Ready, Set, Cancel,

[Ready, Set, Cancel,]

"The Power of Habit" is an interesting read... for what my opinion is worth....

 

I think though, that you are spending too much time in questioning. A quote from the book concerning Tony Dungy and athlete's:

 

“Champions don’t do extraordinary things,” Tony Dungy would explain. “They do ordinary things, but they do them without thinking, too fast for the other team to react. They follow the habits they’ve learned.”

 

Mr. Dungy goes on to explain his struggles in getting his team to believe and not question the method that he was trying to teach. They went through a good deal of frustration during the season, until the players started to believe in the concept. Once they stopped questioning, they started taking effective action that placed them in the right place at the right time to make the plays that needed to be.

 

This to me was one of the more powerful chapters in the book as it pertains to trading.

[Recomended Brokers]

As someone just striking out on this wonderful venture, you probably wouldn't go wrong with Interactive Brokers. The rates may not be the best, but they have a good track record as far as being on the up-and-up. Not many worries there. All brokerages make their money pretty much the same way.

 

If you've already decided on a trading platform, you would need to find a broker that supports it. Other than that compare commissions, ask about margin requirements, and even though it's like pulling teeth sometimes, get a list of other fees and charges.

 

As a matter of due diligence, you can check the FCM website to find past rulings for or against a firm, which will also provide details on the nature of the filing, and fines levied. None of that will make much sense to you, but if you see a lot of activity in that regard you may want to look elsewhere. No need to pay much attention to "failure to supervise" as they all get hit with that from time to time... then again, unless it's a lot. Even after you have selected a broker, it's just good business to check the website occasionally just to keep yourself current.

 

Edit: I meant to say "NFA" website not "FCM"

[90% Analysis/10% Money Managment]

It's a good rule to help you survive. I risk less than that now and I don't get in and out in a day unless something is really wrong with my "analysis".

 

It's same as heading for the house. If you get short a few times and there isn't anyone willing to sell lower than you did, then, well you had better go home.

 

I have no positions at this time. Seems like a lot of chop that I want to avoid in the frame that i am trading.

 

To kind of make it back to the "kid" and the OP. It's not often successful to apply axioms to trading. As a for instance: you (mm) are sitting out right now because of the chop... as for me, I revel in the "chop"... I'm geared for chop, and I love it. The days that frustrate me are the days that the market grinds higher. It's a difference in temperament and style.

[90% Analysis/10% Money Managment]

The most important ‘analysis’ is the one that finds the system that best matches your true nature. If you are trading a system that is not a match with your true nature you are stressing your sympathetically aroused primal structures, mutating them to be LESS adaptive, resilient, ‘tough’ ...and your technique will inevitably gradually and suddenly erode.

 

True words...

 

I've come to question as to whether or not I could (would) teach my methods to someone else... the answer is "no". It took me a long time to come up with what I do. It's an amalgam of getting my ass kicked, who I am, and continuously seeking out sound fundamentals. It is something of my own understanding, and I think that (in large part) is why it's successful (for me... in this time and place).

 

No one ever said this was easy (well, some have said it... I think they were not telling the entire truth).

[90% Analysis/10% Money Managment]

The amount you put at risk in a single trade needs to be insignificant to either or both you and the amount of funds you commit to trading.

 

A really bad day trading should only impact you emotionally; financially, you should not lose >1% of the total funds you commit to trading. Size each trade accordingly. As you approach 1% in loses, stop trading for the day,

 

I don't know that I've ever used the 1% rule (strictly)... except possibly when I was starting out (it's one of those things that kind of makes sense). Now... I tend to apply the "it's time to head to the house rule". I suppose it comes with experience, but there are some days that you just don't get it, and you are not going to get it. Best to head for the house...

 

Money management in it's most base form...

[90% Analysis/10% Money Managment]

The kid...

 

As zdo has pointed out... it is all system specific...

 

Not to get too deep in the weeds, but throughout my trading day, I'm constantly in a state of analysis (even when I'm in a trade). I will often take trades that I consider to be of higher initial risk than other trades (an assessment that goes on in my simple, and often flawed mind). I do this because (1) I'm skilled, and (2) you have to have money "on" to make money (risk). From that moment, I rely on trade management to control risk (again constant analysis). For me and my style of trading "trade management " is "risk management"... the two are not separable.

 

As to the term "money management", my position size is always the same. I trade on a very short time frame. For someone who trades on a longer time frame, scaling in and out of trades may make sense (there again; you are controlling risk... initial risk and tail end risk). If you have deep pockets, and are willing to take on the risk, then money management takes on a greater importance. For me "money management" doesn't really come in to play.

 

In the end it all comes down to controlling risk... and it is system specific. For me it's 100% analysis... every day, during the entire session.

[You Were Here Too Once]

You are trading with (against) other traders. So what is the strategy for taking money from the other traders? It is a rhetorical question so you do not need to answer it. A strategy to trade price leads to other traders taking money from you.

 

Price Action is?

 

I really do not know what it means to trade price action. It's an overused and ambiguous term.

 

For anyone who is interested, there is a very good definition of "trading price action" available on Wikipedia. Key search string: "trading price action definition"

 

MM is correct though, the term is overused and abused. The reason that the phrase "price action" is so ambiguous is that someone who trades time based bars is going to have a different perspective than someone trading volume or tick charts. Likewise, your definition of the concept is going to be slightly different depending on what timeframe you have chosen to trade.

 

Probably the biggest factor that leads to the ambiguous nature of trading price action is that no two traders are going to derive the same answers from the same data. We trade the concept formed in our mind, not the market as it is presented.

 

Edit: There was some mention of "keeping it simple" in one the of posts from above. It's not a bad concept for what it's worth, but trading price action is not simple (in this traders definition of trading price action anyway). It requires focus, and a constant assessment in context of what is occurring now with what just happened. Throw in: pace of trading; trending or non-trending; volatility; support / resistance (in all it's various forms); price build into a breakout... and on.

[Do 90% of Day Traders Lose Money?]

Hey,

I started "day trading" with $40 000 CAD 3 weeks ago. I am up to $46 500 which represents an increase of a little more than 15% overall. Note that I am limited to 1-2 trades a week (since I have to wait 3 days for my funds to become available). But after reading many specialists say 90% of traders lose money, I am under the impression that this is just the luck of the beginner and that I will eventually lose all my profits in the near future.

So am I doing something right or is this just the luck of the beginner?

PS: I do not make random trades so I am not gambling. I usually hold a few hours but sometimes will keep 1-2 days.

 

First... what you are doing doesn't fit the definition of "day trading". Second... over such a small sampling size, there is no way to gauge your performance... it may just be dumb luck. I would almost venture that you may have not seen a losing trade... certainly not a series of losing trades. The one thing you have in your favor right now is that you've managed to credit your account with $6500 (good for you). Imagine how it would feel if it were reversed, and you were trying to dig out of that hole.

 

Speaking from personal experience, the most difficult aspect of trading for a living is getting over the hump of being a break-even trader. This can be a slog at times, but that's what you've signed up for... it may take a while.

 

I amuse myself... "digging out of that hole". My bad... stop digging, start filling...

[I Am One Strange Kat]

Do you intend to apply the SLA or develop a trading plan of your own?

 

If I may wax philosophical for a moment. Can anyone actually apply a trading plan of someone else as their own? Should a trading plan outline not only the strategy for trading, but also address type of trader, use of leverage, stop loss, ones own "eye to the market?," etc.

 

So I'd answer you this way, my desire is to make the straight line approach, my philosophical foundation for a trading plan. It makes sense in my mind any way.

 

The SLA as written is a template. The trader must yet make some decisions on his own, such as what constitutes a "break".

 

From what I have seen... and I don't follow the DBP thing closely... the guy is laying out some really great instruction (it's good stuff... no doubt... and, it's free). You will find though, that one must make things their own. One can take this instruction anywhere you want "it" to go. These are principals (the beauty of it)... understand, and apply them as such that they are your own.

[Where Does the Lost Money Go?]

and there's deliberate fraud too !

 

FFS, there's currently a 40 page thread over at the zoo encouraging traders to trade without stops, and the main cheerleader is none other than the sites content manager.

 

Its nothing to do with ignorance, stupidity or being ill informed, its a deliberate attempt to hose their membership (again) its not even being written 4 lulz

 

thankfully the sites as dead as a dodo, and making new lows every day so no real damage done

 

Sadly (or, not so sadly)... there is a fool born every minute. New traders (retail) are like children left in the woods (to become feral children). You must name all the animals, and find what's good to eat, and what's not... and sometimes, all of it makes you sick... or you get eaten... or you are sick more than you are well... or you just freeze to death. It seems much easier to hook up with someone who claims to have the answers. Consider this: that they don't have the answers, because they are not there with you. The best answers come from within. It is survival...

 

In a world where that person doesn't have to freeze with you... well... what is to be expected if the outcome is that you freeze to death. No one gives a shit; not really...

[Where Does the Lost Money Go?]

That is perfectly true, and a very good point although I doubt the good people at trade 2 win would necessarily agree :haha:

 

In answer to where does the lost money go, a fair chunk of it definately ends up in the pockets of those altuistic people who devote their lives to "helping traders" :rofl:

 

There are altruistic notions that are ill informed... the road to hell is paved by good intentions (so to speak, and there may be some earnest notions there). There is no morality in the markets... it is what it is. The sooner a trader understands that... the sooner one can move on to something real...

 

The thing about losing money is: you have lost money... it really is that simple. There may be some discussion of where it went that is useful (in any regard... that money is "fckin" gone), but unless that discussion ends up at your own feet, I would doubt that you'll benefit from it.

 

Everyone looses money in this business. The "understanding" comes when you begin to understand that it is "all" on you...

[Day Trading]

Are you asking this question out of personal experience... or something you have imagined?

 

If you have a large amount of product that must be moved... let's just say crystal meth. You may have to take a different approach than someone selling dime bags. It's a problem of distribution and finding willing buyers.

 

If you are large enough, you will have to trade differently than someone who is smaller. As you have chosen to have posed this question, I would assume that you are not "that" large.

 

Possibly, you can elaborate...

[What is the Most Common Investors Mistake?]

Sounds like a fun association - but I only saw a few minutes of that film ...decades ago. You'd have to fill us in a little bit more Thx

 

zdo

 

It always amuses me when you start talking about "flow" to noobs. I'm sure it leaves them shaking their heads... "that sh*t is crazy talk".

 

From the movie, Gen. Jack Ripper expounds on his (insane) theory of "precious bodily fluids"... it's mentioned several times. His theory wraps up communism, fluoridation, and orgasm into a neat package (at least for him). I think the reason that I made the leap, is the correlation of the words "flow" and "fluid". Also, the above mentioned "crazy talk". That's my best guess as to why I went there. It's in my recollection now... go there every time... can't help it.

 

I get "flow... I get you. I'm not sure everyone else does...

[Too Simple to Work? Advice Needed]

Thank you jpennybags. Yes it is a simple breakouts trade, maybe to simple to works but viable as you mention.

Would you recommending this path?

 

Understand... I would never tell you anything as gospel (so to speak). The best answers come from within. If you think that's a "cop out"... think again. Finding a way to deal with the market, and to draw profits from it... that's all there is. It does come from within... there is no magic answer. I do have one piece of advice... and it's only an experiment: ditch the MA's and learn to trade what you see. I think you may have the stuff to do this (be observant)... don't know... it's up to you (I think you may find the MA's worthless... ditch the short one before the long).

[What is the Most Common Investors Mistake?]

I'm a novice investor and I would like to know your opinion or maybe some experience.

 

Edward... most of the answers you will get from such a question about "investing" will come from "traders" not "investors".

 

I allow a paid professional to deal with the big money; the small money, money used to generate income, I deal with. So, if I'm doing my job, the small money (after expenses, and charitable contributions) becomes big money which is invested.

 

That's my small brained explanation of how I invest. You don't have to have a big brain to trade (regardless of what you may hear from traders). Ha!... you just need to have "flow". I understand zdo, but it makes me laugh every time. It's good to employ the use of big brained people when investing... I'm not big brained.

 

Edit, note to zdo: It may just be my idiot trader brain that takes me there, but I'm reminded of the movie "Dr. Strangelove" and "precious bodily fluids". I realize that's not a good correlation, but it amuses me none the less...

[Too Simple to Work? Advice Needed]

Traveller...

 

If you'll notice, your entries are at breakouts of price consolidation periods... nothing wrong with that at all... it's a viable way to trade.

[Candle30 Scalp Method (EA) - FT Stage]

seem you have a good experience with "knife fighting" with the market, can you elaborate a bit . as you already stated sometimes it's a difficult days, need to keep u the game face on, but how long are you gonna do this. based on similar situation, I start to thinking to turn everything into logic, with less target profit, but in return I'll surely had an extra time to do something else.

 

I think the allure to scalping for most people is the high win rate... psychologically, it's fun to win, even if it's a small amount (also, it's a way of trading that can work in all markets; day in, and day out). What needs to be understood though, is that the margin for error is very thin; much like a knife fight. A trader can stitch together 3 winning trades, and give most (if not all) of it back in a single loss. Your profits are built not from how you win, but from how you loose. In that regard, how one exits a trade is far more important than how one enters a trade. While it is true that crisp entries will make your life easier, it's good trade management that brings success (in the day-to-day scalping business).

 

That is why I think that it would be very difficult to automate a scalping system. That's not to say that it can't be done, but I think that with the resources available to retail traders an automated system must allow for a larger margin of error than scalping provides, and that is where one should apply their resources. Just my opinion...

 

As to how long I'm going to do this: "Until they take my bullets away" (so to speak)... maybe I should've said "knife", but that analogy has already worn thin.

[Posibilities in Day Trading]

Is it possible to become rich by stock trading? Do people make enough out of day trading?

 

1. Is it possible to become rich by stock trading? The answer is: "you tell me"

 

2. Do people make enough out of day trading? The answer is: "define enough"

 

I think you may also need to consider, and if possible, refine your definition of "rich", "stock trading", "people", and "day trading".

[Where Does the Lost Money Go?]

I think a lot of people underestimate the effects of fees, the brokers really do have a MASSIVE edge.

 

As you point out there are a myriad of reasons why people are getting hosed by these costs, personally I think it's a fairly fundemental part of the game figuring this stuff out

 

If you really want to bleed a account dry you could always follow the advice given by trade to wins content manager Mr Tim Wilcox who suggested simultaneously opening long and short trades in the same instrument ! :helloooo:

 

Zupcon... There may be traders that overlook the effect of trading costs (fees). I'm sure it happens... there's one in every crowd (so it seems).

 

It would be akin a grocer selling produce who had no idea of what he paid for the produce. Toss in floor space, stocking, refrigeration, marketing... and if more is ordered than he can sell... spoilage and disposal. For that grocer, this is the cost of doing business. If the guy who orders my produce orders too much, and does it repeatedly... he's going to get the "come to Jesus" talk, or he's going to get fired (probably both in the end... as I've hired an idiot).

 

My point is, that traders don't zero their accounts because of fees... It happens because they order too much produce. They are operating an unsustainable business model.

 

I tried the method of entering both long and short for a brief time. I could never make it work... I was ordering too much produce (so to speak), and I got fired (so to speak). It made me laugh at your mention of it... surest way to lose twice, and your broker will thank you at the end of the day. That's not to say it doesn't work... it just didn't work for me.

[Candle30 Scalp Method (EA) - FT Stage]

prax...

 

I think you will find it very difficult to automate a successful "scalping" strategy. Success (consistent success... which is what's required) in scalping requires an understanding of order flow, and how price action develops and plays out. It also requires that one be able to recognize trades that aren't performing, and to exit these trades with as little damage as possible... and if you can get out with a little profit, all the better. The decision must be made in a matter of a few seconds, and it requires a "second sense"... if you will allow that kind of language.

 

The win rate must be extremely high compared to other trading methods. I can't speak for other scalpers (we all trade differently... passive or aggressive), but I enter trades on 1/1 R/R basis. That initial risk/reward changes with each tick during the trade, and it's a matter of constant assessment as the trade develops.

 

This style of trading is not for everyone. Showing up every day for the "knife fight"... it is just that... can be difficult at times (day-in-day-out you must show up with your "game face" on). Because it suits me, I wouldn't have it any other way. My use of the term "knife fight" may be a bit of a romantic indulgence... but we all need our romantic indulgences for why we do what we do.

 

All that said... from a personal perspective as a retail trader:

 

Anything that can be "thought" can be programmed... it's only a matter of protocol and if/then statements. There may be a way to program what I do every day, but I have my doubts that a retail trader would have the resource to go there.

[Vive Le Volatile… and Yes, It is All About Me.]

On June 21st (father's day) my daughter and her husband took me out for a fine dinning experience at a favorite restaurant… thanks for thinking of me children. Father's Day is an adjunct holiday to Mother's Day… as it should be (face it guys… we didn't do that much, and what we did do was a pleasure). They are both engaging conversationalists, and I can be too… so, it's always fun.

 

I commonly avoid talking "shop" with family and friends, but the subject of "how is business" does come up. I most always try to politely steer the conversation back to something more interesting, but this evening I had "something" to say (and… I was into my second scotch). I lamented (not bitterly) about what a tough year-to-date that it had been. Every other trader I've spoken with has come with the same sentiment. It has been (so it seems to me), since the first of the year, that once the overnight imbalance plays out, price action goes into a slump (there have been exceptions to this, but for the most part it's a daily occurrence). If you don't make your money in that opening 40 minutes… then forget about it. I think that it has been due to a lack of participation, but I don't really know (honestly, I don't know). It also makes me think that this 5 year run has about seen it's day (not saying; just considering). During this conversation, that I mostly had command of, I stated that: "I hope that Greece defaults". My daughter, kind hearted person that she is, raised an eyebrow at me. To which, I backed away just a bit, considered what I had said, and backfilled with: "Not really… I'd just like to see some volatility back in the markets… it's probably "so wrong" to hope for such things, but damn… "it" really is all about me". (which brought a laugh).

 

The past 6 days… I've made more money than in the past 6 weeks. Am I pleased… yea, I am. Though… there has been this sort of lingering feeling of guilt about my comment (not just the comment, but the fact that down deep… I was hoping for it). Who would have predicted on 6/21 that there wouldn't have been a deal struck… that a referendum would be called… that the "Grexit" could be possible (or necessary). As remote as that comment was, there is something inside of me, down deep, that says: "yea… that's what I want".

 

In my heart-of-hearts I hope that some compromise can be reached that is good for all parties… honestly, and I don't think it's too far gone. But yea… pleased to see the volatility… carnage is a good thing for my business. Sad, but true…

[Market Bubble]

The author of this article poses an interesting statement about the bubble / no bubble debate...

 

If you're looking at the data, and telling yourself that "it will be different this time" because of this or that reason... well, good luck with that.

 

Stock Market Crash - Business Insider

 

In this interview Robert Shiller sheds some light on why it may be different this time...

 

Robert Shiller on stock market bubble - Business Insider

[Where Does the Lost Money Go?]

I, respectfully, disagree. Too many traders overtrade and some of them are very good traders too. Overtrading leads to excessive fees. If you are trading for a tick or 2, the transaction costs are too high as a percentage of the trading profit. A trader needs to be at an unsustainably high win rate to make money. Eventually, the costs suck his account dry.

 

Well... I suppose it can happen and probably does (the reasons are myriad), but it sounds more like operating a poor business model is what sucked the account dry... not fees.

[Where Does the Lost Money Go?]

I understand that a loss is a loss and in that sense it makes no difference. I also know how the costs are formed for individual trades. I also know that there are different winners and loosers at different times, where some are more often winning and others more often loosing and money is not equally distributed (be the reason luck, skill or whatever).

 

What I do not know, and what is interesting, is how much of these loosers' money could really be available to better traders. If it turns out that something like 90% of the losers are collectively trading with a 0-profit, 0-loss strategy (like random trading) and are just loosing their money in commissions, it would seem as if long term investing would be a better idea than trading. However, if the loosers would be collectively loosing mostly due to all making bad trades (following the crowd, reading same news), it is a different story.

 

I suppose it is interesting to contemplate these things. How markets work interests me too... fascinating... and in some ways an oddity that can't be fully explained. I applaud your curiosity. Regardless of how you trade, long term investments are important... because we all wear thin eventually (no matter how good you are).

 

No one looses their account to fees. The reason that people zero their accounts are myriad. Make sure it doesn't happen to you... and if it does... learn from it.

[Where Does the Lost Money Go?]

Thanks jpennybags, it was an interesting paper to read even though it does not really give info about how much actually ends up in commissions since there are so many other participants than day traders. Do you know from where one can get that kind of data to analyze? Are there any publicly available datasets?

 

A perfect answer to the question would be a real world example of something like this hypothetical stock exchange (100k traders, in one year):

- 95k loosing traders have collectively trading accounts of $95M in the beginning of the year, which becomes only $50M at the end of the year.

- 5k winning traders have collectively trading accounts of $5M in the beginning of the year, which becomes $10k at the end of the year.

- This would mean that $45k has gone to broker commissions

- Somehow the holdings must have been corrected by the index or something.

 

Are there any data like this available?

 

The market changes from year-to-year... month-to-month... week-to-week... and, day-to-day. One could argue, and be totally right in saying... second-to-second.

 

What you seem to miss is that there are winners and losers in every time frame. Everyone pays a fixed cost to trade. You may have a winning trade that facilitates another winning trade... or you may take money from someone who is losing... or, you both may be losers.

 

NONE OF THIS MAKES ANY F*KIN DIFFERENCE!!!!

 

The money you lose from your account, is lost... it makes no difference who takes it. You can observe studies, and write papers, and piss and moan about the reality of things, but it is what it is...

 

This what you must deal with.

 

Don't know if there is any data available... someone else may. Just saying... don't worry about it...

 

You can get some sense of the failure rate from the study... not saying it's you... could be "me" tomorrow. We shall see... it's good while it lasts... make the best of it.