trying to get money as you do posting these redundant essays, you would be trading a live retail account
@Ksmetana: I'm not performing at my 100% right now. That's one reason I post these essays -- keeps me from trading. The deep thought is quite beneficial actually. Observing what works, what doesn't, etc. I'll be back to 100% soon enough but gotta take it slow while I'm losing. Maybe use the down time to develop some systems.. Gambling Vs Successful Trading Stress and performance become more dominant the more trades that one makes in a shorter period of time. The tendency to gamble also becomes a greater factor. The market is a continuous casino. There are no built-in rules. No one to tell you "you've had enough or take a break". So, it helps if you start with a method that enforces a structure. I started by predicting the market for 1 or 2 days in advance. I define my predictions by time. This gives me a tremendous advantage because I've converted the continuous process casino into a discreet turn-based game. Such a discreet turn- based system greatly reduces stress and leads to measurable feedback that one can work and improve. One takes more losses and there is less dread. I mean you take a loss and get it over. You don't have to sit in a position and hope for it to come back. I've now found more opportunity in the day trading space. The best way to start day trading, in my mind, is to just look for 1 or 2 opportunity per day. At that rate of trading, the performance pressures are still relatively low. However, there are obviously more opportunities and as one places more trades then there comes a real risk of losing balance and losing grounding. I'd say it becomes an issue for those placing more then 2 trades per day. So, we need more structure. For that, I've added a principle that if I start to lose then I quit. There are many reasons to quit when we start to lose. I'll give a few examples: 1. The market may be trending and we are looking for a reversals. Many reversal indicators will "lock in" when market trends. Shutting down is worthwhile. Likewise, if we are looking for trends and the market isn't going anywhere then shutting down is a good whipsaw reduction measure. 2. Our ability to make sound trading decisions, if are intuitive traders, is limited. It is limited like any other resource and is replenished by rest and sleep. 3. Balance is restored. It is probably true that 7 out of 10 days that if I just kept trading that I'd make money. But, I'd run a risk of having a huge losing day which is just not worth for me.
Me: Coach, I was knocked down really hard from a former friend. I think it may be hurting my performance. Coach: Reflect on that. Think on why that would be the case. Me: Just takes a way some of my momentum.. hurt my feelings, a show of disrespect. Coach: And do you predict the market for respect? Me: No.. I predict/trade the market to serve. Coach: Well, you gotta decide if you want to continue or quit. If you want to quit then sure you can. Me: I've made over 80%+ returns on my system. I've one of the best long term tracked futures systems. The evidence indicates I'm extremely good at this. Coach: Extremely good? You're at your best at this game. But that's besides the point. If I told you to quit, would it make any difference? Me: I don't see how I can quit. I enjoy this. I enjoy the game. Coach: Right.. then don't give a flip what anyone else says. Do you serve or not? Me: I serve till they bury me. Coach: Then you serve. Take it easy. You've added too much pressure with all your talk. You were flat for months at a time. Heck you've had 12 losers in a row. You're a great loser. Take it easy till you get your footing back and then you'll win again because its easy when you take your most confident trades and quit when you start to lose. What could be easier? If you enjoy the game.. then enjoy the game. Enjoy the game. All of it. You used to look forward to being proved right/wrong. Maybe you need to find that passion again.
YES YOU CAN I've lost recently in my trading. You know the jokers here who claim and shout about how they call the move, well unless they set a stop or risk % for trade and exit level then it means nothing because I've been RIGHT on almost every move but just haven't been aggressive enough and used too tight a stop. But what I want to say to the people who want to do the impossible -- the guys who want to do what you fear is impossible -- IT IS POSSIBLE. I believe it is possible. Yet.. it may not be possible doing it the way you're trying to go about it. Ego is very important in trading because EGO is confidence. Confidence is extremely important because being decisive is important. I don't know many decisive people who aren't confident. Yet, balance and managing risk is also paramount. Learning from past mistakes is critical. Focusing on losses is a losers game. I want to share more about what I do. First, I strongly believe that I've an incredible ability to trade and call the market. If "guru status" was based on ability then I'd be you a popular guru... I'm not and don't want to be. However, I would like to have a trade room where I call my trades. This would not be for anyone benefit but to myself though because I'm always working on my game, thinking about it, trying to get it to next level. I want to say that if you want to be good -- really good -- then you can't be reading or paying any attention to what all the negativity on EliteTrader say. I mean the guys who say you lose or who are negative. Why? Because being CONFIDENT is 99% of trading once you can read the market. Okay and I also want to share that I'm coming to an idea the market is efficient if one trades in a risk conservative way. I couldn't understand it. How could I always win but fail when I tried to use tight stops? I would force myself to trade 24/7 to see what I could do and as learning experience. I'm starting to toy with the idea that all the "edge" in the market comes from taking risk -- it may not be "pure" edge but rather an edge that depends on a third hidden variable. If you are skilled then the more risk you take then the more you earn. Contrary to the market being some sort of battlefield where the pros pick off the amateurs, I think the market is a risk transfer mechanism. Risk is transferred from those who can't manage it to those who can. I don't know just thinking. The people who say the micro-market is just noise. I can easily see that on 1 point basis there are traders trading the ES and their stops are getting hit. You can easily see this and happens over and over. The patterns aren't really all that different then on larger time frame but it is harder to execute fast enough due to slippage and lag. It is very evident the sell algorithm is a 2-sided algorithm that buys and sells. Sells and then tries to buy enough to run the stops and then sells again. I want to talk about stops and tape reading. Tape reading is really what I do. I will use measurable edges but I don't think anybody could become professional without tape reading. However, tape reading isn't an edge either!! Tape reading is only an edge when combined with context. Tape reading is primarily a RISK REDUCTION tool. However, it is not perfect.. The way I usually manage my trades is to set a huge stop and then use my tape read to exit. I try to keep my stop from getting hit. But I use only get 1 or 2 'windows' to exit on. If I miss my window then my tape reading skill isn't worth anything. In general, I've found the following stop management strategies to work: 1. Set a huge stop and try to exit on tape read 2. Set a huge stop 3. Set a moderate stop and a moderate target and then aggressively re-enter when stopped out. 4. Setting a tighter stop and a tighter target. Only works when trading momentum. So you see there are several stop management strategies that work. However, if you use a stop then you must be MORE AGGRESSIVE in your trading. The following are poor combinations: Moderate stops and low aggression Tight stops on anything but strong momentum Any size stop without a target Large stops when the market is highly volatile Large stops on trend days (against you) Moderate stops on range days In general, I prefer to set targets to manage my risk. Also, once you use anything but the biggest of stops then you can usually use a smaller stop without hurting performance that much more. This is kinda contrary to what I believed. In other words, if you trade optimally then you're probably risking about 2% to 5% per trade. I know what TO DO to trade optimally but I don't want to take a huge hit so I set a moderate stop. Provided it is isn't too tight then I give up performance.. But let me stress again that if you set a moderate stop then you can make it generally much smaller because you already gave up a lot of performance just by setting it. What doesn't work is not having a risk management plan and watching a trade go against you and hoping to get out!! I will never be in that situation again which is why I use the C2 constraints to automatically get out of the game if I lose more then around 3% to 3.5% on any single trade. So I've a few options and things to think about. I can do away with my setting stops and only try to exit on my tape read -- risking 3.5% per trade, I can use a moderate stop or a combination. So, I've somethings to think about. I think also if you trade long only then using a bigger stop is much more a possibility... I'm usually out when the market rallies -- too much risk.
Narcissistic personality disorder is a mental disorder in which people have an inflated sense of their own importance and a deep need for admiration. Those with narcissistic personality disorder believe that they're superior to others and have little regard for other people's feelings. But behind this mask of ultra-confidence lies a fragile self-esteem, vulnerable to the slightest criticism.
The grandiosity section of the Diagnostic Interview for Narcissism (DIN) (Second edition) is as follows:[3] The person exaggerates talents, capacity and achievements in an unrealistic way. The person believes in his/her invulnerability or does not recognise his/her limitations. The person has grandiose fantasies. The person believes that he/she does not need other people. The person overexamines and downgrades other people, projects, statements, or dreams in a unrealistic manner. The person regards himself/herself as unique or special when compared to other people. The person regards himself/herself as generally superior to other people. The person behaves self-centeredly and/or self-referentially. The person behaves in a boastful or pretentious way.