A Retail's Day Trading Experiment
- Thread starter ironchef
- Start date
Thanks for asking. A good question.
Did more "let profits run" ended up with more losing days and less profitable. Too often, profits became losses.
I need to get back to the purpose of paper trade: To quantify the approach, the gut feel, convert into rules and numbers/indicators. Without that, I am not sure it will last.
That reflects my feeling. When market gets more and more efficient trend following strategy becomes less and less effective.
Most time the price movements are in a zigzag battle and when big price move does happen it reaches equilibrium very quickly. Imagine in a perfectly efficient market the price will only have extremely fast straight line movements, devoid of any potential detection of impending further price moves, thus no possibility of high probability trades.
Most time the price movements are in a zigzag battle and when big price move does happen it reaches equilibrium very quickly. Imagine in a perfectly efficient market the price will only have extremely fast straight line movements, devoid of any potential detection of impending further price moves, thus no possibility of high probability trades.
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When my paper trade -> back to live style, things got back to "normal". It tells me my live is likely exploiting some market inefficiency. I need to capture it in rules and numbers.
I spoke too soon.
Starting January, I switched over to the thinkorswim platform. Paper traded for three weeks. Disaster! First time I had 3 losing weeks paper or live!
I think something is wrong yet without any indicators or references, I really can't tell, it is as if all of a sudden, the market just changed and what worked before no longer works.
Over the weekend, I decided I need some indicators, if nothing else, to capture and quantify the approach. After some study, I decided the best indicator that reflects my approach is MACD.
I am starting to use MACD as my reference indicator. First day doing it, so far so good.
Stay tune.
Starting January, I switched over to the thinkorswim platform. Paper traded for three weeks. Disaster! First time I had 3 losing weeks paper or live!
I think something is wrong yet without any indicators or references, I really can't tell, it is as if all of a sudden, the market just changed and what worked before no longer works.
Over the weekend, I decided I need some indicators, if nothing else, to capture and quantify the approach. After some study, I decided the best indicator that reflects my approach is MACD.
I am starting to use MACD as my reference indicator. First day doing it, so far so good.
Stay tune.
MACD worked but when I reviewed the trades, patterns and rhythm worked better because MACD introduced a time lag and though profitable, I usually entered and exited too late.
Today, I went back to patterns and rhythms and it worked again. However I am going to keep the MACD as a reference (a crutch).
For some reason, the market for this stock changed and now is back to "normal". Perhaps it is true, someone is "managing" this market.
Today, I went back to patterns and rhythms and it worked again. However I am going to keep the MACD as a reference (a crutch).
For some reason, the market for this stock changed and now is back to "normal". Perhaps it is true, someone is "managing" this market.
I found, using indicators to trade has one overwhelming advantage over "gut feel", patterns and rhythm: Imposes strict discipline on trading, takes guessing and subconscious tweaking out of trades. Most important, it also helped me conceptualized and quantified the methodology, captured the basic concepts.
Another advantage: It reduced click anxiety, hesitations of entry and exit.
I have now gone one full circle: Instead of using indicators as crutches, the last two trading days, I used them to trade. Results: Up ~1% each day. Though more losing trades, sub optimum entry/exit, they forced me to take losses without hesitation and to let profits run.
As you spend more time with the charts, you'll begin to see how the price movement affects the indicator. Price has to move first.
Yes, all known and available (to me) indicators follow price. That is why I use tick by tick and DOM in addition to 1 min, 5 min charts.
I am still very much troubled by how random prices behaved and it is as if I am trying to imagine order in a chaotic system.
It mostly worked but my confidence level is still very low.