First let me say that the way I trade may not be for you. The set-up I use is a screen full of different stocks, indexes, and indicators like trin, tick, vix, etc etc. No where on my screen will you see an intraday chart. Stocks and indexes that I monitor are hopefully key ones....like IBM, INTC, MSFT, CSCO, C, GM, MMM, etc. I monitor bonds, SOX, the bank index, biotech index, the gold index, and others. In short, I load up my screen with symbols so that I can get a feel for different sectors and key stocks. I review those stocks, and others that I don't monitor real time, in the evening to get a feel for where I think we're at. I also actively monitor news. It helps to keep you in tune with what's happening...but more importantly, the markets reaction to said news. I begin each day with my notebook. On it I have things like the important highs and lows for ES, NQ, and where important daily moving averages are for the important indexes....moving averages like the 10, 20, 50, and 200 day averages. As the day progresses, and I note anything of importance, I add it to my notebook. OK, so that's my basic setup. What I'm looking for is a clue. The clue could come from anywhere, so I view my function as a sort of detective if you will. Now here's what I don't do: I hate to chase things. So I don't buy breakouts for instance, I don't sell a breakdown. I'm looking for situations that aren't quite so obvious...because those are the situations where maximum potential occurs. What I try to do is anticipate and capitalize on what other short term traders may do...and understand, I know they are all using the computerized software to generate their trades. LOL. Now let's say the low of the day gets taken out. Clearly, there were some traders that were long, who are going to get stopped out. And probably there are some other traders who seeing the weakness are going to short it. It's possible that a point of that type is a point of maximum potential. Why? The guy who was short has a stop someplace...probably not too far away...he's a possible buyer. The guy who was long and got stopped out when we broke the low is bullish, but he's out now. If we start to go back up he's going to buy again. If we broke the low the chances are that most of the weak hands have sold. Any upward price action that comes from such a spot is going to be explosive. We had an example this afternoon. What? 6-7 points up in about 15 minutes after we took the lows out. Not long after we took the highs of the day out. Now, you can't routinely buy new lows...I'm not suggesting that. I watch the screen, I monitor the underlying instruments that make up the index. Hopefully I'm going to recognize the real moves from the false moves. That false move is one I'm going to be all over. I also like the buy/sell reactions against the main trend. I rarely would buy a breakout. I'm either in before the breakout...or I wait for some type of reaction. The market's there everyday. I don't have to be part of the crowd...which is the surest way to lose money over time. Stops? I don't like to enter them because they influence my thought. I get out of my trade when it isn't working, whether that is a few points, or 50 cents. But keep in mind that typically I'm buying at points where the market is extended to begin with, so chances are I can keep my loss to a minimum. My losses are normally going to be a few points. I know that this is probably not giving you what you want. We all want certainty. And what I'm telling you is that the computerized methods that you currently use may give you the illusion of certainty....but are no substitute for rational thought, for an understanding of the market place. I'll try to post more, but let me end with this story: I knew a guy on the floor who kept a point and figure chart by hand in the pit. He'd make his columns of X's and O's, and when the column of X's went past the last column of X's that was a buy signal, a sell was the same only with the O's. One day he explained how this chart worked to the biggest trader in the pit. The trader said: You mean you want to buy if it goes up here? The chartist said: Yes. So with a big flurry the big trader started buying...and drove it up to the spot where the chartist wanted to buy. When he stepped forward to buy, the big trader sold to him! Now he asked the chartist: You want to sell down here, right? And started selling until he drove it back down to the spot where the chartist sold, and the big trader bought from him. True story. If you buy strength and sell weakness....you are at a maximum disadvantage. The big moves you'll make money on. But then again, anyone can make money on the big ones. It's all the other routine moves...which is most of them....you're at a severe disadvantage. Something to think about. Hope this helps some. OldTrader
OldTrader, Your insights are among the best I've seen on ET. I have printed out your post. This is the second print-out I've made from the thousands I have read. I can't thank you enough!
wow- with the exception of oldtrader- good post man- every one since mine has been horseshit banter that is worthless- how can 6 pages be about -"hey, buddy- whats up? i like to trade- i don't trade well- if you do can you teach me? what am i doing?..yadda yadda yaddda....: its rediculous that someone will try to make fun of me for bagging on a strategy that returns 30-40% winners- thats crap and i wouldn't waste my time with it- why study a 40% successful strategy and have a lot more losers to be pissed about and have to manage when you can learn one that has MUCH higher probabilities of success and is easier to make money at? well, i suppose i am just very happy with what i have going and the fact that while it is low risk and lower returns. i can still manage to make consistent profits of over $1K a day- thats all that i will say...... i'm not trying to be cocky or condescending, just stating my .02- and it is a public forum here.....do what makes you money. period. if you have a successful strategy, great- exploit it- if not, get one- i have a trading business plan and adhere to it rigidly....peace and good trading everyone...
Smokey, No offense, but if a thread I started was nothing but horseshit to begin with, at least we got a few gems out of the garden? Not every post you read on Elite Trader is going to be a mind-expanding experience. I think the contributions Oldtrader has decided to make for us more than makes up for the other pages filled with what you call mindless banter.
Oldtrader! i was originally going to reply back to your last post tomorrow because i wanted to think it over (and i'm also tired). but, you took the time to respond to me in a meaningful way and i should at least take the time to thank you. as others have said, your posts here have been great. anyone who reads your posts can tell you are speaking from the heart. many of the good traders here don't like to say too much about their trading. whenever i come to this web site, i try to read every new post there is -- at least quickly. i do this because i never know where, when, or from who i might find something useful. you are exactly why i do this. you even got someone to make their 1st post ever here and they've been a member for almost a year! (i'm referring to "cheezeits.") he said that your post deserved his first response. like i said in my other post to you, the knowledge you bring here is like something right out of "reminiscences of a stock operator." anyway, i just wanted to let you know that the wisdom you share here is appreciated by me, and i'm sure others too. please continue to post here whenever you can. thanks again, GG!!
You can't buy strength and sell weakness, but you can't routinely buy new lows either(and, i assume, the reverse is true too --selling new highs) Doesn't make too much sense to me at this point, so i am not getting much from this, maybe further posts will clear this up.
Smokey I was simply trying to point out to you that there is more than one way to make money in this game... 70-80% is not a necessary ingredient to make money... Let me ask you a question; I assume that since you are hitting at a high 70-80% clip your avg win/avg loss ratio is well below 2-1 right???
Old Trader +Gordon Gekko quote. Good warning,especialy with September having a 40 year record of sideways chop[-.03 %, on the S&P 500. Discretion + moving averages , plus price action can sometimes stop chop. ____________________ ''There are old traders and bold traders;but no old,bold traders'' Leiber+ Weissman-Jack Schwager quote