Back to the Basics

Most traders beleive they get paid to come in and push the buy and sell buttons all day long. It makes sense, after all, if you do not place a trade it is impossible to extract a profit from the market. While that is certainly true it is also true that the more active you become in a given tirmeframe the less likely you are to make any substantial amount of money. The reason is simple, there just are not that many great trades. Great trades are the ones that will pay your bills. Professionals wait for great trades, amatures run around like crack addicts looking for anything that moves.


Brandon
 
Discerning Good Setups From Poor Ones
Mini-Lesson

06/20/03 09:01:01 Toni- this is a great example though to help you
learn when to discern a good setup from a poor one though
06/20/03 09:01:59 Toni- the fewer inhibitors.. the higher % correct you
will have
06/20/03 09:03:15 Toni- so you can cut down and add to make the
avalanche or phoenix etc different rates of success.. you may be
comfortable with 60-70% accurate if over time the additional number of
trade signals you get makes more
06/20/03 09:03:40 Toni- or you might want to customize it down to a
setups that works 90% of the time or more and take a lot fewer trades
06/20/03 09:04:06 Toni- and yes.. there are setups that have 90% or
better odds off success but you don't get them often
06/20/03 09:04:52 Toni- for a higher % avalanche
06/20/03 09:04:57 Toni- here are things to look for:
06/20/03 09:05:11 Toni- a pullback that is sharper than the last
section of the prior rally
06/20/03 09:05:19 Toni- a pull directly into the 20 sma
06/20/03 09:05:37 Toni- a narrow base along the moving average followed
by a trigger as the prior bar's lows break
06/20/03 09:05:50 Toni- no moving averages meaning the 20 or 200
06/20/03 09:05:51 Toni- intraday
06/20/03 09:06:02 Toni- on any of the time frames the setup occurs on
06/20/03 09:06:10 Toni- or on the higher time frames
06/20/03 09:06:24 Toni- ie 5 min avalanche with a 15 min 20 sma under
it adds a lot of risk
06/20/03 09:06:33 Toni- if it's not there.. it leaves it open to move
06/20/03 09:06:52 Toni- if your setups also doesn't have a significant
price support right under it that also helps
06/20/03 09:07:24 Toni- not as significant as the moving averages
thoguh
06/20/03 09:07:45 Toni- if the volume is dropping off as it bases along
the moving average for the avalanche
06/20/03 09:07:50 Toni- that makes it a better setup
06/20/03 09:07:55 Toni- it shows indecision
06/20/03 09:08:05 Toni- and a trigger for the avalanche will bring in
more panic
06/20/03 09:08:31 Toni- if the rally into highs before the avalanche
pattern starts to form is coming into strong price or mvoing average
resistance etc
06/20/03 09:08:34 Toni- that also makes it better
06/20/03 09:08:43 Toni- if the trend is exhausted that is better still
06/20/03 09:08:59 Toni- an exhausted trend is often one that has had
three waves of buying or selling
06/20/03 09:09:13 Toni- so the more of these you combine, the better
your setup will be
06/20/03 09:10:55 Toni- it's simply putting these things together and
enough of them together on each setup that will often make the difference
between someone saying.. well this setup just stinks.. i can't ever make
money on it! and someone else who makes the majority of the money on the
same setup but has it more refined
06/20/03 09:11:22 Toni- of course.. letting your profits run and being
able to identify your targets well
06/20/03 09:11:33 Toni- will also be a huge factor
06/20/03 09:12:25 Toni- =) for members, i have several clases in the
members section that just focus on lowering risk and setting targets
06/20/03 09:12:39 Toni- they become much easier with practice


06/20/03 09:18:49 Toni- one thing on breakdowns
06/20/03 09:19:05 Toni- the earlier you can catch one on a new trend
intraday the better
06/20/03 09:19:11 Toni- after several drops already
06/20/03 09:19:19 Toni- the stock will start to think more about a
larger corrrection
06/20/03 09:19:31 Toni- so if you have a stock that bases after just
reversing
06/20/03 09:19:39 Toni- that is going to have a higher R:R
06/20/03 09:19:49 Toni- than if you have had three waves of selling and
are now seeing a base
06/20/03 09:20:15 Toni- that base you would then want to be larger than
the prior two if the prior two are of the same general length
06/20/03 09:20:18 Toni- now..
06/20/03 09:20:25 Toni- if you have two prior bases
06/20/03 09:20:32 Toni- but he second base was like twice the first one
06/20/03 09:20:42 Toni- then you can get a third base still break with
good R:R
06/20/03 09:20:49 Toni- because what you have are the first two moves
06/20/03 09:20:57 Toni- equal one on a larger time frame
06/20/03 09:21:09 Toni- so that the socnd base will be the first larger
time frame correction
06/20/03 09:21:12 Toni- I should post a chart
06/20/03 09:21:19 Toni- because otherwise i'm going to lose you =)
06/20/03 09:21:31 Toni- hold on a sec and will draw one quick
06/20/03 09:21:42 Toni- then read over this with that chart again and
it will be clearer
06/20/03 09:29:43 Toni-
http://www.tradingfrommainstreet.com/img/roomexamples/breakouts.gif
06/20/03 09:29:58 Toni- ok... if you read over that coversation again
with this chart it will help
 
Brandon,

I trade ES and I currently use Esignal for data feed and charting. I would like to know in your opinion what is the best data feed and charting for trading the ES?

BTW, thank you for the free trial membership to TFMS!
 
Hi Brandon,

Thank you for your education, it really helps new traders.
Can you explain the differences between trading e-minis, ETF, stocks. And who should trade them, depending on experience.
 
Hi Brandon,

I really liked what you said in a couple of your recent posts.

As a professional market player your job is not so much to make money as it is to preserve capital, i.e. to lose a minimal amount of your capital when the chips are down. You must protect your trading capital like it is a newborn baby. This means not trading when the market is choppy and confused. If your system would have lost X amount of dollars today, but you happen to have noticed the market is not treating your system kindly so you are on the beach soaking up the sun and sipping mai thai collecting interest on your margin account, this is a very real victory.
More...


This is so true. One of the things I have noticed about many traders who are struggling is that they are constantly in positions even when the markets are clearly choppy. I have tried to persuade a number of them to cut back on the amount of trades they do per day, and to try to stay out of a lot of the chop simply by not trading during the mid-day chop-fest period. One underlying issue that has come to the surface is that many of these traders believe that they must trade to be traders (always remain active in the markets). I have tried to convey the concept that NO position, when market conditions call for it, is a position that is just as valid as a Long or Short position when the market is moving. For newer traders who are coming from an 8-5 corporate work culture, the idea of simply standing aside for a portion of the day and not taking any trades is contrary to their sense of the traditional American work ethic. For some traders this is a difficult hurdle to overcome.

Most traders believe they get paid to come in and push the buy and sell buttons all day long. It makes sense, after all, if you do not place a trade it is impossible to extract a profit from the market. While that is certainly true it is also true that the more active you become in a given timeframe the less likely you are to make any substantial amount of money. The reason is simple, there just are not that many great trades. Great trades are the ones that will pay your bills. Professionals wait for great trades, amateurs run around like crack addicts looking for anything that moves.
More...

I tell our traders that part of your JOB as a trader is to do nothing when there is nothing to be done...not to try to make something out of nothing.

PEG LEG JOE
 
Quote from AMT4SWA:

Brandon,

I trade ES and I currently use Esignal for data feed and charting. I would like to know in your opinion what is the best data feed and charting for trading the ES?

BTW, thank you for the free trial membership to TFMS!
More...

I think that if you are trading the indexes exclusively that Esignal or Tradestation are both great. If you are doing stocks I love realtick for its scanning and sorting ability, which is the best out there IMHO even if they do have some reliability issues from time to time.

Brandon
 
Quote from SlickRick:

I forgot what this thread was about. Cam someone bring me up to speed?
More...

From the first post Over the last month or so a surprising number of newbies have been starting to come into the market, more than anytime I can remember since early 2000. Maybe it should not be such a surprise given that the bull is back and all (This according to Barrons, Cavuto, Joe Battataglia and all those others people and groups that have performed so well over these last few years)

What has been pretty surprising to me though has been the genuine lack of basic knowledge that many of the people coming in have. Things like trends, support, resistence, money managment, basic entry techniques, order types, choosing brokers etc. So, with that I'd like to start a thread going over the very basic aspects of trading. This will be useful for Emini or stock traders, swingtraders, daytraders etc.


Also to pimp my site
:p :p :p
 
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