Day-Trading 2.0 for small traders

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Hi All,

following this amazing thread for quite a while I would like to post my experiences based on what I destilled out of the wisdom and knowledge jjrvat presented.

On the pic there are 2 sim trades from the european morning I made on the EuroStoxx - which is a great contract to trade I think.

What I do apart from basing my trades on price action is a bit different to what jjrvat has shown.

I do not use pivots or a longer term MA as trend indicators, I use an additional chart for the bigger picture.

Also I don't use fixed targets on my trades at the moment. I would like to scale out.

The trades are based on price action and a trigger, but I have to say that this is all in an experimental status.

My predefined stops are in general 10 ticks and my targets 5 and 10 ticks, but everything will be adjusted to price action. So in general the stops are quite wide and a stoploss means quite a big hit in comparison to the winners.

I have to say that I'm working on this for two weeks now and the results on the sim are really good.

I wanted to add this to the general discussion and look forward to jjrvats posts on trigger and risk as these are the topics I'm working on.

<img src="http://250kb.de/u/080325/j/a51ba203.jpg">
 
Depends on your win% for stop placement. Please note that I don't use this system but my own for trading forex.

My win% is around 60%, and most of my stops are just a tiny bit wider than my profit targets. However, if my stop has not been hit, I may sometimes add more to a trade, and bring the profit target down a little.

So if your win% is very high, you can have wider stops, if over time, its around 50%, you better have a higher profit target than stop loss. You will need at least 3 months to calculate your actual win%. I have calculated mine based on over 1 year real money trading. Once you know your win%, the next step is to not break your rules.
 
Pkchill, timokrates,

Thanks for your comments. I will analyze and reply in detail your previous posts. I am posting some comments on amitman post first.

oraclewizard77,

I have calculated mine based on over 1 year real money trading. Once you know your win%, the next step is to not break your rules.

I like this concept. I agree with you 100%

Amitman,

thank you for your answers i know the second trade is valid but the risk/reward ratio is so poor that if you have trades like this you are going to fail in the long run...

I disagree with you. When you place this trade you don’t know how big the next wave is going to be. The only reference you have is the distance between price and the slow MA, in any case or job as traders is not try to outguess the market… you trade what you see and that was a valid entry (plus +/- 7% max profit range in a stock in less than a week with a max drawdown to the clear stop of +/-1.5% is not bad at all)

al in all i think i understand the basic concept but the entries and stops are still a problem. maybe you coukd help me with what i had today...
today was my worst trading day in a month,

First, sorry to hear that you had a bad day … as you know having losing days is part of traders live, isn’t it?

Second, I can’t help you with that only you can find the solution. What I can give you is my honest comments on your charts in the context of this thread. This is only my opinion and I am not going to pretend that I have the truth and you have to trade in a particular way so take or leave what you think is useful or not; comment, argue or criticize whatever you think that can positively contribute to this thread, you, me or anyone else reading this.

Third, I have never traded SPY so I don’t have any experience on this instrument + sadly I don’t have access to second charts or tick chart in AMEX instruments so I am limited to minutes, volume and range charts.

I’ll continue in the next post with your chart

jjrvat
 
Amitman,

Don’t get me wrong but in your chart it seem that half of the time you tried to outsmart the market and the market outguessed you and in the other half the market outsmart you and you didn’t realize it.

In general I can’t “read” your trades. Sometimes you respect triggers and not waves. I can see why your trigger in the 1st, 3rd, 5th and 6th trades but where are the confirming wave lows/highs? Either they never made it inside the trigger zone or they confirmed way after you pull the trigger. Only the 3rd trade made a confirmed High but only with your trigger (17 HMA) not with 25 WMA!!!. You got in too early because apparently you are trading the indicator and not waves. It seems that you are analyzing highs/ lows only with price (you should consider discarding the 25 HMA it’s worthless according to your chart) which is perfect but you will need a lot more screen time and worse with such a bouncy chart.

The main problem with pure price for Hi/Low analysis without a visual aid is, as it appears in your chart, is not recognizing the previous Highs or Lows (that’s clear) but recognizing in-situ which bar just made a high or a low so you can recognize when a wave ends or starts. That’s the reason you plot a HMA (or any other indicator) to have the “most” objective (it’s not 100% but at least it gives you a concrete reference for price) visual aid to analyze price.

In the other trades you respect waves but your triggers are not efficient with your indicator, there are 0.20 cents away (2nd and 4th trade you pull the trigger too late). Your trigger for these trades is worthless if you are going to give up your entire potential target waiting for confirmation.

Your chart look really complicate to trade not because the instrument but ‘cause the way is plotted:

1. At first glance you can see that is a messy chart (bars going up and down. Have a glance at the 2nd chart posted above (timokrates) and compare in which one is easier to recognize waves (sorry 4 the comparison ;)). My point is not saying that you should change the instrument but to improve the way you look at thinks. Perspective is a key issue for successful trading!!!

2. What is the average true range of your 30 sec chart 0.20, 0.12, 0.07, etc ??. Is that consistent with you stops, targets and whipsaws in your chart?

3. Did you know that you were trading the news? Your first two trades are minutes before and after News (Consumer Confidence Report) that for your bad luck the really bad news went first (that’s another reason your 1st trade failed) and minutes after the revision was positive (that’s another reason why your second trade failed … that long bar that you went short on the close). In my opinion trading a 30 sec chart during important news is a suicide (you need 8 to 18 ticks or 5 to 10 secs charts… but that’s another topic).

4. Did you know that all of your trades except the 3rd were placed on the pivots? (Middle points … I’ll highly recommend you to plot them, they are really helpful). Not only that, but also you placed the trades exactly in the opposite side from where they got clearly rejected.

I leave you with a SPY chart (0.1 constant range bars) quickly smoothed without distorting too much your timeframe and simple wave HL analysis.

jjrvat

28vwrnl.jpg
 
Good point.

As I have not really made the step into professional trading, things like checking the possible advantages of scaling in and adding to winning positions are on my list.

At the moment I'm mostly trying to analyze price action correctly.

Quote from oraclewizard77:

My win% is around 60%, and most of my stops are just a tiny bit wider than my profit targets. However, if my stop has not been hit, I may sometimes add more to a trade, and bring the profit target down a little.

So if your win% is very high, you can have wider stops, if over time, its around 50%, you better have a higher profit target than stop loss. You will need at least 3 months to calculate your actual win%. I have calculated mine based on over 1 year real money trading. Once you know your win%, the next step is to not break your rules.
More...
 
JJvrat
thanks again for your time.
a few questions about you comments, though. you say there was no confirmation of the Highs/lows, by confirmation to you mean a change of the slope of the HMA? if so you say i should enter a trade only AFTER the HMA changed it slope? this could be way too late...
another thing, you say in the second and 4th trades i entered to late but this was actually to early because the HMA hadn't chaned is slope yet, so the minimum is to wait for a close below the HMA and then enter under is low for a confirmation but you say it's too late, so when would you have enterd? before the close of the big bar? when we still don't know it actually going to close below the HMA? and the HMA itself didn't change its slope yet??
that's a contradiction in your very own words.... and I'm sorry if I'm bothering you but I really want to understand...
that's the thing i really don't understand when exactly you get into the trade and this is cruciel because this is exactly the thing that separates a winning trade from a loosing one (supposing your price analysis is right, of course)
two more things
about the news, you're darn right and i should really be aware to them.
about the pivot points I plotted them but apperntly they a re different then yours. in the chart I've posted the brown middle line is the pivot piont.
and for the range charts, if really find them better although you must have noticed that there is some bad data in you chart (from about 15:02-15:10) in my chart there is actually a short trade there which failed but all the other trades during that day succeded (5 trades).
and the last question what is the MA in the chart of the spy you gave, is it a 25HMA?
anyway what i really need to know is when to enter cause as it seems i just don't do it right either i enter to early or to late... anyways thank again would really appriciate your answers.
amitman
 
Hey all,
I'm really learning a whole lot from your dialog--please keep it up! Anyone know how I can configure my hma's or wma's to have the color change on slope change on Ninjatrader? Amitman, I too am having troubles getting in at the right time. I watched the bp go up all morning long in a beautiful upward trend and I look back and wonder why I didn't get more ticks!!! I also get frustrated cause it waves wonderfully b4 I come to the charts to trade, then I place my trade and all of the sudden, out of nowhere, comes a spike that takes out my sl--and might I add, a spike that hasn't made itself known for the last 3 or 4 hours of trading...lol That happened to me twice today and I thought my analysis of hh's and ll's was spot on. In the end, the market is going to do what it is going to do, luck just wasn't with me today to get in on the majority of trades that followed price analysis. I am really happy, though, knowing that at some point in the future I'm going to get this down and be able to take the many positive trades along with some of the negative ones (sometimes the market doesn't cooperate.) As to pivots, I plot mine on close of midnight, your program may plot them different, but should have a setting. I noticed at each pivot an incredibly noticeable confusion point--nice waving up to the r1, then spikes around r1. I just don't trade within 10 ticks of the pivot--jjrvat may shed light in a differing opinion, but I get stopped out too often there.

Just a point of difference jjrvat on the chart that you posed to amitman, isn't there a valid trade between l6 and l7--it follows the trendline and breaks long for quite a few ticks--I would have triggered that long trade at the crossover of the lesser wma/hma--and depending on my risk management, it might have been a b/e trade or it would have hit my sl below l6 on l7.

I'm posting my morning on the bp for all of your perusing. Nice up move, wish I could have gotten more. Notice the bunching at r1...comments? pkchilly
 

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thanks a ton nkhoi! I'll put it into effect...

Just letting you all know why I like the jpy so much. I've been having a crazy time putting up good numbers today from the bp, here's trading the jpy for 1/2 an hour--notice how easily the tops and bottoms are delineated. Enjoy--any comments, again gladly accepted. Oh, and I should say that right after this I put another trade in and got stopped, only a 3 tick stop but clearly below the last low--and it kept on going short to the bottom in one single run. Only 5 tick profit, but pulled 12 ticks from this run after loser. pkchilly
 

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Amitman,

Maybe I didn’t make myself clear before. My point is that you are not going to find a successful trigger if you don’t analyze price properly. My chart had the intention to make you think that if you don’t see waves properly you are wasting your time tweaking your entries. The order of analysis changes everything. Plot your charts in perspective and master the basic the rest come naturally, that’s why my first point on the post “developing your on trading system #1” was about choosing the right timeframe.

The same yesterday SPY chart from a different perspective (volume 1000000). (Only HULL 25). Green arrows are perfect entries (macro direction ok / price analysis ok / trigger the same HMA with double confirmation a close above/below and change of slope +/-.

Why the trigger works in this case? That’s the question you should try to understand.

jjrvat

a46ji8.png
 
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