An Attempt to Learn How to Trade Consistently and Profitably

I think its hard to have a bias, especially on 1 min charts.
I try to have an awareness instead of a bias. I am aware of the release of narket announcements, or general news, etc.. but I don't know which way they will move the market.

Over-trading after early losses is a bitch. After a loss, it can be hard to turn off, and wait for tomorrow to start again. For real world issues, I would try to fix a problem right now by working harder. That doesn't seem to work as well in trading for me.

Maybe try looking for one good trade a day. I took one each in YM and NQ today. Finished 20 min after the open. I still feel like I am leaving money behind by not looking for other trades, so I just turned it off, and will go for a walk now.
 
MrMuppet said:
Ok, now we come to the meat of things.

Right now it doesn't make any sense to put some performance metrics over your results. You have probably less than 1000 trades under your belt so any statistic has low value.

You should go through your winning trades 1 by 1 and try to figure out common factors why they worked.
Let's say your best longs happened when at the same time the USDJPY dropped, Treasuries dropped and Gold pumped. Then you try to replicate these trades in your next sessions and don't take the longs that don't go along with all other markets.

That's how you find setups on a continuous basis. Most people make the mistake and focus on the losers. You HAVE to look at them to find out if you are making any major mistakes like selecting the wrong strikes or not respecting your stops, but you won't get better by harrasing yourself because of your losing trades.

Figure out what works by analysing your winning trades!
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excellent advice throughout this thread

:thumbsup:
 
BonScott said:
I think its hard to have a bias, especially on 1 min charts.
I try to have an awareness instead of a bias. I am aware of the release of narket announcements, or general news, etc.. but I don't know which way they will move the market.

Over-trading after early losses is a bitch. After a loss, it can be hard to turn off, and wait for tomorrow to start again. For real world issues, I would try to fix a problem right now by working harder. That doesn't seem to work as well in trading for me.

Maybe try looking for one good trade a day. I took one each in YM and NQ today. Finished 20 min after the open. I still feel like I am leaving money behind by not looking for other trades, so I just turned it off, and will go for a walk now.
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Yeah, I appreciated the feedback. Been just looking at markets in the morning while I study for math. I think it's the open that gets to me. I want to ride the first initial move. I'm pretty sure I do better 30 minutes after the open. Once the market consolidates a bit and gives me information on where people are buying / selling. For now I know correlations effect the market, I just don't know how to use it to my advantage. I'll probably think about it. I have some ideas.

@MrMuppet gave me some clues, but just looking at them it feels weird. I gotta really think about correlations. My trades on Monday were similar to my trades on last Tuesday. I notice a very interesting dynamic in the options market. Expected a move downwards because of it, and I just ran with it through out the entire day trying to short the market. Essentially I was just trading the big picture plan(which is a big problem, I was trying to force the market to think my way), but it never aligned with the price action. Pretty sure I went insane on Monday. I was really wondering If I could even trade properly. :( I never walked away to take a break either. Just glad I ended up positive, pretty sure it was luck.

I wont trade the open, maybe wait 10-20m until I start opening positions.
 
attempt said:
Whoops I meant higher lows not lower lows.
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If I were seeing higher lows, I would not go short unless I saw the price pulling back from an overbought position. Until then, I would look for long signals only. Higher lows means the bulls are outbidding the bears at increasingly shallow dips, but the erratic highs indicate the bears are putting up stronger resistance at the higher prices. How much room do prices have to run between the upturn from the most recent low and the area where the highs become erratic? If there is enough "space" between those two areas, you could try to grab a few points on the move up, but if the distance is too short, just wait for more favorable conditions. Common sense and patience are the trader's best tools for extracting profits and staying out of trouble. We can't force the market to move the way we want (as even giant hedge funds were recently reminded!). We can only w...a...i...t for it to move the way we want.
 
QUOTE: "NOTHING MADE SENSE as the markets were going higher, treasury was increasing gold was decreasing usd/jpy was increasing."

Makes perfect sense (not that markets always do, but they do in this case). When Treasuries move higher, that is an expectation of lower rates due to expected economic weakness. Expected lower returns on Treasuries makes stocks more attractive. Economic weakness also means "flight to safety," thus USD strengthened against JPY (Japan's exports will be hurt if its customers' economies weaken). Expected lower growth reduces inflation risk which reduces incentive to buy gold as an inflation hedge.

Intraday price movements are mainly about psychology/expectations--and not necessarily expectations of what will really happen, but of what other traders think will really happen, or even expectations of what other traders expect that other traders think will really happen, etc. Keynes (a successful fund manager--on his second try, the first time he went bust) compared trading to a beauty contest where the judges do not vote on whom they think is the most beautiful contestant, but on whom they think the other judges think is the most beautiful contestant.
 
"I had a short bias from the gecko" -- Unless you were shorting GEICO (Government Employee Insurance COmpany), which uses a gecko as its symbol, I think you mean "from the get-go."
 
"After a loss, it can be hard to turn off, and wait for tomorrow to start again." -- If you keep your losses to around 2% per loss of your initial trading account, and your trading plan has a positive expectancy (you'll make money over a large number of signals), then you can shrug those losses off. Big losses per trade or a plan you lack confidence in will leave you a nervous wreck.
 
"I wont trade the open, maybe wait 10-20m until I start opening positions." -- This is why I am a fan of reading books and articles by experienced traders (unlike some people). It is the near universal wisdom of experienced traders that you don't enter trades in the first 20 to 30 minutes after the stock market opens. But congratulations, you have reinvented the wheel.
 
MrMuppet said:
You have probably less than 1000 trades under your belt so any statistic has low value.

You should go through your winning trades 1 by 1 and try to figure out common factors why they worked.
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1000 trades with the same plan is way more than enough to evaluate the effectiveness of your plan. But if you are trading by the seat of your pants, no number of trades will ever be enough to be meaningful. "Discretionary" does not mean trading without a plan. It just means you have some flexibility during news events, etc.

Winning trades don't mean jack squat if you are trading without a positive expectancy plan. If you just enter the market at random, you will win about half your trades by chance just because you were on the right side of the price movement. But WHY were you on the right side of the price movement? Blind chance? Or because you are trading with a plan that stacks the odds in your favor? In the first case, you will learn nothing from analyzing your winning trades. In the second case, you also will learn nothing (unless you deviated from your plan and won anyway--then you should kick yourself, since it is, in the long run, better to lose for the right reasons than to win for the wrong reasons). Instead of analyzing one's winning trades, a trader should analyze his trading plan (and his losses, but only to ascertain whether he lost because he deviated from his plan, or whether it was an inevitable loss that should be taken in stride).

If, over the course of more than 30 trades in which you strictly follow your trading rules, you are winning more money than is likely to occur by chance, and the bigger of your worst loss or worst drawdown on an intraday trade is not more than 3% of account size (bigger drawdowns are acceptable for longer term trades), then all you need to worry about is whether you are following your rules and whether your rules are still working (that is, that they have not ceased to be profitable as market conditions invariably change--some plans are more robust to variable market conditions than others).

Trading plans must include position sizing (bet sizing) rules, money management rules (for limiting losses), exit rules (when do I get out?--some overlap with money management rules here, but not complete overlap), and finally entry rules. (Like the openings in chess, entry rules get most of the attention, but they are not the most important element in the trading plan.)

In my humble opinion, I think it is a good idea for an inexperienced trader to cut his teeth on swing trading without leverage (or with options which have limited downside) and only attempt intraday (which is more challenging) after he has some success trading multi-day swings.
 
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@attempt, School and LEARNING to day trade at the same time--that's tough! During the school year, why don't you just trade very small positions on the weekly charts? Then you only have to check them once a week, but you will still be learning the basics. Market prices are fractal in nature, so the skills you learn on one time frame can be applied to another later on. Focus on learning now while keeping your losses and profits both very low, and you can scale up the size of your bets later, after you are consistently profitable with small positions. You will inevitably lose money during the learning process, so keep the amount you risk as small as possible. Maybe you could open a forex account and trade one mini-lot or one micro-lot. There's a lot of leverage in forex, which makes it dangerous for the inexperienced trader, but still one mini-lot only moves approximately a dollar per pip. It's a relatively low stress way to master the basics as long as you don't scale up your bets before you know what the heck you're doing.
 
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