Just like our school teachers used to say, "We've gone over this before...so you should know it."
Always good to be reminded of the little things by the Master.
AHG - Profitable Strategy for Struggling Traders
- Thread starter Anekdoten
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Always good to be reminded of the little things by the Master.
Anek, is that a "m" formation forming on the 1000 er2 chart?
Employment situation friday is the one that will send us moving one direction or the other
Hi everyone,
I've been lurking for a while and this thread has been very helpful for improving my entries lately (Piscuy's posts especially caught my eye because I scalp a similar style that he does, except nowhere near as experienced yet, so I exchanged PM's with him a bit. He suggested that I post here since I might get some interesting responses... and yeah, I'll try to post some charts of my scalps some time soon when I get the chance).
I'm not trying to come across as an expert in any way, I've only been trading for about a year and am currently at a prop firm. I'd still consider myself somewhat of a beginner and I consider this an ongoing quest for knowledge and ways to improve my skills on a daily basis. I know there are a lot of varying opinions on trading styles and especially on scalping at the pace that I do (and I realize that some of my techniques are probably less practical if you trade retail but I hope my ideas can still help in one way or another). I'm posting this in case it may help anyone else or if anyone with more experience in this style has criticisms or comments.
I scalp fairly short time frames (usually 2 to 15 minute positions) and mostly concentrate on price action (charts, time and sales ... I do use simple moving averages but not for the crossings that most people do, just more of a quick visual reference of uptrend/downtrend/range). The last few days have been a lot better (small wins, small losses, a couple big wins... basically what all scalpers look for).
The last couple of days, I've just been contemplating new ideas for my position-sizing. I know this is something Anekdoten mentioned right on the 1st post of this thread but I'm still part way through reading the rest so I'm not sure if it's been addressed since then. Basically it's the averaging-UP (not down) approach that he mentioned
Again, this is just an idea, I haven't started doing it this way yet:
Say your full position size is normally 4 contracts (I also trade equities a lot so this same idea can be applied to say 1000 shares or whatever). But when you see a setup and you've decided on your entry and stop, you just enter with 1 or 2 contracts first, not all 4. If you're wrong, you can stop out and you'd only be locking in the loss generated by those 1 or 2 contracts. If you're right, you can punch in with more contracts within a few ticks in your favor to make your full position of 4 (but here's the key: you now move your absolute maximum "mental stop" to your break-even point)...
So after this, any further profits should be amplified by your full position size, but any of your losing trades should only be with 1 or 2 contracts. Now, even your "so-so" win/loss days should come out at least a little more profitable in the long run... in theory.
If anyone has any opinions on this idea (or if anyone is already using this and has comments on how well it works), I'd love to hear from you. I know it's probably not entirely original but I thought it'd be worth discussing since it might inspire some new ideas and applications for it too.
On a side note, I do already use a position sizing strategy but not that one. I just take full positions and get out in pieces during winning trades to lock in early profits just in case it loses momentum early, and move my mental stop to the break-even point. I've just been thinking of new ways to improve on this if possible, that's the main reason Anekdoten's mention of averaging up sparked some ideas.
(It might be worth noting that my prop firm has a CME membership and special discounts with a few of the ECNs for NYSE and NASDAQ issues, so my transaction costs are fairly low and I always use limit orders entered right at the moment I feel the entry and hit the bid/ask so I don't use market orders for any of this, ever. It did occur to me that the transaction costs of implementing this idea would be an issue if you trade retail, but I guess maybe someone on brokerage like IB might be able to pull it off with equities, I'm not sure.)
Anyway, thanks to everyone who's contributed to this thread! It's helped me become more consistent lately.
-evsloth
I've been lurking for a while and this thread has been very helpful for improving my entries lately (Piscuy's posts especially caught my eye because I scalp a similar style that he does, except nowhere near as experienced yet, so I exchanged PM's with him a bit. He suggested that I post here since I might get some interesting responses... and yeah, I'll try to post some charts of my scalps some time soon when I get the chance).
I'm not trying to come across as an expert in any way, I've only been trading for about a year and am currently at a prop firm. I'd still consider myself somewhat of a beginner and I consider this an ongoing quest for knowledge and ways to improve my skills on a daily basis. I know there are a lot of varying opinions on trading styles and especially on scalping at the pace that I do (and I realize that some of my techniques are probably less practical if you trade retail but I hope my ideas can still help in one way or another). I'm posting this in case it may help anyone else or if anyone with more experience in this style has criticisms or comments.
I scalp fairly short time frames (usually 2 to 15 minute positions) and mostly concentrate on price action (charts, time and sales ... I do use simple moving averages but not for the crossings that most people do, just more of a quick visual reference of uptrend/downtrend/range). The last few days have been a lot better (small wins, small losses, a couple big wins... basically what all scalpers look for).
The last couple of days, I've just been contemplating new ideas for my position-sizing. I know this is something Anekdoten mentioned right on the 1st post of this thread but I'm still part way through reading the rest so I'm not sure if it's been addressed since then. Basically it's the averaging-UP (not down) approach that he mentioned
Again, this is just an idea, I haven't started doing it this way yet:
Say your full position size is normally 4 contracts (I also trade equities a lot so this same idea can be applied to say 1000 shares or whatever). But when you see a setup and you've decided on your entry and stop, you just enter with 1 or 2 contracts first, not all 4. If you're wrong, you can stop out and you'd only be locking in the loss generated by those 1 or 2 contracts. If you're right, you can punch in with more contracts within a few ticks in your favor to make your full position of 4 (but here's the key: you now move your absolute maximum "mental stop" to your break-even point)...
So after this, any further profits should be amplified by your full position size, but any of your losing trades should only be with 1 or 2 contracts. Now, even your "so-so" win/loss days should come out at least a little more profitable in the long run... in theory.
If anyone has any opinions on this idea (or if anyone is already using this and has comments on how well it works), I'd love to hear from you. I know it's probably not entirely original but I thought it'd be worth discussing since it might inspire some new ideas and applications for it too.
On a side note, I do already use a position sizing strategy but not that one. I just take full positions and get out in pieces during winning trades to lock in early profits just in case it loses momentum early, and move my mental stop to the break-even point. I've just been thinking of new ways to improve on this if possible, that's the main reason Anekdoten's mention of averaging up sparked some ideas.
(It might be worth noting that my prop firm has a CME membership and special discounts with a few of the ECNs for NYSE and NASDAQ issues, so my transaction costs are fairly low and I always use limit orders entered right at the moment I feel the entry and hit the bid/ask so I don't use market orders for any of this, ever. It did occur to me that the transaction costs of implementing this idea would be an issue if you trade retail, but I guess maybe someone on brokerage like IB might be able to pull it off with equities, I'm not sure.)
Anyway, thanks to everyone who's contributed to this thread! It's helped me become more consistent lately.
-evsloth
I trade in a similar way although I would not consider myself a scalper.
Where most people I know tend to take a full position then scale out, I usually enter with 1 contract and add if it moves in my favor.
I trade only YM. Once a trade has moved 10 to 20 points in my favor I will ad another contract and move my stop to break even. I will keep adding until the trend line is violated.
The downside is a lot of break even trades. The upside is on trending days I do quite well and on choppy days my losses are minimal.
There are lots of days that if I had scaled out at plus 10 and moved my stop to break even I would have many small winning trades, however my losers would have been 3 or 4 times the losers. 4 cars @ a ten point loss means you need 4 trades that go to plus 10 before they back off. Even if trading 2 contracts you need a couple winners for each loser.
I use a system similar to Anek. Once a trend is established I will stay with it until it changes. Iâm rarely in at the start of the move and usually leave a bit on the table. I agree with other posters who state that entry and exits are only a small part of an overall trading plan. Discipline and money management also have to be considered.
This is by far the best thread ever on ET.
Boib,
One great start, non exclusive, for an averaging up approach is a reversal formation at the LOD or HOD.
Study reversal formations very carefully.
ie Double Tops, Double Bottoms, M tops, W botoms, V bottoms, Triple and Rectangles.
As soon as you get confirmation begin your average up approach with a minimal position.
Add on every possible pullback before the next major support or resistance area as soon as a strong/weak bar is evident once the retracement looks exhausted.
Sell/Cover it all around the next significant support or resistance point or partial.
If resistance becomes support or support becomes resistance you can begin all over again with your minimal position or can continue adding to what it is still in play provided that you have a change of a trend trailing stop protecting every add and of course, past profits.
Confirmation is an insurance card, use it accordingly but make it a requirement for every move you make, whether it is entry or exit.
Every trade should be an educated prediction and every add should be an additional confirmation.
The more confirmations the more your car size should increase because at first we never really know where price will go but as we get additional data supporting our original trade theory, the story starts revealing itself.
As you well know this method promotes small losses and all kinds of winners from miniature to gigantic. It is no coincidence that it is chop proof because if you get no additional confirmations you stand on the sidelines with your small position. This method will also help you avoid calling tops and bottoms because in the back of your mind you don't want it to end, this can be a very powerful psychological asset.
The absolute key to mega profitable consistent trading is having the skill to spot the birth of a new trend correctly and playing it responsibly with solid money management.
Hope it helps and glad to hear you are doing well.
Anek
One great start, non exclusive, for an averaging up approach is a reversal formation at the LOD or HOD.
Study reversal formations very carefully.
ie Double Tops, Double Bottoms, M tops, W botoms, V bottoms, Triple and Rectangles.
As soon as you get confirmation begin your average up approach with a minimal position.
Add on every possible pullback before the next major support or resistance area as soon as a strong/weak bar is evident once the retracement looks exhausted.
Sell/Cover it all around the next significant support or resistance point or partial.
If resistance becomes support or support becomes resistance you can begin all over again with your minimal position or can continue adding to what it is still in play provided that you have a change of a trend trailing stop protecting every add and of course, past profits.
Confirmation is an insurance card, use it accordingly but make it a requirement for every move you make, whether it is entry or exit.
Every trade should be an educated prediction and every add should be an additional confirmation.
The more confirmations the more your car size should increase because at first we never really know where price will go but as we get additional data supporting our original trade theory, the story starts revealing itself.
As you well know this method promotes small losses and all kinds of winners from miniature to gigantic. It is no coincidence that it is chop proof because if you get no additional confirmations you stand on the sidelines with your small position. This method will also help you avoid calling tops and bottoms because in the back of your mind you don't want it to end, this can be a very powerful psychological asset.
The absolute key to mega profitable consistent trading is having the skill to spot the birth of a new trend correctly and playing it responsibly with solid money management.
Hope it helps and glad to hear you are doing well.
Anek
Thanks for your reply, I appreciate the insight from someone who's traded with this technique.
Ironically, I told my friend about this idea today and she told me she's already been doing it in a dice-based game that she plays on facebook... figures.
Yeah I definitely agree that money management and discipline are much bigger parts of trading than just entries and exits.
I actually started into trading being told that 90% of traders don't make it... knowing the odds were that far against me actually helped me to go against human nature more with the emotional side of it. That's actually what made me cut losses very strictly from the start.
This thread is definitely one of the best places to exchange trading ideas on the entire internet.
-evsloth
I am sure that I simply forgot the details, but hopefully someone can still answer. I have read up to page 88 actually so im sure I just have forgotten it in the flurry of reading.
I usually enter on the break of the low / high (either going short or long with the trend) when decent r/w is presented as well as volume dries up. To short i look for lots of reversal candlesticks and a narrow range bar to make entry cleaner/better probability. For long, opposite.
I noticed a lot of the entries that I would have taken you would have ignored and I would have stopped out sometimes. Although... sometimes I got better entries. The volume charts don't seem to provide as clean candles as I get with the equities I look at using time charts, so I'm somewhat puzzled.
From what I saw in the charts you wait for a confirming candlestick to show that price action is ready to turn. Basic candlestick analysis is what it appears to me. Do you wait for the bar to finish? I prefer just price for entry... although I was better able to follow your charts when it had the stoch.
Sorry if this question has been asked or if its a little convoluted. It's as best as I can explain it...
I do not really feel qualified to post here, although if you wish to see my crumby stock picks I will post them
.
I will post some trades this weekend as well after I paper trade ES on replay.
I usually enter on the break of the low / high (either going short or long with the trend) when decent r/w is presented as well as volume dries up. To short i look for lots of reversal candlesticks and a narrow range bar to make entry cleaner/better probability. For long, opposite.
I noticed a lot of the entries that I would have taken you would have ignored and I would have stopped out sometimes. Although... sometimes I got better entries. The volume charts don't seem to provide as clean candles as I get with the equities I look at using time charts, so I'm somewhat puzzled.
From what I saw in the charts you wait for a confirming candlestick to show that price action is ready to turn. Basic candlestick analysis is what it appears to me. Do you wait for the bar to finish? I prefer just price for entry... although I was better able to follow your charts when it had the stoch.
Sorry if this question has been asked or if its a little convoluted. It's as best as I can explain it...
I do not really feel qualified to post here, although if you wish to see my crumby stock picks I will post them
.I will post some trades this weekend as well after I paper trade ES on replay.
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