Jeez, I can't believe a half-naked women was prioritized before my important question. Oh well, I'll be more specific this time. What software do you find to be the most efficient for scanning for %Gainers from the Open?
"Concerning high probability trades and passing. Why do you pass? Do you have a better trade? Or you just prefer to leave the money in the account and not risk it? Wouldn't it be better to just risk a small amount, maybe using tighter stops or taking a smaller win?" my trading methodology when scalping index futures is primarily small targets (smaller than the risk in terms of stop distance) for first target with VERY high positive expectancy. I basically let my setups (i have 21) run a competition with each other. I keep the most successful ones, and the less successful ones are prone to elimination. i want a setup to have, generally speaking, extra points/factors of agreement, because i know (based on extensive analysis via excel etc.) that when I have multiple confirming factors, that the trade is more likely to workout, even than the overall average. my least successful setup "wins" 72% of the time. I prefer hi-prob setups because it basically eliminates drawdown to a large extent (when you are using 72% + positive expectancy AND 5+ trades a day, it is very rare to have a down day) suits my goal (for index futures scalping), which is income generation, NOT capital appreciation with those goals in mind, capital preservation is key, since it is the capital that i use to generate income. i simply want to, in general, be entering trades where i have just tons of stuff "on my side" and let the retail traders chase breakouts and enter low probability trades that grind their accounts into parking meter money. sitting out the "iff'y" trades sometimes results in watching a setup that would have been a nice moneymaker, pass me by. oh well. i simply want to listen to what the market tells me. also, the VAST majority of my setups are of the "fade" variety. iow, i am rarely playing "breakouts" or trend following, etc. so... since most of these setups (not all. but most) capitalize on reversals, i am not going to enter a reversal when market internals tell me the price action is more likely not to reverse (like the TRIN example).
Both, and longer... it really depends on what specific time frame I'm looking at for a trade... I should mention that I also look at multiple time frames and candle increments for a lot of my trades as well, as it seems to provide a better gauge for what a stock or etf is doing by looking at five or six day/one hour charts along side the one and five minute charts. If you are a new trader, try Yahoo!'s Finance Stock Screener, it's simple to use and it's free (but it's not real time unless you give them $$$) Or try SmartMoney.com's (I'm pretty sure you have to pay first) If you're using a broker with real-time Level II software, you probably already have these same tools available to you through the broker's software. Or if you're using RealTick, or something like it, they'll probably have them as well. Again, quality post. But I'm wondering, do you use 20+ setups for just intra-day trades, or is that from day, swing, short-term, and investments combined? Also, do you trade (intra-day) in one certain trading style with the same time frame and capital risk:reward expectancy, or do your setups and stops (etc.) change when the expected trade time (length of trade) or market direction changes? For example, do you use different trading styles at 1pm, than you do at 10am? I'm curious because I trade early morning breakouts, as a retail trader, with very low win:loss percentages, but my trading style at noon or 1pm is not even remotely similar to what I'm trading at open. What I preach about aligning the variables of a trade before pulling the trigger is not what I'm actually doing in the earliest minutes of the open (and how could I, when most technicals are completely out of whack because of the opening gaps, crazy volume, and the like?). However, what I've been trying to teach new and young traders is that the numbers are important in trading successfully, but not more so than understanding why exactly the market does what it does. I've NEVER recommended that a new trader start out trading morning breakouts/breakdowns because, in my opinion, they truly need a well lit trading environment to work in, and not a dimly lit basement with flickering light bulbs. As I've explained before, new traders need to focus on less volatile trades, with at least moderately longer trade times (unless it starts moving against them of course) so that they can develop a healthy understanding of the markets and why they work the way they do. I'm not going to tell Vista that I think he shouldn't trade breakouts, but only because I'm not familiar with his experience level. He has been on ET since 2001, maybe he's just looking for some new alternate trading styles to explore. If that's the case, and he's well experienced in other trading styles, then have at it and ask away... If you (anyone) open trades in the first half hour, especially highly volatile ones, and then try to stay in that trade all day long, then you'll be losing a LOT of trades. I don't trade breakouts for very long. Win, Lose, or Draw I'm out in a matter of minutes, not hours. The problems that most (and by most, I mean MOST) beginners will likely encounter with them is that they can (and regularly do) move in the opposite direction than they were just headed, and when they do it happens very, very quickly. Trading multiple positions at the open (the uncharacteristically volatile ones) for a beginner is damn close to account suicide too. It truly is amazing how fast the gag reflex is in human beings. I've been trading the open for a while now, and my doctor claims I'm becoming one of the leading experts on Spontaneous Projectile Gag Reflex Syndrome :eek: ... The best bet for trading the open is to know your platform intimately, and know how the markets function expertly. Very, very few new traders can do that. By the way, most of that wasn't directed to either of you (whitster or Vista) I was just addressing the topic in general...
Instead of trading at different times, I would like to talk about trading with different time frames. Stocks are heavily influenced by news and fundamentals, so I would say that the bigger your time frame is, the less important the technicals become. I see that when holding overnight fundamentals are alreay becoming quite important; this is probably not true when you trade within a few minutes. I've been trying to look at longer term strategies (haven't started yet and already want to expand ). I see a lot of potential, but I find it quite hard. Screening becomes more complex, and to test you need weeks or monts, compared to a few days, or maybe hours. Any experience with this?
Yes. Regarding my intra-day trading, depending on what the markets overall are doing, and what time of day it is, and what my expected trade time frame is, my intra-day trading styles vary greatly. However, in my investing and swing accounts, all of the things I look at to base my decisions on are really very similar. Yes, there are a lot of fundamentals that I look for in my investment accounts, but I still pay attention to the most important indicator, price. Volume doesn't matter as much as it does in intra-day trades, but I still look for some long-term patterns. When it comes to trading swing or investment accounts, matching all the variables together is even more important than with intra-day trades. Over-trading your investment accounts will kill you long-term growth potential because you're not letting your trades completely develop. Make sure before you pull the trigger in these accounts that you're ready to wait out the trade, things on daily charts take longer to develop, so don't base your buy (or sell) decisions based on just price or a news announcement alone. Good posts, keep 'em coming... J?
" Again, quality post. But I'm wondering, do you use 20+ setups for just intra-day trades," in regards to my futures trading (mostly YM but i do a little gold, oil and corn as well), i have about 22 setups (several "are similar enough to arguably be different versions of one setup. but there are 22 right now). 2 of those setups are overnight setups. all the rest are intraday. it is totally dependant on market character, as to which i take. i have one setup that i have not traded in over 2 months. others i might trade 4 times a day. it just depends on what the market is doing. there are setups for most market environments. " or is that from day, swing, short-term, and investments combined?" i use a much more fundamentals oriented approach to my longer term investments and stock trades. sometimes, i basically own't use ANY TA, other times, it is a combination, and rarely it is TA only. like i bot UARM at IPO as an investment. that was 100% fundies. CROX and HANS were some other nice investments that i banked off of, and were almost entirely fundies plays. obviously, intraday scalping index futures, my setups are not fundamentals based but for investments and longer term stuff i like to be contrarian and somewhat fundamentals based. " Also, do you trade (intra-day) in one certain trading style with the same time frame and capital risk:reward expectancy, or do your setups and stops (etc.) change when the expected trade time (length of trade) or market direction changes? For example, do you use different trading styles at 1pm, than you do at 10am?" my targets and stops are predetermined for each setup. they are based on the structure of the setup/and themarket i am trading. i don't have different styles for time of day, but i do have differnet rules. like, there is one setup that i NEVER use within 1/2 hr of cash market close. why? because it doesn't work nearly as often. i am not "allowed " to use it then. i am also much less likely to consider a "breakout style setup" (although i rarely trade breakouts anyways) during the "doldrums" hours of 11:30 am to 2:30 pm EST "I'm curious because I trade early morning breakouts, as a retail trader, with very low win:loss percentages, but my trading style at noon or 1pm is not even remotely similar to what I'm trading at open." i trade index futures, and i would say less than 5% of my trade volume is any sort of "breakout". "What I preach about aligning the variables of a trade before pulling the trigger is not what I'm actually doing in the earliest minutes of the open (and how could I, when most technicals are completely out of whack because of the opening gaps, crazy volume, and the like?). However, what I've been trying to teach new and young traders is that the numbers are important in trading successfully, but not more so than understanding why exactly the market does what it does. I've NEVER recommended that a new trader start out trading morning breakouts/breakdowns because, in my opinion, they truly need a well lit trading environment to work in, and not a dimly lit basement with flickering light bulbs. As I've explained before, new traders need to focus on less volatile trades, with at least moderately longer trade times (unless it starts moving against them of course) so that they can develop a healthy understanding of the markets and why they work the way they do." well yes. one fundamental difference betweenindex futures (or even corn, oil, gold, etc.) is that they are not closed all night. so, even though I consider cash close to cash open levels for "gap" purposes, etc. one can also look at the overnight session (and premarket indications of volume, instiotutional interest etc.) to get an idea of "do i fade the gap, stand aside, or go with it?" i have an almost entirely quantitatively based decision matrix with hard #'s that answers these questions for me. so, there is almost no subjectivity whatsoever, to early morning trades, only a decision (before i enter) as to which gap setup or early morning setup to use (i have 3 differnet version for example of one gap play, based upon the size i want to use, and target/stops i want to use) "I'm not going to tell Vista that I think he shouldn't trade breakouts, but only because I'm not familiar with his experience level. He has been on ET since 2001, maybe he's just looking for some new alternate trading styles to explore. If that's the case, and he's well experienced in other trading styles, then have at it and ask away... If you (anyone) open trades in the first half hour, especially highly volatile ones, and then try to stay in that trade all day long, then you'll be losing a LOT of trades. I don't trade breakouts for very long. Win, Lose, or Draw I'm out in a matter of minutes, not hours. The problems that most (and by most, I mean MOST) beginners will likely encounter with them is that they can (and regularly do) move in the opposite direction than they were just headed, and when they do it happens very, very quickly. Trading multiple positions at the open (the uncharacteristically volatile ones) for a beginner is damn close to account suicide too. It truly is amazing how fast the gag reflex is in human beings. I've been trading the open for a while now, and my doctor claims I'm becoming one of the leading experts on Spontaneous Projectile Gag Reflex Syndrome ... The best bet for trading the open is to know your platform intimately, and know how the markets function expertly. Very, very few new traders can do that." i realize the characters of indexes *(futures) are differnet from stocks. but i tend to avoid "breakouts" because i know how the institutions use them, which is primarily to get the retail trader into buying the daily high/low, which is *usually* the WORST time to enter long and short respectively. i have to have some REALLY robust market internals to play a breakout ON the breakout (e.g. a buystop entry to go long). almost all my entries are limit orders either fading the market direction, OR buying a breakout on a pullback.
okay, so let's talk about TA and systems. In the longer term fundamentals seem to play a major role, but what about in the shorter term? I mean, obviously after the news is out, given the fundamentals, everything is left to the market, and then the only thing you can do is look at the charts. Still, if you look at a chart you can be much more precise if you know what is going on in the background. The same setup can have different outcomes depending on the situation of the company. For this reason I would think that indices, futures and forex are probably easier and more effective to trade on a pure technical basis. How different do you think a pure mechanical system can be, in terms of performance, in these different markets? P.S. I appreciate you guys answering these questions. I would also like to encourage other people to join. Thank you
Alright here is a PM from 2many, I was asking about bear markets. In Bear markets I only take a certain number of hits (losses) before I call it a day. In a bull, I tend to keep going all day long. I have less patience in stock selection in a bull because the consequences tend to be less severe than in a bear. In a full bear market, I tend to trade ETFs long on the occasional upday, In a decent bull market though, I just throw capital around in a half dozen or so individual stocks and wait for one to move, then I exit the rest quickly and move that capital into the gaining position (often times plural). In a bear market, I implement more screening criteria, or squeeze specific criteria tighter for the purpose of shooting for a higher win %. In a good bull, I tend to shoot first, shoot later, then ask questions after shooting a third or fourth time. What was that- BAM!... Good bull markets are good for long side trades, because 6 or 7 out of 10 will make money, even if there was no particular reason to go long in the first place. Good bull? Flip a coin, you're odds are heads and tails both make money. Bull markets make everyone heroes, bear markets make us either broke or humbled. I would like some more discussion on bear markets. I hear some traders say ohhh he made those gains in a bull market, he's no hero ... ok sure I understand but why can one not make good returns in a bear market. Is there a lot less opportunity? Less intra-day volatility? You say bear markets can kill traders, how so?(If he is just as comfortable going short as he is going long) What are the differences between bull and bear markets? What are some big obvious things you noticed and what are some small little details you observed?
Thanks for answering the previous question. Have another one. You mentioned that traders need to hold onto their position unless it moves against them. That's the difficult part. How do you determine that if the trade has not hit your stop loss yet? It could be just noise or it could be that one should really get out of one's position. Advise needed. Thanks