By looking at my trades last week I formulated some thoughts for the coming week: 1. Reduce scalp trades from 56 to 45-50. 2. Last weeks gains were upper end of profit range as far as points so i anticipate some rough trading this week therefore I will be more patient and look at setups a bit more closely. 3. Keep good trade management going and attempt to keep ave gains and losses in same line as prior week. Other than i am very pleased with last week and look to get as close as possible to duplicating the performance. AllenZ
Not only that but as soon as you find something that works the key is to stop trying everything else, and just keep on trying the thing that is working.
I want to endorse AllenZ's rules and suggestions. I have looked at his trade reports and have to say that I don't necessarily agree with his methodology. I am not aware of the set-ups he uses, but he frequently goes both long and short during the day, and for me, that is a major problem. I do think his rules are sound however. Scalping is pretty much a losing or wash game for off floor traders. Many blow out on the floor doing it, even though they can trade off paper and see what the big hitters are doing. One big move against you wipes out many small gains. I have used tick level charts but now trade off the 5 minute, 60 min and daily. Tick charts can be useful but they can also be distracting and get you too focused on short term noise. You can get very good entries off the 5. I am looking for 3 or 4 trades a day max, most days less. When I see newbies making 20 or 30 trades a day, I really wonder what it is you are seeing that I am missing. The other thing you have to understand is the relationship between the tick and the premium and how it relates to program trading. For many years the S&P futures traded almost solely off two things--this relationship and the bonds. The bubblemarket kind of overwhelmed the influence of program trading, but it seems to be becoming more of an influence lately. Also, the bonds now seem to trade inversely with the stock market, so I would say don't worry about that relationship for now.
They both have no uptick rule. Also, when the Single Stock Futures come out, they to will have no uptick rule.
AAAinthebeltway- My system is not a scalp system for the mini's as i look for 6-12 points moves which is not scalping to me. I look for 3-5 trades a day which sounds same as you. I scalp only to amuse myself while waiting for a setup that fits my system. After reading your post it sounds like you agree with me a lot more than you think. I use the 30 and 60 to find most of my trades. I dont use tick charts or even 1 minute charts. I am working on my scalping only as a way to increase my profits as long as I am not hurting them in the meantime. Thanks Again AllenZ
AllenZ, I agree. We seem to have a lot of common ground. The newbies are lucky to have you posting here and giving them some sound ground rules.
these guys at: www.eminidaytrading.com are having an open house tomm and Wen., where they will make real-time calls and share they way they trade the minis. worth a look for sure.
ALLEN Z: a question for you: my trading style started with profit targets of 5-10 points with a 5 point initial stop and has eveloved over time into on a 4-10 point target based primarily on trading and watching every tick on the chart (almost) for the past 1.5 years. I am curious what rationalr is behind your stategy of shooting for 6-12 point profits??? thanks
Great question!! I did some extensive research on chart patterns. I set out to look for patterns that I could easily recognize and had clear entry points or "triggers". Next i added moving averages to help identify directional likelihood. My goal was to find setups that occurred 1-2 times a day on average. Then I played with different numbers, using 4,5,6,7,8,9,10,11, and 12 point targets for each. If a move managed to make 6 points and a 4 point stop kept me in over 50% that would fit the criteria. If it moved 10 points and 6 point stop kept me in over 50% of them, that fit the criteria. Basically, if i could achieve a target on better than 50% of the entries with a stop that allowed for a 1.5:1 risk to reward ratio i would include that pattern in the "system". The target is just a probability based on the stop and pattern. I found about 3-4 patterns that setup 1-2 times a day on average allowing approximately 20-25 trades per week over the past few months. Not rocket science i am afraid. I believe trading is merely a game of probability and risk control. I avoid having a directional bias. I can go long as easily as short as long the setup permits. I follow the trend when necessary and fight when it is worth fighting. The patterns I use require some discretion, but very little. The entries are clear. The basis is sound. That is all you can ask for. AllenZ