Which real live future trading room I should choose?

Discussion in 'Index Futures' started by Affecto, Aug 24, 2009.

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  1. Jreality

    Jreality

    He didn't jump in until the /ES had pulled all the way back below around 1010.

    Earlier in the daytime session, the /ES was moving upward, and this was a full reversal back to the start of where it was priced at before the downward move overnight. His expectation was that /ES would head to new highs, and the trading opportunities would be on the long side. After all, the /ES had completely reversed the downward move of the nighttime session.

    However, the /ES then started to collapse, but it wasn't until the downward move off the top had completely moved down to the original starting point of the upward move that he was convinced the downward move was the real deal as opposed to a mere headfake. EDIT: In other words, he was convinced the move was real when /ES moved down below the bottom of the night time session.

    He then jumped into the short (scaled in) but realized it was a late entry and got out quickly, especially due to the technical glitch. There were no other trades during the day.
     
    #51     Sep 2, 2009
  2. FB123

    FB123

    He is clueless. I already anticipated the market drop before it even happened, because I knew that after a runup like that and good news coming out, if it doesn't spike higher immediately and keep going, it's going to fall. Same thing in reverse - if terrible news comes out and the market doesn't drop further, start looking for a rally. It was looking weak at the top after that news - that's NOT what you want to see after good news comes out.

    But aside from that, there are ways to start catching that trend right off the bat near the top even if you didn't have that idea going in. There are lots of ways to identify these things as they are happening EARLY in the trend, not after it's already 80% over. But it's not going to be an easy-to-follow "do this, then do that" kind of method... basically you will have to learn how to read price action. Nobody can really teach you to do that, you can only get it by staring at the market for months and months and months. It takes a long time to master, but once you can do it, it will never stop working for you, and is much better than trading with limited setups.


    Nothing wrong with that idea. (I didn't agree with it, but that doesn't matter.) The problem is that he let his expectations color his view of the market, and that caused him to miss out on a great short opportunity. He should have been able to read the price action and reverse his thinking when the market started to prove him wrong.

    If my assumption about a market drop had not started to materialize, I would have changed my bias to the long side very quickly. The faster you adapt, the better you are as a trader.


    He doesn't know what he is doing, dude. Drop him. You have a better chance just staring at the market and figuring things out yourself.
     
    #52     Sep 2, 2009
  3. Jreality

    Jreality

    You remind me of someone on another forum who insists that trading price action is the way to go. He says he doesn't use any indicators.

    QUESTION: can I read price action from ordinary candlestick charts, or do I need to read time and sales data? What timeframe do you use to read price action and catch a move like what happened today (sept. 1st)?


    EDIT: well, I can see clues near the top (the wicks in the candles, indicative of distribution) as well as the weak retrace attempt to regain the 1024 level on declining volume. That is where I would have gotten in (with a stop above 1025) if I hadn't been in fear of the snap-back rally (which he was very concerned about). It's amazing he waited almost a whole 1.5 hours before jumping in.
     
    #53     Sep 2, 2009
  4. FB123

    FB123

    I'll tell you my setup since you're curious, but no specifics on my method. I trade primarily off of a 20 second chart since I am a scalper. I also have a 1 minute and a 3 minute. These are my primary charts that I stare at 90% of the time. I also have longer term charts further out of my line of sight, right up to the 8 hour and daily time-frames. Those are very useful for seeing large S/R levels and patterns at a glance. While I say that I am a scalper, actually I only scalp during range-bound markets. As soon as the market starts to trend, I become a trend-following trader. There is a key to knowing what to look at to figure out when it's starting to do this. I can't tell you what it is, because that would be giving away too much.

    I use a single MA on the 3 minute and 1 minute charts, along with a VMA on the 20 second chart. I read all 3 time frames simultaneously, although mostly my eyes are on the 20 second (obviously). The MAs are useful as reference points when reading price action, and also to keep the various time frames in your mind all at once, with how they relate to each other.

    Reading price action is not about learning the standard candlestick patterns you read about it in books. They do appear, but you don't need to know their names. You just need to see reversals happening again and again and again, and you will start to recognize how they form. Actually, all kinds of patterns will start to become recognizable to you that nobody ever wrote about. The speed at which bars form is extremely important. There is so much more information you get in real-time watching a bar form than you get by looking at a static chart after it is completed, even on something small like the 20-second time frame.

    I strongly recommend reading Alan S. Farley's book called the Master Swing Trader. It is quite possibly the worst written book I have ever read in terms of grammatical construction (it's literally a series of almost unrelated sentence statements from beginning to end), but it contains a hell of a lot of good information for day and swing trading. Pay attention to when he talks about the "trend-range" axis, and how markets transition from one state to another. He talks in very detailed language - it's definitely not a book for beginners, but you'll find it useful if you take the time to go through it.

    Your key to success is going to be detecting how the market transitions from a range-bound state to a trending state, and vice-versa. If you can nail that, the rest is easy. There are very tiny signs that show up in price and volume patterns again and again, not written about in any textbook, that will tell you when the market is starting to change state. I see them all the time on my 20 second chart, which most traders don't look at (which is one reason why I have a huge advantage over them).

    It also is important to learn how to read volume properly and its relation to price movement.

    Finally, stop trading the ES. Start trading markets that have a better daily range relative to the slippage costs to get in (defined as spread + commissions). The ES is not good in this regard, and there are easier markets to trade. I trade crude - but it's jumpy, and you really don't have much time to think on that one, so be careful if you want to start there. Otherwise maybe Soybeans, or for indices, the Russell is way better than the minis.

    I can tell you that there is no easy path to success, as you are finding out with your educators... your best option is ignoring them all, watching the market, and trying to figure it out on your own. But expect to put in many thousands of hours of work before you even have a shot at it.

    That's about the best I can tell you...
     
    #54     Sep 2, 2009
  5. Jreality

    Jreality

    Thanks for the replies. I guess I'll have to just accept that I have a lot of work to do if I'm ever going to master this thing called trading. The guy from the other forum who trades price action says the same sort of things you say.

    Anyway, time to hit the hay and hope I can eak out more than 1 point of profit if the /ES should move 30 handles again tomorrow. ;-)
     
    #55     Sep 2, 2009
  6. FB123

    FB123

    Yeah - I started out a long time ago thinking that trading was easy too. Actually, everyone starts that way. The sooner you realize how hard it is, the sooner you're going to be able to decide if you really want to do it or not. You really have to eat, sleep, and breathe this stuff if you want to make it, especially as a daytrader.
     
    #56     Sep 2, 2009
  7. Jreality

    Jreality

    I happened to notice that Rockwell Trading just opened up a new trading room "Trading with Markus" with Markus Heitkoetter doing the trading. **QUESTION FOR ANYONE WHO IS A MEMBER**: I'm curious if he uses a simulator in the live room. I stumbled across a video of a webinar on his site in which he was teaching people a trading strategy for sideways markets, but he was using a simulator. He was asking the people in the room if they were nervous about a particular trade. He told them he wasn't nervous. I thought to myself, "of COURSE he's not nervous, he's NOT trading with real money" ;-)
     
    #57     Sep 2, 2009
  8. FB123

    FB123

    I've attended a couple of webinars with Heitkotter - he's a very nice guy, sounds like a truly decent person. I think he once gave away a trading course for $7, and a free copy of his book to anyone who wanted it.

    However, I don't like his trading methodology at all. He uses a combination of MACD and Bollinger Bands to enter/exit his trades. Basically it's a pure trend following strategy, nothing better than a simple MA crossover could do. I've seen him run this in a slow market and get chopped up, which he should have known not to do. Over time he does make money because all trend followers will eventually catch a trend, but his methodologies are not that great and won't make you a lot of money. This is pretty much true of any educator I have ever seen that runs chat rooms and the like.

    One of the better methodologies I have seen is from TradeGuider - they use VSA (volume spread analysis) in their trading. VSA in general is a pretty useful thing to learn, to it's worthwhile to attend a few webinars from these guys and see what it's about. You should read Master The Markets by Tom Williams first.
     
    #58     Sep 2, 2009
  9. + 1 million :)

     
    #59     Sep 2, 2009
  10. Jreality

    Jreality

    I agree that his "Simple Strategy" (his normal trend following strategy) isn't too profitable unless you happen know when NOT to take the trades and that ain't easy to know.

    This other strategy that he was teaching in the webinar I stumbled across was a strategy for trading sideways markets. It involves using a type of bar chart that has 2-tick bars. In other words, a new bar isn't drawn on the chart unless it trades (closes) in a 2 tick range. If the previous bar was up, he would go short 1 tick above the previous bar's range and then if the market reverses as expected he would wait to cover and flip long until 1 tick below a bar that happens to close down 2 ticks and he would flip long.

    This could work (maybe on a day like today), but if you suddenly get a major move out of the chop then you could get your head handed to you. His goal is to switch quickly to his regular strategy if his MACD/bollinger signals happen when he is in the middle of trading with the sideways strategy so he could catch a potential trend start, although he would have to take a loss to switch from the sideways strategy to the regular strategy. He also doesn't use a stop when using a sideways strategy (which to me is a potential recipe for disaster). He says he doesn't use a stop because the sideways strategy flips directions frequently and if he had a stop he would forget about it and possibly get entered into in a position he didn't want to take. He feels it's not worth entering a stop because he could always hit the flatten button. I suppose that's okay most of the time. He did say you could use a catestrophic stop of, say 6 or more points.
     
    #60     Sep 2, 2009
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