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Old 03-29-2011, 07:26 PM   #1

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Lightbulb How "complex" is Your Trading System?

So I've had the dream of day-trading for over 10 years and have casually been researching it in that time frame. Several months ago I found myself with more than the needed 25k (~75k) to be a day trader and have begun the process of actively working toward that goal. I set up an account with TOS, loved the system, not the comissions so I switched to mb trading. Their commissions were better but fill price and customer service was a joke so I am switching to a lightspeed/Esignal solution and probably keep MB as a secondary broker. I also obtained a powerful PC w/ 3 large monitors so I'm set for tools. I've studied the psychology of trading and am confident I know what is needed mentally to win, I'm also confident I know general trading principles that are needed to win. I userstand excecuting on this knowledge is a different story.

I trade qqq exclusively since I like it's price, liquidity, and speed/level of volatility. I may add another stock later but am undecided... Something like appl which is similar to qqq but seems to be more volatile.

So my question is specific to the trading SYSTEM you use - that is buy, sell, hold signals. How complex is it? How often do you see these signals? When I was starting I tried trading simple MACD crosses (modified) but found that taking each opportunity was guaranteeing faliure... So adding in a pieces to the system such as only trading with prevailing trend and only trading after the price has broken out of a range lowered those opportunities but they were still too numerous to be successful without a very good system of exit.

How simple or complex is your system? I am still honing in on a system for me that would work well day trading qqq. Any system-related insights are very appreciated and would be very helpful.

Not sure how green this post makes me look, I am definitely new to this but have treated trading like a FT job with the ammount of time I have given it recently so in spite of my newness I know I have the intelligence, drive, determination and passion for trading to be successful at it - I may need some help along the way, so if anyone is willing to provide insights beyond what they would post here - feel free to pm me. I saw a post a while ago about the 38 steps to becoming a day trader or something like that and I've been through most all of those steps so I know I'm not far off and am lightyears ahead most wide eyed newbs.

Thanks all!

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Old 03-30-2011, 10:20 AM   #2
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Re: How "complex" is Your Trading System?

Firm,

The crowd will tell you "as simple as possible"
A few will tell you complex 'problem' require complex 'solution'
My thoughts -
Your edges should be as simple or complex as you personally need them to be to stay true to your own nature.
Find your own way!

Have you read http://www.traderslaboratory.com/for...irst-8410.html ?
Applying is not easy at all - but you may be ready...hth

All the best
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Old 03-30-2011, 10:33 AM   #3

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Re: How "complex" is Your Trading System?

one simple rule to profitable trading... just don't argue with the market.
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Old 03-30-2011, 12:43 PM   #4

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Re: How "complex" is Your Trading System?

Quote:
Originally Posted by Firm Biz »
I trade qqq exclusively since I like it's price, liquidity, and speed/level of volatility.

I may add another stock later but am undecided... Something like appl which is similar to qqq but seems to be more volatile.

So my question is specific to the trading SYSTEM you use - that is buy, sell, hold signals. How complex is it? How often do you see these signals?

How simple or complex is your system? I am still honing in on a system for me that would work well day trading qqq. Any system-related insights are very appreciated and would be very helpful.
It might be helpful to start thinking from the other end:

Trading is competitive.
When you are starting a trade you are trying to take money from other people.
Also keep in mind that you are now swimming in a pond together with some people (big companies like GS and many others) that make big efforts (very clever people, enormous computing power, best data feeds, ultrafast connections) to take every penny out of the market.

Then it might be helpful to think about the instrument you are trading.
QQQ is running parallel directly with NQ futures and (not so exactly) with many other futures.
Therefore if you'd manage to find an edge in QQQ that would mean GS (and the other sharks) left big amounts of money on the table.

If people say "I have a simple profitable system" that would mean the big trading departments with their huge budgets simply overlooked something very obvious and simple. Decide for yourself the probability that this happens.

To start trading in my view it's advisable to look at single instruments that are traded with some (but not too big) liquidity.
Big liquidity means extreme competition!
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Old 03-31-2011, 01:25 PM   #5

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Re: How "complex" is Your Trading System?

thanks for the responses guys. Uex - I appreciate your insights on QQQ, I hadn't considered this before, hadn't heard it before but it makes sense. That is essentially where I'm getting hung up - I've been infatuated with QQQ due to its liquidity -- but I am struggling mightily to find an edge that works consistently.

I find one that could be profitable, even ultra-profitable but only for days possibly a week or so at a time, then it turns wildly unprofitable and yields consistent losers. Your logic makes sense.

Anyone have suggestions of some stocks I should consider or any other insights to get me on the right track? Perhaps what level of volume I should look for - volume where I would find stocks that aren't so liquid the competition its too fierce but liquid enough that it is day-tradable?

Thanks,
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Old 03-31-2011, 01:33 PM   #6

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Re: How "complex" is Your Trading System?

Thanks for the responses guys. Uex - interesting points on QQQ, I haven't heard that POV or thought it myself. All I ever hear is the more liquid the better. It makes sense that at some point the liquidity would turn against you.

That logic would explains my current struggles. I have found "edges" (if it could even be called that) in QQQ that hold up, but only for a period of days or maybe weeks... then it turns around and yields consistent losers, even in the same general market type - leaving me baffled.

Do you have any suggestions of some stocks I should be looking at? Or even perhaps a range of ideal volume for day trading within which I should be looking at stocks?

Thanks again, any insights/thoughts to help me get on the right track is greatly appreciated!
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Old 03-31-2011, 09:33 PM   #7

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Re: How "complex" is Your Trading System?

Quote:
Originally Posted by Firm Biz »
When I was starting I tried trading simple MACD crosses (modified) but found that taking each opportunity was guaranteeing faliure
Firm
If that was guaranteed failure, then would doing the exact opposite be guaranteed success? The point I'm trying to make, is that traders must fight the impulse to act in ways that seem right when you find out that those impulses and strategies are wrong.

Seriously, consider what would happen if you did the exact opposite of what you thought would make money. The point is, to think in different ways.

Insanity is doing the same thing over and over again and expecting different results. If trading in a way that seems "right" always looses you money, then maybe we all need to be very, very wrong.

If you find a system that will loose money 100% of the time, guaranteed, please let me know what it is, so I can do the exact opposite. I'll give you 80% of the profits, and just take 20% for trading the system.
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Old 03-31-2011, 10:05 PM   #8

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Re: How "complex" is Your Trading System?

What moves price? Volume? Big players? Yes, but that's just superficial. Volume happens because decisions were made. Big players enter because decisions were made. What were those decisions based on? The QQQ tracks the Nasdaq 100. What affects the Nasdaq 100? Do the QQQ's track the NQ emini? What affects the NQ emini? What are the inputs to the NQ emini? If you chart the QQQ and the NQ, they are practically identical. The NQ is an index. It MUST do what the Nasdaq 100 does. So whatever those 100 stocks do, AS A GROUP, that is what the NQ MUST DO. It's an index, it must be indexed to the Nasdaq 100. What are the inputs to the the NQ?
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