The eroding profits while reducing losses tradeoff is a real sticker. I sometimes think that if I go over the same thirty days' work one more time . . . But going back over the same road again and again, trying various approaches, is the only way I know how to make progress, then apply whatever I come up with to a new set of days. Sometimes, though, I get stuck, which is where threads like this help me to back off and look at the same old same old in a different way, possibly rejuggling what I already do and either modifying it in some way or adding something new. But reducing losses while increasing profits seems to me to be less a matter of tweaking a mechanical system and more a matter of trying to improve a discretionary system. For example, there's the whole lunchtime thing. Used to be you could set your watch by that 1230 reversal. Those were the days. And even now there are occasionally some nice reversals and trends during that time. But looking at a month's worth of charts, or more, in an objective and rational way, the percentages just aren't there. and since it's difficult enough to maintain the morning's focus throughout midday, one is most likely to miss the correct entry anyway. What I've been missing most of all is what I call "velocity" or energy. With rare exceptions, this is to be found only in the morning hours, and often not even then. Granted there are trends and reversals to be found even on those days when it seems as though everybody's gone home. But I get real nervous watching even a 1m bar just sit there and sit and sit and sit, locked into a 3 pt range for a half hour. I'm hardly addicted to action, but please! When one looks, then, at reducing losses and increasing profits, one way, at least for me and at least for now, is simply to stop at 1130 to 1145. Just stop. If nothing else, it helps one learn whether he's trading to make money or trading for the action. --Db
Db... All this discussion is good...and like Natalie has said...it helps us crystallize or thoughts. Sometimes we become complacent in our trading and fail to see the obvious. That be said, let me try to explain my reason for what someone on this board referred to as a "method" of trading. Perhaps this will be helpful...and maybe Natalie can agree/disagree with what I say. First...the reason I trade this method is because I what to attempt to identify when the market is trending on an intraday basis. I know my limitations....i am terrible at scalping. My thinking is if it is not trending, I don't want to trade. This is the only method that I have seen that will indicate this. If I can capture only 2-3 good trades a week...I can do very well. Today is an excellent example...as was last friday. Now as to the specifics...these can be very subjective. All I can say is that I base most decisions on "market structure". views the false breakout part of the market making a higher high then a higher low? If it was, then I would probably take the breakout to the new high taking into consideration the complete range so far. Has the index already spent 80-90% of it's ATR? If so, my risk/reward would not justify the trade. Now did the market retrace and make another false break to the downside? This would tell me that it is likely to be a choppy day and I might just quit for the day. The only indicator that I have found reliable is the price action itself. I do look at volume and the nyse/naz up volume/down volume,& Trin/Trinq. For instance yesterday I did take the upside breakout on the NQ at 1050.50...but in retrospect...with a Trin/Trinq so bearish as it was...I should have waited a few minutes. I more than made up the loss though on the downside break.....this is typical of this method. So there is a fair amount of discretion involved. Much of it is also based on profit/loss...for instance. Yesterday we saw the NQ retest my short entry @ 1037.5 after a good run to 1025, which by the way, is often typical. If I had been around...I had something to do so I had covered earlier, I would have reshorted but probably with only 1/2 position size...I would have only been risking 1/2 my profit. This is why I don't think that this can really be backtested with any degree of accuracy. To me this method is very simple....not necessarily easy...sometimes it is very difficult to just let the profits run and not grab the 4-5 points you already have. That is why I will grab 1/2 at about 3 points then often times just walk away....with a breakeven stop...psychologically I can handle that,...although I have read that this is a poor method of trading. I don't mean to be vague...and I hate those posts that give the impression that to trade successfully you have to be some kind of "Zen Master". I don't consider myself real bright...if I can do it anybody can! My experience is that "really smart" people tend to overthink everything. The rest of us aren't handicapped by intelligence. How smart can I be.....I used to be a broker with a major firm!!! Now there's a job where stupidity pays...even I wasn't stupid enough to be very good at it. No offense intended....but I noticed, while in the profession, that the stupidest people made the best salesmen. They would believe anything that a wholesaler (mutual fund salesperson) told them. Now we all know, that you really have to believe in something to sell it. By the way....statistically...those with the lowest Series 7 scores are the most successful (highest gross commissions) brokers. Sorry.....don't mean to ramble....hope this has been of help. Mike
Much of what I am doing is deiscretionary, and it's based upon, I've made this mistake before so I'm not going to fall for that one again... I know that there are many ways in which I could make much more, but, I like to sleep at night without the pressure on me. I'm not very good at looking at long runs of failures either, and this way I manage to keep my blood pressure down Seriously though, there are quite a few little nuances that I've adapted to over time e.g. I don't take a long trade if the first 30min bar finishes at it's high, and the next bar continues upwards without retracing 1 or 2 points to give a price overlap between the 1st and second bars. In almost all occasions there is at least a 1.5 overlap, and if it hasn't taken it at the beginning of that time farme, it will most likely come back down to collect it, and may end up being a sharp reversal. (today on the ES was a good example of that, and I didn't take the long trade on the up break.) The opposite for the lows too. Little things like this just serve to keep me out of trouble. I've also found, that where there is a strong pullback (like today) that using the 15 min bars and similar rules to 30 min bars, I can get the short position well before actually breaking down through the range, on the basis that the 15 min is continuing down, the upper break has failed, which generally means the lower one will continue on. It's hard to quatify things like that, that have built up over time and experinece, and it's even harder to systematise them into hard fast rules not least because I don't even remember half of them until they crop up again. However, both yesterday and today have both been quite good for me. I've taken my profits and being on GMT instead of EST, I'm probably going to just let it go for the rest of the day now, and I'll probably look back at the market later to see if there is anything in the last hour or so... Sorry, now I'm rambling too. Natalie
As for the downside break yesterday, I'm interested in how you played it. I didn't take it at the new low because of the series of expansion bars leading up to it (they nearly always result in a bounce). I'd also be interested in how you played today. I'm not interested in a recipe. I'm more interested in your thought processes, if you are willing to share them. --Db
Db I generally set my stop orders after the first 30 min. and then do something else. So yesterday I got filled and then almost immediately taken out for a 4 point loss on the up side break. I fortunately made a miscalculation....I just reviewed my records... and set a sell stop @ 1038.5...should have been 37.5. I had a limit buy for half @ 33.5 and was hit @ about 11 am est. Placed a breakeven on the rest. Had to go do something so covered the rest after that move to 29 after it retraced to 31.5 @ about 11:45 est. Today..my daughter came to the door right about 6:59 pst and I went to let her in....believe it or not it is raining here....it's really weird.:eek: So needless to say I had not placed my orders and missed the upside spike....although I would have done alright because I would have entered @1037.5 covered half @ 1040.5 and then moved my stop to breakeven once it had moved to 1041.5. My short entry was @ 1024...although I was real tempted to enter after the upside failure per our discussions on this board about reversals....but stuck with the original plan. I had an order to cover half @ 1020.....why...that was BIG support and I figured it would either bounce or crash off that number. It crashed! Next BIG support @ 1002. Followed it down and place a stop just above the broken short term support per the 3 min chart @ 1011.5 which was subsequently hit. Even though I don't usually trade both I also shorted the ES @ 898....made another error should have been 899...covered half at 933.25...it moved so fast I didn't even have time to enter a limit order for my usual 3 points...rest stop place @ BE then followed it down to 891 and placed stop just above recent high 895.5 which was hit. Natalie......interesting stuff about the 15 min bars...one question. When do your bars stop/start. On my charts the 3rd bar starts at 10am....so the first 2 would not include any news etc. For instance today the second bar on my chart had a high of 906.25 and closed @ 906. The 3rd bar opened @905.75 and had a low of 905.25....this would have complied with your parameters if I understand you correctly. Please let me know if your data is the same. Mike
Thanks for your response. We seem to be on the same wavelength. So you decided to take the 1033.5 short because of the lower high on the bounce? --Db
Yes Mike. That's the same for me too. I'm learning a lot from this conversation, looking at the same from a slightly different angle... Natalie
Given the fact that reports are most often issued at 0945 and 1000, have either of you ever dabbled with, for example, 20m bars? That would get you in at 0950 and/or 1010. --Db
Actually, funny you should mention that, but - Yes I have - only problem was that the system defaulted them to start the 3rd bar at 10.00 which didn't help much, and started the first bar at 9.20 which was even less help. It doesn't seem to matter what size of bar, they all deafult to 10 a.m. I'd love to be able to work on say 17 min bars or something like that with 34 as the biggie instead of 30 but I just can't do it. I drew them by hand once for an experiment and they worked very well indeed... Maybe I will be able to when I get some new equipment (when I finally stop changin my mind about what to get...) Natalie