Calling 'Em Like I See 'Em

Illiquid, thanks for the interest. Recently, I have found that I would have been better served (at least when trading the equity indices) to pretend that (in a sense) no trading has ever taken place before today -- i.e. to approach each day as its own entity.

This was not always the case, and it is something that I have not conquered. I also don't think this will continue to be the case forever.

Basically, the more markets are trending, the better served you are to know what happened yesterday, the day before, etc. Price levels, S & R, all these things carry over, and it would be foolish to ignore them.

A prime example of this is ZB over the past 3 months.

See, as well, E6 (Euro). Even though it has been consolidating for the past 4 months or so, it has tended to carry over some intraday tendencies quite consistently.

ES and ER, conversely, have been very tricky. Just when you think you've seen a multi-day breakout to the long or short side, the next day the markets reverse without so much as looking back.

The astute day trader picks up on this quickly. Trend does not have to mean continuous movement in one or the other direction (at least not within the context of this discussion). In this context, consolidation and the lack of ability to breakout of the consolidation can itself be self-reinforcing (=trend), and can offer the gutsy trader very low-risk counter-trend (in the coventional sense) trades. Even not-so-astute traders such as your's truly eventually catch on (but are always wary that due to their slowness, may have caught on just as things are about to change!)

Hope this convoluted mess makes some degree of sense.

Quote from illiquid:

How much influence, if any, do you allow the previous day's action or chart/tape movement on a higher time-frame, in regards to your daytrading? Or do you prefer to wipe the slate clean of opinions and just focus on the present session? Or somewhere inbetween?

As an aside, I've always held the same attitude towards the importance of entry as you've stated earlier -- just that the vast majority of what qualifies as low-risk for me has been to enter fading momentum, rather than jumping aboard a moving train.

Nice trading btw.
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Thanks for the feedback, trendtech. Not sure what you mean when you write "you seem to be very confident in your system to trade like that." What is the "that" to which you refer?
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I meant being confident in taking a large position size in relation to account size. You seem to trade large size. My IB account is about 12K and I am reluctant to risk more than $100 per contract on er2 and I would not trade more than 2 contracts per position. I trade off 3min chart.

Perhaps it has something to do with psychology (fear of losing) or not being really sure if I am on the right side of the market when entering. Somehow I am reluctant to take bigger risk. I am still not profitable but not really loosing great deal.

trendtech
 
Quote from QuietTrader:

Hope this convoluted mess makes some degree of sense.
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Made alot of sense, thanks for the detailed reply.

Part of me shares the same attitude that I'm better off pretending there was no trading yesterday; more often than not, my opinions tend to close off half the opportunities the current session would offer, if I'm not already fighting a tape that goes counter to expectation. As an example, I've missed this little rally in EUR simply because of my perceptions of the overnight session.
 
I choose not to keep huge amounts of cash in my trading account. If the need would arise (this has happened before), and I took numerous consecutive losses, I would have no problem depositing more money in my account. As I said, keeping it relatively low keeps me sharper, and saves me from the "it's just the market's money anyway" mentality. Until you have turned the corner towards becoming a consistently profitable trader, you would be foolish to be trading any bigger size than you already are. "I am... not really loosing (sic.) great deal" -- that's only thanks to your conservatism.

If I may be so bold: Why are you trading ER?

Thanks for the feedback, trendtech. Not sure what you mean when you write "you seem to be very confident in your system to trade like that." What is the "that" to which you refer?
____________________________________________________

I meant being confident in taking a large position size in relation to account size. You seem to trade large size. My IB account is about 12K and I am reluctant to risk more than $100 per contract on er2 and I would not trade more than 2 contracts per position. I trade off 3min chart.

Perhaps it has something to do with psychology (fear of losing) or not being really sure if I am on the right side of the market when entering. Somehow I am reluctant to take bigger risk. I am still not profitable but not really loosing great deal.

trendtech
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Illiquid,

Just accidentaly deleted my reply to your post while trying to attach a chart. I'll try again, in short:

Short-term day-traders (even if they purport to follow the short-term trend like I do) must be ready to admit and recognize the change of trend as it's happening. The key word here is: flexibility. Each moment, to some extent, must be treated as its own entity. The fact that the sellers/buyers seemed in total control just moments ago can not allow one to become so jaded as to miss the fact that things might change or might have already changed.

For traders who pay a lot of attention to price-action, such as myself, this is a particularly difficult task.

For this reason, on many of my charts (5 10 15 min) I keep a modified moving average. I don't necessarily trade off it, but it sure comes in handy as a heads-up to a CIT (change in trend). This particular MA tends to change without the normal lag associated with MA's, yet doesn't flip flop much. I've come to like it. Attached is a five minute chart:



Quote from illiquid:

Made alot of sense, thanks for the detailed reply.

Part of me shares the same attitude that I'm better off pretending there was no trading yesterday; more often than not, my opinions tend to close off half the opportunities the current session would offer, if I'm not already fighting a tape that goes counter to expectation. As an example, I've missed this little rally in EUR simply because of my perceptions of the overnight session.
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Attachments

Quote from QuietTrader:

Short-term day-traders (even if they purport to follow the short-term trend like I do) must be ready to admit and recognize the change of trend as it's happening. The key word here is: flexibility. Each moment, to some extent, must be treated as its own entity. The fact that the sellers/buyers seemed in total control just moments ago can not allow one to become so jaded as to miss the fact that things might change or might have already changed.
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That's pretty much it in a nutshell.

I remember when I traded stocks, it was a hell of a lot easier to just trade 'em and leave 'em day to day; if instead you are staring at the same markets every session, it gets alot harder to extricate yourself from a particular bias or scenario you might fall in love with. For me, it was always having one eye on the reasons why that conflicted with maximizing daily profits -- hard habit to shake.

Thanks for the chart, I should probably add something like that as a heads up for when mine is buried in the sand. :)
 
I choose not to keep huge amounts of cash in my trading account. If the need would arise (this has happened before), and I took numerous consecutive losses, I would have no problem depositing more money in my account. As I said, keeping it relatively low keeps me sharper, and saves me from the "it's just the market's money anyway" mentality. Until you have turned the corner towards becoming a consistently profitable trader, you would be foolish to be trading any bigger size than you already are. "I am... not really loosing (sic.) great deal" -- that's only thanks to your conservatism.

If I may be so bold: Why are you trading ER?




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When I started day trading I have tried YM, ER2 and EUR. Also I have made a few trades in dax and hsi (real trades, no simulated). After a while I started trading mostly er2 because I think it trends better than ym. Euro was just to much risk for me. I use button trader as front end to IB. Button has a dom with a tick chart and I can watch both YM and ER2 tick charts at the same time. ER2 has much bigger moves after a break out, I mean if ym moves 3 ticks er2 will move 6. Not always but most of the time.
 
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