DugDug

As a suggestion Thales - get a ghost writer or someone who has more time to write it for you. Write a book about trading patterns - attribute it to who ever you like. (TT, LBR, God, Aliens) Put in a bunch of hindsight trades - because clearly thats all they are as you must have a time machine that allows you to print ideas before they actually happen Then here is the catch - put a price on it and sell it! We humans are a funny bunch - we place no value on something when its given to us for free - however when its given a value by someone else we suddenly decide it must be worth something ---- go figure. I am pretty certain all the detractors will gladly pay for it - because then they figure its the holy grail of trading and it will lead to instant riches! (on second thoughts - can I steal your stuff and do it myself - I promise to give you a cut) I for one (as I am sure a few others do) appreciate the hard work, ideas and post and hope the detractors if they are PMSing you give you their money in the market.

welcome back Cory - you were away for wayyyyyy tooooo long - (sounds like a friendly drug dealer ) Someone made a great suggestion in another post of recording versions of the trading plan - that way you can see what improvements you make in your ideas. eg; version 1.1, 1.2, 1.3 and not to just over write them as I usually do. Also while you are new to trading I hope this puts things into perspective - I have been trading for 17 years now.... and still learning things. (do you know the old joke about the young bull and the old bull looking at a herd of cows?) I am adopting more intensive day trading ala thales style (similar to what I did but on the dailys) The point is I am writing a whole new trading plan of setups ideas and rules for this - even though I know what I am looking at in my head -- its always a good idea. Additionally due to the more intensive nature of trading intraday and constantly adjusting the advice of 1-2 instruments is spot on. There are too many distractions otherwise. When I used to market make options trading anymore than 6 stocks was pushing it mentally - and generally only 2 were busy and kept the majority of the focus....

Two interesting longer term Fib levels coming up in the AUDUSD. If short using a longer term runner, these are a place I would normally look to lighten off a little. (at present I have no positions - paper trading is getting be back on track though ) Fib retracement levels previously show some chop at similar levels between 50-61.8%. Plus the 100% fib extension of the last few days moves co-incides with the same levels. can save some heartache if it rebounds even only intraday... they can be big. (additionally if the AUDUSD really starts to capitulate from here targets of about 70 maybe in order? \

John - "Ever noticed when someone is having a bad run...? advice given is often to say hey take a break...seperating from it aint as easy as just saying this is it ? as you know well through your coaching egs or from your own experience and what you have heard from others...Hence when someone can seperate from what they are identifying with they can then see the object more objectively and when we can do this we usually trade better." The idea of co-dependence is always an interesting one - I have always found the good traders are the ones who really love the markets, the thrill, the money, the constant dealing..... and yet you still need to be able to switch off when you are not trading well. Or alternatively switch off when trading well - over enthusiasm sometimes hurts also. The disassociation I guess is often referred to as perspective. Many people I know over the years have mechanisms to do this - enforced holidays, hobbies, meditation, drinking. (sometimes a good night on the sauce used to put things in perspective after either a good or a bad week - whatever works right - but now I am to old) There is a great section (rarely mentioned ) in one of the market wizards books that talks abit about this from a particular un-named traders ideas. Point being - part of knowing yourself is knowing which pain to listen to and then having the distraction (for want of a better word) to be able to enable you to walk away and refresh. (Famously George Soros had a rethink about things when his back played up on him)

rather than trading forcing you to "know yourself" I find that it forces you to be more "truthful/honest to yourself" I consider these completely separate.

Hi Tom, I have done a lot of work similar to this, and was looking at expanding more into intraday trading (too much time on my hands!) hence the tread to look at combining strategies in order to get the most of it by taking profits on smaller trades to smooth the PL Do you only trade the short term divergence and the trend trading on the stock indexes, or do you have a more diversified basket of commodities, FX, rates, and stock indexes? Do you find that it sufficiently smooths the returns without detracting from the PL (21% pa is good) how are the max drawdowns? (seemingly inherent in most trend following systems - however stop and reverse may be different) How was the recent 12 months (it looks good on your chart)- most long term trend follwers have not enjoyed them - even if 2008 was good? (plus if you PM me there is something organised via another site you might be interested in if you are in the UK specifically related to trend follwing)

interesting.... a good measure for what should ideally be a dynamic document. Given I have decided to change a few things in my trading I am back to version 1.0 however I like the concept of versions. thanks.

Tom Demark has all his indicators via Bloomberg - but I think thats probably a tad expensive.

Thales - thanks for the answers - it makes perfect sense to adjust - I was wondering if you found in your experience if you did or did not adjust quickly. AUDUSD - this is proving an interesting example (for me at least) The question about the speed of the move and retracement was along the lines of .... given bar A - a big up bar, would you expect a reaction to short it so quickly. (generally I would say no - apply some patience and await for a more substantial type pullback before looking for a short trade.) This pullback did occur, touching the low of 8885, but then the subsequent rally which has taken out the new high at 8925 - point B has traded above the original stop, I will say the whole pattern has ended - move on to the next setup? thanks. Given the recent volatility - eye currumba - shows the importance of taking quick stops if trying to capture moves such as this!!!

Thales - two related questions regards timing - I ask as you have the most experience in this sort of pattern you use, and it will be interesting to have your take on it in terms of what you do in real time. thanks. 1) do you feel there is a timing issue for when to enter a trade.... example - the pullback in the AUDUSD seems to be occurring quickly - does this normally give rise for concern in your experience - OR just take what the market gives? Do you feel more patience is required? 2) Given the recent EURUSD, do you adjust the trigger points - move up the sell trigger point , move down the stop loss - as I have in the recent chart... or do you stick with the original setup? (sorry the old level shown on the chart for the stop loss looks a little misleading - ignore please - but the question remains the same.) thanks.

AUDUSD aprroaching resistance zone - expect it to fall from here, since there has been a lower low registered in the last move down. just looking for some sort of trigger rather than blindly selling at the resistance zone and trying to pick the fall

BF - if your trading gets simple enough to use the charting of IB then you have made it so simple that carrier pigeon to the broker would be good enough.:haha: I spoke to them about this and they actually said they have no intention of being a charting program - so dont hold your breath - a real shame as it means you have to use other programs such as Ninja if you wish to trade off charts - without doing this when using IB :crap::crap::crap::crap::crap::crap:

Damn.... I have been away and finally looking back at a few things, trying to actually look at this day trading properly - the first chart I want to post - and Thales is on it already I have added a small (i think someone referred to it as a chop channel - if this breaks they are usually good resumptions of the downtrend. (I am only paper trading at the moment as I am out of sync with the market - plus trialling Ninja Trader) EDIT:::AUD/USD had a similar pattern, but quickly negated and rallied..... I expect the EUR might do the same.

IB sucks for charts and trading off the charts - and they know it. (they are fantastic for cost, multiple orders entries, baskets, options, markets etc; not really relevant for most day traders) Dont use IB for yur charts or trading off them. Link to a third party system. if you are only requiring one or two markets try and use a system that does it all - you can also look at Ninja trader, Pats, OEC

buy art and support up and coming contemporary sculptors Sculpture by the Sea (personally I dont care about cars, houses etc; so long as I can live comfortably without having to worry about bills and where the money is coming from..... sad but true)

so you are actually looking for a larger than recently previous days ranges in order to determine what? I could post plenty of charts showing large range days. what then? it will be in hindsight. Are you asking for help, ideas, or are you proposing to discuss something? I am with Tams - confused.

When I look back at my trades I actually compare the original stop level v the actual stop level and record a brief reason for why it was less (or more) eg; nervous, did not feel right, poor trade, no acceleration. This usually results in a large majority of stops being smaller than the original loss based on me being nervous - or not feeling right about the trade (I have never quantified why - maybe I should). I think this is a more accurate measure as its real trading on a discretionary basis v fully systematic. Interestingly enough on about half of these should I have kept the original stop loss level as they then turned into profits. It has never made much difference to the PL overall (as lots of little losses do add up, compared to lots of even smaller losses) but I prefer the feeling of discretionary control suits me better at the moment, plus I use more context. The most important thing I have been concluding lately that suits me, is that longs and shorts based on the context of the market behave differently. (I dont care about robustness and purity of a system that treats everything the same - I want one that will allow me to consistently make money in a way that suits me, plus different markets definatley react and trade differently). eg; if in a downtrend and a nervous market the reactions are likely to be quicker and more shallow, while in an uptrend reactions seem to take longer, and pullback further. Currencies trade differently to crude to equities. So in each case the things to watch for are slightly different. So for some markets I give more leeway to stops others less. The downside to this is that it can get confusing. too many choices are not necessarily always a good thing. The one consistent thing that I find continually rises its head from profitable traders ---- is you have to give yourself the opportunity to participate in the runners. Just aiming to make money day in day out with little scalps (while it does work for some and I am not knocking it) is tough work.(good for the brokers). I have always found that myself and others I know make the majority of the money on a small percentage of the trades. (I only I knew which ones in hindsight)

thoughts - I am having the same process I am running through myself. I have to differentiate between scalling in and scaling out. Conclusion - same as you - there is no right or wrong answer but a series of trade offs between monetary PandL and mental ability not to deviate from the strategy - If you find that you make less money scaling in and out, but its mentally easier, then go with that. The biggest issue I am personally finding mentally challenging is reentry after scaling out. eg; sell 3, TakeProfit on 1, TP on 1, = net short 1, then sell 3 more as a new short, TP on 1, TP on 1 = net short 2. I say this as I keep asking myself, why am I taking profits, when I am willing to short again? It might feel good, but also can cause me stuff up what I am trying to achieve. (again a trade off) As someone pointed out to me - if you like the trade and its going your way, trade more, dont take the profits off. (this is tough to do, its possibly not really suitable to day trading in which you should take profits as you are looking for lots of small opportunities.)

James - "Then they just think it's because they can't control their emotions or they're undisciplined. The problem was because they never really took the time to understand how the markets work - and they never took full appreciation of the risk. They had "risk management" but never really accepted it." Not to get into an argument James but I think you are actually agreeing to disagree with yourself if that makes sense.. To trade and to understand the markets does take discipline and emotional control. Many rush in, develop bad habits then wonder how to fix it and look for quick fixes. Many never develop a truly comprehensive trading plan from the get go, instead its done on the run. You are 100% correct, but I think the point when most older traders direct new people to the psyc and discipline part of the process it is to tell people that if you dont get this part of it and dont understand that self control and the goals and reasons for why they are trading is an integral part of the initial understanding of risk management and also the ongoing risk management and self control that is required (hence journals, reviews etc; to ensure you continue to improve or dont drift into bad habits), then you will make things harder for yourself. Its all part of the big picture. Both understanding yourself, understanding how the market works, understanding the mechanics of the trading platform, understanding the strategy you adopt. This is why trading is often referred to as a business.... and not a hobby (except for some). I know one of the biggest risks to my business is me - not just the market.

so if you are looking to hedge your cash against inflation then by going overseas is a different trade. You will then have currency risk, and you then assume the other country has no inflation either and the value of its currency will rise relative to the US. Lets say inflation runs to 10%, you will still only make money if the USD falls against the currency you are in. As when you bring the money back if the currency has not moved the monetary amount is the same. I think plenty of countries will have problems. In order to protect he purchasing power of your cash - while there are often many products offering to do this. The best way I have seen is to buy real assets in your local currency (not futures contracts as the premium can kill you) and ideally borrow today at low rates and let inflation eat away your debt - just like the government:) Things like gold, land (not necessarily houses), diamonds, art, stocks with businesses that can easily raise prices and maintain its profits. TIPs (google them) Now then you have the risk of the asset falling in real terms, transaction costs etc; To protect against inflation is a long term proposition generally. As per any trade their is a risk/cost of protection.

In the UK as in other places the focus is more along the lines of where the business decisions are actually made and who controls the entity. If you live in the UK and make all the decisions here, and trade via an offshore vehicle then the tax authorities can deem that the profits should be brought on shore and hence taxed. Ways around this are to use collective schemes, trusts etc; however the premise remains the same.... and the tax authorities are likely to deem the money is to be taxed here, so by not declaring you are evading tax.... not a good result. All of this will cost money as well. It all depends on your assessment of risk, future tax penalties and fines.... appropriate for a trading forum. This will depend entirely on the individual and basically tax is something only qualified accountants and lawyers should (but not necessarily helpfully ) be advising you on. Personally I just pay my taxes and focus on making the money - I am happy to sign a big cheque to the tax authorities every year.... it means I have made money.

James- "Moral of the story, stop worrying about yourself. Figure out what other people are doing, make a strategy, stick to it." if you cant figure out why you are doing things, how in the hell are you going to figure out why the rest of the world are doing things. (I have enough trouble working out my girlfriend, so I now just say "yes dear", go with the flow and do what I want anyway..... it works without much analysis of what she wants)

This is a really good thread for advice (this is why TL is so good - for all the great free advice available) on not just what to put in a trading plan but exactly what questions to constantly ask yourself. Even when you have a comprehensive trading plan, it needs to be updated when situations change or occur that you had not recognised. It needs to cover everything, from what to do if your computer goes down, to what happens when a trade reverses, how to define patterns, why you should not do certain things. Its a living document. (you would be amazed how many start up hedge funds dont have very comprehensive procedures documents such as this - an they also have a high failure rate due to operational issues) There is a massive massive difference between knowledge and understanding - knowledge is saying "yeah yeah I know that", my guidelines are vague, broad and I can fudge it, if you understand it then you should have no problems being able to write it down and explain it to others in a very simple fashion, as you understand what to do in various scenarios. As mentioned above - somebody else should be able to replicate what you do easily. This is much harder than many people think (in many endeavours not just for trading) I personally am like Thales - but I am now trying to really put my understanding on paper for a few new ideas - its tough. I did it early on when I started trading. I had over 300 pages of notes on ideas, trades, thoughts. Looking back on some of them I thought "how could I not have known that?" - it always seems easy in hindsight. I threw them all away when I moved once as I thought I would never need them again - what a mistake.

I am coming to the conclusion that as in trading, the simple things work best, dont reinvent the wheel and if it aint broke dont fix it. Initially there is no substitute for hard work, planning, trading time, and understanding and analysis of the past trades in order to improve them, until it becomes that unconscious competence (I think that is what is its referred to). Find a setup, trading style that works for you - dont try and fit a square peg into a round hole, and most of all be determined/persistent and really commit to making it work - learn, practice, get a mentor, get help (dont waste money on quick fix seminars). Finally give yourself a set date to take time off, analyse and realise that sometimes certain things may or may not be suited to you. If you find that trading does work for you and you are successful continue - otherwise stop and do something else. I think that many people have to realise that while trading may sound glamourous, exciting etc; etc; the reality is different and that it just does not suit everybody, most people are not prepared to really change themselves (if this is what is required) and its as simple as that. While I know I can generally do anything I set my mind to - I might not be the best at it - there are certain things I just dont wish to do. eg; dressmaking, missionary work, political life, lawyer. By looking for reasons of why we are doing, or not doing things, sometimes we miss the important question of why we are doing the actual process in the first place. I dont trade to make myself a better man - I trade to make money, so I can take holidays, buy art, feed myself etc.

I tried it, it certainly has potential but it was just a personal vibe of the thing that I did not like so I will not persist with it. While I think it certainly has lots of potential and might revisit it down the track.