Shiko, this is an interesting thread, and I wish you all the luck in the world. I don't want this to sound negative, so excuse me if it does. First, there is absolutely no excuse to be losing because you mishandle orders. You are like a guy who goes hunting with a new gun but doesn't know how to load it or put the safety on. What the hell are you thinking about, seriously man? Before you trade another share, get your workspace set up properly so you can see ALL open orders, hopefully highlighted in green or red, anything so you don't have open orders lyng around like IEDs waiting to blow up in your face. Second, I was concerned about your statement that you barely had time to focus on three stocks. I think good traders are focused on several stocks, the S&P, the oil market, interest rates, data releases, leader stocks that tend to set the tone for the whole market, stocks that tend to lead the sector you are trading, plus news. This gets easier as you get more experience, and certainly you don;t have to focus on every tick of everything, but I sense that you are suffering some tunnel vision and not aware of things that are affecting your stocks and the market in general. Third, I have some doubts about the method you are apparently trying to employ. To simplify, it sounds like you are trying to trade support and resistance at the tick level. I think this is a terribly hard approach. It is good for your prop firm, but their interests are not aligned with yours. They want two things, volume and low risk. You want net profits, which often means less volume and more risk. I understand that you are part of their system, but you need to at least keep this inmind. Fourth, and related to the above, I think becoming a "specialist" in two or three stocks is not a bad idea, but the reason you do it is to understand how they trade. I don't see that understanding from your posts. It's more than observing that the week's high was 20.50 or that the day's low was 19.50. It's things like knowing how your stock tends to lag or lead the market and sector, what are the economic,political ornews oitems that will affect it and how, are there patterns that seem to repeat in it, eg if it takes out the first 5 minute high, does it tend to run, or maybe does it tend to make a low in the first hour and if it holds, youcan safely buy pullbacks, etc etc. Lot of stuff to think about. What i think is a very hard approach however is staring at ticks all day and saying, ok it looks strong here or it looks like resistance will hold. This is not 1998, where it was easy to spot mutual funds accummulating stock. Fifth, I think you need to do some rethinking about your profit-taking strategy. This is where some backtesting can be very useful. I can tell you it is very hard to make money trading purely intraday, and the reason is you chop around a lot but you never get the stock that doubles or triples. I can't prove this, but I think most daytraders would be better off if they traded far less but looked to get far more out of their winners. One technique that a lot of traders use is that if a trade goes green the amount of their stop, they pull the stop to break even and let it run until there is an obvious reversal. At worst, you are out at b/e and you might have a big winner. The best daytrades I have are the ones I put on in the morning and close at the close.
I'm not quite following you. If you only have one position open at one time, why do you have 4-6 orders open? Are you scaling in and out? Are you folllowing more than one security? Can you briefly explain your execution method. I don't want your set-ups just how you trade. In my case, trading stocks, I have a watch list of 100 stocks that I narrow down to 5 or 6 each day based on activity. I enter on a set-up with an attached stop order. I then manage the trade with trailing stops. I am continually monitoring my watchlist and managing trades. I may have as many as 10 different positions open at one time. I'm never in a hurry. The stop orders are on the brokers computer so any glitch at my end shouldn't result in a catastrophic loss.
Very good stuff here. Very true. The less I trade the more I make, it seems. My best individual trade this year was the result of a power outage keeping me away from the trade for nearly an hour. I looked at the chart when the power came back on and I realized I would've likely taken $200 out of the trade if managing it tick-by-tick, but because I had no access to the trade, my $30 stop protected me and I came back to a $1200 profit. I now do more often (still not often enough) what AAA recommends and give the trade time to work. As for day trading vs swing trading, my take on it is, yes a swing trade can double or triple, but a swing trade is usually a much smaller size to protect against gaps that can ruin you. Day traders have serious leverage and their risk at the end of the day is over. As an example using a stock that's very close to having doubled this year, you could've bought 500 shares UAUA back in Feb when it found support just above 12.00 in a strong long-term uptrend. By this week your position would be up around $4000. On the other hand you could've day traded 5000 shares on one of its breakout days and made between $5000 and $7000, then be flat end of day and sleep like a baby.
Shiko: What instruments are you trading? I picked up you said "15 ticks". If you trade equity, now with penny increments that only means 15 cents. It may or may not be a lot depending on which stock you trade. If you trade AAPL, 15 cents can be run in 10 seconds. Of course if you trade C, 15 cents can take a whole morning. If you trade, or plan to trade, intraday, you need to be aware of the time-of-day characteristics and popular reversal times. This is what make day-trading difficult.
I agree completely. I tried to trade breka outs/ down but at this time I have no enough ticks to risk to do it. I practically have to scalp and look for set ups that provide the lowest risk and break outs trades are not often trades with lowest risk. Stop often should be set 10-30 ticks away. However there is one set up worth waiting. It is exhaustion. I am practicing to trade it now. Yesterday actually we had this set up on FAZ, WFC and MS all almost same time, however i was already out for the day. Generally , I am not that bad at scalping when I am patient and cut losses quick. Monday-Wednesday all the money were made with scalping. We have very low fees and discounts happen often. Plus, I always trade the way as to earn money from added liquidity and rarely pay much in fees. For example: $9 gross, $8 net. What I do need to do is to watch bigger picture as I tend to concentrate on 1-2 min charts too much when constantly picking ticks.
I disagree. My stops on breakout trades very tight stops because a true breakout moves quickly and if it fails, I prefer to stop out quickly and re-enter, or look for a reversal. Even trading a high-priced volatile mover like AAPL, my initial stop on a breakout trade is 10-20 ticks away and I usually move it to break even within seconds.
AAAintheBeltway, thank you very much. I see nothing negative in your post. Idea about New order having different color is an excellent one and I will try to implement it if platform permits. I understand what you means by meaning that my interest and the firms differs. However it is simply as that, the firm has all the money and they ahve a system that pushes me to scalp. with 100 shares my daily risk is $20, with 200-300 it is $30. with 500 it is $60. you got the idea? The more shares i trade the less risk per share I get. I understand it is possible to be allowed to trade 500 shares but to actually trade 300 shares. it is what ia m going to do at least originally but I do feel ok with scalping. The thing is that I need to keep an eye on the big picture to know when to scalp and when to look for bigger moves. Obviously I was lost yesterday in scalping. I have SPY opened on my screen and I always watch how my stocks act in relation to the market. FAZ is moving against, MS doe sits own thing all the time and WFC is with market most of the time. Yesterday I was watching market started coming down and WFC started moving up. I thought of it as strange and started shorting WFC. But closing at loss at 2-4 ticks. Then decided to go long and it started dropping with a market. So, original decision was right but entries were wrong. I needed to wait to let stock show me that it indeed found resistance and turning around to follow the market. Generally, I am not experienced enough to pay attention to everything and I am always weak in fundamentals, thus I am concentrating on what is happening and do not think why.
And that, Shiko, is the key to the trading kingdom. An inability to do that cost me far more money than I ever made. Only recently have I started to learn how to do that.
I will explain. As I am tradiung and scalping, I see price moving around S/R and I am setting orders to enter. If one is hit ok, I am in. I always cancel order before opening another, but sometimes it happens, as my window is always full of canceled orders. 50-80. Then, I am in trade, I set limit order to exit, but I see prices is not reaching there and I want to get out quickly. I cancel order, set another, no fill, I cancel c, set another. many orders like this and as I see sometimes 1 order avoids my attention and stays there like a land mine. At the moment I am only watching FAZ, MS and WFC and SPY of course. But think of adding FAS although I doubt I have enough ticks to risk trading it. Some guys at the office trade it, but I saw them making $50 in 2 days and then losing $100 in 2 days. This stock is dangerous. Overall liquidity looks good but per each price level there is few shares. Slippage with bigger sizes can be substantial. And I do not think they can trade this stock with real size. like 5000-10000 shares. I am willing to try it with 200-300 shares to trade for more ticks but this is it. My plan is to improve my scalping to the level where I am able to scalp at least 10 000 size with highly liquid stocks like FAZ, BAC.
I would like it too, but I am quick guy personally and I really enjoy scalping As I told before, with 10 000 size and trading highly liquid stocks a lot of things are possible. I do not think 10 000-20 000 size per trade can have any difficulty with say FAZ. Here my interests and that of the firm coincides. On the other hand, I would like to have bigger runs. I see clearly that some set ups while having very little risk provide for very good runs. If I risk 3-5 ticks and get 10-20, I think it is a great R:R ration. These set ups happened yesterday around 1:00 p.m. I already was out of ammo.