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brownsfan019

Market Wizard
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Posts posted by brownsfan019


  1. TradeStation totally sucks for data reliability and execution speed.

     

    notouch - I'm surprised by your TS statement regarding data. I have not had a problem (knock on wood) in months. Many, many months. I had tried ESignal and they had major data issues then and came back to TS and haven't looked back.

     

    What markets are you trading where the data is unreliable? I trade the main e-mini markets and the Euro FX and it's been great for months!!

     

    I do not trade thru them, so can't speak on behalf of execution. Don't care to have all my eggs in one basket.


  2. I haven't upgraded to Vista (yet) and probably won't for awhile. I never really liked being a guniea pig in my opinion of running a new OS right away.

     

    As for Office 07, it takes some getting used to, but there are some neat features hidden in there. Like anything else new, it takes time to get used to, esp as you become more and more dependent on the current version. For example, Excel now has quick access to formula building stuff that is very convenient for me now. Outlook has the ability to send text messages to cell phones! There is some great stuff in Office 07.


  3. Pivot and Soul - I understand what you are saying. And it makes sense that if a person is placing a stop purely based on a dollar amount, then that stop may not need to be hit to be wrong.

     

    It appears there may be 2 ways to place stops:

    1. A monetary stop
    2. A stop based on the trade/pattern/etc

    To be honest, I never really thought about placing an arbitrary stop based on a fixed dollar/tick amount. But, I can see why traders, esp new to trading, could try this method. If using a monetary stop, there may not be a reason to wait till it is hit.

     

    With the way that I trade, each stop is different and dictated by the current market conditions and trade. Sometimes I literally have a 2 or 3 tick stop. Sometimes it's up to 10 ticks. The reason for stop placement here is simply based on the market conditions and movements. In essence, my stops are at 'micro-trend respect levels'. I know that doesn't make a ton of sense, but basically my stops are put at an area that on a short-term chart that level is being respected. For sake of discussion, call it minor support/resistance. So, if I am going long and I place my stop just beneath some short-term support, until that support is broken, I am still in the trade.

     

    I understand that we all want instant profits and quick. There's nothing better than a trade that just sky rockets in your direction. But in reality, that doesn't always happen. So, for those new to trading or looking for ideas, just keep in mind that if you place stops in areas that are respected, you should consider giving that trade room to move. That's my opinion. Others say get out and then look to re-enter. I personally don't care to jump in and out b/c I am waiting for the move and maybe I am a tad early. I'm ok with being a little early and being patient. Others disagree.

     

    Here is another key in all of this - your commission costs. Any trader should take the time to contact numerous brokers and negotiate a good commission rate. Keep in mind that if you are trading 1 contract and 2 or 3 times a day, you are not going to get rock bottom commissions; but, it doesn't mean you need to overpay as well. I personally would recommend the following futures brokers:

    Also - as you trade more, make sure you are still receiving good rates. Brokers are good at giving you a rate to get your busines NOW, but very few (if any) review your account to see if you qualify for better rates. So, every so often as your volume and activity increases, be sure to test the waters again. Most often, you can simply get your current broker to lower rates if they know you may change.

     

    Negotiating commission rates is just part of the business as far as I am concerned. If you are not doing this, you may be overpaying!


  4. The number one reason for small businesses failing is lack of adequate capitol, I'd guess the same reason for traders. If a person can stay in the game long enough they have a much better chance of learning what works for them. If it was easy everyone would be doing it, or perhaps I should have said, "still doing it".

     

    Good point drk - a trading account of $2500 trading E-Mini's is more than likely eventually going to be blown out.


  5. Things are different, however, when the trade moves against you from the start. I believe it is possible to know that you are on the wrong side of the trade PRIOR to your stop being hit. One does not have to wait for his stop to be hit to know he is at least wrong on timing and possibly right on direction. If your stop is 15 ticks away, I find it hard to believe you don't know you are wrong when price is 3 ticks away from your stop.

     

    Pivot - my observation on this would be that your stop is too far to begin with. Stops are there to take you out at the very point that you are wrong. If your stop is 15 ticks and at 12 you know you are wrong, then your stop should have been placed at 12, not 15 in my opinion.

     

    For me, and I've mentioned this before - I am not wrong until my stop is hit. That's it. My stop must be taken out before I know I am wrong on the trade. That's the purpose of protective stop losses. They stop a loss from becoming larger. The reason for this is simple - unfortunately not every trade is immediately in profit. Sometimes the trade is in the red for a few moments and then moves in my direction. As long as the stop is not taken out, this is a great trade in the end. Of course we all want to be in the profit immediately, but that's not realistic.


  6. King, Stops should be placed in relation to price action (pivots) and not a fixed value... same is true for profits, price action should tell you when the move is over and not a pre fixed target... fixed targets its like spoiled kid that wants something (candy).... markets dont give some times what you want... market has a dynamic you want to simply follow... I here a lot here on TL about 10 12 points targets on YM.... thats some how pretty foolish, because some times you will get a 30 move and you leave money on the table... and some times market made a nice 8 point move and you didnt get it and waited to get mowed with - 10 -12.... price action is the best way you can manage a trade in terms of stop/trail.... if the market wants to give you a lot of profit he will give you, if he doesnt want to give you much profit... want give you... now never forget this : RRR = live or die.... cheers Walter

     

    Walter - allow me to share one piece of advice I received awhile back when trading - there is no way perfect way to trade. What works for you, may not work for others.

     

    Point being - you cannot say that one way of trading is 'foolish'. That's just completely inaccurate.

     

    For example - the argument can be made that if you go for +10 on the YM, why can't you re-enter the trade again if it indeed moves the 30 pts you quote. Just b/c it may have taken 2-3 trades to capture profits vs. one, that trader is just as profitable minus the tiny commission. However, that same trader is constantly taking profits and that can do wonders for your psyche.

     

    Just keep in mind that when you reply to threads, you are providing your opinion. And while you are entitled to it, calling people or ideas foolish is indeed, foolish. Just b/c you don't like it or agree, doesn't mean it can't or won't work. As my high school math teacher used to always say - there's more than one way to skin a cat.

     

    (I have no idea why that quote has stuck with me for so many years. It's rather disgusting, but proves the point.)


  7. King - I think wsam has it for you. Either you have to accept this or change it. It really comes down to testing multiple stop movement setups and see what works best for you over time. Nothing is bullet proof.

     

    Here's what I found. Either:

    1. Take trades going for a 'smaller' profit target with multiple trades
    2. Take trades looking to catch the bigger moves and a lower amount of trades

    Now, once you decide on what type of trader you are, that can help dictate what type of stop movement you use. For example - if you decide that you want smaller profits but multiple trades, then you should be aggressive with your stop movement or simply exit at a predetermined profit target. Or you can be 'generous' with your stop looking to catch the bigger move.

     

    I have found that it's very, very difficult to catch the bigger move and have an aggressive stop. The chance for a small retracement is just too strong, unless of course trading around econ news.

     

    Just keep in mind that while I am sure you will get some good advice here, you have to test and prove to yourself what is best for you. Sorry to sound like a broken record, but I really believe in proving a strategy to yourself. We can provide guidance here, but until you are on board, it's going to have a hard time working.


  8. Robert - like Soul said, you just need to pay attention to the DOM and your chart. Knowing the exact date of rollover is not important if you simply follow your charts and make sure your DOM reflects that chart. Volume will start to pick up on the forward contract before the current contract expires, so you will always be moving with the highest volume contract.

     

    I understand you want the details on dates and rollovers, but if you day trade, that is not important. What's important is trading the contract with the highest volume currently.


  9. Here's what I do:

     

    TS is always set to @YM

     

    My T4 (order entry software, not to be confused with TS) will also automatically roll once the contract is no longer being traded. Sometimes, my T4 still shows an 'old' contract simply b/c it is not expired yet, but you'll be able to tell real quick if your TS chart does not match your DOM.

     

    Keep in mind that when you go to the new contract, very rarely are the prices identical to the old contract. In other words, if you set TS to roll with the @ sign, and you forget to move your DOM, when you go to place a trade on the DOM, the price level showing on your current chart will probably not be the current price on your DOM. As soon as that happens, a trigger in your head needs to go off. It should not make sense. That should tell you that your DOM may need to be bumped ahead a contract.

     

    For example, right now my @YM chart is at 12,694. Now, if you go ahead on the YM chart to YMM07, the current price is 12,795. So, if I was by mistake trying to place a trade on the wrong DOM, something doesn't add up - why is the DOM off by 100 points? Well, it's the wrong DOM.

     

    I don't trade on TS, so I'm not sure how their order entry software works.


  10. Besides, the mistake trade, I'm very content with this method of trade management, there is nothing else better knowing you have a risk free trade once that stop has been moved to BE+1.

     

    Winfred, I used to think that like as well - just get my trade to a positive position in the worse case scenario!! That can do wonders for your psyche.

     

    Here's the catch ... Moving that stop is so easy and tempting that many of my trades were being taken out at +1 tick and these were later 'winners'. In other words, I turned a +10 pt trade into a +1. That will also do wonders for your psyche.

     

    So, as I've tried to say over and over here, each trader must do what's best for their pysche and trading account. I can't do the BE+1 trade, it doesn't work for me. If you can get it to work and make money, that's great!!!


  11. Robert - if you are using TS, just put @YM as your symbol and it will move automatically to the contract with the highest volume at the time (which is where you want to be trading in my opinion).

     

    Same thing for the other indexes - @NQ, @ES, @EC etc etc

     

    You can also do this in TS - go to Symbol lookup, Custom Futures and then pick and chose your options there. I prefer the @ sign, much easier.

     

    If you trade off of something different than TS, which I do, you will easily see if your DOM is matching your chart.


  12. I would suggest one thing guys - make sure you test this theory before putting it into play. It's easy to find trades where this would have worked, but I am sure you can find trades where it took you out prematurely.

     

    I toyed with the exact same thing you guys are and found for me it did not work. The reason being that it's very realistic for a trade to move in your favor, retrace a tad (and take your stop) and the continue the move in the direction of your trade. That happens a couple times to you and you will rethink this.

     

    I've found that I need to give a trade 'wiggle' room. It's too easy for an aggressive stop to be ticked out. One thing you may want to consider - BE MINUS 2. The theory behind this being that if the price comes past your entry point, then you are wrong and want out. The price moving to BE + 1 does not prove that you were wrong, which is the point of a stop.

     

    Just an idea.

     

    And of course the other consideration here is that if the majority of your trades move to +7 or +8 and then retrace, perhaps it's time to adjust your profit target. Is 2 ticks worth taking heat on a trade and losing or making 1 tick before commissions? I don't know, you need to answer that.


  13. I agree wsam, it's not necessary to sit in front of the computer all day, no doubt. But, as you said, to be looking for other business opp's, while trading and working is a bit much to be doing all at once.

     

    Basically King, the options for 'passive' money are:

    1) Conservative - savings, checking, cd's, money markets, etc.

    2) Moderate - mutual funds, etf's

    3) Aggressive - all those great online opp's out there

     

    In each of these situations, you turn your money over and someone else does something with it, whether it is 1) a bank 2) a fund manager or 3) a scammer.

     

    There's probably other things that could fit in here, but here are the basics with very low minimums, if any.


  14. Brown, how did you get to the place where you are now? You mention you don't trade like others. How did you find your stride and how did you know when you had found it? I'd love to hear that story :)

     

     

    The reader's digest version - I was a stockbroker prior to trading. I loved the markets and wanted to tackle this beast on my own. I left my job after 4.5 years of building a book (not easy to do) and have been trading full-time since. I haven't (and can't) look back.

     

    Here's why I think some guys make it and some don't:

    • Treat this as a full-time business.
    • Have cash reserves to get you thru the hard times.
    • Realize this will take time - probably much longer than most can stomach.

    Like most new traders, I looked at everything and bought A LOT of stuff. Looking back, I laugh now, but I think it was necessary in the beginning. Since there was not a bullet proof method of trading (unlike being a broker), I had to prove to myself that I could do this.

     

    I 'found' myself after looking at just about everything out there and deciding on what makes sense to me. Personally, I love candle formations. I think a candle can tell you so much about what is going on in the market than bar charts or other charts. And the beauty of it is - what I see as a 'hammer' you may not. I think intra-day trading requires flexibility and the ability to adapt.

     

    It's not easy, we all know that, but for those that can do it, the rewards are incredible.


  15. I am still trading part time and only trade the morning session of the US index futures. I keep a full time day job (in Asian) but am eager to learn more way to increase my income. I just wonder how traders utilize their time to make extra bugs besides extracting money from the market. Is there a way to get passive income while one is trading the market?

     

    Would love to hear some concrete ideas for my insights. Thanks

     

    King - this is not what you want to hear, but if you are going to treat this as a part-time hobby, you will be paid accordingly at least at the beginning. Trading is a FULL-TIME endeavor IF you want to be good at it. And you realize it can take YEARS to get there. And a whole bunch of other stuff...

     

    Point being that if you are just casually trading when time permits, that's fine if it works for you, but I highly doubt you will reach the point where asking how to make extra money is a concern...


  16. As I mentioned in another post, that stat is a joke and means nothing. There's no substance to it.

     

    While stats are based on numbers, stats can be manipulated very easily to the person or vendor looking to benefit from them.

     

    It's easy for someone that loses in trading to say that so few actually make it, which in turn makes them feel better about themselves. Misery loves company.

     

    One thing I have learned in my years of trading - don't pay attention to any stats that you personally have not compiled. Most everyone out there has an ulterior motive - whether that is to simply feel better about their own failure or to sell you the holy grail that will prevent you from becoming part of the majority of losers.

     

    Note - as you can tell, this is one of those things that really, really gets me going. I believe that stat was created by the numerous vendors out there trying to sell you the magic pill of trading.


  17. Here's a favorite quote of mine - It's not timing the business, it's time in the business.

     

    That quote holds true with just about any business out there, esp trading.

     

    As for getting to profit - I agree with the KISS principle. I do not necessarily trade like some of the other guys here, but that's ok. It's what works for you. There is no instant, perfect indicator or system. Losing is part of the game. You just have to get back in the ring and keep throwing punches and over time, you may be one of the ones that throw the most punches and gets the most knockouts. As long as you can take the punches thrown at you and not give up, you just might get that KO in the 10th.

     

    And - this is big - consistency is key. Prove to yourself a methodology works and then work it every day, each day.


  18. So, the moral is, test, test, test.

     

    Test, test, test and then repeat the exact rules the same way each and every time. It's uncanny how the human mind works and that these 2 sample trades have shown doing the exact opposite each time would have turned a profit or kept the loss small.

     

    I know that doesn't help with the loss, but hopefully this was a great learning experience for you and those reading the thread. The key is to be consistent in your trading. Jumping from one setup, indicator, etc to the next will not make you money over the long term. Once you have proven to yourself that the trading system you have works, then work it.

     

    I think in the end it's all about confidence - if you are confident in your entry, stops and exit strategy, you can take the trades w/o hesitating. If you are unsure of your setups, then 2nd guessing will play with your mind all day long.


  19. Pivot - thanks for the kind words. Not to get all mushy here, but those are perhaps the most kind words I've ever received on a forum. As we stated before, you don't find many websites where that type of dialogue would take place. This forum appears to be more about quality vs. quantity, very different than other forums.


  20. And the devil's advocate here... ;)

     

    It can be argued that those that drop out of med school after one semester 'failed' as doctors as well.

     

    My point being that while the barrier to trading is simply cash, I would think that if you were to examine those that treat this as a full-time business vs. the 'hobbyist' your results would be very different.

     

    A full-time business owner will:

    • Realize this is a 40+ hour work week in the beginning
    • Realize that creating a steady stream of income will take many months, probably years
    • Realize that while any new business is difficult, you have to fight thru the most difficult times
    • Take ownership for their business and blame noone but themselves

    A casual hobbyist will:

    • Think this is a get rich quick program
    • Blame everyone, everything BUT themselves for failure
    • Give up after a very short period of time

    Now, if you were to track the stats of true business owners vs. hobbyists from the beginning, I believe the stats in the end would show the owners having a higher % of those in profit. Of course there will be owners that fail and hobbyists who happen to make it, but the majority will favor the owners in the end.

     

    It's just frustrating to read a stat where everyone is lumped into one pile. I am not a casual hobbyist. This is what I do for a living. I trade. I don't do anything else for my income and wealth creation. Take my stats and put them up against someone that trades when they have the time and really don't need the trading thing to work out and I would venture to say that over the long haul, I'll still be here years from now when the hobbyist is off looking for the next get rich quick scheme.

     

    I'm not disagreeing Pivot, just venting some frustration with how these calculations are done.


  21. 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!

     

     

    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.

     

    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.

     

    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.

     

     

    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.


  22. 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.


  23. 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.

     

    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.

     

     

    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.

     

    ***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.

     

    *****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!

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