Can completely discretionary traders every succeed?

[Muskoka Joe]

William:

Shooting from the hip is not what I do. I have a basic premise that I have tested empirically and know that it works okay--- not fabulous but okay. I feel that I can turn okay into something more by judging when to get out, and/or anticipating the signal correctly.

I started by getting a system that tested okay on a 60 minute chart, then I started to test it on other time frames. With no slippage and commission and fixed stops and targets I could get the system to show a small to decent edge from time frames of 15 minute up to daily charts. Trading it as a system would be no big deal at all, but I was just looking for the edge, and then looking to see what I could learn by watching it real time.

I watch it in four time frames simultaneously. I believe there is benefit in doing so in that I begin to see (or sense) the trend and shifts in trend looking at all 4 time frames. You learn to sense the bogus moves that will be reversed.

I get about 1 to 3 signals per day per market. Although there are times when I get a signal and see that it is wrong and just reverse. Though nothing I have ever tested works reversing--- it is just a sense that a trade is wrong enough that it is going the other way with a kick. I think you get that by watching enough.

My target is 1 to 2 points in a mini in the current market. About 10 to 20 ticks in the currencies, and 4 to 6 tics in the bonds. However sometimes I am in a trade it goes 2 ticks my way and I get out. I can't say why I get out, except mostly (say 70%) it turned out to be the right thing to do (30% should have just stayed in). I think you get that sense just by watching the same thing over and over. Perhaps the key is watching something like a system signal and the aftermath rather then just watching randomly all day.

The targets sometimes get adjusted. I held the bonds for a full point the afternoon before the 4th July weekend. It was just a different scenario, and you could tell by the feel of watching it trade that some blood was going to be spilled. But that is an exception. Mostly markets give small bites and therefore I take small bites.

I keep a journal. I think it helps to workout before I trade. I eventually got that thru my head by writing it in the journal when I worked out and when I did not. Same as being a "sparrow" on the profit side. A sparrow, for me, is the way to go. Very small bites, just keep getting paid. Write it all out in the daily synopsis.

 

[Grob109]

Quote from martys:

Hi Joe and Brett,

Your posts on discretionary trading have been really interesting to me. But there is a false impression that there is a very loose strucuture to this and that often cause trouble for me and I assume other traders when tried to shoot from the hip. So I doubt that is what you are suggesting.

Maybe it's a dumb question, I just want to get an idea how picky are you? May I ask on average how many trades do you make with this type of trading on any one market each day? Are they mostly high probability and small profit scalp? Or you tend to ride it a little bit? Or both?

What makes you take this route? How long does it take to become in tune with this type of trading?

Thanks.

Regards,
William

Maybe later on your path you will consider several different things than you mention. For now, it may be posible to consider what you inquire about and get interim answers.

Suppose you have those.

I think that you will notice an interesting thing then. What will come up for you is looking more into the operations of the market itself and then how a person can construct a division of responsibilities with the market.

These two considerations (market operations and sharing reponsibilities with a market you "know") take the concerns you now have off the table. Those that joe and Brett comment upon too.

Why would this be?

At some poiint deep into considering how the market works, a person discovers that it is very orderly and has a behavior. That is a natural outcome of understanding that living human beeings, collectively form the market and the market size compared to one person makes one person's impact insignificant statistically speaking. Needing descretion and or using descretion is not a factor for a person who knows the market and is able to share appropriate responsibilities with the market.

In this thread having and/or using descretion is being compared to another thing of some sort. Call it non-descretion to keep it simple.

How would both descretion and non descretion fit into knowing the markets and appropriately sharing responsibilities with the market?

Knowing and sharing build to an operating system. The operating system probably has major characteristics common to all operational efective and efficient systems. The universe of the two sets called descretion and non-descretion, seem to drop out of the picture as unnecessary operational elements.

One of the tests of the efficacy of this viewpoint is the tendency that most wizards seem to display. They seem to be at one with markets. When I read about wizardry, I like the feelings I get in considering how the refinements that they achieved melded into an informed (See Larry Harris "informed" stuff under types of traders) behavior.

Here is the thing that is citable relative to you and Joe and Brett who have not been there to take a look as yet. It comes down to one and only one bias that you have that is so prevalent. This bias is like a wall that separates you from wizards and informed traders and investors. One one side are persons who see the market as entries and exits. One the other side are persons who engage with the market in a compact that involves stepping up and being a continuing part of the market and working from inside the market recognizing the insignificance of each individual.

Entering and exiting is like working at a job part time. trading, on the other hand can be a full time job where the work is a continuing effort. Of course we can now see and understand the key characteristic of "descretion". It is the self chosen precept of chosing whether or not to work at given times. Think of high schoolers who work at McDonalds. Nowadays they start to work when they have their homework done (part of the time of doing homeork, McDonalds pays for). They step in and out of work filling roles thatare assigned on the spot and where a set of given skills is understood to be attained.

When a person decides to be a full time employee, this apporach goes away and another takes its place. At that point the person has a job to do and works as part of a team.

Trading is a two element team comprised of the market and the person. The person "knows" the market and yields a specific role to the known market. The person also knows his role is to work at extraction of the money the market continually makes available. He monitors it, analyzes it, makes responsive ecisions and acts to always be on thr right side of the market as the market changes (change in the market is the singular market necessity for making money). Regarding effectiveness and efficiency of extraction there is a less than perfect situation as a consequence of skill level, but there is not a set of characteristics allowable as descretion of non-descretion. Descretion and non-descretion are on the other side of the wall where a part time world exists.

Most people do not get around to seeing the dividing wall, it seems. They deal in being residents "outside" of the market. Occasionally, they enter to plan on exiting back to the comfortable "outside" where they for all practical purposes find an environment that is in their comfort zone.

On the other side of the wall, peoiple team with the market and work with the market all the while having comprehensive designated responsibilities. It is like riding a bicycle as I have mentioned many times. You touch the bicycle; you get on; you go where you want using the bicycle; you take care of the bicycle and you use it appropriately when you chose. yuo cannot do some things the bicycle can do. The bicycle is not like you at all and is not able to do your riding responsibilities. Descretion and non-descretion are, again, not part of bicyle riding to go from one place to another effectively and efficiently.

Knowing the market is like getting a bicyle. Don't try to build a bicycle; go get one where they are built and sold. you can have any color you want by selection; it will not change color at your descretion though.

Do not worry if you do not understand what I posted.

 

[Muskoka Joe]

NZBRYANT:

I am in the market 1 to 5 times a day total all market trades, usually for short bursts. The shorter the trade, the sharper my mind is. I lose focus/mental sharpness if I have to hold a trade too long.

The bank traders I worked with sometimes also made markets but they made a lot of the money through prop positions. There were guys would pip the market 100 times a day.

 

[nzbryant]

Grob109/Jack:

That post you wrote is brilliant. I am now CST trading on daily charts, and it works.

Far fewer decisions to make than 'edge' trading.

One has to ... let go.

 

[nitro]

I most definetly shoot from the hip. But it is a hip that has seen every tick and in my mind's eye I have a chart of what the movement looks like, even though I actually never use a computer to display the chart for me.

All trading is recall.

nitro

 

[libertad]

The method that I day trade never seems to change...no matter what the market does...markets just do what they do...and it becomes natural to expect certain moves to occur...

I would never hold a overnight position for any reason...Excellent commission rates ... execution technology and charts make day trading a winning endeavor for me...and has made my living around the world a real pleasure...good internet access can be found in most parts of the world now...

I have been trading for 27 years... All the way from pneumatic tubes and graph paper to direct access and instant charting...

Trading is a lot like breaking in a new baseball glove..and you simply become part of the game...and most days you get several times at bat...you have chances for singles..doubles..triples..and home runs..and strike outs...Just stay in good shape..show up..and play the game...

The best game in the world...

 

[BSAM]

Quote from libertad:

The method that I day trade never seems to change...no matter what the market does...markets just do what they do.....

Good post, libertad!

 

[BSAM]

Quote from nitro:

I most definetly shoot from the hip. But it is a hip that has seen every tick and in my mind's eye I have a chart of what the movement looks like, even though I actually never use a computer to display the chart for me.

All trading is recall.

nitro

:eek:

Nitro.....

I now officially declare you a certified genius!

 

[Grob109]

Quote from nzbryant:

Grob109/Jack:

That post you wrote is brilliant. I am now CST trading on daily charts, and it works.

Far fewer decisions to make than 'edge' trading.

One has to ... let go.

MMM yes, in the sense that the repeated "hold" decision is a repeated automatic one since the market is not giving you anything "new" or "what wasn't that".

The letting go is like an immersion...letting go of being outside the market and just slipping into the market's stream of consciousness and going with the flow.

Like launching and rafting along in an unsinkable float boat named "NOW". The more action the more fun and profitable the ride is.

The ride of about 500 miles from Whitehorse to Dawson on the Yukon river is an unbelievable experience as the river activates on the summer glacial melts. It averages 8mph and gets stronger the further downstream you go. Finally at some point you recognize to use sound as the sensing element to stay in the main current. The transported glacial sediments "rub" against the canoe bottom and continually "sand paper" it to a fine polish. As you come to thewhite river input, like adding cream to coffee, the volcanic tuff white seam allong the bench becomes over a foot in depth. The sound changes completely as the rivers merge and so much finer silting is added. Sort of like the pm market restarting after a mornings play.

I can say that sleeping along the bench at night is so sound; besides the temps going down to freezing usually, there is the motion still being felt in yor body and the lulling of the sound of your subconscious assimilating past experiences that enable you to make better mileage as the weeks pass. after dawson towards Circle (where the artic circle crosses the Yukon), things get bigger in everyway.

The salmon you see have only been making the trip since after G. Washington's time (1500 miles) before the time a glacier temporarily blocked what was about a 150 mile trip to the Pacific.

I feel that your taking the effort to go to SCT is really an important trip. It certainly is like crossing a line in the sand across which you will never return. There's a club that explorer's join, when they have gone to new places. Fun to chat about when things like that happen. Walking through herds of Dahl sheep with llamas where the sheep have never seen humans and so have no fear of the llamas or us.

It is hard to create expressions for what is to come for people; getting to the end of being "outside" the market just never comes up for most people.

SCT does turn out to be a lot less hectic than being outside and trying to gain more and more time in the market to make the money that is available.

 

[cornholetrading]

Grob:

I started a thread awhile ago that eventually got off track and went a different direction. Anyway it dealt with the concept of trading by constantly being in the market and reversing your position. I think that was what you were talking above. I tried investigating it but could not figure out a way to make it work without getting chopped up during certain parts of the day. Maybe it was because I could not figure out accurate enough price points/signals on where to get out of a trade and reverse it. At times you have made it sound like it is not a complicated concept to figure out but I have unable to do so. I like the concept but have not figured out how to make it reality. Maybe you can share a little enlightenment on this topic. Although it is a little off topic for this thread but I thought I would mention it since it was brought up.