Sounds like for some, this may be the more appropriate tune: http://us.share.geocities.com/draketown/smile.mp3
A very apt song for the business of independent trading! Short term directional based day trading of index futures. Identifying regularly occurring conditions where the next significant move (up or down) can be accurately predicted and a position established on the turn. At the beginning of the stairway after designing how to take a net profit from each trading day, starting with a live account, and consistently adding to my gains. The new step every day is to increase capital in the account. Each day brings a new equity high, and another contract is added after a profitable interval. (total equity / $3000 = contracts traded). A lot of the professional / institutional activity is not directional based - ie market making, spreading, intermarket relationships, relative value plays, etc. There are a small minority of successful directional players who tend to keep to themselves. I don't know much about how others deploy their play but suspect that they have reached similar observations and exploit similar conditions. Good points: the ability to execute profitable trades each day, making a net profit per day, with a small proportion of small loss or scratch trades. Taking a high net profit per contract each day compared to the market range. Having a clear strategy to enter around the turns of markets and take most of the move. Not needing to be "reactive" or having "stress" when trading as I know the conditions I am able to play, and how to play them. Many here seem to change their plan according to what the market does (as in getting shaken out of a position) rather than having a plan for each market condition. Major problem: some very short term setups are high probability but only good to a certain number of contracts. Scaling of a larger size has to occur in front of a larger move, so will hit a threshold on a high proportion of my trades, with the big gains coming the 1-3 times a day where a bigger position can be built. Second major problem -the number of markets which can be exploited by a single trader. Don't want to discuss too much about the concepts. Not wise, and wouldn't be understood by most anyhow. In simple terms there is a structure in the markets which can be used to take high probability trades each day. The same information is available to all and those who work hard can achieve success via the correct thought and a winning attitude.
All of seven years ago, it seems, I suggested the theme of Gershwin's 'Stairway to Paradise' for start-out traders. Begin today! You'll find it nice, The quickest way to paradise. When you practise, Here's the thing to know, Simply say as you go... I'll build a stairway to Paradise With a new step ev'ry day ! I'm gonna get there at any price; Stand aside, I'm on my way! And heres the live chart for 'Stairway to Paradise'. Do you want to read it? (LOL) http://www.youtube.com/watch?v=jmsAGYZr_jw&feature=related
It is madness To be always sitting around in sadness, When you could be learning the Steps of Gladness. Yes, please. I wonder if the analytical mindset required to interpret market information correlates to appreciation for and the ability to create music. On that point, many thanks for the Wagon Christ recommendation. I have a successful trading model which I use in a liquid index futures market (e.g. NQ). This allows various high probability setups to be understood, taking a trade from the turn of the old leg (within a few points) to when the new 'leg' appears to be finishing (usually within a few points of the end of the leg). I add points with this daily, but am aware of liquidity considerations in the near future due to the magnitude / duration of the moves being exploited. This is not a whole day / reversing approach due to insufficient understanding to deploy positions on each 'gyration', however it generally signals 4-6 trades per session with >85% being profitable. Usually the prior 30-90 minutes is sufficient context to take a trade within the regular session. However, a weakness is playing the open as the analysis does not always know both the anticipated direction and if there will be a counter move. This limits trading at one of the most liquid times of day and is lacking pieces of the puzzle which are required to build a larger position size exploiting bigger moves. For the last few weeks following your recommendations, I have gathered and tabulated intraday data for this market going back 4 years and have started analysis in Excel. Using my existing market knowledge as a starting place to ask the questions, already some interesting discoveries. Even knowing with high probability whether a BS day or a SB day is a useful preliminary divide and filter. Longer term goal is daily templates based on location in the market. Then updating the templates with the new data as the session advances. This will be immensely useful in knowing where additional size can be safely deployed. (current trades closed out around 18-24 ticks in NQ, with some smaller gyrations played for 12-16 ticks. The market can only take so much for this size of move). Hopefully some amateur traders have come through here in seven years and found the real gems in your posts - perhaps some have even considered your approach. I certainly don't expect you to share what isn't prudent to, but did want to express my appreciation for your suggesting this fruitful line of enquiry.