DugDug

Theoretically - your risk reward should not change for each trade regardless if it 1, 10 or 100 contracts. The process of actually increasing contracts is different..... While ideally this can be documented and ordered - eg; allocate a certain number of contracts to varying equity levels of the account, trade to be consistently profitable and then increase size after 4 weeks, reduce/increase size when certain equity levels are reached. Personally when I first started trading it was based on comfort levels, starting at 1-5 option contracts, raised to 20-50, it still remember doing the first 100, then the first 1000, and finally in lots of 1000. There was no process, just when I felt comfortable.... but primarily once I was consistently profitable. I would say that its important that once you step up, or down a level, stay there for a period, otherwise you risk the possibility of having some losses while trading larger, scaling back becoming profitable again, and then scaling up and loosing again. This can affect the absolute dollar amounts massively. Think through how to cope with this possibility, as you dont want to step up a level and then be spooked into suddenly being profitable only with smaller amounts. Currently in retraining myself (in more intense intraday trading), I will stick to 1 contract until I am consistently profitable with a proper basis, then it will be a matter of upping contracts based on equity actually committed and comfort.

Jashano - welcome - re matching charts and data, many people trade slightly different contracts, or the spot as opposed to futures. Plus with the FX different bar starting times may result in slightly different data sets - hence trying to match exactly will be hard unless you have the exact specifications of someone else's chart. Have no fear in posting ideas, mine constantly seem to loose! - its all about ideas, education and helping yourself and others....so I am sure everyone is happy to see other ideas and other contracts.

I have only come across rebates as you describe them being available to registered market makers. By agreeing to provide liquidity, they pay a certain amount of fees that are then rebated back to them by the exchange....for this they have certain obligations. The only other mention I am aware of is in the system of a person actually receiving rebates from a broker for using their system to trade other peoples accounts....(sometimes known as "soft dollars") eg; the broker charges the clients accounts $5 per trade to the client and rebate $3 back to the actual trader of the account. This to me is a scam of sorts, if the said trader is already charging a management fee, or performance fee to operate an order. They should either be a broker or a manager....not both. Like BF no idea about it for futures, my only experience has been in stocks.

Hi Bill, just to add a few hints when looking for scanners - especially for stocks. 1) define your stock universe - as it can be huge 2) define your entry setup and level so you know exactly what it is you are scanning for 3) actually write a process (this clearly should be refined over time) as to how you manage the daily process of scanning for things. This will clearly define what you are after. One thing you will find is that a lot of time the setups will give you many many possibilities at the same time - so unless you have a clearly defined way of scanning, then processing the results you will chase your tail. I used excel (as its easy to cut and paste and very manipulative) to define the universe of stocks, and define those that I found interesting, and then further chopped up which I thought made sense in the big picture fundamental viewpoint (eg; a setup in a stock that is a utility and yield based for me is different to a mining stock) Ultimately I found that there is no substitute for just literally going through and manually looking at the charts on a continual daily basis - this can actually be achieved very quickly once you decide your initial universe and setup rules.

thats why I suggested the lowest common denominator book possible- you need the help. Generally the smartest people in the room are the ones who actually know they dont know everything and are not the best and the smartest at everything.... the others are just boring arrogant sh..theads.

Urma I find everything you are saying interesting and agree with most of it, and believe that computers can definitely help us with clearer visualisation- however I guess the feeling that gets evoked from people via a few of your posts is "Sure I am happy to discuss things, but I just dont feel like being told I am a fool for my previous beliefs, ideas or for the previous tools I used because that was what was available, and if I continue to use them even if profitable I am a fool"...the first response will be emotional not rational. (whats the old joke of NASA spending millions to design a pen to be able to write in space, when the Russians say we just use a pencil") Maybe we need to use those computers to help us interact with other humans in a better way. Startling people and telling them they are mentally infirmed or criticism just does not work. (I know as sometimes I am guilty of it) (Dale Carnegie "how to win friends and influence people" Chapter one - Principle one - Dont criticise, condemn or complain.) So on that same point I should just shut up now.

(please correct me if I am wrong or intruding here Thales - this advice below is also a note for me) Cory dont get too caught up in the tick levels or what you are seeing v what others are seeing - a bit like when you are in a trade its sometimes not the best to listen to others opinions, until your plan comes to fruition. also Once a trade level has reacted or broken then it will become a new level for later trades, yet the focus should be on the next anticipated level and the present action, that way you wont fall into the trap of chasing trades, or regretting missed trades. Just move to the next level and loo for the next trade. Finally while Thales has a lot of experience at picking levels to a tick, as a new trader, focus first on the zones, and the flow of the market, then focus where a good tick level is. (I have been guilty of this, looking for exact tick levels and it can be frustrating trying to be exact. In my previous life we used to trade stocks almost to the cent, however we watched them day, after day, after day.....) Worry about it being exact as and after you get better at the reading of the market.

Hi firstbrain - I dont take it personally - this is the internet However while you are correct in that a lot of people already have proven certain things, there is no substitute to take a little bit of time (not copious amounts) and really understand it and have something to show you/remind you how the little differences can make a big impact. While you say people dont need to be convinced to use proper money management you also then remind us that in your opinion 98% traders dont use it - I would argue that the reason many people throw out or forget their money management principles (and many other trading principles) is precisely that while they may know about MM, they are not convinced and they dont truly understand it. Hence the exercise. (my first post was to point out that you need a strategy first)

Another good practice/exercise to do when trying to get the head around money management - regardless of which book you get. Use excel to run through some different scenarios of what happens with compounding of different percentages. Look at what happens when you do some things like looking at increasing your contracts and decreasing your contract sizes, as the account equity grows. eg; when the account equity grows by 20% increase your contract sizes. If the account equity falls by 10% decrease the contract sizes. Look at what happens if you risk 1% per trade, 5% per trade etc; consider the risk of ruin. (you may need to use larger numbers to understand the real significance here) The exercises, even if very simply done will convince you of the power of money management, and by trying to work out how it actually looks in excel can really help get the mind to understand it.

Also 6EM0 is looking interesting from a trend trading perspective. (I assume the spot is similar) Breaking new highs over the last 20-25 days.(one measure that people use) You may see people covering shorts, getting long. Just something to keep in mind.

Nice Zdo.... I had a phone call with a friend overseas today and when you mentioned the 10,000 hours I had a laugh. My friend is the classic studied what she loved for 4 years (micro biology), then decided to do something completely different as the money in science is not so great. I wondered how many people study trading, do the time, actually get to the successful stage of being a consistently profitable trader (not accounting for absolute dollars made), and then decide to say "right been there done that - lets do something else". My guess is not many but definitely a few.

Cory - this is one thing I have pondered.... taking profits early, letting things run. What ever you decide - make it consistent. Thales is very active and it works for him, quickly trailing. Otherwise, if you are to let it run, be prepared for a lot more scratch trades where a profit turns into BE. As a few thoughts -----on your chart I noticed - there is a big range between the entry and the stop -on this larger than recently normal volatility my thoughts would be to take profits quickly.... in the case you looked at, most likely at the 50% retracement of the recent run up from 136.40 to 18.19. Also given that the EUD has made a new high over the recent days.... this would imply a touch more bullishness, and hence I would be looking to take profits on any shorts quicker.

After turning from bullish to bearish they should change the name to El bearisho

Very true - after years of market making doing sometimes 200 trades a day, then trading longer term trend trading, you would think it might be easier, however I sometimes think I have more habits to break - I have to get into the habit of taking profits. Not usually a problem for many people. Its a very different discipline, related but different. I certainly wish I had the dedication of Dinero - good luck - give my best to your wife - I come from a family of 5 boys so I can sympathise with you.

Previously when longer term trading A=2 hrs B=1hr C=3 hrs (including reading papers, the internet, everything) Now attempting to day trade more. A=8 -10 hrs B=1hr C=8 -10 hrs (same as watching the DOM really) Actual financial results seem to have a negative correlation to the hours spent so far.....which should be telling me something. (I should stick to my longer term trades)

6J M0 - hit profit target and out. NOTE: While I dont post trades often I think this is the first winning trade I have posted (thankfully not the only winning trade I have had). Its sad the satisfaction that actually gives me. One best point, was that I waited and waited for the one min chart to break..... after it had entered support on the hourly..... did not go early, did not try and fade it, did not try and short it late in the recent pullback only to be whipsawed out..... just waited.

Now that you are out of 6J, I have been stalking a similar long trade on it. I was looking for support in the 1HR chart, narrowed down to the 1 min, and waited for a swing break. I figure I am going early and there could possibly be a pullback to get long again, but with close stop, now at BE....let it ride. Looking for a possible TP at 11.075 - The 50% retracement of the recent fall last night on the hourly chart.

Absolutely the idea of anticipation still needs to be separated from the belief in prediction. You still clearly need to wait for the actual trigger, that you anticipate COULD happen. Interestingly enough this could still be used in longer term trend trading (discretionarily applied as opposed to purely systematic), as it could probably help improve entries, and possibly minimise some slippage, and whipsawing stops. (I actually find I sleep better with my longer term positions, the shorter term trading recently has my brain ticking over way too much at present..... and big boys....that brings up whole other connotations. ) thanks.

Thanks Rich, in terms of the names I guess then they key to remind ourselves is that we wish to align ourselves with the manipulators and not the masses. So we need to put ourselves in their shoes I guess. (my suggestion of renaming was not to change anything but to help give me the "aha" moment) I think that this alignment causes issues with many traders as this I implies a bit of anticipation and targeting which is always something people warn against, with sayings such as - you cant predict the future. So we all wish to react, and read the market rather than anticipate it. However by aligning ourselves with what the market is actually doing - in terms of a cycle - then we are listening to the cycle and going with the cycle - rather than just blindly watching and reacting. The other thing I have always rallied against is the name a market manipulator - always has negative connotations. Would it be considered similar to thinking that they are just the big players - the market movers/the big volume. (I hate the use of the word smart money) (always interesting for me, coming from some longer term trend following to where I always say "I have no idea where the market will get/go to, I just let the market take me for the ride", as opposed to trying to short term trade the mini trends)

Hi Dinero - I figured that might touch a nerve - always good for discussion (While I dont actually blame accountants) It does show that its the mechanisms that will allow or not allow such behaviour that has recently occurred. You will always find ethics to be an issue, however ethics are a far harder area to police, monitor and even measure and define. And even then.... you will never be able to stop someone who is going to be fraudulent. Thats why you are meant to have the checks and balances in a system. The point Dinero made about the complexity is very important, it implies that these things are too complex and really should be simplified....or if you dont understand them, dont trade them. When you have the banking lawyers writing these documents and deliberately making them complex, and then people actually buying into things they dont understand then you can expect a disaster. (I have seen a good study from about ten years ago showing more mining companies have gone broke due to complex financial hedging of their own products than other reasons - food for thought) However ultimately if am a reductionist and believe that everything can be boiled down to some simple concepts (so bear with me here) Everything ultimately is either an asset or a liability (and to an extent, either a future or an option) - and if people are allowed to inflate assets and hide liabilities they will. (think about it in terms of everyday events, even in someones resume) Its only natural.....so when you have an industry being paid to come with accounting rules to suit the companies they are being paid by - as opposed to the actual end users - the investors....then ultimately there will be a problem. Why dont the regulators actually appoint pay the auditors? (I know this has its own issues) This is not the first time this has occurred, and whilst everyone is blaming the bankers and the hedge funds and the regulators, I just prefer to go straight to the source. (Just for the sake of discussion and a slightly different take on it) I guess you could always ask Harry Markopoulos about why the regulators are not much help either. (ultimately its a combination of a lot of things (regulators, human nature, accounts, too much leverage, public v private money), but the knee jerk reaction to say its just greed misses the point that the vast majority of people if given the same opportunities will see a few bad apples doing it because they can)

also heading into a 50%-61.5% retracement of the last leg up on the hourly chart from 135.40 to 138, (using the 6E M0 contract)

Sorry Cory :crap: - I apologise - I saw the date at the top of the chart - and Sunday thinking led me to the conclusion as the expiry was due. I also completely forgot you are trading the spot, not futures. Still, always a good reminder for myself.

Hi Rich, as a new person to looking at TTT (recently downloaded and tried to read and understand it ), and while I dont want to confuse matters, are the names - buy days and sell days, and short sell days - confusing? ie; a buy day is a good day to short.... Do you think for ease of trying to get the head around it, I called it just day 1,2,3 in the cycle. Whilst still understanding the actual process? Or do you think it would actually cause me to miss something in the ideas. (I dont want to shift the cycles ) (kindof like trying to avoid the old double negatives that sometimes cause the mind to stop and confuse itself). thanks.

Hi Fat Tails while any info is good (so long as its accurate ), and every one appreciates it, I would have thought my advice is actually very helpful. It may not have actually answered his question but I hope he can appreciate the advice. (It was probably a little harsh maybe) I think the recent sub prime example (regardless of who why what caused it) really should be enough of a reminder that we should understand the underlying basis of the instruments you trade - even if only a good grasp of the basics. You may not need to know the ins and outs of the crude oil spot market, but to have been wondering about the spot market for years - that was what sparked my response.

FYI another link today.... Bloomberg News Personally - I blame the accountants from back in the 70s and 80s. The idea of creative accounting has always meant that you cannot believe the numbers - enron, tyco etc; I mean seriously why should accounting be creative unless you are trying to defraud and hide things. The Lehman report that just came out effectively comes to the same conclusion. People where given the incentives and the ability to do this - so should we be surprised when they do? However, has anything ever really changed - anyone read "where are all the customers yachts?" - read it, look at when it was written - and realise the more things change the more they stay the same.