A Retail's Day Trading Experiment

[ironchef]

@ironchef, I have no idea about how you trade, but I think you might be overtrading and forcing trades. Six trades in a morning seems way too many. You seem to be one of the more polite people, so below are some thoughts, which you might consider and test out for yourself and see if that would help.


What many intraday trades don’t realise is that they don’t need to be glued to the monitor, in fact watching the market too close is often counter-productive. It used to be my major weakness (babysitting intraday trades and overtrading)

If you’re trading stocks intraday, then one of the many approaches you could consider is:

1) Scan daily charts for trending stocks which are pulling back, then narrow it down to those where you can clearly see that the pullback is ending (eg. bar is reversing with buying pressure), and put these stocks on your intraday watchlist. Why? Because those selected stocks that are setting up on a daily chart are most likely to have better intraday setups.

2) Mark up your intraday charts(of the above stocks) with the key zones where you can expect buyers/sellers so you’ll be fully prepared to trade only around those key zones (it eliminates emotional reactions, and it provides you with objectivity and good R/R)

3) Set alerts around those zones, and leave your desk and go and enjoy your life.

4) If alert goes off, then just go back to your charts and see if there is an intraday set-up developing, if not go back to enjoying your life.

5) If you get a set-up and, put your order in with a stop, and wait for a trigger.

6) If your entry gets triggered, then set another alert just before your target level (if you’re trading from zone to zone) so you can be there to spot any potential reversal before your target (your target should also be near key levels).
If you’re trailing stops, then just check the charts at certain intervals to raise the stop, and then go on and enjoy your life, and don’t baby sit the intraday trades. (Note: you need to pick key levels for this, preferably on higher timeframes like H1)


If you align your intraday trades with buying/selling pressure (and trend direction) of the daily charts, and if you learn to figure out where the key levels are say on H1, then you can just place ‘set & forget’ trades, and there is no need for you to be in front of the monitor.

Just prepare trade plan and orders, place alerts, close the charts and then go and do something else, and just check the market once in a while.

You can be in front of the monitor in the morning so you can attempt to entrer and catch the intraday trend and then leave around lunch when things get quit and then come back in the afternoon when things start moving again). If you have a decent profit from the intraday trade, you can then replace the stock with an option and keep it overnight for a swing trade.

Watching each candle form intraday is such a waste of time. All you need to learn is to pick the direction on daily chart, then nail the reversal on daily chart, pick key levels on intraday charts, learn how to spot intraday buying/selling pressure and bit of PA, and then your trading should be easier because it will become very structured, objective, and your hit rate win rate and R/R should increase, plus you should have more time for yourself and your family.

PS: If you’re sometimes struggling with intraday trading, then go to higher timeframes such as the H2 or H1, they’re easier to trade than lower ones. I’d recommend staying away from anything lower than M5 because it gets noisy.

Since there are so many liquid stocks, you can just trade H2 or H1 timeframes and you’ll do very well, no need to stress with the low timeframes. Remember that trading should be about improving the quality of your life, and not about being married to the monitor.

Thank you for the coaching.

Yes, I am glued to the monitors when trading. Seemed to work but you get old very quickly doing that.

I am going to do small live trades for a few months. If it works like the paper trades, then I will apply your suggestions and see if I could make it less burdensome.

I started out with longer time frame. But the scheme has evolved into using a 1 min chart: An in-between of what some called scalping and day trading.

You are correct, lower time frame like 1 minute chart gets very noisy, often lacks structure and not tradable.

Everything is a trade-off.

 

[ironchef]

@ironchef, I have no idea about how you trade, but I think you might be overtrading and forcing trades. Six trades in a morning seems way too many.

I actually made 15 trades in an hour this morning, 6 of those were live netted me a profit.

 

[Jzwu2017]

So your first day going live was green? Not bad!

 

[padutrader]

You are a good trader. Those who gave you a hard time on ET didn't know or understand your system.

I finally recognize it.

you are too kind.
actually those guys were right in a way. i was trying to understand Brooks and failed for 10-15 years. I basically had no clue what i was doing or even why i was doing it

all my life i was trying to find ,what most people knew was futile, what the market is doing.
this is really difficult to find out.
But what Brooks said: the market does what the participants do. What do they do?
they understand what they do and why they do it.
what is it that profitable traders do? They buy low and sell high. yes i know you are laughing but that is what they do.

Put it simply they recognize a trend. and trade it.

so i have now found out, after 30 years of research, that do be a profitable trader, you must recognise a trend.

those who gave me a hard time were right in doing so but they did not give me a solution.

now there are as many trends as there are traders.

if there is an up bar and its high is taken out, then you have a trend.

now if you then have down bar and it's low is taken out, then you have a down trend.

BUT if that downtrend does not take out the low of the first up bar then you have a MINOR downtrend or corrrection or pullback.

if you continue this process or logic, you will see a few trends-a pull back is also a trend, a minor trend, which can always be traded for a scalp, albeit not always for a profit [!!!!!!!!]
this way you will know when a trend has started , whether this is major... minor and what will then be the minimum target of that trend.
AMEN.

 

[padutrader]

@ironchef, I have no idea about how you trade, but I think you might be overtrading and forcing trades. Six trades in a morning seems way too many. You seem to be one of the more polite people, so below are some thoughts, which you might consider and test out for yourself and see if that would help.


What many intraday trades don’t realise is that they don’t need to be glued to the monitor, in fact watching the market too close is often counter-productive. It used to be my major weakness (babysitting intraday trades and overtrading)

If you’re trading stocks intraday, then one of the many approaches you could consider is:

1) Scan daily charts for trending stocks which are pulling back, then narrow it down to those where you can clearly see that the pullback is ending (eg. bar is reversing with buying pressure), and put these stocks on your intraday watchlist. Why? Because those selected stocks that are setting up on a daily chart are most likely to have better intraday setups.

2) Mark up your intraday charts(of the above stocks) with the key zones where you can expect buyers/sellers so you’ll be fully prepared to trade only around those key zones (it eliminates emotional reactions, and it provides you with objectivity and good R/R)

3) Set alerts around those zones, and leave your desk and go and enjoy your life.

4) If alert goes off, then just go back to your charts and see if there is an intraday set-up developing, if not go back to enjoying your life.

5) If you get a set-up and, put your order in with a stop, and wait for a trigger.

6) If your entry gets triggered, then set another alert just before your target level (if you’re trading from zone to zone) so you can be there to spot any potential reversal before your target (your target should also be near key levels).
If you’re trailing stops, then just check the charts at certain intervals to raise the stop, and then go on and enjoy your life, and don’t baby sit the intraday trades. (Note: you need to pick key levels for this, preferably on higher timeframes like H1)


If you align your intraday trades with buying/selling pressure (and trend direction) of the daily charts, and if you learn to figure out where the key levels are say on H1, then you can just place ‘set & forget’ trades, and there is no need for you to be in front of the monitor.

Just prepare trade plan and orders, place alerts, close the charts and then go and do something else, and just check the market once in a while.

You can be in front of the monitor in the morning so you can attempt to entrer and catch the intraday trend and then leave around lunch when things get quit and then come back in the afternoon when things start moving again). If you have a decent profit from the intraday trade, you can then replace the stock with an option and keep it overnight for a swing trade.

Watching each candle form intraday is such a waste of time. All you need to learn is to pick the direction on daily chart, then nail the reversal on daily chart, pick key levels on intraday charts, learn how to spot intraday buying/selling pressure and bit of PA, and then your trading should be easier because it will become very structured, objective, and your hit rate win rate and R/R should increase, plus you should have more time for yourself and your family.

PS: If you’re sometimes struggling with intraday trading, then go to higher timeframes such as the H2 or H1, they’re easier to trade than lower ones. I’d recommend staying away from anything lower than M5 because it gets noisy.

Since there are so many liquid stocks, you can just trade H2 or H1 timeframes and you’ll do very well, no need to stress with the low timeframes. Remember that trading should be about improving the quality of your life, and not about being married to the monitor.

you have something against marriage?......

 

[padutrader]

no need to stress with the low timeframes

stress comes from not understanding.

there are trends on 5 min like there are daily or weekly trends.

you see some people say ...'I am a trend trader!' Is there any other kind?
there is no way you can buy low and sell high if you do not see a trend.
you have [only] two options: sell first and then buy..... or buy first and then sell.

third option is toss coin and forth option is guess

 

[padutrader]

If you’re sometimes struggling with intraday trading, then

then you are not recognizing the trends .........

if you are losing money then you are not trading with the trend but against it.

this is the only reason for losing trades.
PS : I like BIG and RED

 

[padutrader]

babysitting intraday trades and overtrading)

it is your choice.

overtrading is not a problem by itself but you need a very high win rate above 85 % or so.

making a lot of trades and not losing many means you have very high degree of market knowledge.

Also if you trade big volume for small profit, brokerage becomes significant. if you trade 15 lots in ES for one point then you make 750 usd with a brokerage of 60 usd.[Topstep trader brokerage of 4 usd round trip]
this is ok only if you do not lose.

 

[ironchef]

@ironchef, I have no idea about how you trade, but I think you might be overtrading and forcing trades. Six trades in a morning seems way too many. You seem to be one of the more polite people, so below are some thoughts, which you might consider and test out for yourself and see if that would help.


What many intraday trades don’t realise is that they don’t need to be glued to the monitor, in fact watching the market too close is often counter-productive. It used to be my major weakness (babysitting intraday trades and overtrading)

If you’re trading stocks intraday, then one of the many approaches you could consider is:

1) Scan daily charts for trending stocks which are pulling back, then narrow it down to those where you can clearly see that the pullback is ending (eg. bar is reversing with buying pressure), and put these stocks on your intraday watchlist. Why? Because those selected stocks that are setting up on a daily chart are most likely to have better intraday setups.

2) Mark up your intraday charts(of the above stocks) with the key zones where you can expect buyers/sellers so you’ll be fully prepared to trade only around those key zones (it eliminates emotional reactions, and it provides you with objectivity and good R/R)

3) Set alerts around those zones, and leave your desk and go and enjoy your life.

4) If alert goes off, then just go back to your charts and see if there is an intraday set-up developing, if not go back to enjoying your life.

5) If you get a set-up and, put your order in with a stop, and wait for a trigger.

6) If your entry gets triggered, then set another alert just before your target level (if you’re trading from zone to zone) so you can be there to spot any potential reversal before your target (your target should also be near key levels).
If you’re trailing stops, then just check the charts at certain intervals to raise the stop, and then go on and enjoy your life, and don’t baby sit the intraday trades. (Note: you need to pick key levels for this, preferably on higher timeframes like H1)


If you align your intraday trades with buying/selling pressure (and trend direction) of the daily charts, and if you learn to figure out where the key levels are say on H1, then you can just place ‘set & forget’ trades, and there is no need for you to be in front of the monitor.

Just prepare trade plan and orders, place alerts, close the charts and then go and do something else, and just check the market once in a while.

You can be in front of the monitor in the morning so you can attempt to entrer and catch the intraday trend and then leave around lunch when things get quit and then come back in the afternoon when things start moving again). If you have a decent profit from the intraday trade, you can then replace the stock with an option and keep it overnight for a swing trade.

Watching each candle form intraday is such a waste of time. All you need to learn is to pick the direction on daily chart, then nail the reversal on daily chart, pick key levels on intraday charts, learn how to spot intraday buying/selling pressure and bit of PA, and then your trading should be easier because it will become very structured, objective, and your hit rate win rate and R/R should increase, plus you should have more time for yourself and your family.

PS: If you’re sometimes struggling with intraday trading, then go to higher timeframes such as the H2 or H1, they’re easier to trade than lower ones. I’d recommend staying away from anything lower than M5 because it gets noisy.

Since there are so many liquid stocks, you can just trade H2 or H1 timeframes and you’ll do very well, no need to stress with the low timeframes. Remember that trading should be about improving the quality of your life, and not about being married to the monitor.

@PPC, Fully test out your suggestion and approach will take up a lot of time but there are some simple tests I can do to test out using longer time frame.

I decided to backtest the last several days of trading, using 1 min, 3 min, 5 min, 7 min & 10 min charts and my reversal scheme. In a perfect world, hindsight is 20/20, the longer time frame gave better profits, better, longer runs. However, the losses for trading in & out during choppy times were higher meaning the risk of ruin is higher. If my first priority is limit losses, I have to stay with 1 min.

Your #1 to #6 is a completely different approach and require me to lay out a test plan. After my live trade experiment, I will work on it.

PS: If I use the same logic, swing trade will give even better profits, in a 20/20 hindsight world. Did a few backtest and indeed true. The cum losses however were large and I don't have a scheme to limit losses without missing opportunities.

Sometimes I feel like it is all random and I have been fooled by randomness.

Best wishes.

 

[destriero]

Good to hear from you @Cabin111.

1. Someone told me we retails do have an advantage when there are two orders of the same price. Exchanges dictate that retails got filled first? You tell me. I don't know much about market makers except they are the middlemen like specialists on the NYSE.

2. As for my trades real or paper, once I decided to trade, I always used market order and assumed the risk of a sudden price move in order to always got executed. I don't want to lose a trade because of a few cents. With Schwab on every real trade, once I clicked market and it displayed a price, invariably I always got the quote or a better price, never a worse than price. For me, that is OK and that was what I used in my paper trade.

3. As for options, I always used limit order, never market. Black Swans and special situations? I love special situations, have been hunting them for a few years now but I won't comment. What I can say is I never wrote any options after about 2015, always longed, single leg, directional. I like my risks to be well defined and bounded but profit unbounded.

4. I did try to learn how to trade butterfly from @destriero, @TheBigShort, @taowave... but outcome wasn't satisfactory so it is still WIP. I will go back to butterfly after I finish my day trading experiment. To me butterfly is a very elegant instrument requiring lots of skills and I like that.

Best wishes.

Upside flies benefit from vol-corr and lose to sticky D in index. This week is a prime example (where it fails) due to the risk of govt-shutdown.

Sep29 figures:
25D put: 19%
ATM: 16.3%
25D call: 14.6%

You cannot assume that ATM vols will converge to the 25D figure on a touch due to macro/political risk unless a deal is made. IOW, do not mark down vol due to vol-corr when there is specific macro-risk. Generally, you can ignore the vol line when you're betting on pinning as the things are all gamma this close to expiration.

When trading >1M out the vol-surface is dominant.

So I tell people to focus on achieving neutrality when trading long flies (natural/vert-flies) with 1W-1M. Go with upside flies when trading vol-corr (absent known events), and narrow OTM diagonals (locally long gamma) when trading into bear targets.

Into macro? Wide ATM flies strangled (guts) say, 4310-4410 bull and 4230/4330 bear. You can see that the skew is fairly substantial as the call fly is the revenue side of the reversal (reflects down/out skew) shown by the large debit.