Chinese proverb...'Small fish are sweet'.....now I know why...show me a Chinese with a big ...... NiN
The bottom is the better sine wave and the top is better momentum. I have stopped using these for my day trading, in favor of using basic support & resistance with order flow. I'm not really using these for swing trading either. But I haven't removed them from my charts yet. I'm still working on how I want to do my swing trades without these indicators. Speaking of swing trades, on my blog I stated a good case for a market top at 1207.50 or 1216.50. I went short at 1207.00. The market peeked up a bit higher than I expected (around 1224) but the market has since dropped to 94. I've scaled out of most of my position with a small profit and I'm holding one contract. If you're interested in the details you can find it on my blog. I've been posting all my swing trades on my blog, and usually post entries & exits on Twitter real time. This is not as "trade calls" for others to trade off (I highly recommend not following others trades except maybe on simulator) but rather for others to see how I swing trade & provoke discussion. My swing trading is very discretionary. I do not have any "setups" per se. My success rate is pretty high. I very much would love to have specific setups for swing trading, that would make it much easier. But I haven't found any to work.
Hi Handle123, Thanks for sharing your experience. I find it very interesting. I think I agree with most of what your wrote except the last part - automation. I've never done well with that. Discretion is such a part of my trading that I often think it'd be impossible to be profitable without it. I actually believe automation can be profitable but with inferior results to those obtained with discretion. My day trading profit factor last week was 44.24. I only lost 3 ticks total last week. In swing trading my profit factor is around 20. I don't think I could get this kind of performance from automation. I think many automated systems get profit factors of 2-3. I'd love to hear more about your automation. Thanks for sharing.
I am in the process of just recording all the nuances that come up in a given year and putting them into a way that code language can also see what I see, gets very difficult at times, some nuances may not come up but once a year and other times several times a year based on five minute bars. I am willing to not make as much cause some patterns are incredibly tough to code. When the ES was valued much more in 1980-90's, making a full point was very good money, now I am considered a scalper. I am not a scalper in that I do 100's of trades a day, and last few years I have concentrated on lowering losing weekly percentages to under 15% and now finally under 10% while still doing over 25 trades a day in ES, CL, 6E, ZN/ZF, IBM, Google, and now concentrating on lowering my Breakeven trades to under 15% which will make 70% winners or higher. I feel it is more important to accept a one tic profit, even tough if I waited longer for a 8-16 tic profit than to take any kind of a loss. I don't pay retail as I rent my seat. Over the course of several years, I have found a dozen entry patterns, some based on price and others formed by indicators, that by themselves are no better than 60%, unlike most of the NEWBIES who attempt to play the game, the entry is the least part of your trading method, and money management rules makes the coin. Good Money Management rules can turn a HORRIBLE entry method into a wining method. But most don't have the experience to easily do that. My methods for scalping the seven markets I day trade, are robust enough to trade any market, any intraday timeframe, but like in anything, have to alter some of the values of Money Management, but the percentages stay about the same, so that is the main reason of going to automation. I don't believe anything is Discretion, your brain thinks in past history, patterns you have seen before, whether they worked before or not, unless backtested, you yourself can only remember so many times that pattern working. I certainly can't remember the last 100 trades, let alone thousands of trades taken. I think anything we dream up, can be eventually coded, but it is that fear we have to relinquish power to let a machine trade for us that initially make us feel uneasy. Much of what we watch is partly based on reward to risk, longer I do this, less I think in that way. I am starting to think of trading with no stops since my money management rules are so good to me. So if I don't have stops, reward to risk can't be used. So all we have left is average per trade, and generally it is between $24 to 37 a contract in ES, doesn't sound like much, but it adds up when I do 20-35 trades a day. My long term trading in commodities are all over the place though, usually one incredible year of reward to risk 12 to 1 or more and 2 years of minimal profits, but I think this is true for most long term methods. I have done very little swing trading of a few days duration, although I have recently started a few months back of buying and selling options for 1-2 day target with impressive winning %, but only doing a single option till backtesting is complete. I am very conservative when I trade, one of my mentors, whom for privacy sake is name less, nails done 98.5% winning trades and he does 100-150 trades a day in the ES, he been trading longer than I have. He is at his best when he is in the hole for the day as he uses no stops, but I have never known him to have a losing day in past sixteen years, he trades like a machine. I DO NOT condone not using Protective Stops to anyone, as in my earlier days, I allowed a $300 cancellation of a stop on seven contracts each to transform into a $84,000 drawdown cause I was too dumb to get out. I think looking back, I had to be one of the dumbest traders around, always breaking my rules, not until one of my friends bought over an electric devise and hooked it to my finger, you just press the button when you violate a rule, getting a jolt of current, I wore that thing for a year, I still finch when I even think about breaking a rule....maybe I should patent this....
Like the weatherman said: "50% chance it's going to rain today". Before it rains youâre going to see cloudy skies, more winds and choppy water... What are you doing after after seeing such formations is partly considered the discretionary decision that you canât do with autopilots or not very efficiently at it all... Read and react; it's instinctive and discretionary trading at it's best.
Thank you for the interesting thread. I also am impressed by your blog. I hope you don't mind a question.. Can you explain how you identify when the market is "balanced" versus "imbalanced" using market profile. Thanks
Thanks for the compliments. The purpose of this thread is to discuss all this so I welcome any & all questions. The traders reading this thread & my blog are not my competition so sharing is good. Telling whether the market is balanced or imbalanced is very difficult and very advanced. I gave up on it several times thinking it was impossible to do real time. But through lots of experience and practice I'm getting better at it. I don't usually use market profile for this as the market profile can look "balanced" even though price had an imbalanced move down and then an imbalanced move up. The thing is to study the rotations. Is one side stronger than the other? Is it retracing most (all?) of the move? These are the type of questions you want to be asking. And when you use the volume profile concepts you can see it moving from one balance area to another. This move is the imbalanced part. After that it can rotate in the new balance area or continue the imbalanced move. Sorry but I can't really explain it more than that. It is something that takes a lot of time to learn. But if you start asking yourself constantly throughout the day "is the market balanced? If so around which price are we rotating? If not where did we come from and where are we likely to start rotating again". Those questions will help you learn to see it yourself.
After shorting 1207 and covering 1187 (a bit too early I must admit) I went long 1174 and just covered at 189.75. Probably early on the exit this time too but I'm not risking giving any back.