Best fit your indicators to your stocks. Next choose stocks that conform best to your indicators. Then daytrade. But make as few trades as possible with the most stocks, that you can SUCCESSFULLY handle simultaneously, on your computer screen.
If you have no edge in your favor, you are right. But if you have enough screen time to put in an edge in your favor and your max loss is tightly controlled, you will always have gains. (Check out this journal: http://www.elitetrader.com/vb/showthread.php?s=&threadid=148752) My 6/3 trading day post is an example of one trade after another where I put in a stop at a price that would invalidate my setup signal: (http://www.elitetrader.com/vb/showthread.php?s=&threadid=132626&perpage=6&pagenumber=128) I had one small loss and even that would've been profitable had I placed my stop just a few pennies higher at the high of the day. If you have any kind of edge in choosing strong setups, tight stops will rarely limit your success. If you're stopped out at a small loss, you can always get back in once the setup signal becomes valid again. I've often taken a few scratch trades before catching the real move. In fact my journal this year demonstrates quite well how an edge can work beautifully with good risk management and take you down without it. Believe me I've watched a small loss turn into a big loss several times because I "expected" something to happen instead of just getting out as soon the price action invalidated my original setup.
Nod Got Ya!!!! i have not read your journal since my last post because i prefer to give a lot of time between reads. But i decided to respond to this thread because it does not jive with what you are trying to convince yourself about scalping trades and letting some slow cook overnight in the cooker and hoping for the best in the morning. Please explain to me how those coincide with doing scalps and then yet willing to hold SOME trades overnight? You say here a new high is golden but yet you are the person that fades new highs and lows because your indicator says the move is overbought or oversold. What am i missing? Waiting for the F1 race today.............it is over but FOX gets to show delayed broadcast, bummer. I like watching FOX like i need a hole in the head. Nod, do not yell at me, i am just trying to get you to be less stubborn about your mixing scalps with holding losers. I will not reread this thread before the race because some clown will google the results and tell me.
That conventional wisdom like...don't avg in to a trade and always have a good risk/reward is complete bullshit and that just being "right" in the end is all that matters
Hog, you are getting me in an edgy mood now. Most of my scalping occurs during the doldrums when price is trading in a range. My overnights are planned as overnights. I'm not "hoping for the best", I'm putting on the trade based on price footprints that indicate a particular move to a particular target area. I don't hold a trade overnight unless my pre-trading plan was to hold overnight. My chat roomies will confirm that when I enter a trade that I end up holding overnight, I have announced in advance "will hold overnight for a larger move". 95% of my overnight holds produced my best profits. Of the three overnights that gapped against me over the past 8 months, two were mismanaged and exited at a larger loss than necessary and one was exited at close to break even. The total losses on these three trades came to around $3000; the total gains on my overnight trades was many times this amount. Although I am off my target of 100% return this year, I'm really not doing that bad for a noob.
Nod Ok, lets see if we can come to a meeting of the minds here. I have read your reasons for putting on a scalp trade. That you have stated a few times. Where did i miss the signals you use to pre-plan larger moves? I was in the chat with you when you were in ET chat room so i am not completly in the dark. I do not recall trades based on holding overnight, i just recall trades based on stocs and failures of making new highs. Am i not correct in recalling you base your almost consistent "short side" trades based on price action from a 1 minute and a 3 minute chart? here is where i have been trying to help you..............you seem to be making the same mistakes over and over without correction. How many times have you said you left to much on the table? How many times did you say you got out to early? How about STOPS were to close? See where i am coming from? Lets put it this way. What have you changed to correct those trading errors? It is easy to say based on price action after the fact. I think you have potential to be a good solid trader but are spinning your wheels after being bold and brave in the beginning. Some of those overnight trades have taken their toll on your confidence and courage. That shows very clear in taking ever smaller and faster profit taking of small moves. Please do not try to convince me you have a seperate plan for swing trading when i see no tactics stated. Someone led you down a path that is flawed. Shooting from the hip is for cowboys/cowgirls. Traders correct mistakes and flawed strategy or end up on boot hill. Scalping and swing trades do not mix, they have a seperate set of workable signals. PS: Might be away for a couple weeks or so. Maybe time to jump in the ride and cruise around to listen to ocean waves etc. Cocktails in places where i enjoy. Michigan is great place for non severe weather but a change of pace is welcomed also.
I use the 3-min chart for intraday trades and reference the previous day's chart and the 30-day chart for near term S/R levels. I use the 30-day chart for overnight trades and reference the 6-month and 52-week chart for major S/R levels. I do use the intraday 3-minute chart to try and get the best entry for the overnight trade. The ONLY time I used a 1-minute chart was when I planned to enter or exit a trade in the first 5 minutes. Now that I have IB I use the DOM for my opening entries. I don't even look at the chart on open. I know in advance the previous days S/R and the closing price and I use the opening price action to decide if and where to place my bid or offer. And yes, I still have a short bias. Have fun cruisin'!
Great post! Here's a few of my own: "Think like a casino" "Screw my opinion... my system is the only thing that matters" "Think HIGH-PROBABILITY" "Don't try to beat the market... just play my system" "Have a PRE-DETERMINED risk structure" (know your risk on EVERY trade before you take it) "Be confident & humble" - Chris
Nice stuff, Chris. Esp think like a casino and think high probability. Anything less than high probability just nibbles away at profits. I actually had "Be humble" on my original list! Then I deleted it, figuring removing right and wrong from your belief system covered that, because the need to be right and avoid being wrong is all about ego, eh?