Newbies listen ! My Story w/ lessons

I see I've been mentioned in this thread.

Let me clarify.

I tested a variation of the system mentioned in the Daytrading 2.0 thread and, for the few months that I backtested (and then a few more months of forward testing) it was a bit profitable.

However, I made modifications to the system because the entire "system" was not listed in the thread.

The original system in the thread was a scalping system, but no mention was ever made of of money management or of stop strategy. Perhaps the OP did not have time to address those issues.

I tried to make it a "scalping" system, but when I backtested it with 3, 5, 8, 10, and 12 point targets on the YM (I think those were the numbers I used, honestly it's been a while), it was overall unprofitable. As you may expect, the number of winning trades increased, but the overall bottom line turned negative because they were not outweighed by the losing trades.

The only way I was able to make it profitable was to hold every trade until the MA we were using changed slope. Sometimes this meant being 10-15 ticks in profit and then a huge tall bar out of nowhere comes and eats away all your profits, but occasionally it meant 40-50+ point winners which did in fact override the losing trades for the time period I was using it.

According to jjrvat, the author of that thread, that was not how the system was meant to be used.

jjrvat taught price action, using MAs as a guide, but I was making trading decisions based partially on price action (HH,HL, LL, LH) and partially on MAs (letting their slopes guide my entries and exits). The reason for this is I was never able to extract sufficient data about "price action" from the thread in order to quantify it into a trading system, so I used the MAs from his examples instead.

I suspect that if I had all the info jjrvat uses to trade maybe I could be profitable with the system used for scalping. I also suspect that there is a discretionary component to it that cannot really be quantified (which is the absolute bane of my trading existence because it is this same excuse that "gurus" use when none of their followers can make money despite the fact that the system is bullshit and the guru isn't making money from trading it, either... I'm not saying this is the case with jjrvat, however, I'm sure he makes money trading and even if he doesn't, I don't really care because he never charged me any money for his info).

But since I didn't have all the info, I tried like hell to make it a scalping system but I couldn't, so I made it a bit longer timeframe and, like I said, it worked for the time period I tested it. It could've been a coincidence because the market action happened to sync up with the dynamics of that system during the months I was using it. I haven't really played around with it too much in the last year because I've been busy with other things. The thread is quite good if you ignore the spam posts and fortune cookie wisdom that a few members clouded up the thread with and I lay out the entire system (my way) in one of the posts.

Overall, it's a good thread because it helped me begin to understand price action, HH/HL/LH/LL, which I had never heard of or conceptualized before. jjrvat was always cool and helpful when I'd PM him, too.


But for the most part, 99% of the "gurus" on ET (and in the trading world in general) are full of shit, don't make money trading, and sell unprofitable systems. If you ask them for specifics, you will either get some vague reply or you will get insulted. If you try their system and can't make it work, it's "obviously some discretionary issue that you're not understanding."

Don't be fooled by their bullshit. Seriously here. If you ask a specific question and do not get a specific answer in return, you're probably dealing with a bullshit artist.

What would you do if you asked your math teacher "I'm confused, what is the next step in solving this equation?" and your math teacher replied "do what the numbers tell you to do"? You'd probably be like "what the fuck? That doesn't help. You're not even really a math teacher, are you?!"

So, when a trading guru gives you some vague bullshit advice of "do what the price tells you to do," don't take it, because that person has no clue what the hell they are talking about.

 

.... you were not here years back.

it seems like just yesterday when you single-handedly drove everyone out of the ET chat room

 

Some of the best advice I've ever read on ET.

 

Well boys, after 2 full years of struggling, I can say that I'm on pace to make somewhere between $30-$50k this year. I don't know when you cay say you've made it out of the 99% bracket and into the 1% bracket, but I feel like I'm there.

The only thing I struggle with still is when I'm up during the day, and I see a great entry and I take it. Then the market goes against me somewhat, and finally when it starts to turn around I close out for a tick or two profit instead of letting it run. the pyschology aspect is still a mindfuck, but not nearly as much as it used to be ! I'll still have that occasional day where I'll blow up and lose a weeks chunk of profits, but they don't happen NEARLY as much as they used to. And each time they do happen, they happen further and further apart, so there's progress.

Still trading ONLY the ES, and still average between 1-4 trades per day max. This year, my winners to losers ratio is about 70%, which is damn good. This has helped my confidence immensely.

Also, I'd like to make this clear, as I've said this many times but its an important point.

If you are a newbie and this is your only form of income GET OUT NOW. You have no idea how quickly my trading improved when I got a second job making $40k + in the evenings w/ health benefits + pension / retirement. Not having to rely on the trading income is a big pressure off your back.

Happy trading and I hope you all caught this market reversal today. It was damn easy to spot

 

I can personally attest to the mentality aspect when you rely on trading as your sole source of income. Add to that a 15K debt, and you're REALLY UNFIT to trade.

Yeah, that double top was eassssssyyy, and the fact that a lot of trending action seems to fall at around 2PM helped!

 

Congrats... Not too many people can say they are making money consistently.. Keep up the good work and stay focus...

 

thank u man. I appreciate it. not many people really appreciate the work us traders put in to make a buck in the market until they've actually done it. Many newbies think its only a matter of 'how bad they want it' which couldnt be further from the truth. I know b/c it was my initial thoughts of trading. But i must go to bed. I'm terribly drunk from st. patty's day and I plan to be up for the open tomorrow am in 6 hours.

 

Actually ES.Dreamer

His journal was how he started, developed, and progressed as a trader. Throughout the journal he evolved and 'unlocked' more professional concepts to the people following the journal. He kept it simple in the beginning b/c it was intended for n000bs in the first place as a starting point.

In fact he did not introduce volume until much after the thread had closed, in the private chatrooms they migrated to, which i was lucky to be a part of indirectly. Yet he used volume all throughout his journal but he realized it was too complex and too much too soon for the purpose he was trying to serve in the journal, so he held it back until those who 'graduated' from the journal were ready to take the next step.

Yes he does catch tops and bottoms as he evolved but that's simply because he became 'too good' for the simple style he taught in the journal. He wanted the best R:R you can get, the birth of a new trend, and he's damn good at it now.

 

2010: MY YEAR IN REVIEW

(a bit early but every yearly update has been around thsi time)

My update in '09 was in this thread.
The '08 update was here:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=106998&perpage=40&pagenumber=4

as well as the 07' update is there when i first started.

FYI, I do I write these so I can track my progress year after year.

A little summary of myself. Started trading full time in late 2007 trading stocks. Quickly switched to ES futures and proceeded to lose $30k in 2008. 2009 I got much better and swung myself around from a loser to about a breakeven trader. 2010 has been my best year so far and I now trade ES and Forex. I'm up about $16k this year. Its progress, and not much monetarily, but probably better than most in this forum.

I've said many times in my journey, I always think I've 'got it'. I've thought I'd mastered price action many times over and I bragged about it, and I'm always like 'this is it' this is going to turn my trading around or now I know what to do after learning ‘this’. Unfortunately, there's always something to learn. Little by little you have to put the pieces together.

These past few months I’ve finally outlined my final strategy. I HAVE A DEFINITE, 100% EDGE. Its been about a year in the making. The strategy I hope to use forever. In the past, I’ve experimented with 1 min, 5 min, and 15 min price bars with the 60 min thrown in every once in a while. Fuck the 1 min and 5 min charts. They can be helpful but all in all, they’re just noise to me. They sometimes provide good signals, but the profitable price patterns I see develop occur on the 15 min chart as it filters out more of the crap, while the 5 min chart slows me down…mentally. I’ve probably blown about $6,000 the first half of this year using that stupid 5 min chart to base some scalping entries off of.

One of my problems was my thought that since my trading was somewhat discretionary, I couldn’t outline a system. I saw all these profitable traders say they have a system or a strategy….well I was thinking ‘my trading is too discretionary, I can’t have a system”. Well, I was wrong, my strategy can and HAS been put on paper, just took many tens of thousands of hours of charting to see it.

My strategy hinges on specific price patterns combined with candlesticks with their relation to moving averages and trends. It has nothing to do with fibonnaci’s, RSI, Stoch, or any indicators, or even volume. After spending thousands upon thousands of hours glued to the screen, I was finally able to write down on paper the patterns that I’d trade off of. Before writing these down, in years past, I’d still be able to recognize these profitable price patterns, but I wasn’t’ as easily able to identify them off the top of my head nor was I able to know each patterns profit potential….ie how long to hold. By knowing which patterns I will trade, and having them written down, it’s a LOT easier for me to know when to stay out of the market. THE MOST IMPORTANT ASPECT OF MY TRADING STRATEGY (notice I don’t say system) IS IT TELLS ME 95% OF THE TIME WHEN TO STAY OUT OF THE MARKET AND 5% OF THE TIME WHEN TO ENTER.

This brings me to my biggest lesson I’ve learned this year:

When to stay out of the market. My biggest lesson I’ve learned in 2010. You do NOT need to trade every single pullback or reversal. The best traders know WHEN to stay out of the market. This forces patience upon a trader. Many traders complain about not having patience. In reality, they just DON’T know when to stay out of the market. Its as simple as that. Why enter a trade without a positive expectancy of profit ? Inexperience causes impatience. I’m not saying I’ve perfected this, but I’m doing 10x better than this time last year.

This skill goes along way specifically in the ES. Man, the ES is a fucking beast to try to beat on a regular basis. Trading the ES every day is probably not the smartest of moves for most traders. Many days its non-directional…..just chop chop chop. Trading pure chop, at least for me is very difficult, and I bet 95% of traders will say the same. The problem with the 95% of traders that are losers is they just don’t know when to stay out. My strat is based on a market that trends, or trends and reverses. Not pure chop. Unfortunately, a lot people including me at one point, thought that you need to trade the ES everyday to be profitable. BULLSHIT. I’ll trade ES now 3 out of 5 days if I’m lucky. And that’s only b/c my strategy calls for it. Therefore, in order to increase my profitability, I learned that I need to monitor other instruments as well and implement my strategy. This brought me to forex, as its attractive in the fact that I can trade it all hours of the day and I can usually always find a pair that’s trending and not in complete chop mode.

My goal for 2011 is $50k. I’m very hopeful and excited that I can meet or exceed this goal !

 

Wiesman02 , kudos for the great post. This was one of the greatest posts I have come across after a long time . With your permission can I quote it elsewhere giving full credits to you.
Regards
Shiree