TimRacette

Ha I'm not a vendor, look at how many thanks I've received here. My comments are genuine. I will leave it at that. Best of luck in your trading.

Ya again, I just use the fib tool to draw the half way back point, but 50% is not a Fibonacci #

Ya I don't credit much of what goes on this past week up until the second week of January since most of the price action occurs on low volume and thin markets, closing positions at the end of the year and preparing new positions at the onset of January. Ironically it was pretty technical (the Euro that is).

I look for a low or high on the NYSE tick to correspond with a low or high in price on the index like the ES. If that low or high price hold's, that could potentially be the low or high of the day so I look to go long at low ticks with low price and short and high ticks with low price. That's an example of one of my counter trend setups because we're moving higher (uptrend) get a high tick of day at high price when I take a short (against the trend).

Elovemer, first of all the phrase halfway back and retracement don't belong to anyone in particular. Just type it in in Google or on YouTube and you'll find 100 videos and articles all talking about the same thing. Second I do give credit to Mr. Halsey, not only in other videos, but in posts I've written on TradersLab. Don't be so quick to judge.

That makes sense, a 1 lot with a small account. I prefer to scale out because a lot of the time intermediate profit targets will be hit much more often than the larger profit target. This way I can exit 3/4 of the position and trail the rest to the larger (in my case 15-min) profit target. As for scaling in, that's certainly a viable strategy...For Example... On the euro if you trade really small time frames (I use a 233 tick chart) you could enter 2 contracts at a larger level like a 15-min and then if the trade goes in your favor enter 2 more at the 233 tick chart entry. This way you are only risking half the position if it blows through your entry and if the trade begins to work in your favor for the first 2 contracts then your risk is reduced when adding the second 2. For a breakout strategy I'd prefer to go all in all out as the best price would be the onset of the trade, but I see the value in both scaling in and scaling out.

Ya gosu I'm just saying I found ETFs a nice alternative to trading 1 or 2 lots because I was able to scale out. Obviously everyone is different. You could certainly trade 10 lots with a 10k account if you're controlling your risk right? Just my opinion.

I would also argue that you need capital to trade futures, or any market. It can't be expected to make a 100k return per yr on 10k. While I understand risking 1-2% of your total trading capital is hard for small trading accounts, if you were to take a set of 20-30 trades and multiply your risk per trade by say 25 (a theoretical worse case scenario for this example a string of 25 losers) how much capital would you need to overcome that draw down. Then multiply that # by 3, what does it come out to? That could be used as a starting point for capital requirements. I personally found the ETF method helpful for the reasons of being able to still make live trades and scale out, but at small risk. Once I built my confidence up then I just switched back over to the corresponding futures contract.

I can see the value in that. It also helps develop patience. The tricky part arises in 2 areas, using a smaller profit target vs. bigger profit target and using a tight stop versus a wide stop if you begin to trail (you in the general sense). I started with 1 contract on the ES before moving to 2, 4, etc then I added in the 6E. If I did it over again I would start with the 6E 1 contract, much bigger swings and reward/risk ratio.

Hi pips, I read through your trading rules, you have some really good stuff in there, but there's also things you probably don't need. I have two specific comments regarding your word document. The first, try rewording it to the first person I instead of you/your. It may seem subtle, but it can help embed your routine and principles on a subconscious level. Second, For your trade entry section, take a 3x5 note card and write out your exact entry criteria in steps. Put this in front of your screen and when you think you see a trade setting up, just run through your "trade entry checklist" to make sure it fits all your criteria before pulling the trigger. Writing out a trading plan is great, but it's usefulness comes in the simplicity and being able to refer to it when the trade is setting up. Over the years I've gone through my trading plan and simplified it to the core idea so there is no room for interpretation. This was a great Saturday morning exercise along with reviewing my trade notes from the week. Best of luck and happy holidays, Tim

I also use Infinity. Paper trading is great for working out ideas and tuning your methodology, but the real value comes in the experience of pulling the trigger. If you aren't able to trade at least 3 contracts in the futures markets you can always trade the equivalent ETF in blocks of 500, or even 100. The point is that you are involved in the markets and able to scale out. Much more valuable I feel than paper trading when the market is good.

Great post Bootstrap. #10 was a big one for me. I was afraid of what others would think about me if I didn't make it in trading. Once I realized that it really doesn't matter what they think and I committed to doing whatever it takes to become consistently profitable I started to see big things happen. Whether it's on a conscious or subconscious level I think your list of 10 can really help frame you with the right mindset. Happy Holidays, Tim

Haha right on MM, I dig it.

I didn't realize I would receive so much #hate from my reference of 'Trading in the Zone'. I was just trying to relay an important occurrence in my own trading where I began to think in terms of in terms of probabilities and look at my trades amongst a sample set instead of individually, that's all.

Ya, JEH I can see your point. I was more focused on relaying what's resonated and worked for me, the message of thinking in terms of probabilities and that there is no one who can predict the market.

I find that I'm constantly internalizing trading ideas while off doing other things away from the screen. Often I go back and re-read books like this (along with the Market Wizards Series, Reminiscences and Pit Bull to name a few more). I always end up pulling out more great nuggets. Sometimes it's reading something at the right time when you're in the right frame of mind. I think that was the case with Trading in the Zone. After reading it a few times, and at different stages of my trading I would absorb different pieces of information. p.s. I enjoy reading your comments MM, lots of insight, thanks.

The biggest leap forward in my trading came when I began to think like a trader. This important realization was a result of training my brain to think in terms of probabilities. The best book hands down (for me at least) that helped me think this way was Trading in the Zone by Mark Douglas. Thinking in probabilities did a lot more for me than just help analyze my trades. It allowed me to trade with more confidence because I knew the likely statistical outcome of a series of trades. (As a side note you can see what I do each night as part of my nightly homework here). I’d like to pull from some of Mark Douglas’s work in this post to help you better understand how to think like a trader. Think in Sample Sizes Looking at the markets in terms of probabilities is extremely important, both to help you understand your edge and to calm your emotions from trade to trade. I like to think in sample sizes of 20 trades. I am not looking at my profit/loss for the day or week; rather I am monitoring my p/l for the last 20 trades. Each trade you make is simply one of thousands of trades that you will make over the course of your trading. If you keep this in mind and limit your risk on every trade then mentally there is no need to fret over one or two losing trades, or even a string of losing trades. Monitor your last 20 trades. What is your worst string of 20 trades? What is your best string of 20 trades? The numbers may surprise you. Eliminate the Emotional Risk Thinking in terms of probabilities also helps remove the emotional risk of trading. Mark Douglas talks about the 5 Fundamental Truths, they are as follows… 1. Anything can happen 2. You don’t need to know what is going to happen next in order to make money 3. There is a random distribution between wins and losses for any given set of variables that define an edge 4. An edge is nothing more than an indication of a higher probability of one thing happening over another 5. Every moment in the market is unique When you train your mind to think in this way, the emotional stress and fear of pulling the trigger diminish. You become less concerned with the outcome of each individual trade and more concerned with how it fits into the larger statistical set. Become an Observer Think about how objective we are when observing the markets with no money on the line. This is the state of mind we are looking to create throughout the entire trade. Win, lose, or scratch. One exercise I find useful is to visualize yourself standing just behind yourself, watching over your shoulder as you trade. Does this trade meet your entry criteria? Is this a trade taken out of boredom? Are you sure you want to break your rules? These are some questions the observing self would ask your conscious self. Once you’ve identified your edge, practice executing your trades the same way, each and every time. Use this observer exercise to help keep you in check and remain disciplined. The 7 Principles of Consistency Mark Douglas talks about 7 principles which help beginning traders develop into consistent winners over time. The following are his list of guiding principles… 1. I objectively identify my edges 2. I predefine the risk of every trade 3. I completely accept the risk or I am willing to let go of the trade 4. I act on my edges without reservation or hesitation 5. I pay myself as the market makes money available to me 6. I continually monitor my susceptibility for making errors 7. I understand the absolute necessity of these principles. I never violate them. So to think like a trader means to think in terms of probabilities, identify your edge, execute your trades the same way each and every time taking every setup that first your criteria and then analyze your trades not individually, but in sample sizes. Doing these things (over time), can help develop a level of consistency trading the markets.

Ya I only have it happen every so often (getting filled at the bid/ask without it trading through). Sometimes have my order or a handful of contracts will fill at the bid then it trades through and the remainder is filled. It has everything to do with your data connection and where you are in line (FIFO) First in First Out. You can also setup 'market if touched' orders instead of using a straight limit order.

Look how many millions and millions of dollars the casinos take in each year.The Blackjack tables in Vegas give the house a 51% Edge, to scale, 1% is massive. On a more personal level, pull up a compounding interest calculator and throw in 8% over 30 years, change it to 9%, 10% etc. see how just 1 percent can make a huge difference. I think most traders lose because they aren't able to capitalize on there edge to scale or with any size. The more $ you manage the smaller % you need to make to keep increasing your bottom line. What % would a new trader have to make to bring in 50k a year on a 10k account, 50k account, or even 100k account. As the years go by in my trading I've come to realize it's simply a #s game, well a mental game of #s Enjoy the day, Tim

Ya Phil, I will round in the the direction of my trade then add a tick when I am using limit orders.

I'd actually have to agree with you Qiman. This was the first post I put up where I used "secret" in the title and regret doing that now. All the other things I've shared have been more direct. Thought I would mix things up a bit, but I'll stick with more direct headlines from now on. I appreciate you reading the post though. Happy Thanksgiving.

Very true Josh, perhaps that wording wasn't best suited. At times I am filled when price touches my limit, but it's more common for price to need to trade through. Point taken though, thanks.

Most traders experience a significant amount of slippage on their positions. Most traders also fail. There are two things you must know to get better fills, less slippage and fewer stop outs. The first thing which leads to better fills is knowing when to use the different order types. When entering a position you have the ability to place a market order or a limit order. Which is best. Market Orders These orders are great for exits, but dangerous for entries. This is because a market order is an order to buy or sell at the market, whatever that current price may be. We all know that the markets move incredibly fast so when you place a market order or click the join bid/ask you are essentially throwing your hands up in the air saying “I don’t care where I get filled.” Is there a better option? Limit Orders Yes. The way to get better fills is to use an order time foreign to most traders, limit orders. This order type ensures that you will get the best fill possible because a limit order is instruction to buy or sell at the price you select OR BETTER. This means you cannot get filled for anything worse than where you place your order. When to NOT Use Limit Orders There is one instance that you would not want to use a limit order, when placing stops. A stop order is saying, “When price touches this level I want to close out my position at the market.” For most order execution platforms a stop order is by default a market order. If you were to use a stop limit order and price were to quickly move through your stop price, you would remain stuck in the position. Think about it. That limit order is saying, “I want to get out at this price or better” so if you’re long with a stop below you and the market quickly moves through your stop limit order, the order will stay active and not fill you, very dangerous. Tips for Breakout Traders If you are the type of trader who likes trading breakouts, instead of waiting for price to breakout and then clicking the market button consider using buy stops and sell stops. Placing a stop just above the break out point where you would like to enter will push your order into the market at the point that the market breaks your level. While this order is a market order, placing it well in advance will help reduce slippage because most platforms use a FIFO, (first in, first out) method. Meaning if you want to buy above highs and place your order sooner than the next trader, you will be filled first. If you wait for that breakout and then hit the market button you will be last in line. Example Trades Tips for Traders Using Retracements This is where the power of limit orders really shines. If you’re the type of trader who likes to buy or sell when price has retraced of its highs or lows, using a limit order will ensure that you will get filled at your price or better. Waiting for price to retrace can help reduce the number of stop outs you take. The reason being, you are not impulsively jumping in at highs, you are waiting for that pullback in the larger trend and as that counter trend trade loses steam, you enter in anticipation that the market will resume in the current direction. The Downside of Limit Orders One con about using limit orders is that if price does not go beyond your order you will not be filled. This however, can be looked at as a good or bad thing. Limit orders ensure you get the best possible price, and I’d rather trade in this way missing a few trades, than taking stop out after stop out, by impulsively clicking the market order.

I find that the 50% level or whichever method used for entry is just that, an entry signal. The difference is how each trader manages the trade once their in it.

Good point Mitsubishi, technically 50 is not the series being 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144... I refer to it as a fib line only because it pull up my fib tool to display it. Really it's just a halfway back.