BlueHorseshoe

I recall the same Steenbarger post. If I remember correctly, there was also an interesting stat about starting account size - something like if the account was 20k rather than 10k, then the chances of survival were more than doubled.

I agree. The other day I pulled down an old chart pattern trading book from my shelves - Curtis Arnold's PPS - trading system. At the back was a wallet in which an old diskette must once have slotted. The whole thing just seemed so incredibly dated compared to the slick online marketeers of today - how many John Carter wannabes are out there now? Hundreds. Personally I wouldn't be suprised to see a new wave of marketing around algorithmic trading systems arising. Yes, I know that these have been a possibility for retail traders for a good while, but I don't think they've fully come of age yet. One of the platforms was advertising on Bloomberg the other day with a slogan of 'where robots are traders' with the promise of users being able to give simple english language instructions to build a strategy. Now why did I ever bother learning EL or Java (or B.A.S.I.C. back in 1992)!?!? As well as being a very real potential way to make money, simple algorithmic trading is also a marketeer's dream for lazy traders. Having said which, so is the ego gratification of discretionary trading . . . That's enough from me, I think.

This is a good tip for those trading futures. Note that if you're in the uk and using financial spreadbetting, you will struggle to get a spreadbetting firm to accept an instruction to do this. Yes, they'll give you margin calls, but they'll often let your account run into negative equity if they think that you can afford to pay up. Many do, of course, offer guaranteed stops for a premium, which will do the same thing, or even allow perfect hedging, allowing you to be simultaneously both long and short a market.

Hi Tams, Completely inappropriate to this thread, but I'm guessing you might know the answer . . . I want to create a condition in EL to specify a recurring date in every month. So, for example, the third of every month: If date equals third day of any month of any year then . . . Do you know of a simple command with which to I can achieve this? Thanks, Bluehorseshoe

If your worst nightmare is cleaning out an account, then trading a poor strategy is also a sure way to invite this. A strategy that loses money because its performance is damaged by stop losses is a good way to invite your worst nightmare. Consider these two scenarios: - You know that your worst case scenario (your stop loss getting hit) is limited to, say, a two percent loss on your account. - I know that my worst case scenario (a once in a century single day decline that wipes out my account) is limited to, say, a two percent loss of my net worth. I can afford a two percent loss of my net worth. I am happy to gamble my entire account on the future performance of my strategy and the unlikelihood of a market crash because the account represents risk capital - money that I can afford to lose. The reason I am prepared to do this is because I know that the chances of losing all my account capital are extremely small - much smaller, in fact, than the chances of wiping out my account capital through successive stop-outs on otherwise profitable trades. Trading without a stop is not stupid - trading with money you can't afford to lose is stupid.

Some brokers will ask for a phone number. They won't initialise the demo until they've spoken to you on the phone. This is probably just a way to guarantee that you have given correct info before they give a free trial (pressumably there is some minor expense to them doing so in terms of exchange data etc). If you have any serious intention of progressing to real trading then I would give real contact details and sign up to demos with numerous companies. If you then start playing them off against one another then some great discounts start to come out of the woodwork. This isn't hard to do as most brokers have their strengths and weaknesses.

I'm a little worried about your definitions here. Surely the fact that the englufing bars correspond with swing highs and swing lows can only be determined after the fact? How, precisely, are you defining a swing point?

Ha! I've been signed up to TL for nearly a month now but nobody has made that remark yet! I was very suprised when I registered that the name hadn't already been taken.

I have way more posts than this under my belt Mitsubishi, but I'm afraid to tell you that this will be my last. I bought this book last week, and today I just bought myself a small island in the Bahamas Seriously though, this forum should employ both moderators in the traditional sense, and a special team of people to sniff out and berate dishonest vendors and shills. Sometimes I even have trouble working it out myself, so its not hard to imagine how new traders can be sucked in . . . Cheers.

Hi ZDO, Yep, my fault - I hadn't read Predictor's original post carefully enough, and there are some bits that I don't think I'd agree with. So, specifically, I was agreeing with the statement that stop losses will damage the performance of a strategy. From the tone of your recurring 'broken record' posts, would you say that there are no 'universal laws' that are applicable across all strategies? Certainly some of oft repeated adages such as 'cut your losses short yada yada' don't apply to all strategies, but don't you think there is any rule that applies across all systems/methods/styles of trading?

An ascending inverse umbrella pattern with a bullish swinging dutchman candlestick formation at the 49% percent retracement level (the number 7 has mystical properties in ancient numerology, and 7 x 7 is 49). But to say anything more definitive I'd need at least another dozen indicators on there . . . Sorry Tams, sometimes I just can't help but be sarcastic! Seriously though, I see steady a steady, stable (low volatility) uptrend in which I'm looking to buy pullbacks, pretty much as MadMarketScientist suggests. Ideally I'd be looking for a pretty substantial pullback before getting involved at this stage as the market is starting to look a little over-extended . . . But in reality I'll just buy when my strategy tells me to buy, and grit my teeth through any adverse excursion.

Predictor has given this same advice about stops on other threads - rather than me writing a post to say exactly the same thing, go back and read through his post - it is all very good advice. Hope that's helpful.

An adverse risk:reward ratio is probably a pretty good way to define scalping in fact. With both kinds of scalping (buying at bid, selling at offer, and trading for small intraday moves) another thing to bear in mind is the frequency with which the strategy can be implemented. A strategy that only makes $10 per trade but trades twenty times per day is obviously going to produce a better return than one that trades once per day and makes $100 per trade. So as well as the expectancy of a scalping system you need to consider the opportunity to exercise that edge.

Hi tmaxey, I wasn't casting aspersions at you, the software vendor, or anyone else posting in this thread. I was just providing a general cautionary note about vendors jagging the forums, for Marty221 and for anyone else reading. I have absolutely no knowledge of this specific vendor or his products, and I am completely unqualified to comment upon them. Cheers.

Okay, now it's a hell of a long time since I used ProRealTime for any kind of coding, but its the first platform language in which I learnt to code), so this is little more than a guess . . . Try something like: This is my code: IF (DOpen(0) < DClose(0)) Then BUY 1 SHARES AT MARKET ENDIF IF LONGONMARKET THEN SELL AT MARKET NEXTBARONCLOSE ENDIF Little more than a guess, but it will be a fault in the code rather than a glitch in the software, so keep playing around (and read the manual, which is actually quite helpful). Cheers.

Hey Marty221, Be cautious about how much faith you place in information given about vendors on trading forums. Anyone can sign up, remember, including the vendors . . . Due dilligence is a must! If you're looking for automated strategies then three big names are Joe Krutsinger, Thomas Stridsman, and Emilio Tomasini. All have published books, and all have made systems available for free. I am not prepared to vouch for the quality of their trading systems or products - once again, exercise due dilligence. Hope that's helpful to you.

Hi Tim, Thanks for your reply. As your entry method is undisclosed and/or discretionary (which is perfectly understandable - I don't tell people exactly how I trade either), there's probably no way that we can get a certain answer to this question through any kind of testing of historical data. However, if you were willing to provide us with the basic figures a sample period of your live trading, then we could easily work out the effect of scaling out on your performance. If you were prepared to do this we would need the following info: Number of contracts out at -8 stop Number of contracts out at -4 stop Number of contracts out at +4 target Average gain of contracts exited for greater than -4 Total number of contracts traded within sample period This would be interesting as it would allow us to make a valid comparisson even though the entry method is not known.

Not really. Divergence must always be between two things, ie one is 'diverging' from the other. If you were just looking at price but no metric, then what could the price be divergin from. The prices of two seperate markets can, of course, diverge from each other, although 'divergence' probably isn't the term that would be used in that instance. Having said that, it may be possible to estimate what the reading of an indicator would be, and to identify where divergence is most likely occuring that way. I can't see why you'd want to do this though - surely it would always be easier and more reliable just to use the indicator?

If you're wanting to trade forex with volume as part of your strategy, you can always apply the indicator to the relevant fx futures contract, which will have volume.

Hi Tams, Just wanted to add that although this is the common use of the term nowadays, 'scalping' traditionally meant buying at bid and selling at offer, as another post points out. Confusing! Cheers.

Asking for the 'best' way to do anything on this forum is a surefire way to produce a thread that quickly degenerates into pointless mudslinging, from what I've seen! However, as I am a swing trader and not a daytrader, it's nice to have the opportunity to discuss this on TL. A general desription of my approach would be to say that I buy corrective pullbacks in longer term uptrends, and that I short corrective rallies in long term downtrends. This is a form of 'reversion to the mean' trading, and assumes that the market tends to move back in the direction of the longer term trend. Some markets are more mean-reverting than others. To do this you are going to need three things: 1. A method of determining the long term trend (moving averages, trendlines, and heikin-ashi techniques are all popular). 2. A method of identifying precisely when to trade the correction (overbought/oversold oscillators, fibonacci, and volatility channels are all options). 3. The means to throroughly backtest your strategy over a significant amount of historical market data to ensure that its past performance would have been acceptable to you (a key assumption of which is that future performance will be similar - there are many pitfalls associated with system testing and you should make yourself aware of these). I hope that's helpful to you.

I have already tried to have this discussion with Mr Racette in a different thread (http://www.traderslaboratory.com/forums/futures-trading-laboratory/11717-quit-job-watch-dom-6.html#post137296). While Tim is happy to talk in general terms and present ideas, as in his post above, it seems that he is unwilling to provide any hard figures with which to back up his claims. I don't know how you feel, but I find it very difficult to have any kind of meaningful conversation when people on this forum aren't prepared to discuss things in terms of what they can demonstrate actually to be the case. Hopefully this time Tim will be a little more forthcoming with the evidence for why he thinks scaling out and trailing stops improves his profitability.

Hi Octavian, It is used to be common for larger traders to use mental stops because they didn't want a stop order in the market. If a stop order was known to the floor then locals might run it. Nowadays, such large traders are likely to employ sophisticated algorithmic methods enabling them to hold a stop with little chance of detection (iceberg orders etc). They are also able to 'spread' risk very rapidly using a highly correlated market. Another reason why traders don't use stop losses is because they do not have a fixed exit in mind from the time that they enter a position. I trade in this way, using a dynamic stop loss derived from an indicator that adapts to market conditions. This does not mean that I will allow a position to move indefintely against me and wipe out my account, but that my system decides on an appropriate time and place to exit the market. Volatility based stops derived from Standard Deviation and Average True Range are quite common; these are a good example of a dynamic stop that can also be placed in the market as a hard stop and then updated as price changes develop. Often, such a stop will only be moved in favour of the trade, so that it becomes a trailing stop. I'm afraid that the 'nothing to lose yet plenty to gain' principle doesn't quite apply. The performance of every strategy that I have ever seen has been negatively impacted upon by the inclusion of stops losses. So it becomes more a case of a personal decision about how you control risk, and the stop-loss that you use should be developed accordingly. I hope that answer is helpful in your trading.

Thanks for an interesting idea - I'd never considered using the DMI in this way. Just shows how brainwashed we can be into using an indicator in a particular way. Cheers.

Is this place called Vegas?