There is something to be said about routine in life. Traders, especially scalpers need to reduce stress and develop a high win rate. Too often they try a technique out, it works several times then doesn't work two or three times and they then abandon the technique and try something else out. In the Guinness World Book of records there is an article about a guy who nailed 20,000 free throws in a row. His secret: routine. He always took the same exact stance, used the same exact finger placement on the ball and followed other details down to the T. How does this apply to trading? Think about it! You tell me! How could I use routine in first 2 hours of RTHs session over and over to make money? Do you think routine has to be practiced over and over until it can be done without thinking too much about it? Give a trading example. Do you think it needs continued practice to keep it at a high level of execution?
Scalpers to be good scalpers need to develop a good attitude by: 1) learn the rules of the game and develop others that work and fit you. 2) Practice, practice, and never quit practicing even 20 years down the road. Thus forcing yourself to follow techniques until you get really good at them and they flow from second nature. They have to be continually used and practiced to keep them sharp and honed. 3) Ignore the naysayers. The world is full of folks who seem to enjoy using destructive habits of critizing everything you try to do with no interest in lifting a finger to encourage or help. They resort to name calling, false accusations, slandering a trader. Ever wonder why? Think about it! They often speak negatively of things which they know little about and likely have never tried over a decent period of time. Why would they act that way? Think about it! 4) Figure out how to win as a scalper by thinking outside the box. For example, I cannot tell you the times averaging down has saved a scalp and turned a loser into a winner for myself. But many if not the majority of traders despise it and declare it a terrible thing to do. That is because they have never learned what context to do it in and how to do it and WHAT to do when it IS turning out bad. They try it 10 times, lose their shirt, pants, and socks and with a loud voice and declare it a terrible, useless practice. They refuse to acknowlege they are not yet good enough and have not yet learned how to employ the technique in a profitable way. 5) Be a bit of a maverick. I said at the beginning of my journal that I was a bit of a maverick. 6) scalping or trading has to be enjoyable and a challenge. If you have been unable to achieve this with passion then maybe you should not continue making yourself miserable. Life is too short of a journey to be depressed, miserable, unhappy as you walk through this thing called life. Everyday I can trade i wake up passionate to engage the challenge. When I have a bad day yes I moan..groan..try to understand what I did wrong..then I go to bed and awake the next putting that bad trade..that bad day behind me. Might as well AS I cannot change it. So, I awake with renewed vigor ready to passionately accept and engage the challenges of trading the markets again employing principles and techniques that have proven to work for me. 7) develop your own determinations about the markets. Learn how to win with your account size. Some have large accounts and money is not much of an issue for them. Others have small hard earned savings and that is all they have to trade and it may only be the size of a small account. Trade the instruments and the size you can afford to trade. Over time you may find that to be growing as you get better and better at it and you may come to the point you can step up to another level of trading. Never ever despise small beginnings and never deride and mock others who by neccesity have to trade small. Determine to live your life by these things. 8) freely help others who are beginning their trading journey. There is no need to monetize their ignorance or lack of experience. Help them! Somebody, sometime, somewhere along the way helped you. Freely you have received freely give. It will come back to you. It is more blessed to give than to recieve.
I am not saying it in jest but with some statistical evidences to support my statement: If I have no clue and cannot predict the future, then, when I guess I have only a 50:50 chance of being correct. Normal slippages and bid/ask will ensure I will be losing. On the other hand, if I simply follow the price trend, there is actually a slightly greater than 50:50 that the trend will continue. The key is how long and for how much will it continue? Statistically, there are certain situations, like @volpri's TR, the chance of continuing for one or more ticks is >50:50?
Good Morning ironchef, Guess trading is better for me. I know many ET members do like guess trading and hope trading, but it makes me feel better. Too much learning is not good.
Hello volpri, Yes, I agree. However, trading is different, because High Win Rate Trader will eventually get this equity curve below. Then on the next 123rd high win rate trader will get this. Then what does the high win rate trader do?
Hello ironchef, Yes, you can. What other option in trading do you have but to guess and hope trade? Thank you,
Hello ironchef, Why do you not want these type of "black swan drops" to not happen? Why not want the inevitable, that will happen for certain?
Of course, what you are showing there can happen, but it doesn't HAVE to happen. There are reasons as to WHY it happens. Please consider the following: Big losses ONLY come if a trader lets them come. The impetus maybe lack of skill reading and trading PA, employing averaging down in unfavorable contexts, bad timing, unexpected market pushes, no SLs, trading strategies and techniques that have no real and proven premise to work off from. As traders CAN CONTROL WHEN we enter a position. We also can control WHEN we exit a position. As traders we (most of the time except in a severe crash) can control HOW much we lose. We can even control how much we win if the market moves in our favor. What we cannot control is "how" the market moves and in what direction it ultimately moves. But, we can work off probabilities of particular possibilities to develop and execute strategies and tactics that tend to work. I never blame anyone but myself when I suffer a loss. Especially if I suffer a big loss. And I have suffered a few but have never blown a real account unless it was way way back in the very early days. I don't ever remember taking a real account to broke. I think I would remember that! IMO I own the trade, EVERY trade. I made the decisions. It is on me. I don't blame the Fed. I don't blame the economy. I don't blame the broker. I don't blame any manipulation. I don't blame a running of stops. I don't blame front running. It is up to ME to devise and execute the necessary actions to increase my account and it is up me alone to protect my account. Those things said what I do like to do is look at a losing trade after it is over and try to detect why I suffered a loss on a trade and then maybe I practice on a SIM to see if I can develop a better way to become more skillful in the losses I take and suffer so as to mitigate them overwhelming the profits that I have been made. A scalper has to maintain a high win rate IMO but his strategies and techniques must also include "how" and "when" he executes an entry and how and when he executes exiting his position,. HOW he does this must be in such a way to render an overall profit, over time. The reason it is so important for a scalper to maintain a high win rate and control his losses is that he is going for such small profits on small moves. If he cannot maintain a high win rate over time he will lose as a scalper. Small profits and low win rate are like mixing water and oil. The low win rate will be his undoing. That said, too tight of a SL will do a scalper in too. Why? Because of the constant market probes on every single bar in every session. Scalpers are generally going to be upside down on initial R:R. That in no way means he is not controlling his losses. His initial wider stop losses are necessary to: 1) Give the trade time and distance needed to work in his favor. 2) For uncontrollable and unexpected catastrophic moves in the market. But most of the time he WILL NOT take his initial SL. He will be out of the market faster than you can spit IF his premise on why he took the trade proves out by subsequent PA to be wrong. We all enter a trade on a premise unless we are just guessing. When that premise is wrong, we MUST control our losses. For instance, I short in the top 1/4 of a TR. My premise is it will likely trade back down towards the middle and even to the bottom of the TR. At least enough for a scalp. WHY? because of market inertia. Markets resist change (just like people LOL). Markets are based on human behavior. Chew on that one a bit! So, the premise is based on simple observation that the market in an established TR will likely continue doing what it is doing until change is FORCED upon it. Involved in that premise is also the concept that SHOULD it go against me and trade out of the top of the trading range that within 5 or 6 bars it will trade back down towards the top of the TR or into the TR enough for a scalp. The rationale for that is any BO attempt will encounter opposing pressures. The reason is based upon the observation of many TRs and seeing that around 80% of BO attempts will fail. Again, markets RESIST change, therefore they have inertia. So, the technique is to fade the edges of the TR until that no longer works because the premise has now changed. So, a scalper who fades the edges of TRs also has to develop a mechanism whereby he can determine IF is premise is no longer valid. If he determines it is no longer valid then he must get out immediately and take the loss regardless of where he has initially placed his SL. He controls his losses. Then he needs a mechanism to quickly get back that loss. Your charts above show a trader who did not control his losses. And maybe a premise that does not work in the markets. A faulty premise based upon faulty concepts that are impulsively acted upon.