ES frustration today

[torero]

It's great to quotes great traders and try to emulate their success such as Mark Fisher and others, but you always have to put thing in proper context. First, he trades size in the pits, thus he has low commission costs, he can see everyone's hands better than retailers with the screen in front of us, and he's more concerned about how to get in and out with his large positions. I believe most of us cannot do what he does, we can't afford fees and scrape a profit with so many trades, we cannot see others' hands and those intangible cues like pit traders have (noise level would hint a more activity to come), and our positions are so small we only think about getting in and out at the price we want, not when we have to like he does. All I'm saying is comparison is fine but proper context must be exercised. This is why books cannot conveyed nuances.

[torero]

	Quote:	walterw
	I believe we all learn in this type of debate... thought we can clearly think diferent.... if we all think the same there would be no market.... I cant help it but I will attach an excell with my input... hope it helps... cheers Walter.

Excellent illustration, walter! This is exactly my method as well. Knowing where the S/R is helpful but remember it's not glass, but rubber band. This is the reason I use the confirmation after a breakout, to find the pivot to set my stop close to it, despite it having violated the S/R level by pushing farther in than expected.

[TinGull]

As Soul would say....it's amazing to see how many different ways so many people can profit from the same markets. It really is something amazing when one person sees things a little differently than another, yet both can seize opportunities to make money in the same markets.

[brownsfan019]

	Quote:	PivotProfiler
	If your stop is placed at a point where the conditions for the trade become invalid at your stop level that would be one thing. But you still should be able to see you are wrong on timing and Possibly right on direction.

Right, and if I have to sit tight to let the trade work, then I will vs. exiting and then re-entering later.

	Quote:
	Most people, however, use money stops. They base stops on the size of their account or on some risk to reward matrix. If your stop is based on how much you are able to lose, why not exit sooner once you realize that you are on the wrong side. You don't have to lose all of what you risked to be wrong. This is one of the times that you can limit your losses. Sometimes the market will move against you and hit your stop. Other times the move towards it will be gradual and you can save capital by an early exit. CAPITAL PRESERVATION IS THE NAME OF THE GAME, AFTER ALL.

I found that the problem with thinking like that is you are going to exercise too much discretion on when to flatten a position, which in turn could turn into a winning position - just like the OP's initial post. I guess my view is that if you are not going to honor your stop, why place one to begin with? That just turns into a mental game - you have a hard stop on your DOM, but you know in your mind that you will probably hit the flatten button before that level is reached. So, the question becomes how and when do you flatten and why? I think there's too much discretion being exercised there, especially for a new trader. In the end, most new traders will hit the flatten button very quickly and end up taking many, many 'small' losses.

As for capital preservation being the name of the game, I would debate that as well. We are daytrading volatile instruments. To go into that game thinking 'I just want to survive' is a terrible mistake and a costly one. If you just want to try to break-even most days, why bother playing? To me, the name of the game is WINNING. Just keeping the capital already have does me no good. That's a terrible risk/reward setup - risk is your account size and the reward is to come out even or slightly ahead. I'll pass on those odds. Trading money should be RISK CAPITAL not the house payment.

	Quote:
	As a trader I need movement. If the market is not moving then nothing is being done. If you believe that one of the edges an off the floor trader has, is trend, then why enter a trade when trend in not present? Yes, the assumption was that the direction is correct. What is not known is how long the distribution/accumulation phase will be. While you're sitting tight waiting for the market to be marked up or down, there may be another market being marked up or marked down.

I agree, we all need movements to make money. No doubt. However, it is possible to enter what you believe to be the start/beginning of a trend only to find it stall a bit and then resume the move. That's not uncommon at all on the indexes. Actually, very rarely do we see a giant move in one direction. Most days we will see a smaller move, some pause (or rest) and then another move. This pause period can last 1 minute to 60+ minutes. You just never know how long. I am willing to wait it out vs. exiting and then re-entering later.

As for another market moving while you wait, that's based on what you are watching and how much you can trade. I trade the US indexes and the Euro FX. That's about it. So, when the YM is moving, so is the NQ, ES, and ER2 usually. When they are not moving, I am considering the EC. That's it. So, my cost of holding a trade is minimal b/c I have limited the markets I trade on purpose.

	Quote:
	***As for profit target exits: I am glad they work for you. I believe exiting at a target is speculating on the future when it is not necessary to do so.

Not so much speculating as knowing your setups and what is a realistic profit objective. I am not looking to hit home runs here, just single after single, after single. For example, currently on the EC my profit target is 10 ticks from my entry. The reason is that I know that the EC can move 10 ticks in my direction before any type of retracement that could take my stop out. Once my target is hit, I look for a reason to re-enter in the same direction. If another signal appears - and during a strong trend they fire off like crazy - I will keep getting in and going for 10 and then look to re-enter.

	Quote:
	*****One more thing: I am very glad that we are able to have a civil debate on a topic without the name calling and boorish insults of the other sites. Thank you Soultrader for community such as this.

Very true. Some boards out there would have resulted with name calling and a bunch of negativity. Thanks Soul!

[torero]

I have to agree with brown, there has to be discipline when trading and making an entry. Believe I've done this and it was nice to continually taking small losses but psychologically it hurts watching your capital shrink and see the fees accumulate, it's a negative sum game and doing that will not break even or win. The market is a very nasty place to play with your head and emotions, teasing you to come in and out... over and over until you plead for mercy. A trading plan with stop loss (not jerk it around) will decide once and for all if the trade works or not.

[brownsfan019]

	Quote:	torero
	I have to agree with brown, there has to be discipline when trading and making an entry. Believe I've done this and it was nice to continually taking small losses but psychologically it hurts watching your capital shrink and see the fees accumulate, it's a negative sum game and doing that will not break even or win. The market is a very nasty place to play with your head and emotions, teasing you to come in and out... over and over until you plead for mercy. A trading plan with stop loss (not jerk it around) will decide once and for all if the trade works or not.

I guess tor is like me - we like clearly defined rules and then follow them. To simply say that I will flatten sometime before my actual stop is hit will play with your mind all day long.

Today was another great example of setups that took a little longer to hit, but they did. Here's the best so far:

• Long YM at 12737 at 10:09am EST
• Moved up nicely initially, but no profit target hit (actually 1 tick away)
• At 10:12 and 10:13am the trade is in the red, but not stopped.
• At 10:43am profit target hit for +10.

So, it took 34 minutes to reach my profit but I could have easily turned this into a loss if I paniced or didn't feel like waiting.

The other question I have about exiting and entering quickly is how do you filter these trades out? I mean, how do you not get chopped to death when it's consolidating? I would rather be in a trade and patiently waiting vs. trying to go long, then short, then long again b/c you want to get in right before the big move. I just don't see how you can time these perfect and not get chopped and also not trade frequently. It's not adding up to me.

[walterw]

I have the belief that any congestion its included in a trend... so market its always trending... there is no such non trending conditions really... now on the speed universe you are trading... things may go flat... but on a higher speed universe that is trending... ok ? now on this "keymoo laboratory example" we have a congestion happenning on a smaller speed universe than the one keymoo was trading... so that congestion its yet inside the trend of keymoo speed universe.... you dont want to be in a trade if your speed universe gets congested.... because you are not trading on the higher speed universe trend.... now you wana hold if you get a congestion included on the trend of your speed universe.... kind of dificult maybe I can do an excel to explain better.... cheers Walter.

[Anonymous]

1. Please note that I never said "the trade feels" wrong. I have only talked about getting out at predetermined levels in both price and time. In other words, a plan that is repeatable. Not that much discretion here.

I also talked about jumping back on board. I said if you method only produces a signal to enter on a mov. average cross, for example, if you get out then you need another cross to get back in. For this type of entry, getting out is NOT good, because you can not get back in quickly. Moreover, with the cross example, before you can go long again , the moving averages have to tell you to go short. So this not actually the situation we are discussing here.

2. The one thing that all successful traders share is this: survival.

They have survived the learning period long enough to get to a place where the are now able to make money. Capital preservation is key. You can not make money tomorrow if you lose it all today.

I would have to agree with the POP: trading is a loser's game. He who loses best, wins. If you can take the losses and still be around to take advantage of the wins, you make money. You become one of the few.

95% lose in this game. That does not mean the other 5% got that way by winning from the start.

I am reminded of the story of a new trader that got a job on the floor of the CME. What was the first thing he learned? Some secret method held tight and known only to the coven of pit traders? No. He was taught how to get out of a losing position 100 times out of 100. Note getting out here does not mean setting a stop and waiting; it means recognizing you're on the wrong side and taking yourself out.

a. If it is just about winning, why would so much time be spent on handling losses?

b. If it were just about setting stops to be hit, why would so much time be spent on getting out of bad trades?

c. (although not what we are talking about here) If it were about winning trades, why wasn't the trader given that INDICATOR so many losing traders are searching for?

3. As far as over trading. Two things: being right and sitting tight. This keeps the amount of trades made down. And the other is what trades you enter to begin with. With VSA it is possible to enter trades at the point where the Mark-up phase is just about to begin or beginning. A trader can position himself to take advantage of the supply/demand imbalance and thus by pass that channel, sideways movement. In short, selectivity on signals coupled with being right and sitting tight. But if you find yourself in a go nowhere trade, get out. If it then starts to move, be nimble enough to jump back in.

Again, jumping back in does not mean getting in just because. You should have clear rules for entry and re-entry. Maybe you have to look for a add on signal as your new entry point, that is a choice you would make. But the concept of getting out, then getting back in does suppose a nimble approach. Which is why the people who are writing about it most, tend to be floor traders.

4. Once a stop is in place it should never be removed. And it should not be moved except in the desired direction of the trade. Putting in a stop in the first place is for protection. There will be times when the market moves against you too fast for you to get out sooner. A stop can also help you define certain market conditions or where price is on the "playing field". But the idea that only at that price do you know you are wrong is felonious at best. Especially, since most people use stops not based on what the market is telling them but on account size. If you have a 20 tick stop, you can't realize you are on the wrong side of the trade after the market moves 15 ticks against you (5 pips short of your stop)?

In truth, good stop placement usually means stops are further away than most people would want them to be. The market doesn't care how much a trader has in his or her account. The market will, however, tell a trader where the optimal place to place a stop is. But for most traders this place can be too far away. Now, why not place a stop at the level dictated by the market, but have a mental stop (much closer and more in accordance with risk parameters) as you real stop? Which is essentially what I have been suggesting.

[brownsfan019]

	Quote:	PivotProfiler
	I would have to agree with the POP: trading is a loser's game. He who loses best, wins. If you can take the losses and still be around to take advantage of the wins, you make money. You become one of the few. 95% lose in this game. That does not mean the other 5% got that way by winning from the start.

It's funny - I've seen 80% of traders fail, 90%, now 95% and even 99%. Who is verifying these stats? People trying to sell you stuff? I've never seen a published CME report that details 95% of traders fail. And what is 'failing'? This stat that is thrown around so casually out there has no statistical basis whatsoever. It's the guys selling you the holy grail that want you to believe very few make it, but for those that do... Watch out! Now by my stuff or else!

	Quote:
	a. If it is just about winning, why would so much time be spent on handling losses?

B/c handling losses - esp mentally - are a big part of the game. In the end however, if you don't win, you don't survive. Your account may be in tact, but you will have little $$$ to show for your time.

	Quote:
	b. If it were just about setting stops to be hit, why would so much time be spent on getting out of bad trades?

I don't agree with this necessarily. Stops are there for protection and to get you out of a losing trade. That's their purpose - get out of a bad trade. Pretty straight forward to me.

	Quote:
	c. (although not what we are talking about here) If it were about winning trades, why wasn't the trader given that INDICATOR so many losing traders are searching for?

I don't understand this either... Many systems out there make money, but traders are too soon to give up on them. The 'holy grail' is out there, probably staring you in the face, but human emotions do not allow the trader to actually see the system make money over time. In other words, a stochastics crossover system for example will make money over time. Will the average trader be around to see that? Nope, as soon as they enter a drawdown, it's time to find the next grail.

	Quote:
	In truth, good stop placement usually means stops are further away than most people would want them to be. The market doesn't care how much a trader has in his or her account. The market will, however, tell a trader where the optimal place to place a stop is. But for most traders this place can be too far away. Now, why not place a stop at the level dictated by the market, but have a mental stop (much closer and more in accordance with risk parameters) as you real stop? Which is essentially what I have been suggesting.

Ok, here is where we disagree completely. Good stop placement is NOT the same as a stop that is far away. On my trades, I am NEVER below a 1-1 risk/reward ratio. It's more like 2-1. So, if my YM profit is 10 ticks, the average stop is 5-10 ticks.

Proper stop management does not mean put a stop really far away. Quite the contrary actually. If you have a strong entry, you can have a very acceptable stop that will be respected. I've pointed to a few examples in my personal trading just in the last 2 days where this was. A couple trades the stop was ONE tick away and it never got triggered. And we are not talking about a 20, 30, or 40 pt stop on the YM. 10 points at the MAX.

Now, the question may be - how do you have a 'close' stop that is respected? For me, it came down to working on a smaller timeframe for charting. You cannot do this on a 15, 30, or 60 minute chart. I use volume based bars and have each market set so that during quick moving markets, I am getting signals galore. During slow moving, I can tell b/c the candles take a long time to form.

Volume based bars by far have taken my trading to a whole new level. And I found them on elitetrader. I don't want to discuss the 'enemy' per say, but of my time over there, the ONE thing I found useful was volume based bars. Search for ProfLogic if interested.