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wrbtrader
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Posts posted by wrbtrader
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For the past 5 days I have been waiting for the past two trading sessions unfold in my favor. Actually, I should say that they would have. Today was the second session and I had "better" trades than the 1st session but I missed them all and actually ended up down by a tic after 2 trades. Both were good trades but I exited too early.I got knocked off my horse and got out of the zone. The zone is vital to my success. I got knocked out because my wife swung the door wide open with our baby in her arms and entered the room to ask me a question. It took her awhile just to ask it. This aggravated me tremendously. Perhaps it was because I have told her a number of times not to interrupt me as it has caused me to lose my zone. I felt it was just disrespectful. She could have at least opened it a little and quickly asked me in a quiet manner.
I always assumed I would remain calmer as I progressed as a trader but I'm more easily ticked off now. The more I understand my "zone" the more I'm easily ticked off because I clearly know when I've been knocked out of it.
Is it just me or is it like this for everyone?
You must go further than just having a conversation with your spouse about your work hours at home.
Therefore, to enforce it to ensure she doesn't forget along with having a constant reminder...
Go to any big office supply store and a nice sign that blends in with the room decorations near the door and the sign should clearly state your work hours and a "Do Not Disturb".
Let her know in the conversation that she can disturb you for emergencies only.
Until you do that, you too are at fault for the interruptions because your not being clear with her and clear means you've gone beyond just a conversation (re-read comments about office hours sign).
If that doesn't work, consider renting a small office and the expenses for such going to pay that bill should quickly catch her attention because that's money that's no longer going back into the household.
Next, after a few years, you can do without the door signs and conversations because she will understand.
As for the kids, that's a different story but hopefully you'll be more adjusted in your trading in that interruptions by the kids themselves doesn't knock you out of the mental game sort'uv speak.
You should also consider getting a separate business line or an online telephone via Skype.
Simply, treat your trading like a business and those around you will see it as a business.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
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OK, no offense doc, but I don't see any added value from your post vs. the other posts from the other traders here.Before I get chastised or anything, when I look to a professional 'trading doctor' I am looking for more than 'you must find your own way'. I specifically asked about how to train your brain to accept that you will not catch every move, take every tick, etc. That's a very specific question looking for a specific response.
I think you'll find that the most active of us on this board have been given the 'find your inner trader' stuff. And I'm sure it looks good on brochures, books, etc. But if you really want to tap into this forum and provide value, I'm looking for more than this post, esp after 8 days since I first posed the question.
Personally, I'm not impressed thus far. That may mean very little, but I think James should be aware of the overall impression we have. I would also suggest that James occasionally survey members when it comes to a vendor being on the board. It's a fine line to be a vendor on a message board and one that should be examined occasionally.I just want to jump in here to address to issues in which one concerns your questions and the other concerns a partner vendor of this discussion forum.
First of all, I read this thread with interest because to me it is a common problem concerning trade result expectations.
Here's your question again.
So my question is - how do you train your brain to accept your trades as they are? In other words, how do I train my brain to accept the fact that sometimes trades will continue to move in my direction after I've already exited a position?
In my opinion, you got your answer from others that have responded to you prior to Dr. Janice Dorn providing some insights.
This is how I train my brain to accept the fact that sometimes trades will continue to move in my direction after I've already exited a position.
Prior to entry, I have a trading plan mapped out from entry to exit just like any top athlete does.
For example, lets say a football coach ask the quarterback to throw the football to a specific player on a route about 5 yards to achieve a needed first down.
That quarterback has a task and the task is mapped out on the sidelines and in the huddle prior to the snap.
He's not ask to throw a touchdown nor a 30 yard pass...he has one specific task and that invovles getting a first down.
If that goal is achieved...top athletes rarely go back to the sidelines and say I could have gotten a bigger play via throwing a touch down.
Instead, they go back to the sidelines feeling good that they've accomplish th goal that was mapped out prior to the snap.
This is true for any sport or any other career professions.
Lets get back to trading.
If your a trader that's using fixed profit targets...you will have a difficult time in catching a big move via the flaws associated with fixed targets.
For example, you've conditioned yourself to believe exiting winners at +2 point profits while exiting losers at -1 point loss...
Your conditioning your brain to take action when either +2 point profit target is reach or when -1 point loss is reach.
Thus, its a waste of time to wonder about those 3 point, 5 point or bigger moves when your trading plan is conditioning your brain to take action at a less number.
Further, if your achieving the goals set by the map trading plan (getting those +2 point trades)...
Your achieving success and to ask for more or to question why you can't capture more is also saying your not satisfied with your trading plan or fear is involved when you reach your profit target on volatility.
I'll talk about the fear aspect a little.
Some traders get fear (shocked) when a profit target is reached on increased market activity.
It's fear that catches the trader off guard and then the conditioned brain kicks in and tells you "we don't have time to do additional analysis, dump the position now".
My point I'm trying to get at is that if you want to capture a bigger move on some trading days...
You need to improve your understanding off the markets so that you know when trends are most likely to occur.
Knowing that will allow you to map out your trade (condition your brain) prior to entry to go after a bigger target than the +2 point target.
Simply, a better understanding of the markets allows your brain to accept the fact that sometimes trades will continue to move in your direction after you've already exited the position.
In other words, your brain (you) will never accept the above facts about the markets until you develop a better understanding of the markets your trading.
A better understanding that lets you know its time to map out a touch down scenario, first down only or whatever.
With all that said, getting back to Dr. Janic Dorn...she's a partner vendor of this forum.
She's not going to offer to good stuff of her service for free.
Further, I thought her commentary was good in par with the other free advice you gotten at this discussion forum even though you obviously feel she didn't add any further insights.
Think about it, you already got your answer from others prior to her commentary and yet you were not satisfied enough in that you expected the partner vendor to provide further info beyond what others have already said.
Dr. Janic Dorn may have saw that not much added value can be made beyond what others have already said for free.
She's a partner vendor and if you need help with something that's beyond what others and I have already stated...you should visit her site to see if there's something she may offer that can help you.
If not, she'll probably be like most of us in that her advice is in par with the advice of others.
By the way, I played sports on the international level in the 80's and I could not have reached that level without the paid sports psychologist my parents had hired...whatever was given for free was basic common sense knowlege in comparison to the good stuff as in the stuff that cost my parents some bucks.
He had to spend a lot of time with me before he could properly help me.
Therefore, I can't imagine a trader psychologist or the likes being able to resolve what's bugging you about your trades in a few paragraphs nor without getting to know you better as a trader as in the stuff you don't talk about.
Further, if you say your question differently...it may shed more light when answered.
How do I accept the fact that I'm not satisfied with my trade results after I've exited (reached my goals for the trade) to only see the price action become more profitable had I not exited the trade???
Think about it...would you be asking this your question (my rephrase of your question) if the markets immediately reversed in the opposite direction after your exit or if you had a better understanding of what tends to cause a trend?
Is this a chronic problem in your trading in which you could have gotten more out of your trades...if not...why bother with this type of hindsight analysis.
Best Regards,
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
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...I also like Mark the idea of mapping a trade out prior to entering it, but to be honest - that does not work too well for me either. I do that on stock swing trades, but with intraday futures trading, it's a little harder to do on the fly for me. I understand you can look at pivots, previous days stuff, WRBs, etc. etc. but then you end up with a chart cluttered with lines. Of course one of those lines will prove to be the best exit but odds are you will have one hit if there are lines everywhere...Hi brownsfan019,
I think you misunderstood my post or thought I said something.
I do not draw lines on my charts...not one single line during trading.
However, I do draw one key WRB s/r zone on my chart after the fact when someone ask for a chart example to show the WRB s/r zone I was talking about.
Thus, during actual trading, the only thing on my charts are price itself and sometimes I have volume on my chart because I chat in realtime with some traders that heavily do volume analysis.
Therefore, I have volume on my charts so that I can see and understand what they are talking about even though volume analysis is not part of my trade decisions.
Therefore, there are "no annotations" on my charts during trading.
My point, mapping out my trades prior to entry is the reason why things are simple and simple to me is defined by being able to adapt to changing market conditions along with having to view as few info as possible that allows me to trade in a mechanical like reaction.
However, I do keep in my head (my thoughts) of one key WRB s/r zone along with the reason why it is the only one I need to know about.
Than after the trading day has complete and when I'm updating my trade journal...that's when I annotate my charts due to the fact I want to see what I was thinking about for any particular trading day in the past.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
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In the end, I was simply looking to supplement or replace my existing exit strategy. And as mentioned, some days the visual WRB's worked like a charm and other days like Wed left me very frustrated...That's a difficult mental battle to hae when your entry was in hindsight incredible, yet your P&L did not reflect that. I understand that some days there won't be much to take when you want bigger moves.
As I've mentioned a number of times here, in the end, it's all a giant mental game. And for me personally, not taking more out of a move that goes almost TWENTY ES pts in your favor is a battle that I cannot win. That's just me. Some guys won't bat an eye as long as they turned a profit, but I always push myself, esp in my trading business. I won't settle for 2-3 pts on a 20 pt move and be content. Again, it's not me.
OK, this post has gotten longer than I thought. Off to watch the Cavs hopefully beat the Pistons and then to bed.
Hi brownsfan019,
This post isn't only directed to you but to those that plan on participating or reading this thread in the future.
I'm a strong believer that prior to any trade we need to map out the possible scenario from entry to exit.
Thus, some trades I enter I do not have a goal of trying to catch a big move and that decision is made prior to entry.
Also, there are trades I'm just trying to catch a few points (not a big move) or a few ticks.
Once again, the decision is made prior to entry.
However, I do understand enough about the market dynamics that sometimes things unexpectantly change in the supply/demand.
It's during these times when we need to have the ability to adapt our trading plan to stay in trades that have a big chance to develop into a trend day.
My point, May 30th Wednesday should only leave you frustrated if you mapped out that trade prior to entry to be a big winner via your prior analysis revealing that May 30th Wednesday has a good chance to be a trend day.
Simply, if your goal was to exit at the first WRB appearance and if you did just that...
You had a very successful trade regardless to how far it moved upwards and you shouldn't be thinking about what you could have gotten.
To take this a little further, you should design a contingency plan re-entry method just in case it does develop into a trend after you have exited the trade.
In that case, this really has nothing to do with WRB's and has every thing to do with not having a re-entry method on trend days.
Once again, your goal for the trade should be determine prior to the entry because if you don't your going to be beating yourself (getting frustrated) with any type of exit strategy.
The real question or another question is how does one determine if a trading day is more likely to be a trend day in comparison to range or choppy trading days.
I already answered that here at Traderslaboratory.com in another thread and partially in this thread.
* Market Seasonal Tendencies
* Contracting volatility trading days usually are followed by a trend day or a trading day with at least one strong (parabolic) intraday price movement.
* Key Economic Report or Regular Schedule Market Event related to the FED
I've already discussed the contracting volatility prior to May 30th Wednesday and the key market event that setup the WRB S/R zone to give us a point in the sky to shoot at.
However, I did not mention (intentionally) the other regular schedule market event on May 30th Wednesday.
That's the 2pm est FOMC minutes.
All I'm saying is this, traders missing trend days is one of those discussions that will always uncover frustrations regardless to the exit strategy being used (it has absolutely nothing to do with WRBs)...
Trend Days is a very popular discussion, always will be and should be because they involve what really moves the market.
Big Hint: My personal experience (+15 years) and via talking to many other successful traders...
If you want to ride those big price moves on trend days or be at the plate when a trend day occurs, you must keep track of anything related to the FED and its former chairman.
Thus, the best trend days are associated with the FED and when the FED is not walking nearby...the ES, ER2, NQ and YM will try to find direction from other key markets (Hint: Oil and Gold).
Federal Reserve Board: What's Next
Forex Forum, Forex Calendar, Forex News @ Forex Factory
Note: Any decent realtime news alert source about the markets will catch stuff like when the former FED chairman Greenspan is giving a speech et cetera.
"Knowing what really moves the markets (the real indicators) will put us ahead of most."
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
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PP - I appreciate the comments as always. You are right, trying to figure out exactly how to exit is a difficult task. As you said, some days WRBs work well, other days staying the trade longer is better, etc. etc. And especially after a day like yesterday where my initial long entry was nice and to extract a small portion of the move, that can bit you in the butt to say the least.As I said, I'm not 100% sure that WRB's work well enough into how I trade to be comfortable with them. There are 2 glaring issues surrounding WRBs for me:
1) WRB does not appear when trade moves in your favor. You can patiently wait, but if nothing shows, nothing shows. There needs to be a plan B in place. And what that plan B is, I'm not sure.
2) WRB takes you out prematurely. There are a variety of ways to work around this as well, but as you said PP, some days taking 3 WRB's will work, some days 2 and some days the first WRB is all that you can get... I've yet to find a good screener for when to take the first WRB and when to take more than one.
I think the WRB's have very strong merit and consideration if it can work with your trading or become your trading. I have only been using WRB's as an exit method, so perhaps that is part of the issue at hand. I don't have the desire to learn an entire new method like VSA purely for the purposes of using that in conjunction with WRB's purely for exiting purposes. That seems like a lot of work and hours of study in an attempt to refine the exit method. If I was just starting out and looking for something to grab a hold of, perhaps that could work.
Hi,
Maybe I can help or shed some light on this issue.
First of all, using WRB to enhance your exit strategy needs to be within the context of WRB s/r zones from the prior trading days.
In addition, trying to use only the current developing WRB as an exit signal while ignoring the past (most recent WRB's) for the sake of keeping it simple will backfire and cause difficult trading.
Therefore, you need to understand the price action of the prior WRB's (your screener) to help with your exit strategy of today.
Lets discuss your Emini ES 5min chart of May 30th Wednesday.
First, you mention you had some size on the trade and wanted to know what reason would be in place to tell you to keep some contracts beyond the WRB you exited at.
Yes, there's a big reason and it has a story to help you understand the remaining chapters in the book.
WRB s/r zones contain a wealth of information about key changes in supply/demand especially when they produce swing points that cause very strong market movements.
In fact, when such occurs, you need to keep those key s/r zones on your chart to prevent missing riding a big train beyond your normal profit target (this is also answer a prior question you had on this issue).
Now scroll back on your ES 5min chart back to May 24th Thursday because that's a big trend (down) day with its swing point around 10am est...same time the 10am est New Home Sales report was released.
That key White WRB s/r zone on May 24th Thurs had a body of 1526.75 - 1530.75 while the high price of the interval was 1532.50
However, the big news of that week was not Thursday...it was the bearish tone to the speech (Madrid teleconference) by the former FED Chairman Greenspan on May 23rd Weds around 2pm est because it was the talk of the town after the market closed on that day.
Check your 5min charts on May 23rd Wednesday around 2pm est and you'll see a Dark WRB with its s/r zone 1532.00 - 1530.25
Yep, that same WRB s/r zone on May 23rd Wednesday had an enormous impact on the WRB s/r zone on May 24th Thursday and it pact a wealth of info about the change in supply/demand.
Lets now fast forward a little and the Emini ES is range bound for May 25th Friday and May 29th Tuesday on very low volatility in comparison to the price action of May 24th Thursday.
Going forward some more, May 30th Wednesday the Emini GAPs down at the open to start the day @ 1513.75 thanks to the bearish price action in Europe's futures in reaction to Germany economic reports.
However, soon after the open, within the next 10mins the market begins to climb upwards and produce some bullish pattern signals around 0936am est via the 3min chart (Bullish Engulfing) and it formed after bouncing off the simple s/r zone produced on ES 5min chart via a Dark Hammer line and White Hammer line back on May 25th Friday between 1005am - 1010am est...
A s/r zone (Long shadow that was once a WRB) that help demand show up off the lows on both of those range bound trading days of May 25th Friday and May 29th Tuesday.
With all that info above that should have been mapped out prior to May 30th Wednesday (knowing your entry and exit prior to the trade)...
Regardless where your long entry was in the morning of May 30th Wednesday, it merit holding some remainders of your ES position into that WRB s/r zone of 1526.75 - 1530.75 because the market has already proven on May 24th Thursday that the former FED Chairman Greenspan can still produce key changes in supply/demand.
My point with all the above, trading is like a book and to understand today's price action you really need to understand the prior chapters.
Therefore, its ok to keep it simple but today's WRB's are interconnected to the WRB's of the prior trading days especially when key changes occurs in supply/demand within those prior WRB's and these are price areas that the big boys don't forget until the next one ocurrs.
Lets now take one more step forward, take a look at today's (May 31st Thursday) intraday lows for the Emini ES.
Do you see the price area (s/r zone) it bounced off around 1:30pm est via a volatility spike ?
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis is a doorway to consistent profits."
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What are some things you guys do when on a hot streak?...I prefer to sit down and determine the reasons why I don't have a win streak.
Hopefully, its because I'm not following my trading plan and that helps enforce that I need to get back to following the trading plan via the view to start making money instead of via the view I want to start a win streak.
Also, I get a little more worried when I start looking at it (thinking about it beyond a few seconds) as a win streak when it occurs because that implies to me its a game instead of treating it like a business (a good day at the office).
It's this reason why I try to look at my end of day, end of week, end of month or end of year summary results instead of looking at it per individual trade when I'm following the trading plan.
Yet, when I'm not following the trading plan, that's when I began looking at individual trades especially at my commentary involving the psychological aspects of the trade that's in my journal for each and every trade I've taken.
I guess I'm saying is that when we approach our trading each trading day as if its a business...when we have a hot streak its no big deal but only to those that view it as some game (high five, cheering, patting themeselves on the back et cetera).
In fact, its usually another trader that's reviewing my trading results that tells me I'm on a hot streak.
I then let the comment go into one ear and out the other ear so I can get back to treating my trading like a business.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility analysis is a doorway to consistent profits."[/b]
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You enter an intraday trade long, and the trade immediately goes against you.What do you do? Here are several possibilities:
1)You exit the trade at your preset stop and wait for a new entry
2)When the price action hits a support point, scale in
3)When the price action drops below a support point, reverse the trade and increase size.
4)exit on the close of the day and take a loss whatever that is.
5)exit when my risk tolerance is hit.
There may be other options.
Let's here from you and tell us what you would do.
I'm a strong believer to map out the trader prior to entry.
Anyways, my contingency plan involves #1, #2 and #3 depending upon the price action at the time of the trade.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility analysis is a doorway to consistent profits."
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Soultrader,
Thank you for the side by side chart comparison.
Mark
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Can somebody post three charts side by side that represents the exact same price action via a Candlestick chart.
* Time Chart
* Tick Chart
* Volume Based Chart
I don't have access to Tick nor Volume Based chart and I'm curious what they all look like preferrably for a price action between 0930am - 10am est or for the price action when a key economic report is released on any particular trading day.
Thanks.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis is an open doorway to consistent profits."
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Update here on the WRB front - as the charts I've posted have shown, when there is a WRB, it should at the very least get your attention. How you interrupt that info is up to you.There is one serious flaw with WRB's and using them for exits however - when they don't show up! :mad: In other words, if you have a trade that moves in your direction but a WRB does not appear, the question becomes what to do. That has been causing some frustration on my end. For example, I had an ES short on 5/4/07 that moved approx 4 pts in my direction. One WRB appeared that provided a good exit. Since I am trading multiple lots however, I was looking to exit at different levels and all that showed up was one WRB. Of course the argument is to simply exit on the first WRB you see. The rebuttal to that being it's not uncommon to see more than WRB appear.
So then it's simply a matter of taking most/all off at a certain point (however you determine that) or try to catch the bigger moves (when they are there).
Hi brownsfan019,
There are several different ways of using WRBs as profit targets.
Lets use your Short in Emini ES futures on May 4th Friday as an example even though I don't have access to the type of chart you were using:
* You wait for a Dark WRB to form below your Short Entry
* You use a prior White WRB s/r zone as a profit target
* You use a prior Long Lower Shadow that produced a swing point as a profit target (long shadows at one point in time were a WRB).
* You use a prior pattern signal that produced a swing point as a profit target.
* You use the s/r zone of a prior key market event (economic report, regular schedule event like a FED speech, geopolitical event et cetera) that produced a swing point as a profit target.
* You use the s/r zone of a GAP between today's Open and yesterday's Close (gap fill is the profit target).
My point is you need to pick a profit target trigger price prior to your entry that tells you if a Dark WRB doesn't form below your entry while price continues dropping in your favor...
That's when you use one of those prior WRB events as profit targets because they are shifts in supply/demand that produces support/resistance zones.
Another solution is intermarket analysis.
You will use a highly correlated trading instrument or index to Emini ES and if it develops a Dark WRB while ES does not...
You treat the trade in ES as if it did reach a Dark WRB.
The worst case scenario for WRB as a profit target is if you find yourself in a situation where you didn't manage the exit properly when those prior WRB targets were reached...
Exit the position at a profit on the next White WRB retracement against your Short position.
I think for May 4th Friday many of the above possibilities occurred.
Last of all, you need to have what I call a Max Profit Target for your trade prior to entry.
That means if no WRB's appeared and you decide to ignore all prior WRBs or s/r zones as profit targets...
You exit your position at the Max Profit Target.
For example, I currently trade the Russell Emini ER2 futures.
My Max Profit Target is 10 points and on a few occassions I have hit that target and exit my position eventhough it was not a WRB exit.
These types of price action scenarios needs to be mapped out prior to your entry to prevent trade management problems and for you to document in all so at a later date you can determine which type of Profit Target Contingency Plan solution is suitable for your trade management style.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis is an open door to consistent profits."
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Very good points there Mark. Mind if I ask what your thoughts are on impulsive behavior and trading? ThanksHi Soultrader,
There are lots of books on how to control impulsive behavior and I myself am no expert on the subject.
Also, most major cities have meeting groups for adults that get together and discuss their impulsive behaviors and how it is causing problems in their professional careers.
I guess there must be someone with a clinical background organizing these types of discussion/resolution groups.
With that said, from a trading point of view, these types of traders tend to easily become overwhelmed with anything involving trading.
As soon as they realize something is no longer manageable, to ease that feeling or agony of being overwhelmed...
They take impulsive trades as in trades outside their trading plan or don't manage trades by their trading plan.
Myself, if I feel like I'm getting too anxious or too aggressive in my trading...I stop trading and do a physical exercise for about 20 - 30mins and then when I'm done with that I sit down and go over in my head with my eyes closed via visualizing completing any uncompleted personal task that's not trading related (ex. fixing the flat tire on my spouse mountain bike).
This calms me down and allows me to refocus along with giving me confidence I can stick to the trading plan and complete my trades as designed.
In addition, I keep a personal trading diary that documents how I felt while trading along with highlighting a few key trades where I felt things felt too stressed.
By the way, if anyone suspects they have a serious problem with impulsive behavior, they shouldn't be trading because they are under a high level of tension and should be under psychological professional care.
Mark
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Self SabotageWhat is it and how to stop it.
Can anyone elaborate on why we do it and do you have any mental exercises
to deprogram it? ( or know any websites or mentors that help with this?)
Hi Bfbusa,
Every one has a different experience.
Here's my personal experience and listening to the experience of many retail traders along with that of some institutional traders.
Self sabotaging occurred via a direct connection to something that's unresolved in my personal life.
The same is true for all those traders I personally know.
* I know a trader that's not organized, messy and dirty home along with not taking care of his personal grooming as if he hadn't showered in a few days.
In his trading, he's very sloppy...puts on trades with no stops and goes off to due personal stuff to come back to see the worst has occurred.
However, if you talk to him...he states its just poor trading and lack of discipline.
* I know a trader that doesn't have confidence in anything he has done in life. He doubts his abilities and moved from job to job until he became a trader.
In his trading, he moves from indicator to indicator, moving from one method to the next method without giving himself a chance to learn how to properly use something.
He studies the markets 12 hours per day and feels is never enough while struggling as a breakeven trader.
* I know a trader that is always blaming others for anything that goes wrong in his life. He never accepts responsibility nor is able to discuss that it takes two to tangle sort'uv speak.
In his trading he blames the market for his losses, market makers, market manipulation, data provider, ISP and anything else.
He frequently is telling others at forums how wrong they are and how right he is.
He's a losing trader and gives up very easily after easily getting frustrated with a single trade loss...
Overall he's a losing trader.
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I can go on and on to talk about those that are impulsive problems, anger management problems, multitasking problems, party types, liars et cetera but I think you get the point.
That is, before we can resolve self sabotaging, we need to be able to resolve those things in our personal lives that has transcribed itself into our trading.
Step back and take a long look in the mirror.
Myself, I'm a perfectionist in my personal life and I have worked very hard to just not be so anal about things.
In my trading, I've learn that losses happen and that I can actually benefit from a loss to help me be profitable in my next trade.
It took years to not be so anal in my trading and that improved my trading tremendously without having to change any method nor rule in my method (tweaking me system) when all I had to do was tweak myself sort'uv speak.
Simply, one of the commonalities of the successful traders I know is that they are in tuned with whom they are, aware of how their personal behaviors gets transcribed into their trading and they've learn to deal (resolve) these things as they interact with the markets.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis is a doorway to consistent profits."
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Mark/NihabaAshi,I am also very new to trading - just learned what is really a stop order looks like back in November 2006. Currently I am paper trading and I was green for the past week from Wednesday. My real money accounts are just above b/e. I trade mostly S&P e-Mini contracts. I have no problems at all seeing what went wrong with the bad trades and can usually know it before I pull the trigger. I am a very technical person and have found some success in understanding my current mentor who presents a technical system. To give you an example, on Feb 27 and during the crash, I was shorting the market even when it first hit 1412.00 (front month ES). He is about 3 hours by airplane from where I am.
I won't comment on how many of the attributes you mentioned above actually fits my mentor but I have to say that it is definitely more than half. Nonetheless, can you recommend one or two names that fit the above (mostly) profile that you described? It would help me further my studies.
The other question I have is based on the snap shot above, where do you think I am in terms of maturity?:o
Hi FFTrader,
I know a few traders that fit the profile I describe (Treasury Futures trader, NYMEX Futures trader and ES/DAX trader).
However, for personal reasons, I will not recommend them.
As for your maturity as a trader, I can't comment on that because I don't have enough info about you as a trader.
I will say this, traders that take a business like approach to their trading tend to have a professional approach to the markets.
Also, you mentioned that your mentored has many of the qualities I've described.
If you can visit your mentor and allowed to watch him trade from his account during different types of market conditions...
It's one of the best ways to further your studies.
I myself was mentored (Seattle, WA) in fulltime for several months and a few days per month afterwards for a few years back in the early 90's...all in person.
The first thing I notice was the business approach, organization and the balance of science and art involved in trading.
Yet, he would remind me that the real learning will occur on my own when I trade with real money during many different types of market conditions (I'm not talking about Bullish & Bearish markets).
I think it took me about 5 years to feel like I knew what was going on in the markets.
Thus, my market puberty phase was a little slow but I was in no rush (I took my time) mainly because I had a great part-time job that didn't conflict with my trading schedule during those early critical years of trading.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis is a doorway to consistent profits."
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I'm new to trading the futures market and i've been researching different trading programs, Secrets of Traders, LBR, DTI, etc. does anyone have insight as to which is better for a novice?Thanks:confused:
Hi Kevinfeeder,
The services you mentioned are very different from each other and each offers several products.
Thus, its impossible to know exactly which if better for a novice considering you have not been specific to what your needs are nor what type of trading you want to be doing.
With that said, all seem to be offering one thing in common...
Mentoring Program.
If that's what your really interested in...I highly recommend you read and understand the following especially if the fees involves several thousand dollars:
1. Mentor shows recent verifiable documentation of their trading.
It works both ways...you should also show verification documentation of your own trading.
This will show the mentor that you actually need help, properly capitalized and allows the mentor a peek into possible trading problems you may already have transcribed into your methodology.
2. You should be allowed to visit the mentor and watch him/her trade even though the mentor is not required to educate you for that particular day(s).
This helps avoid the issue of false verifiable documentation because such is easy to make.
If your satisfied so far...the mentor should then go visit you in your trading environment to watch you trade.
You should compensate the mentor for any traveling expenses because by this time you already know that the mentor is the real deal.
Its at this time the mentor can determine if your trading environment has an impact on your trading (don't underestimate this)...
It's possible you could be using the wrong trading platform, charting program et cetera...
For the style of trading your doing or going to be doing.
Heck...your computer workstation may be inadequate.
The mentor can make recommendations at this time to get you on the same or similar level he/she is on.
Mentoring should not begin until you've fulfilled those recommendations.
3. You should be very specific about your goals and the mentor should be very specific about his/her goals with you because they now have valuable information about you...
Your trading environment and your trading habits.
4. At this time, you can move into the discussion about fees.
However, lets pretend a mentor and student agreed upon 2 months of mentoring (in person).
Also, until the actual mentoring begins, you should require the mentor to post his/her trades in realtime in a private chat room that you are a member so that you can be ensure his/her edge hasn't been lost nor is in some sort'uv normal drawdown period.
If the mentor already has a chat room, join it especially if its free or offers a free trial and this will give you further insights into the mentor's communication skills (very important).
Remember, past performance is not an indication of future performance.
Therefore, this is the reason why you want to stay in touch sort'uv speak prior to the actual mentoring to ensure the mentor is still profitable and involved in the markets.
Mentor should charge you a small fee for such especially if he/she is responding to any of your questions about his trades.
After all, he/she does have a verifiable trading record.
However, do not mimick the mentor's trades because you cannot possibly get the same fills nor do you understand the mentor's trade methodology at this stage of the mentor/student relationship.
5. The fee's the mentor charges you should correlate with how much income from his/her trading the mentor will miss while mentoring you.
Remember, by this time you have access to the mentor's verifiable trading record and know exactly how much you should be compensating the trader to mentor you and that compensation should not be less than the income the mentor will miss while mentoring you.
Example, if your mentor is making on average about 2K per week and you want to be mentor for 4 weeks...
Guess what, be prepared to cough up 8k.
Now, that may sound obscene but look at it this way.
Why would a trader with a verifiable trading record risk mentoring you for a lessor amount knowing they are losing money (not having the opportunity to fully devote to their own trading).
Here's another option for determining the value for the mentoring is while the mentor is trading from his/her account while trying to educate you at the same time.
If the mentor makes 1k during the week of mentoring you when there's proof they average about 2k per week...
You should at least compensate the mentor for the missing profits.
Now...the above is only the minimum.
6. Mentoring should last long enough so that the mentor can coach you through your own trades.
If you lose money during this period...its either deducted from the cost of the mentoring or a partial refund is entitled to you.
Maybe the above is the same.
7. There should always be educational material...written in stone...that explains everything or almost everything the mentor has shown to you.
8. There should be follow-ups...online or phone conferencing is ok at this point.
9. You should agree to make yourself available for reference for the mentor in case future clients ask for such...
Along with your trading records of a minimum of 3 months after the mentoring has concluded.
This allows the mentor to show future clients if there's real value to his/her service.
The point for all the above is just because someone has a verifiable successful trading record...
Doesn't imply they are suitable for teaching.
Using an academic analogy...I've met brilliant college professors that didn't know how to teach...
I guess that's what those teaching assistants were for. :o
10. Student and Mentor should be trading the same trading instruments via the same or similar position size.
11. Student and Mentor should be using the same trade execution platform (ex. X-Trader, NinjaTrader et cetera) even though they may be using a different broker.
The above also (although is a stringent process) helps ensure a fair value has been given for the service.
Something else...I've read several posts here all over the internet about finding someone to mentor you for free or to avoid anyone that doesn't mentor for free.
Good luck because there's no such thing as a free lunch in this business and those traders that make such suggestions (free mentoring) will never recommend to you a trader that mentor's for free.
Anybody that mentors you for free will be coughing up their time and energy...such is valuable to any successful trader.
More importantly...it has a value.
12. All mentoring should only be done in person. However, follow-up mentoring to the in person mentoring can be done online via realtime communication.
Last of all, if you or your mentor ignore any of the above...
The odds are very high that either the student will be unsatisfied with the mentor or the mentor will be unsatisfied with the student.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis is a doorway to consistent profits."
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malvado,How strong is the relationship between S&P and DAX? And also DAX's relationship to opening of the US markets? Does DAX trade overnight as well? Thanks.
Hi torero,
It really depends on the trading day and what's occurring via key economic reports, key market events and geopolitical events.
Simply, some days the S&P reacts to the DAX and other days the DAX reacts to the S&P.
You can see the evidence of the S&P following the DAX in the ES Emini overnight data on those trading days you see strong price spikes in the ES in the overnight trading session.
When you see that, more often than not its related to something occurring in Europe or elsewhere in the world.
In the past when I was trading the ES, DAX and the CAC40...if one gave me a pattern signal and if I didn't feel like trading the trading instrument with the pattern signal...
I would take the trade in another trading instrument via the pattern signal in the other (sister trading).
Example, bullish price action in the DAX and I would take the trade in ES or vice versa.
Thus, the correlation is good enough for sister trading on many trading days.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis is a doorway to consistent profits."
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Objectively a breakout fails if I have an entry signal and it hits the corresponding stops.It may then be followed by another breakout which may or may not fail.
A breakout succeeds if I exit with a profit.
This is a traders answer not an analysts answer. Every trade is a combination of risk and reward.
Hi Kiwi,
I like this answer a lot from a traders point of view.
Humble1: "So how does one determine [objectively] when a breakout fails? I have not seen this answered yet."
However, here's technical analysis point of view and one I seen elsewhere in another discussion.
A failed breakout occurs when prices retraces back through the breakout point, which can be different from one trader to another due to differences in the trade methodolgy, prior to the profit target being reached.
Its also possible for someone to trade the same breakout and designate it as a success while the other trader designates it as a failed breakout and that's why I like Kiwi's answer because it reflects what really happens most of the time.
For example, lets say two traders go Long when prices moves above a prior swing point of 547.00
One trader has a target of 2 point profit while the other is looking for 5 points.
Price then moves upwards and hits 550.00 with one trading exiting his position at 549.00 because he had a target of two points.
His stats will show the breakout was profitable but doesn't show if the breakout has failed.
Price then moves higher to 550.50 and then retraces back below the swing point of 547.00 to hit the stop of the other trader at 746.00
The stats of that particular trader will show the breakout resulted as a loss and has failed.
However, what if the price than quickly goes back up through that 547.00 swing point and reaches 560.00 and then continues higher into a trend development.
How do the stat guys categorize that breakout...
Did it fail or not?
Simply, via an actual trade point of view...a failed breakout can only be defined by profit or loss upon exiting the trade.
However, via a technical analysis point of view if it doesn't retrace for example a swing point breakout (there are different types of breakouts) that could be categorized as a breakout that didn't fail.
Yet, from a technical point of view...what about those breakouts that retrace a prior swing point and turn back around to go back through into the direction of the breakout.
I think the latter is what frustrates us traders the most.
My favorite type of breakouts are Volatility Breakouts but I won't go into it because it will take this thread into another direction (not on topic) and I can talk about this elsewhere here at Traderslaboratory.com if there's a discussion about such.
To answer the thread starter question...
Blaze: "I would like to know how one can determine if the breakout is legit or false. I have been caught plenty of times buying a false breakout just to be stopped out seconds after my entry."
One of the best ways to differenciate a breakout that is most likely (high probability) to fail as in to retest the breakout point...
Divergence.
Yet, although I like to trade one particular type of breakout...I still think its one of the toughest game in town.
Therefore, to be a successful breakout trader, you need to be able to recognize what causes them to fail and/or use a secondary strategy that involves fading breakouts.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis will open the door to consistent profits."
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I'm sorry guys, I really did not expect this thread to get so complex and such. I was just curious how/if other traders use charts of highly correlated markets to trade.My apologies that it dragged out.
Hi brownsfan019,
My apologies for getting off topic and the other discussion has concluded.
Getting back to your question when you asked the following...
For those that trade multiple markets, do you exclusively look for your setups on each respective market or do you initiate a position if one of your correlated markets shows a trade?
As I mention before, I've traded this way in the past and backtested it.
It's a very profitable way to trade but requires a lot more work.
In fact, it was more profitable than when I was only trading just one trading instrument.
The backtesting showed such and the real money trading showed such.
What turned me off from it was that it was too stressful and overwhelming at times.
I remember telling other traders at the time that by 11am est I was done trading for the day because I was mentally exhausted from this type of trading.
However, here's the key, I was doing it all manually without any fancy order system.
That's the reason why I eventually settle on sister trading.
It's much easier for me to watch multiple markets to help with trades in the particular one trading instrument I'm trading in comparison to actually placing trades in multiple correlated markets.
Yet, maybe trading multiple markets at the same time via the same trading stle (ex. daytrading) it wouldn't have been as stressful nor overwhelming if such can be more automated via something like when a trade is initiated in ES for example...
It automatically opens a position in the other trading instruments that has been checked for such.
It'll be interesting to know if anybody knows a trading platform or add-on that allows for such a trade execution and I admit that at the time when I was trading multiple markets at the same time...I didn't look for such a trading platform.
Also, getting back to sister trading...I mainly due it now when I'm concentrating on one pattern signal for whatever reason and if that pattern signal has a low frequency for appearance.
For example, you know a lot about the Bullish White Hammer pattern from the Trading Hammer's (revisited) thread.
I know some traders that exclusively trades that and nothing else.
However, their trading instrument only produces 1-3 daytrading pattern signals per week.
Well, that's ok if that's the type of trading you want to do.
Yet, if your looking to be more active in trading Bullish White Hammer patterns...you need to do one or several of the following:
[*] Follow more than one chart interval and this requires having more than one monitor.
[*] I've documented over a dozen different types (sub-groups) of Bullish White Hammer patterns and only a few of them are reliable.
Therefore, trade more than one type of Bullish White Hammer pattern.
[*] Your fortunate to be trading with other traders that uses the same pattern signal...
Each trader has the task of monitoring a specific correlated trading instrument via a different chart interval in comparison to the other traders in the office.
A lot of trust is involved here and this solution works because I did such for three years very profitably when I lived in Seattle, WA.
Yet, we weren't trading Hammer patterns and we were trading a different pattern signal that appeared a little more frequently.
[*] Follow other markets that are highly correlated with your trading instrument.
You can either follow other futures, indexes, inverted price actions et cetera.
For example, I know one trader that only trades Bullish White Hammers in NQ Emini Futures.
He monitors closely the NDX.X Index, Nasdaq Composite Index and Nasdaq Advance Decline Lines.
In comparoson, another trader that trades only NQ Emini Futures and that exclusively trades Bullish White Hammer patterns...
She monitors, ES/YM/DAX/QQQQ and NDX.X Index
[/List]
This increases the frequency of the Bullish White Hammer pattern appearences so that a day trader can be getting 1-3 trade signals per day in comparison to only following your trading instrument to get 1-3 trade signals per week.
Therefore, sister trading, has many advantages if when trading a pattern signal that doesn't appear as often as you want it to.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis opens the door to consistent profits."
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A lot of talk to rationalize something so simple. Occam's Razor, perhaps?Simply, keep doing whatever is working especially if its proven in backtesting and real money trading.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
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SenseiYou are wise in much and I for one thank you for your participation, both in forums in general and here in particular.
I must humbly disagree here.
If signal type A has such an advantage over signal type B, why trade signal type B?
If signal type A decreases in reliability when volatility decreases, why trade signal type A in a decreasing volatility environment?
I think the more prudent approach is to trade A all the time, with the ability to ADD to the position in those times when volatility is both high, and the position is in profit.
Simply, the original position is constant, but the actual size can be increased as the MARKET allows via movement in one's "desired" direction.
Now, suppose signal type B is better than signal type A when Volatility decreases. Here one could trade B rather than A, but the initial position size of B should be the same as the initial position size of A under A's optimal condition-increased volatility.
As I see it, if one is not willing to put the same amount of contracts on B, he is saying that he believes less in B than A. But if one believes less in B, why take the signal in the first place? Again, if the desire is to make more trades, trading more markets, via sister trades or not, or trading more timeframes seems the better course of action.
When test out a new signal type C, yes one could start out with fewer contracts. But once the test period ends, either the value of C merits a full position or no position at all.
I believe in UNDER trading is size and frequency. Too many traders need action and thus look for multiple ways to get in. Yet, if there is a wide disparity among signal types the edge is lessened due to overtrading.
Again if one starts out with x amount of contracts and then adds on as the market proves the trader to be in tune with it, then the best signal type under the best conditions ends up being the one with the most contracts in total. But this is at the end, not the beginning. And the beginning is of course when nothing is truly known about the eventual outcome........
It is not the mutiple signal types I question, rather the variation of size associated with each. Either they are all 5 contract worthy, or some are not while some are. And if some are not, why trade them?
Hi PivotProfiler,
It's all about opportunities.
Lets say signal A gave pattern signals at the following times with results -
0940am = $60, 1042am = $125 and 1535pm = $95 for a total of $280 profits
On the same trading day, signal B gave pattern signals at the following times and results -
1002am = $48 and 1118am =$175 for a total of $223 profits
Now, lets say signal A has a reliablilty of 85% while signal B has a reliability of 72%.
If I only trade signal A because its more reliable while ignoring a profitable signal B that's less reliable in comparison to signal A...
I just lost the opportunity to make an additional $223 dollars.
A few days of lost opportunities adds up quickly by the end of each trading month.
Thus, instead of having 5 trade opportunities...I only had 3 trade opportunities on that particular trading day.
Lets change the story to changing volatility conditions for one pattern signal.
Signal A is reliable 78% of the time in normal to high volatility conditions and gave 2 trade signals during these conditions on a particular trading day.
Signal A is reliable 69% of the time in low volatility conditions and gave 5 trade signals during these conditions on the same trading day.
If I ignore Signal A during the low volatility condition when the risk is greater...
I only have 2 trades for the day instead of 7 trade opportunities.
Further, because where trading a profitable strategy when the risk is higher...to reduce that risk to equal the same/similar risk level when volatility is high...
We need to reduce our position size when the risk is higher but the strategy still has a positive expectancy.
The above story will change if we stop comparing a Profitable situation versus Profitable situation into a Profitable situation versus Losing situation.
Thus, if comparing a profitable strategy versus a strategy that's not profitable...
Then I would strongly agree with you why bother with the other strategy that's not profitable.
By the way, I have multiple strategies for different types of price action.
For example, if have a pattern signal that only appears a few times per year in a particular type of price action involving market seasonal cycle.
I have another strategy that appears every trading day at least twice involving market breadth indexes.
I have another strategy that appears twice each day involving Japanese Candlestick patterns.
I have another strategy that appears twice per day involving intermarket analysis.
I have another strategy that is only used during the U.S. presidential elections via a market seasonal cycle.
All have different reliabilities and all are profitable.
Your suggesting someone shouldn't use multiple strateiges and only trade the strategy that's the most reliable...
I'm going to lose a lot of money because of the lost trade opportunities due to the fact I don't have one strategy that appears all the time.
Therefore, when you suggest to trade the most reliable method all the time...
In my particular situation and I'm assuming its the same for any other trader that uses more than one strategy...
The pattern signals just don't appear all the time.
By the way, my most reliable profitable method only appears during U.S. presidential elections and if I tweak it so that it appears every day, every week or whatever...anytime or all the time...
It's a losing method.
The key here is that the market is not the same all the time and we should be thankful this is true every trading day.
I also think one of the reasons why some traders (not all traders) overtrade is because they want to be active in the markets but they are using a strategy that doesn't produce many trade opportunities.
Thus, they easily get impatient and fear missing something that results in them taking additional trades that's not part of the trading plan (overtrading).
Therefore, it can be debated that having only one strategy, it can encourage overtrading if that one strategy isn't active enough for you in producing opportunties to make money.
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Look at it this way, lets pretend your only using one strategy and its very reliable with a reliability factor of 89% when the markets is trending.
Then the market changes from trending to a tight trading range and you stay on the sidelines because you know your strategy is not reliable in tight trading ranges (it's not profitable).
Now lets say you have the opportunity to develop a new method via something you've read on the internet at some discussion forum about tight trading ranges.
Your able to develop a method that's 75% reliable during tight trading ranges and not reliable in trend like market conditions.
My questions to you are the following?
* What are you going to do if the market is range bound for the next two trading days?
Yep, this is a trick question. :rolleyes:
* Are you going to trade the same position size if you decide to trade in the trend price action and the range bound price action?
* What if you tweaked (made an adjustment) to your trend strategy so that you get trades when the market is range bound but the tweaking (strategy variation) is not as profitable but still profitable...
What are you going to do as in your position size managment...less contracts or no trade (0 contract)?
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With all that said above, its possible your talking about strategies that appear all the time as in giving multiple signals each and every trading day.
Only type of trader I know that uses one strategy that gives him multiple pattern signals as in all the time are scalpers.
I'm not a scalper even though I will exit a position fast if profit levels are reach soon than expected, price conditions change dramatically after my entry or my stop is hit (stopped out).
I day trade (a few signals per day), swing trade (a few signals per month) and I position trade (a few signals per year).
However, I do take more than a few trades per day as a day trader but only because I'm the type that's constantly testing something new in an effort to improve my performance.
Also, you can overtrade as a position trader too if you only get 5 trade signals per year and one year you overtrade and do 12 trades in which 7 were not part of the trading plan.
Thus, overtrading to me is taking trades that are not part of the trading plan and has nothing to do with frequency.
A pattern signal is a pattern signal. Therefore, if on Monday your pattern signal appears 3x...than you should take at least 3 trades.
If on Tuesday your pattern signal appeared 15x...than you should take 15 trades and its not overtrading unless you add in one trade that's not part of the trading plan to make it 16 trades on Tuesday.
To conclude my discussion on this...
Had I stopped learning new things many years ago when I had my first profitable strategy and only stayed with that one strategy (ignoring the stuff that's less reliable even though they are profitable)...
I don't think I would be where I'm at today and I hope I learn more things that either improves what I'm using or gives me additional profitable opportunities.
In fact, many of the world's top athletes or top business owners are doing multiple things to help them stay at the top sort'uv speak.
Yet, if you can reach your goals with one strategy that appears all the time...
More power to you and keep using that approach.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis opens the doorway to consistent profits."
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This is a considerations that has occurred to me lately.Sometimes, usually later in the day, if I am up, I will start taking half positions on my trades so as to not blow away my existing profits on stop outs. Seems prudent at first glance. But wait! I've noticed that it tends to be an excuse to get into a half-assed setups because nothing else is going on, or is just a reflection of chickenheartedness, and neither is a good habit to foster. If the latter and if the trade works out I kick myself for not taking a full position.
A trade is either worth a full position or it's probably not worth the trouble. In or out, black or white.
Another way to look at it is to ask: Would I take this trade with double my usual position (assuming your account could tolerate such a trade)? That tends to clarify things.
I think this is a different situation and not uncommon with many traders.
If your profitable early in the trading day and fear losing those profits later in the trading day...
It's a discipline problem if your decreasing a position size is also encouraging you to take trades you normally don't take just because the market is boring as in nothing else is going on.
Not taking these types of trades is the proper thing to do.
In contrast, taking these trades with a partial size and seeing the position become profitable...
That's a bad trading habit to get into because your enforcing the concept that taking trades outside your trading plan is OK TO DO and when doing such you should go with a FULL POSITION SIZE.
Here's an analogy, lets say you have a very reliable signal when your signal appears at a s/r level.
You also know your signal is not reliable when you trade it in price action that's no where near a s/r level.
However, on some occasions a few of those trades are profitable even though overall its a losing situation.
Your suggesting that its worth the risk to put on a full size position on taking trades not near a s/r level in hopes of catching those few times when the trade will be profitable.
In my opinion, this will instill poor trading habits.
Simply, if the price action is not part of your signal...
Don't take the trade along with squashing any thoughts via hindsight analysis that had you taken that particular trade when it would have work...
You would have made money even though its not part of the price action you should be trading.
Another way to look at it...if its not a valid pattern signal...it does not merit a lower position size nor a full position size.
Instead, it merits no position and you should be on the sidelines.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis opens the door to consistent profits."
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Nice.I have never understood why some people have more than one signal type AND trade different amounts on each. For example, 10 contracts on signal A. 5 contracts on B and only 1 on signal type C.
If signal type C does not warrant a full position, then why take it in the first place?
If signal type A does not show up enough, then trade MORE markets. Here I would of course favor the SISTER trade idea, where you actually trade one market but are taking the clue from another correlated market. Or alternatively trade more timeframes. Even better: do both and using A only.
Hi PivotProfiler,
The main reason why some traders have different strategies (signal types) is for different types of market conditions and/or different types of price action.
For example, a simple example, the Bullish White Hammer pattern is for one market type and the Bearish Engulfing pattern is for another type of market.
Now here's a more complex example, a method designed for breakouts and another method designed for fading breakouts.
Lets talk a little about position size management (different positions for the same pattern signal or different pattern signals).
Some traders know the statistical value of their strategies.
Pretending, lets say signal A is 78% reliable and signal B is 69% reliable during normal volatility to high volatility market conditions.
However, during low volatility or stagnant volatility (no volatility peaks)...signal A is 71% reliable and signal B is 58% reliable.
Lets say I trade anywhere between 1 to 9 contracts and today is a high volatile market action due to something said by the Fed Chairman.
If I get a signal A pattern...I most likely will go in with 9 contracts.
Later if volatility declines dramatically after the market begins to absorb the Fed Chairman comments and signal B pattern appears...
I most likely will do 3 contracts.
Now, lets pretend there's a new strategy called signal C that needs to be tested with some real money after passing my backtesting course.
For a few weeks or months I will only trade signal C with 1-3 contracts to complete the testing process.
Later upon completion of the new strategy testing process...I'll allow trading it as I trade the other signals.
My point with all the above is that the market is different from one trading day to another trading day (big trend, small trend, tight trading range, choppy, flat, earnings driven, breaking news driven, driven by foreign markets, driven by geopolitical situations et cetera).
Position size managment will allow you to be properly position to better manage your risk exposure as the risk levels change from one trading day to the next trading day.
For example, lets say you have statistical facts that most of your profits occurs in the morning trading session and most of your losses occurs in the afternoon trading session.
You need to have a good explanation why you will trade with the same position size or trade at all in the afternoon trading session as you did in the morning trading session.
Simply, to trade the same position size every time is to imply the price action is always the same along with having the same risk exposure.
This is far from the truth about the dynamically changing markets.
Therefore, knowing when to increase your position size and when to decrease your position size is an edge.
By the way, today's market environment I'm trading with 1/3 of what I use to trade many years ago when the markets had more volatility.
Thus, as the volatility declined over the years, I've managed the increased risk exposure via reducing my overall position size.
P.S. Some traders don't trade on FOMC Announcement days because they tend to lose money.
Staying on the sidelines even though they had valid pattern signals is a position size management (0 contracts).
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis will open the door to consistent profits."
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...Again, there's no way to know that going into the trade, so if you are in the ES, NQ, and YM and all move in your favor, you made money. And of those three, one will normally provide a bigger return than the other 2. The problem however is that you don't know that till the trades are completed.Hi brownsfan019,
My experience with this type of trading is that it was too stressful for me and things seem to be occurring too fast when the markets were moving.
Simply, most of the time it was overwhelming and difficult to manage especially when sometimes I got a trade signal to reverse the position into the opposite direction.
It's the only reason why I don't recommend such even though it was profitable.
By the way, I was using DAX, CAC-40 and ER2 sometimes and other times I was using ES, ER2 and NQ.
Also, I do remember having a rule where as soon as one of the trading instruments reached a WRB profit target...I exited all the positions at the same time.
With that said, if someone can do that and not have that feeling of being overwhelmed...keep doing it.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
"Volatility Analysis will open the door to consistent profits."
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whats a YM?thank you
malvado
CBOT mini-sized Dow Futures (YM)
CBOT - mini-sized Dow ($5) Quotes Electronic
Barchart.com - Quote - YMM7 DJIA MINI-SIZED June 2007 CBOT
malvado_xetra, I thought all you Eurex DAX traders knew about the YM futures.
Mark
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For those that trade multiple markets, do you exclusively look for your setups on each respective market or do you initiate a position if one of your correlated markets shows a trade?Example: we know that the US indexes move in correlation most of the time. Very rarely are you going to find the ES down while the YM is moving up. Knowing that, could you not take a trade on more than one market if you get a signal on one of your charts?
Here's my thoughts - as I've been looking at better exits with WRB's and such, I've also noticed that if I have a YM trade and it works, odds are that an NQ trade would have worked as well, even if the NQ did not provide an actual setup for me. The thought process being that if my analysis is correct, why not exploit that on multiple markets.
If we assume that one can implement that, you could trade some sort of combination of the ES, YM, ER2 and NQ.
Now, I know the next question will be why not just focus on the one and trade larger lots there. Good question. First, unless you are just trading the ES, trading larger lots could create some slippage issues. Second, and more importantly in my opinion, while your analysis can be correct it's not always clear to tell which market will provide the most bang for your buck. In other words, if you just trade the YM at $5/pt, your 'opportunity cost' is another consideration.
Anyways, just thought I'd share something that hit me like a ton of bricks this week since we have some great volatility here with us this week.
PS
Not exactly sure what part of the forum this should be categorized under, so feel free to move it mod's if need be.
Hi brownsfan019,
At first glance when I read your question I thought you were asking for example...
There's a trade signal in ES but you take the trade in NQ for whatever reasons.
Many futures traders only trade one market but it shouldn't prevent them from monitoring other markets that are highly correlated to prevent missing trade opportunities when their trading instrument doesn't have a pattern signal
I talk about this a lot in the Trading Hammers (revisited) thread at ET and I use the term Sister Trading.
This involves using a correlated market (+90% correlation at the minimum) to help with more trade opportunities in your trading instrument because there will be times when your trading instrument doesn't have a pattern signal while the correlated trading instrument has a valid pattern signal to merit a trade in your trading instrument that doesn't have a valid pattern signal.
For example, I mainly trade ER2 but can easily trade any other Index Futures.
When I trade ER2...I closely watch the exchange traded fund IWM of the Russell 2000.
Therefore, if ER2 doesn't have a valid pattern signal and IWM does have a valid pattern signal...it gives merits to opening a position in ER2 based upon what's occurring in IWM.
However, whenever I do sister trades...I manage the trade via the price action of the trading instrument I took the trade in and not via the price action of the correlated trading instrument that produced the valid pattern signal.
Also, in the second half of your message it seems like your asking about managing trades in different markets at the same time that are correlated.
For example, going Long in both ES and NQ at the same time.
I personally don't like to take trades at the same time in correlated markets unless there's a broker platform problem.
For example, your Short YM and broker A system goes down while your backup broker B is still working.
If YM goes against you...you can open up a Long position in YM via broker B.
This is a type of hedging to protect your original position even though I know your not talking about this situation.
I just wanted to mention such to give an example of the benefit of having a backup broker.
Anyways, if I'm going to open trades in different markets at the same time...
They aren't going to be correlated or they aren't going to be via the same trading style.
For example, a Long position in ER2 and a Long or Short position in Copper futures at the same time.
Another example, a day trade in YM and a swing trade in T-Bonds at the same time.
Thus, the above types of trading multiple markets at the same time are good examples of when such is appropriate in comparison to a more difficult type via taking the same position in two highly correlated markets via the same trading style.
Simply, diversity in our trading is good as long as it doesn't put all your eggs in the same basket sort'uv speak.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
Interruptions while trading
in Trading Psychology
Posted
There's benefits and disadvantages to both and I've done both.
However, what concerns me is that you said the following...
I've looked into office space to get away from other obligations.
If you have obligations during the trading day, there's a problem and having a sign on the door knob is not going to resolve those obligations.
Thus, when your at work regardless if its at home or at some office across town...
You should not have obligations until after work or prior to work...never during the trading day unless you want it that way.
If that's the case (you want the obligations or think its ok to have them)...they really aren't obligations.
Instead, your doing something personal to intentionally take time off from trading.
For example, I intentionally take time off from trading about 10mins every hour to re-energize sort'uv speak.
I use those 10mins to spend time with my family (spouse and toddlers) and I do not view such as obligations.
Also, I take a long lunch break from trading about 90mins long and part of it is used to take a short nap.
Once again, these are not obligations and I consider them essential for my longevity in trading the markets for +15 years to avoid burn out or worst.
Simply, the word obligations implies these are tasks that needs to be done prior or after trading...not during trading.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term