I may have been my mistake to post systems trading-related discussion on Hitman's thread. If you check the posts, I was simply replying to Hitman's original post of how he did well on Friday, and I said "damn!" b/c I would have done well as well based on my systems trading but I decided to sit out b/c of the holiday volume. Magna asked me to describe why my system gave a buy signal, and so I described it in depth. Then the fireworks began... I apologize if I should keep my posts to a different thread, I was only responding to someone else's question. I have never started a post by personally attacking anyone. I do take offense, however, when others tell me I don't know what I'm talking about based on something like my P/L. The only reason I listed my P/L was to answer someone else's question, and it was only for my daytrading results for this year. Like many other system traders, I started out with EOD trading. I was not successful at first, but eventually turned it around. I started with a stake of $5000 8 years ago and have slowly built that up over time. I take a very conservative approach because this is my personal money at risk and I am very aware of the risks factors associated with my trading. I don't daytrade 100% of my portfolio. I don't trade in only one market. I also take long-term stock and options positions. I diversify because this is the money that I feed my family with and the money that I will retire with. I was simply responding to one poster's question about my specific system that I am daytrading and what it's P/L is this year. It's up 60% this year. That's all, no ego, no chest puffing, nothing of the sort. Regards, Tom
**I have said many times that "systems trading approach" does not equal "100% mechanical". My system generates a signal and *I* have to execute on it. This is part of the discipline. I also have to apply MM techniques and be aware of the risk factors associated with every signal. ** This is what discretionary traders do, so how is this systematic ?? How is what you do different from mine or Hitman's?? **You are making a common misconception of many critics of systems-trading approach. My system does not PREDICT anything. It does not know what will happen tomorrow. It simply reacts to conditions where the PROBABILITY of winning is greater than the PROBABILITY of losing, that's all. ** But if your system tells you to sell only if X, Y, Z happens, then how does your system knows how to react when A happens? For example, you were watching MSFT starting to tank on my given example, you have a chance to get out with a 50c loss, however your system says to allow a 2 point swing, you hold on, later you stop did get hit, and MSFT did go down another 5 points, how is this system better than discretionary in terms of ability to react? You cannot possibly program a computer to react to EVERY SCENARIO possible!! Even if you could, it would take too long to process, it would have mattered anyways. **You just gave a great support for a mechanical way of viewing the markets. Market participants are driven by fear & greed, hence the appearance of support & resistance is very real, and the tendency for price to behave a certain way around S/R is very real and can be analyzed. The system traders tries to these TENDENCIES and PROBABILITIES to his advantage. I never know if S/R will hold or not, that is not the point, I am NOT predicting anything. I am using probabilities to win more than I lose. ** But EVERY TRADER DOES THIS, not only systems, how is your system give a signal that will give you an edge? **The only people who seem to care about P/L are discretionary traders who judge a the merit of a person's opinion based on their P/L? Talk about being naive and ignorant. If I said I made $2500/day would that make a different in your opinion of my approach? ** WHAT ARE YOU TALKING ABOUT?? As traders, we all care about out P&L, it doesn't matter weather you are discretionary or not. Well, let me ask you this if you are seeking help and advise about trading, whose opinion do you value more? Someone who consistently make $2500 and someone who consistently lose $250 ?? Regardless of what system they use, if someone can show me how to make $2000 a day, I'll use his methods be it mechanical or systematic or whatever else you want to call it. **I have no EGO about this. I didn't start any personal attacks on anybody!!! If you read carefully, Hitman was the one who jumped out at me saying I don't know shit and my opinions are not valid b/c of this reason and that reason. I didn't start anything, but I will definitely defend myself.** OK, but you also have to keep an open mind about his technique and ideas. You make it sound like you are being attacked but you also "criticize" him a bunch of times calling him young and ignorant and what not. Is that necessary to bring your point across? Maybe in the end what you do and what I do is not that different. I do look at charts, I do look for S / R, I do look for gaps, I do look at the tape, I do look for overbought, oversold and I do have a systematic approach to my entry and exit. If it so different, that you call yourself a systems trader, please let me know where we differ THAT MUCH, that we so called discretionary traders know "Who We Are"
Hitman is a respected discretionary trader, and Dottom is a new and well respected systems trader. It is a pity to see friction between both of you guys, since you both have so much to offer. Hopefully, EVERYONE can cool it down in the emotions department... it is unfortunate to have acrimony between great minds. Elitetrader is a fantastic forum... going forward I would love to hear more of Hitmans discretionary trading views and more of Dottoms systems trading views. I kindly request that the views can be transmitted on SEPARATE threads to spare people like me being subjected to self-evident acrimony between these two respectable members. PEACE & LOVE! P.S. November is nearly over, so this journal will soon be archived... hopefully the December Journal can remain focussed on Hitman's Trading Journal which, after all, is what it says it is.
Dottom: ***Those of us with ambition hope to one day run one of those large funds, which we cannot do with discretionary trading 100k shares per day.*** That's the comment that got into my nerves, I have had many system versus discretionary discussions, and when someone averaging $250 a day make a comment like that, I am not happy about it and I let people know about it. That was the comment that started the firework. If that wasn't a comment that implied your style is superior to mine, I don't know what is. If you said you were averaging $2500 a day then you would have fell into my GREAT trader category, then I would have been silent (even if I make that myself, which I don't, I will still give people on that level all the credit in the world) and sure you could be lying but I will not make any harsh comments, because people who blow up their stats on a message board for bragging right will never be able to play the game at its highest level, such individuals do not deserve my attention. "I know people trading for 20 years who are losing this year and have an average under zero. Are they incompetent as well?" We are traders, we are as good as our next trade/day/month/year, and anyone can blow up regardless of our track record. As I said before, you don't compare yourself against people who are losing, you only compare yourself against winners, because when you look hard enough you can always find someone less competent. It is extremely difficult for traders to break out of their average stat. range, because it is too easy to be content with what you have, it is the sense of urgency and killer aggression that makes us better trades, to step it up.
Hitman: ***Those of us with ambition hope to one day run one of those large funds, which we cannot do with discretionary trading 100k shares per day.*** That's the comment that got into my nerves... Hitman, that comment was posted on a different thread, called "Day Trading Systems". You pulled it into this thread. I realize you are a very determined individual and you have dedicated yourself to the markets like a religious zealot. I obviously did not mean to say that you have any less ambition than anyone else. You took it as a personal attack when it was never intended that way. That comment, when read in context, was describing the ambition that a lot of system traders possess. The comment on discretionary trading 100k shares addressed the fact that successful hedge funds do not rely on very short-term trading requiring tape reading. Yes they have people who maximize their results when entering/exiting positions, but the overall results are not reliant on this fine tuning. It is a very lofty goal indeed to hope one day to run a huge fund. Many system traders look at how Richard Dennis ran $400 to $300M. He started with his own money. As his success continued, he started trading OPM. He used a systematic approach. This is well documented. The comment you quoted was not a personal attack on you or discretionary trading whatsoever, and it wasn't even posted in your thread, but in a systems trading thread. You first said that my hedge funds examples were invalid. So I gave specific examples with specific names and results. Then you said that since I am not there myself to witness the trades, my examples are without merit. I obviously can't debate the issue of hedge funds if the prerequisite is to have first-hand experience, so I used a different perspective. I talked about the ambition of many systems traders. Then you said that my opinions are further invalid solely based on my P/L (which I have already addressed). At no point did you address the specific issue itself. What Vishnu posted on page 21 of this thread is a good example of addressing the issue directly.
dottom, Thanks for info on your trading, sorry if I got you into a pissing match with Hitman. I was kind of coming from the same place as Hitman: P/L talks, everything else walks. But it seems to me you're doing OK with your system. I know you have some systems posted on wealth-lab as well and they have tested out pretty well. If you don't want to go for big bucks daytrading, that's your own personal decision. It might say something about your trading abilities, but it doesn't taint your system. At least you have the cojones to trade it.
AAA, I've set aside $100k of my account equity for daytrading (where I exit all positions at close and carry no positions overnight). My bread & butter has always been system-based position trading. I use intraday to enter the market, but the positions are held overnight for average of 10 days. I've found much more consistent results with this type of trading. Eventually, I may focus more of portfolio to daytrading (holding no overnight positions) but as I mentioned in another thread, this is my own $ and I can't go bust. If I make $40-60k on $100k that is awesome for me. Then maybe next year I'll make $80-100, then $140-160 the year after, etc. Remember I started with $5k. Add this to my position trading and I make a decent living. I realize some discretionary traders here trade at firms where the economics is a bit different. If you did not work at firm, invested $100k of your own equity, and could run it up to $200-300k year-after-year, then that is very, very impressive and I would want to learn all I can from you! You are obviously doing something right! I hope Hitman makes it to the $200-300k. I'll buy him a beer and maybe we can share some techniques. For me, anything in the 40-60% range, with conservative MM and risk-of-ruin taken fully in account, is perfect for me. If I were to indiscriminately increase my daytrading size 2-3-4x, I drastically increase my risk-of-ruin, and I'm not willing to do that. Peace, tom
Intense game as I made it a mission to take more shots with slightly bigger size today, and it was very difficult as Dow went as close as 10 points of that 10K mark, and would not break through. The result was a market that didn't want to sell-off but didn't want to go up either, but thankfully I was able to make the shots I needed in the afternoon to pull out my 10th victory in a row. 18100 shares each way on 10 of 19 shooting, +897 before commissions, +487 after, no bullets. On Friday I was able to make my first ever appearence on our firm's top 30 list, as I took number 29 on that list (top guy finished with 7600, I guess few people went aggressive on a day like Friday), but this milestone has an asterisk attached to it as less than half of the 500+ traders showed up to play, and most of the size traders took the day off. Still, I got a small discount on bullet prices ($8 for the ticket, 3.6 cent per share, so the minimum cost of a bullet at 1500 shares is now $62 instead of $68), and I finally stopped paying ticket charges (it was 60 cents per stock per ticket per day). Small gains, but they add up. Pre-Market: Some good news on retail, but otherwise nothing special. 9:30: BTK strength and took CRA at 27.81 for a gap-fill, he did fill the gap but in just two prints he fell from 28.20 back to 27.93, I could not get out for a good price so I held a little and stopped out for 5 cents loss. Took some MMM at 116.70 and LXK at 50.92, futures moved but I knew the resistance was there, a little slow on getting out and I only took 20 cents off MMM, 30 cents on LXK. Mean while, energy was tanking and SLB bounced, tried HP long and bailed for flat. 10:05: Took some EMR, thinking futures may have another leg, took some LXK at 51 and made 20 cents, out of EMR for a 5 cents loss, tried some NSM and out for a 5 cent loss. This market is not going up from here, will it fall? Shorted MU at 27.95, he was very strong but eventually gave up and I was able to pull a quarter out of him. Tried some ADI but the market was just too strong, and I covered for a 10 cents loss. Too bad, there was a window when I could have flipped some stuff back to the long side, particularly the red hot technology stocks, but I missed it. 11:30: Anticipating the energy rally, tried EPG, churned a lot of him and barely made any money after commissions, same with EOG, HAL. Tried NE at 28 for two breakout and both came in as I gave up a dime each attempt. No energy rally to save my bacon today. 12:20: Went long LM, very stupid as I put in a stop order and lost 15 cents immediately, never ever put in hard stops when you have time to watch the position. Took him again and held for a 40 cents move but left other half on the table as usual, a little too anxious there. XBD super strong and MER was lagging, churned a lot of him but was able to catch a 40 cents move at the end of day to be up a little in him after commissions. Tried ROH on CEX rebound and sold out for flat. 2:20: Sweet trade, CCU was super strong in the morning but fell like a rock, thought he had a bounce left in him so got in at 46.60 and out for a 40 cents move, and then took a dime scalp again during the final minutes. Took some MEL at 39, daily looked good but he did a big pullback (this is why I hate breakout's on those days), and I sold for flat when it came back to 39, if I held through the wiggle, I should keep at least half, this should have been a profitable trade. If the stock was not strong then I would have been stopped out for a loss already, if he gives me a chance to go flat, don't, hold on. Churned more energy and lost 5 cents in VTS. 3:10: Churned some NSM and LEN, as the clocked ticked to 3:20 I knew we will not do 10K today, did some small scalps and it was time to close up the shop.
Hitman, Congrats on making the top 30, asterisk or not. Its a big step in a long journey. I'm sure you'll see the top spot before all is said and done. Continued success, Kirk