It would take weeks and probably months to fully explain my strategy and even then you may not get it because it is very intuitive and somewhat discretionary. The thing about trading....you can put 2 different traders on a 26/9 MACD cross and get 2 different results. It's not the stratey that makes the strategy successful, it's the trader. So, if you went to Soros or any other big player and asked them their strategy and they actually told you I don't think you'd be able to duplicate their results but all strategies require judgment. At any rate, if you want to dig a little deeper into my strategy here is a start. One thing I will tell you about it....I break a lot of rules and I will never place a physical stop: http://www.elitetrader.com/vb/showthread.php?s=&threadid=112126
and here's another one that explains what I won't do and why. It's kind of lengthy but if you're up for a good read there's some good stuff in there. Sorry about the bold, I forgot to close the bracket. Only 1 word was supposed to be bold. http://www.elitetrader.com/vb/showthread.php?s=&threadid=112874
It's obvious you've got darn good entries....but I still don't get your earlier comment about "I don't use physical stops". I now see something here...scaling-in on entries, eh ?. I don't see any magic here...just a lot of hard work and lots of time spent in the emini futures "School of Hard Knocks".
Right on, there's no magic. This is just a system that I developed over time. It's based more on price movement than indicators. I rely heavily on my "read" of the market, which isn't always right so I need a scaling method to correct the weaknesses in that method. Here's why I don't use physical stops....It's my belief that technical analysis has a lot of value but the market is largely random. I realize most trader disagree with this, which is perfectly fine with me. That's what I want to hear. So, if the market is random and you place a physical stop it means your method of trading is now based on timing (which is impossible to do so consistenly that you can profit from just this method) and you've placed the outcome of your trade at the mercy of the market. Will the market punish you? If you give it a chance it absolutely will punish you. I refuse to let the market dictate how I lose money. That's my decision. Think of this another way......if you have 100 contracts at your disposal, for example, would you put the entire 100 on all at once? Trading that kind of size gives you an incredible advantage over a trader who is trading a 1, 2, 3, 5, 8 etc...lot. You don't have to put your entire wad on with 1 triggger -- scale into it. Nibble at the market and if the iron is hot strike. With this type of entry system there is no need to use stops.
Oh, and yes, I definitely went to the school of hard knocks. I tried in vain to get hooked up with a trading firm. Even the prop shops wouldn't hire me for some reason so I had to teach myself. I blew up more stock trading accounts than I can recall getting my "education." I've never blown up a futures account and it's unlikely I will. I have an extremely high level of discipline these days. I spend more time working on "me" than I do the market. It's all about how you think.
It is interesting that giving the choices of best way to obtain more trading capital the three best would include: 1. go to PROP firm 2. borrow from financial institution 3. borrow from friends The one you chose Profittakingfool was number 3. Those three options are available to most traders as well. The "borrow from friends" one seems to me to be the most stressful b/c if you happen to fail having to live with these people rest of someones life can be difficult. Also the stress of knowing this is friends/family money could cause a trader to made trades he would not normally make. Personally I would chose the "borrow from financial institution" being that if I failed and actually lost some of their money I would just have to find a job and pay them back. I donât think the financial institution would even care who I was, they are just looking at me as another borrower and as long as they get their interest back they would not care if I was successful or not.
Yoda says: "and yet, there is another" take $500, trade options build up to $4,000 cross over or stay with that as plan borrow nothing hold head high friends stay friends, family still knows your name (instead of some other derogatory)
Great info, Profit TF! One quesiton.. What do you pay in short-term capital gains for stock trades under your hedge fund? Is it 15%, 20% or 30%?...
Don't know because I don't trade stocks. I'm strictly futures and run as a CPO. But, it's my understanding that the hedge fund would not pay anything in short term capital gains. Those gains would be put to the shareholders in a form of a K1 and taxed at their odinary rate. I'm not an accountant so I can't say for sure but that's how I understand it.