I know this will be difficult, but.... I am interested in "how" everyone trades. What is your methodology/plan? I am not saying reveal your deep, dark secrets but just describe briefly your style and at least some of the good stuff associated with your attack of the markets. I live in a vacum here in my trading office. Wife calls me the "Wizard". Maybe others here interact, but I don't so I would really appreciate knowing how we all go about this. I think it will help..especially if some of our older, distinguished members will contribute a little. Post some charts of your trading screens and stuff....makes it interesting. VT
I will start... I can't believe it, but last October I began trading an automated strategy full time. I never thought I would admit this. Was a major skeptic and non-believer. It is a simple system. It trades the ER2 and takes one trade per day based on 2 simple rules. I am only in the market a few hours a day. I spent a lot of time developing this and was really skeptical, but it is working. March was terrible, but overall I am really pleased with the results. I decided to go this route to help me manage my emotions. I made a (weak)committment... that for one year I would let the computer trade for me. I will not judge this strategy until the end of the trial. Should be interesting. I am going nuts just watching it trade. I think it is kinda of like retirement....sometimes I am away, sometimes fishing, etc. My only goal is to make sure the computer is on and the ISP is realiable and such. Just keeping the shop open so to speak. I like to trade a few times per day and I suspect I will need to resume this before the trial period ends. (or else I will go crazy). So far though I have not hit my mouse button since October 2004. I used to trade with indcators a while back, but (prior to the above system) I just watched price and S/R levels and entered on pullbacks in the direction of the trend. Nothing fancy. I trade EC, ER2, Notes and Bonds. I tried to keep my size up when prudent and take what the market would give. Although, I would consider this successful....I always seemed to lack discipline soooo.........that's how the auto strategy evolved. BTW - I use Tradestation and RJO. VT
So does this simple 'pullback on trends' systems been working for you? For some reason, I know people use simple systems and still can make loads of money compare to someone who have a complex system who also makes about the same load.. Wonder if there is a contest between Discretionary Traders vs Automated system trading machines. sorta like Big Blue (deep blue??) vs Kasporav in Chess.
I am able to have a profitable business trading and I am grateful for this. I would not say I was overly successful at this method mainly because the following two reasons: 1) I am not able to define the trend consistently 2) I tend to take "gut feel trades" that violate my rules. I am a big believer in keeping things simple. My trading improved once I adopted this concept. In other words, if I buy now based on my observations, will someone be willing to pay more for what I bought in a given time period.
I trade only long side about $10K per position small cap stocks. very small stop loss usually hit within a day or two. I use trade station to scan intraday most of the entries before lunch. cut my losers short let my winners run. about 10-15 trades per month. over $200K in profits for last year up about $30K year to date. current positions (take a look at SNHY still holding from 27.70 and GRU holding from 17.50) VERY BORING. I also trade ES made $370.00 dollars after commission for last year futures go short and long. Not Boring at all. I am about to give up on futures cannot find a tradable edge.
Good for you. I have an exceedingly simple system too that's been working wonders. I assume you looked around with different software vendors before automating with Tradestation? How difficult is the coding and is the slippage manageable. I'd love to automate and pursue other more pleasurable interests during the day rather than be glued to the screen so I dont miss my signal for the day. I find the boredom to be an excruciating byproduct for following my rigid rules. I trade the YM,ER and ES. No more stocks for me!
I trade a bastardized version of Fisher's ACD system. I trade it over indexes (primarily, ER2, ES, NQ), meats, grains, and sometimes energies. I am looking to automate it and expand into equities as well. For those not familiar, it is a methodology based on the opening range. I have done a very large amount of research on it, so my setups are quite different than Fisher's, but the premise is the same: enter on a break of the OR +- a threshold. Unfortunately, my trading is about 50% discretionary, as I take daily technical information and fundamental factors into account. Once I figure out how to satisfactorily incorporate most of my techniques, I will automate it to reduce my emotional impact. You said you use TS and RJO: how do you have them linked? I have looked at Trade Bolt, but I don't like the extra fees, which are somewhat substantial. My real problem lies in the fact I frequently trade pit contracts in grains and meats. Any input you may have on your system setup would help greatly. Note: I currently use Open E Cry for my broker.
I used to try to trade with a bunch of indicators. I tested on Wealthlab for more hours than I can count. I now use price and volume only, other than a stochastic for confirmation. The other thing is I used to be an 'expert' on trailing stops. I found though that the whole concept meant I either a) got stopped out on noise or b) gave back too much, and definitely c) psychologically gave up responsibility for exits from me to 'the stop'. Now I only use breakeven stops, and have all my profit unprotected. That is great for bearing and OVERCOMING FEAR, and makes YOU take responsibility for exits, and that makes YOU focus more on what the mkt is actually doing rather than using trailing stops as a crutch.
This is something I'm currently slowly integrating into my trading plan. However, I must exit some contracts at the first profit target zone and leave the remainders at breakeven. I got bills to pay and a family to support I started realizing when I use trailing stops (profitable trailing stops if hit) I had not been watching price action the way I should have been watching it... Instead, I became so fixated on my open position that I didn't have the ability to adapt/react to take advantage of new opportunites... Not knowing that such (breakeven stops) allowed me to indirectly be more efficient in managing my open position. Simply, trailing stops is counter productive to my trade methodology although it may not be for someone else with a different trade methodology. Now if a trade signal appears while I still have an open position... I either reverse my trade position or exit a bulk of my position (lock in profits) and keep a remaining open small position that still has the breakeven stop... Then either dumping the remainders at the next opposite trade signal or ADDing to the profitable position if a continuation pattern appears. Thus, in a way, I'm using trade signals that appear after my entry...using those trade signals as trailing stops or to signal to ADD to a profitable position. Results so far: More profits and the ability to adapt/react when new opportunities appear... Instead of freezing like deer at night in front of headlights while standing in the middle of the road while in an open position that has trailing stops. The question now is when a new opportunity (trade signal) appears while I have an open position... How do I know if I should either dump a bulk of my position to lock in profits or reverse the trade? Currently, that's subjective and hopefully I'll have specific rules for determing such. Right now...most of the time when I reverse a trade position its because the new trade signal has appeared on a higher chart interval (still playing around with this). Another option is to open a new trade position in a similar trading instrument. Example I could be Long ER2 and later if I get a trade signal to reverse my ER2 position... I could dump a bulk of my ER2 and leave the remainders at breakeven and then get Short in YM if YM is in a similar like price action. NihabaAshi "Don't judge each day by the harvest you reap, but by the seeds you plant."--Robert Louis Stevenson
I did not look around at all. I just spent time coding a methodology I had been using as part of my normal trading day. It is simple enough that it only took me 9000 hours or so of easy language learning. Since I am only entering one time and holding the position until close, the slippage on this single trade is manageable, although it is greater than I had originally input in my trading system!!!