brownsfan019

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.

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...

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.

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.

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.

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.

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.

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! 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. 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. 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. 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.

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.

Right, and if I have to sit tight to let the trade work, then I will vs. exiting and then re-entering later. 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. 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. 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. Very true. Some boards out there would have resulted with name calling and a bunch of negativity. Thanks Soul!

I am wrong when my stop is hit. Not one tick before or one tick after. That's it. Until my stop is hit, I am not wrong, even if the trade is in the red currently. A loss does not become real until the stop is hit or until a trader hits the flatten button prematurely. So, we want to be nimble and exit trades quickly, but also under trade? If you are quickly hitting the flatten button and then quickly re-entering, I believe that's the opposite of under trading. I understand that, but as RETAIL traders commissions are a factor, especially based on what has been negotiated. We are all retail traders here, not pit traders, so to ignore commissions is a mistake in my opinion. If you are trading the YM and paying $5 round trip, you've just added another tick to your stop losses. To me, that's something that needs consideration. Until tomorrow, good trading everyone. Time for this trader to get off the computer already!

4. Have set profit targets before entering the trade and exit when these price levels are hit. Which in turn, can also lead to the possibility of entering a trade in the same direction as the previous trade once the initial profit is taken out. Until my stop is hit, I am not wrong. I do need my stop to be taken out to show me that I am wrong. Until then, I have a great possibility of reaching profit. This is a possible rule to follow when trading. I personally choose to just let my trade go and either prove me wrong - by hitting my stop - or prove me right - by taking my profit target out. I would rather get to the party 'early' than too late. Now, if you work under the assumption that your direction is correct, then why on Earth exit the trade? If you are correct, but early - why can't you just sit tight and give it some time? This is really just a function of the size of the account and the size of the current trade working. If you are trading e-mini's at $500 margins, you can trade 5 different markets on a $2500 account. If a person is over-leveraged in one trade, then something needs to be adjusted to the rules that are being followed. Now, I will aslo mention that trying to focus on too many markets for a newbie can be distracting and overwhelming. I personally trade 3-4 markets as I prefer to focus extensively on a small number of markets and understand how they move and react vs. trying to trade multiple futures, forex, options, and stocks. Pivot - great discussion here. I hope others do not take offense to this discussion, but I hope we are providing a few sides of the story to the OP and others reading. Hopefully our experiences of trading can help some other traders thru the very difficult learning curve...

And that is one way of trading. Another way is to be confident in your entry and stop level and then let the trade work. This will reduce commission costs considerably and help prevent overtrading.

tor - I would think that trading by the seat of your pants can make a lot of money. For your broker. You are correct that certain traders could make this a profitable strategy, but for most retail traders (and especially newbies) this is a one way ticket to blowing up your account, especially in futures.

That may perhaps be the holy grail - get in a few seconds before a move and exit in 30 seconds when your profit is hit. Sounds great and looks great in a textbook. Obviously Pivot and I have different views of time stops. And if a 15 time stop works for Pivot, that's perfect. Time stops do not work for me. I agree that you want to be in the trade before the move, but I really don't care if that move is 1, 5, 30, or 60 minutes after I enter. As long as my stop area is respected, then it's a good trade in my opinion. The key is to realize which type of trader are you and then do the same thing over and over and over again. You cannot one day wish you were a time stop trader and the next day wish you just let the trade go.

First - if you are only concerned with return of capital, then active day-trading is the completely wrong business to be in. Buy CD's at your local bank where they are FDIC insured. Second - time stops are a viable strategy if it works for YOU. Pivot you are making some very specific recommendations w/o knowing the OP and his trading methodology. To say that after 15 min's you must exit is a very specific recommendation after looking at one chart. I say that exiting based purely on time is for amateurs and if you turn a 'winning' trade into a loser, then your full losses are going to destroy your account real quick and the OP's initial post proved this very well. Is a trade a 'worse' trade simply b/c it takes 50 minutes to hit the profit vs. 10? My account shows the same $$$ regardless of how long the trade took. Here's another example from today on the EC (today was a great day for this discussion to come up) - at 9:22am EST I took a short. My 10 tick profit was hit and that's a cool $125/contract. Not bad. Here's how the trade played out though - at 9:53, 9:55, AND 9:59 my stop was ONE tick from being taken out. I just assumed this trade was done for a loss. But, the stop was never taken out and the profit target hit at 10:44am. That is one hour and 22 minutes later. Talk about taking heat and wanting to hit that flatten button so quickly... Again, my account balance simply shows a winning trade for +$125 per contract traded. It does not care that it took over an hour to deliver. The stipulation here is that I KNOW that my trades can take this long to develop. Does it suck? Sure. Is it a great feeling when you follow your rules and pocket the gain? You bet!! My point being that EACH person must test and trade according to what works for THEM. Nobody, myself included, can tell the OP what is best here. We do not know him, his methodology, his account size, his stomach for pain, etc. etc. Since we will never know him personally, the best advice for him to follow is test your trading yourself, paper trade in real time and then make a solid rule - either exit after XXX minutes or wait till stop or profit target. If you opt for the 2nd suggestion - simply set an OCO order and then walk away. Literally.

Key - sounds like you don't even know if your setups need to be given 'wiggle' room or not. That's step 1 - prove to yourself that either a) my setups can take 30+ minutes to develop or b) they need to turn profitable soon (and how you define 'soon'). There's great advice in this thread, but it's ultimately up to you to prove to yourself the best way for you to trade.

I agree with Tin and 273 here. What it comes down to is knowing your system's strengths and weaknesses. Either you KNOW that trades can take a while to develop or you KNOW that they have to get into profit quickly. Noone here can tell you what is best for YOU and YOUR system. You HAVE to prove to yourself what is best. Just looking at this one trade, it appears that this was a great trade. I don't see any problems - your stop was never in danger and your profit target was hit. That's an ideal setup for me. Others want profit and profit instantly. Here's an example from right now - I took at an EC short at 8:45am EST today. At 9:02am the profit target was taken out. Just reading that, it appears to be a nice, good trade. However, here is what happened - at 8:48 and 8:49 I took a little heat. Now, when it came back down again I could have paniced and said just get a tick or two and move on. Had I done that, I would be sitting here, just as the OP, asking why did I get out? My stop was never in danger and this is a 'winner'. Bottom line - if you turn your 'winners' into a few ticks gain and take full stops, you'll never make money.

nu - If I had to choose one session, it would be the morning session. Granted, moves can happen all day - incl lunch - but I think overall, the better action is in the AM. That's what I have found for me and my trading style. You'll have to examine each for yourself to see what fits you best.

Soul - I haven't looked at it in awhile, but I think the volume is anemic. I was kinda hoping it might take off, but guess the interest is not there (yet).

tor - I think you have to watch the EC before, during and after news if you want to catch some moves early. I usually start watching it around 8am EST when there is 8:30am econ releases. And of course you always see setups in hindsight at 3am or so when other world markets are moving. I do not hold any futures contract - EC or not - overnight. It would not be surprising to see a fairly large gap on the EC if you walk away at 4:15pm and return at 8am the next morning. The contract is moving all night, but just looking at those timeframes can show a substantial 'gap'.

tin - I personally do not use pivots. And w/o getting into another 2 page discussion on something off topic, I can see how it could react around pivots and round numbers like 1.3, which we saw this past week. The 1.3 was respected intraday a number of times and then a fairly decent collapse came through and 1.3 was blown away. It would be great if the 'regulars' here posted about the EC and how they are trading it as well. I trade 'micro' trends and this is why the EC works so well for me. I am looking for 10-15 tick profit targets on average, and when the EC wants to move, it can move! It also provides great trading opportunities around econ news. Any day there is an 8:30am release, I am looking for setups starting around 8:00am. On a nice day, I can make more money trading the EC from 8-9:30am than trading the indexes all day. Just makes you wonder...

I have found that the EC is not discussed by itself simply b/c traders do not even know it's there! Which was exactly what happened here when I entered the TL chat room.

notouch - As my original post states, I simply wanted to provide a post that summarizes trading the EC futures contract since after I entered the TL chat room and found out that noone was trading the contract there. I've been trading it for well over a year after I found out about it and it's been a critical addition to my trading instruments. If I had to pick just one, I would probably take the EC over anything else - indexes included. As for discussions, that's up to anyone here that is interested in discussing the EC contract. Like I said, this thread is not the place for EC vs. Spot - Buk already pointed out another thread that deals with that topic. This thread is all about the EC and the EC only. If noone else wants to discuss it, so be it, but at least it's here and available for future reference to traders.

Well, there's plenty of discussions about the ES, YM, ER2 and NQ, so why should this be any different? This is a futures contract, posted in the futures forum; therefore, I assumed the discussion could revolve around the EC futures contract. As for your comments, the EC does in fact have a life of its own. Every day about 150,000 contracts trade through it. Traders like myself trade the EC and don't touch the spot, so it does appear to have a life of its own. I apologize for taking time to write up a post about this contract and trying to discuss it. It was purely done to help educate and stimulate discussion on this futures contract that many traders overlook. That's it. As I said, if you want to start a futures vs. forex thread, go for it and I'm sure people will chime in.