[jonbig04]

Originally Posted by BlowFish »

What are you trying to achieve by simming? Thats the big question.

What exactly are you simming if you don't have an adequate plan? How can this help your consistency and discipline if you don't have something to judge your performance against? The fact you are asking 'why did this not work' rather than 'did I follow my plan' rings alarm bells. Performance is all about how well you stuck to your plan. If you are unsure whether it was a valid trade or not you need to re examine your plan. A simulator is a reasonable tool to see if you can trade your plan without deviation. If you haven't got the plan down cold how will you know if you are deviating?

A simulator is not a good tool to determine if a method works. In fact its a distinctly bad one. Looking at charts (both live and historical or with a replay) is likely to be much better proposition. There are two main reasons. Firstly you can judge the method without your judgements being clouded by actually 'trading'. By all means watch live charts to see if things 'work' but don't add the presure of the simulator.

Secondly you can get more work done by review of charts to see if things 'work'. You don't have to sit in the live market to wait for things to occur. This is the time for iterative refinement to your rules. That's not to say that once you start trading your plan (live or with the simulator) that you might not see some room for improvement.

You might be using the simulator to improve your 'market reading' skills, again sim is not really suited for that either. Do you think you are likely to read what is going on better with a position on or without a position? Again watch the live market or replays by all means but adding the 'fun' (your word) of the simulator is unlikely to help. Far better to scribble in a note book or talk yourself through the price action than trying to trade it.

There is no doubt that becoming proficient at trading can be a lot of work but the journey can be cut down by doing useful work with a purpose in mind. (I know, I have wasted probably 10's of thousands of hours in my time and you know what, I am still prone too)

So what are you trying to achieve by using the simulator? tbh I might be completely wrong (I often am) as I don't recall you having stated that yet.

The other thing to do would be outline your plan (a few sentences would do) then people will be better able to comment on where (if at all) you are going wrong.

Cheers!

You are right. I realized some of what you were saying a couple days ago when I sort of stopped trading b/c I had no plan (yet). There are some areas where I like the sim. Example: its hard for me to see on a chart how tough it would be to hold a certain position. Sometimes when I look at a chart I just see that price when up 5 points in 10 min, I dont see all the small retracements that are in the same candles, if that makes sense. So it kind of helps me figure out how much I can endure as far as risk is concerned, and I've learned a lot of other lessons not relating to method, but I think at this stage you are absolutely right. All the information I need is in typical not-live charts. Thanks for your advice.

As for my plan, I'm getting there. I hope to have something posted here by the end of the day.

[jonbig04]

I would like to start off trading retracements.

These are what I'm working on now. This is basically an outline of what I want to determine. All the real work still has to be filled in, but this way I know what I'm looking for. Each step is contingent upon the completion of the previous one. I still have some steps to add, but i hope you can get the general idea.


1. Identify the daily trend.

Using some way of general trend determination i.e. trend lines, linear regression etc. The trend will have to meet certain requirements (which I have yet to figure out). If it meets those requirements I will be comfortable saying the trend today is X.

2.Asses the strength and probability of continuation of said trend.

Using a certain amount of support zones and watching how price reacts when it nears them. For me to consider the trend strong it will have to break though X amount of support areas with X amount of volume.

3. Identify smaller retracements of the daily trend.

I will have various criterion (yet to be determined) that the retracement will have to meet.Including a percentage it will have to retrace from the current trend ( I havent yet figured out how to do that). It will have a lot to do with declining volume, and other factors that will indicate buyers or sellers are simply taking a break from continuing i the current trend as opposed to buyers or sellers actively pushing the price away from the primary trend.

4.After the criteria for a retracement have been met I will cross examine the potential retracement with what I've learned about reversals (yet to be determined). This will depend on how many characteristics I can find on reversals. It will be something like: off all the reversals I've looked at I can identify 5 things that price did before it reversed. Each reversal had at least 2 (or 3 or so) of these characteristics so my retracement won't be allowed to have more than 1 or 2, whatever the case may be. This will change in time. If I find that the reversal vs retracment ratio is to high when the retracement has 2 of those characteristics, then I will knock it down to 1 and so on and so forth.

[MidKnight]

Might I add that you will also want to consider various trade management things such as position size determination, stop management, profit target determination, rules for scaling out/in if interested, non-confirming factors after you are in the trade. Also asses your unique psychological capital requirements.

What you have outlined above is a very general description for recognizing opportunity, once it is recognized though, it needs to be managed both technically and psychologically.

With kind regards,
MK

[jonbig04]

Yes you are right. I haven't gotten to the actual trade management side yet, but I will. I will determine my hard stop loss as well as my trailing stops with 3 different stages. Also as you mentioned I will figure out my entries and exits.

As far as psychological homework goes, I can't really show you but I AM doing it. What's going on in my head is the equivalent of completely gutting a house before all the new stuff is added. Psychological demolition or cleansing I guess you could call it. Anyways I've beaten that horse a lot around here and decided to start working on my method as thats an easier thing to quantify over the internet

[MidKnight]

Psychological capital, I mean other things besides gutting your house. For example, how many losers in a row can you tolerate? What is the max draw per day, week, month? What do you do when you have reached a max draw - how do you cope and move forward? Do you have a daily (or weekly or monthly) percent or dollar target? If so, what changes when that is reached?

Just a few ideas....this is an enormous area in itself and goes towards ones success I believe.

[jonbig04]

You are right, I haven't factored those in yet. Thanks for the advice. I will address those issues as well!

[jonbig04]

Originally Posted by jonbig04 »

I would like to start off trading retracements.

These are what I'm working on now. This is basically an outline of what I want to determine. All the real work still has to be filled in, but this way I know what I'm looking for. Each step is contingent upon the completion of the previous one. I still have some steps to add, but i hope you can get the general idea.


1. Identify the daily trend.

Using some way of general trend determination i.e. trend lines, linear regression etc. The trend will have to meet certain requirements (which I have yet to figure out). If it meets those requirements I will be comfortable saying the trend today is X.

2.Asses the strength and probability of continuation of said trend.

Using a certain amount of support zones and watching how price reacts when it nears them. For me to consider the trend strong it will have to break though X amount of support areas with X amount of volume.

3. Identify smaller retracements of the daily trend.

I will have various criterion (yet to be determined) that the retracement will have to meet.Including a percentage it will have to retrace from the current trend ( I havent yet figured out how to do that). It will have a lot to do with declining volume, and other factors that will indicate buyers or sellers are simply taking a break from continuing i the current trend as opposed to buyers or sellers actively pushing the price away from the primary trend.

4.After the criteria for a retracement have been met I will cross examine the potential retracement with what I've learned about reversals (yet to be determined). This will depend on how many characteristics I can find on reversals. It will be something like: off all the reversals I've looked at I can identify 5 things that price did before it reversed. Each reversal had at least 2 (or 3 or so) of these characteristics so my retracement won't be allowed to have more than 1 or 2, whatever the case may be. This will change in time. If I find that the reversal vs retracment ratio is to high when the retracement has 2 of those characteristics, then I will knock it down to 1 and so on and so forth.

This was a lot easier to write than it is to do.

[atto]

Personally, I think you would be more successful and have an easier time identifying your "rules" by trading the extremes, and leave trading the middle chop alone. What you listed sounds good, but as you know, you have a lot to add to it before you can even think about execution.