You need to have multiple time frames open. Take trades off of the lowest time frame while using the other TF's for determining your trading days direction and type. But you need to take trades off PA on the lowest TF you trade. Put stops under or above the structures extreme, not the second resistance, that is to arbitrary.
Say you have a channel trend and you get a break out signal to the low side. What you are saying is to put a stop just above the low part of the channel? In my limited experience, the prices usually oscillate after such a move before really breaking out at which point it is often too late to get in. It's hard to know where to put a stop but providing the upper end of the channel is not too far away, I'd rather give it some room. What do you think?
Are you kidding me? If you banked $300K in the past couple of years and are looking at banking $400K in the upcoming year, why would you screw around with trading? Just keep banking.
I think if you are taking the break out as your signal then you aren't going to get a stop with good R:R. That's just not a good entry. If you are getting in on the swing from the other support area and are in the trade before it break resistance then your stop is all the way down at the old support and you are well in the money. Break outs just don't have good RR in my opinion.
Because my mind and body are not scalable. Capital does scale if I can learn to use it and not lose it. Also: money is not everything. I'm just looking to make enough to be semi-retired so I can futz around all day.
The stock I am trading has had about 520 "signal days" in the last two years out of 525. The median signal has about $2.5/share possible capture. I estimate I would be able to capture 1/4 of that move, so between .60-1.00. However, what this means is that a full 260 days have a possible trade of greater than $2.5/share. I'm going to give it some more time before I agree or disagree with you. You may well be right in the end. My "system" depends on making very, very few trades. I have to make sure I stick to that.
Dec 22, 2010: Net of sales: $254, Net of commissions: $122.50 % on capital used: 0.16% % index gain (as of 3pm): 0.05% Trade size: 700 Morning: IB margin requirements. I'm gonna have to email these guys. The rules don't make any sense. It's as if they aren't using the x4 at all! Ended up using a size of 700 but I can see the value in what other people are suggesting in trading small sizes. If I get used to trading small sizes for big gains, that will scale really well. However, if I depend on large volume, then trading will be less smooth. I think I may try deliberately trading 300 shares at a time and being a lot more patient. It all started out horribly because I entered my morning trade badly and was down $300 in the AM. I'm going to have to fine tune and write down the rules for that one. Afternoon: Eventually, I traded out of the negative by catching a couple of breakouts (up and down). I also went over my old data and fine tuned my hypothesis. After the tuning, the hypothesis for today seems nearly dead on but that's barely predictive. Modifications to strategy today: I attempted to get in on the low/high side of upward/downward channels. It works well if you catch the initial development of the channel but not so much after. I think I'll just stay away from upward/downward sloping channels unless I can figure out some way to trade them that doesn't involve scalping. I also started using BookTrader a bit and used the data to inform my trades. Not sure if it is really of any help because I don't have depth data. Plans for next session: * Trading 300 sizes * Fine tune morning signal rules * Make more money (lol)
Also forgot to mention: I got distracted by phone calls and missed a couple of very good trades (while I was still negative.) I'm going to ignore phone calls from now on. If it's important, leave a message!
Found out why IB's margin was not working for me: http://ibkb.interactivebrokers.com/node/1124 Leveraged ETFs have margins corresponding to their leverage. I guess that is reasonable, if not very annoying. I might as well just put up 100% of the cash then.
Dec 23, 2010: Net of sales: $-38, Net of commissions: $-72 % on capital used: -0.17% % index gain (as of 11am): 0.07% Trade size: 300 Made a series of small scalps while direction was developing. While the result was positive, I should not have done this at all. Entered my "special" AM trade beautifully and then chickened out. Why? Because I'm a dumbass. This is going to be my biggest problem. Taking the rest of the day away. Doing some coding. Will probably take tomorrow off as well. Net for the month: 922. Net with commissions: 527.50.