Day-Trading 2.0 for small traders
- Thread starter jjrvat
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greddy,
As for myself, I developed bad habits in trying to pick bottoms and tops. I studied so many different methods that I need to get rid of garbage, and just stick to price action. I was not able to put a single trade on as I watched in disbelief as NQ grinded lower all day.
Should have just watched the chart and trend.
Thatâs a good topic for a future post, getting rid of past bad habitsâ¦
In any case, I still have some old statistics from when I was testing my PBP. One of the most difficult parts is to FORGET about TOPS AND BOTTOMS. 68% of bad trades I had in 500 consecutive trades (live and demo) were related to tops and bottoms. The weird think it was that only 38% of them (losers âcause tops and bottoms) were because I failed to forecast the right point, but the other 62% were the trades right after successful reversal trades. Why? because I forgot about price analysis so I started seeing potential reversal everywhere, or âtoo closeâ to the top/bottom to take that trade, etc, etc, etc. = confusion and paralysis in the analysis = losing money and more important than that lossing perspective and confidence.
As you said just watch the chart !!! ⦠and follow price analysis â¦
Good luck
jjrvat
As for myself, I developed bad habits in trying to pick bottoms and tops. I studied so many different methods that I need to get rid of garbage, and just stick to price action. I was not able to put a single trade on as I watched in disbelief as NQ grinded lower all day.
Should have just watched the chart and trend.
Thatâs a good topic for a future post, getting rid of past bad habitsâ¦
In any case, I still have some old statistics from when I was testing my PBP. One of the most difficult parts is to FORGET about TOPS AND BOTTOMS. 68% of bad trades I had in 500 consecutive trades (live and demo) were related to tops and bottoms. The weird think it was that only 38% of them (losers âcause tops and bottoms) were because I failed to forecast the right point, but the other 62% were the trades right after successful reversal trades. Why? because I forgot about price analysis so I started seeing potential reversal everywhere, or âtoo closeâ to the top/bottom to take that trade, etc, etc, etc. = confusion and paralysis in the analysis = losing money and more important than that lossing perspective and confidence.
As you said just watch the chart !!! ⦠and follow price analysis â¦
Good luck
jjrvat
Ok here's my performance on the YM today.
Chart:
YMM8
500 constant volume OHLC bars
Slow MA = 240WMA colored according to slope
Fast MA = 6WMA colored according to slope
(there's also a 17HMA colored according to slope, purple = down and yellow = up).
Trades placed according to the 6WMA. OHLC bars are also color coded according to the slope of the 6WMA. So green bar = 6WMA sloping up, and red bar = 6WMA sloping down.
Entry criteria = after a higher high and higher low, I enter on the completion of the first green candle (and therefore a sloping up 6WMA since that's how the candles are colored). And vice versa for shorts.
Exit criteria = A few ticks profit or stoploss set 1 tick under previous low (or 1 tick over previous high for short positions)
FIRST HALF OF DAY:
A
Slow MA sloping up, price above.
Fast MA sloped down for one candle and made a new, higher low, and then resume up. I entered at the start of the second green candle (first green candle was confirmation of uptrend)
Buy= 12845
I exited a few ticks later at 12849. I'm not used to scalping at all so I wasn't sure how long to wait.
+4 ticks
B
A new lower low was just made. I entered at the beginning of the first candle after the first green candle (got a little slippage tho).
Buy = 12869
C
Sell = 12862 (when the first red candle completed; short term trend no longer up)
- 7 ticks
D
Thinking that maybe I need to use a bigger scale, I entered here at 12858 after the 6WMA started to slope up again. I was considering the previous group of red candles to be the "higher low" following the red candles at the beginning of my chart.
Buy = 12858
E
Exit after a few ticks profit, trying to scalp.
Sell = 12861
+3
F
The preceding red candles were a higher low, so I entered when Fast MA sloped back up.
Buy = 12865
G
Exit after a few ticks (luckily at the top!)
Sell = 12867
+ 2
H
Price is now below Slow MA. A lower high was formed by one candle right above the Slow MA. I entered at H as soon as the Fast MA turned down again.
Short = 12836
I
Trying to scalp a few ticks (lucky exit at the bottom)
Cover = 12829
+ 7
J
Price above slow MA, higher low formed, enter at J on after completion of first upward sloping Fast MA candle.
Buy = 12871
K
Scalping for a few ticks. Had no idea this was going to be a HUGE uptrend. Missed getting stopped out by 2 ticks.
Sell = 12876
+5
SECOND HALF OF DAY
L
Higher low, enter when new green candle is formed.
Buy = 12898
M
Stop hit at 1 tick under previous low.
Sell = 12886
-12
N
Lower high (previous green candle), enter short on completion of red candle.
Sell = 12831
O
Stop hit at 1 tick above previous high.
Cover = 12844
- 13
P
Looking at my chart I'm not sure why I entered here. In fact, I shouldn't have, because the previous high was a higher high. Oops.
Sell = 12834
Q
Covering the position I'm not even sure why I entered.
Cover = 12828
+3 (but this shouldn't count cuz I shouldn't have entered this trade)
R
Lower high (one green candle before). Enter at completion of new red candle (downward fast MA)
Sell = 12811
S
Stopped out at 1 tick above previous high
Cover = 12828
-17
T
Thinking maybe that previous lower high (the one green candle) wasn't correct, I considered that the last time the price was above the 240WMA to be the last "hight" and then the run of green candles that just formed to be the "real" "lower high." This is obvious if you look at the chart. Sell short at completion of first red candle (downtrend resuming)
Sell = 18262
U
Stopped out 1 tick above prevoius high
Cover = 18245
- 19
Total for day = -44 ticks
Thoughts: Using 1 tick above the previous high resulted in catastrophic failure when my stops were hit on my short positions. Without a 90% win rate I will need to come up with a better stoploss plan.
Chart:
YMM8
500 constant volume OHLC bars
Slow MA = 240WMA colored according to slope
Fast MA = 6WMA colored according to slope
(there's also a 17HMA colored according to slope, purple = down and yellow = up).
Trades placed according to the 6WMA. OHLC bars are also color coded according to the slope of the 6WMA. So green bar = 6WMA sloping up, and red bar = 6WMA sloping down.
Entry criteria = after a higher high and higher low, I enter on the completion of the first green candle (and therefore a sloping up 6WMA since that's how the candles are colored). And vice versa for shorts.
Exit criteria = A few ticks profit or stoploss set 1 tick under previous low (or 1 tick over previous high for short positions)
FIRST HALF OF DAY:
A
Slow MA sloping up, price above.
Fast MA sloped down for one candle and made a new, higher low, and then resume up. I entered at the start of the second green candle (first green candle was confirmation of uptrend)
Buy= 12845
I exited a few ticks later at 12849. I'm not used to scalping at all so I wasn't sure how long to wait.
+4 ticks
B
A new lower low was just made. I entered at the beginning of the first candle after the first green candle (got a little slippage tho).
Buy = 12869
C
Sell = 12862 (when the first red candle completed; short term trend no longer up)
- 7 ticks
D
Thinking that maybe I need to use a bigger scale, I entered here at 12858 after the 6WMA started to slope up again. I was considering the previous group of red candles to be the "higher low" following the red candles at the beginning of my chart.
Buy = 12858
E
Exit after a few ticks profit, trying to scalp.
Sell = 12861
+3
F
The preceding red candles were a higher low, so I entered when Fast MA sloped back up.
Buy = 12865
G
Exit after a few ticks (luckily at the top!)
Sell = 12867
+ 2
H
Price is now below Slow MA. A lower high was formed by one candle right above the Slow MA. I entered at H as soon as the Fast MA turned down again.
Short = 12836
I
Trying to scalp a few ticks (lucky exit at the bottom)
Cover = 12829
+ 7
J
Price above slow MA, higher low formed, enter at J on after completion of first upward sloping Fast MA candle.
Buy = 12871
K
Scalping for a few ticks. Had no idea this was going to be a HUGE uptrend. Missed getting stopped out by 2 ticks.
Sell = 12876
+5
SECOND HALF OF DAY
L
Higher low, enter when new green candle is formed.
Buy = 12898
M
Stop hit at 1 tick under previous low.
Sell = 12886
-12
N
Lower high (previous green candle), enter short on completion of red candle.
Sell = 12831
O
Stop hit at 1 tick above previous high.
Cover = 12844
- 13
P
Looking at my chart I'm not sure why I entered here. In fact, I shouldn't have, because the previous high was a higher high. Oops.
Sell = 12834
Q
Covering the position I'm not even sure why I entered.
Cover = 12828
+3 (but this shouldn't count cuz I shouldn't have entered this trade)
R
Lower high (one green candle before). Enter at completion of new red candle (downward fast MA)
Sell = 12811
S
Stopped out at 1 tick above previous high
Cover = 12828
-17
T
Thinking maybe that previous lower high (the one green candle) wasn't correct, I considered that the last time the price was above the 240WMA to be the last "hight" and then the run of green candles that just formed to be the "real" "lower high." This is obvious if you look at the chart. Sell short at completion of first red candle (downtrend resuming)
Sell = 18262
U
Stopped out 1 tick above prevoius high
Cover = 18245
- 19
Total for day = -44 ticks
Thoughts: Using 1 tick above the previous high resulted in catastrophic failure when my stops were hit on my short positions. Without a 90% win rate I will need to come up with a better stoploss plan.
Hi Jjrvat,
Why did you enter a short at the first arrow on your chart when price was above the 240 WMA? Thank you.
Floyd
Why did you enter a short at the first arrow on your chart when price was above the 240 WMA? Thank you.
Floyd
Quote from jjrvat:
IronFist,
Your same chart 240 WMA and Hull 17 Today YM US morning
10 Trades, 9 winners more that 144 ticks potential range 6 tick max drawdown. 1 losser 8 ticks.
No further comments
jjrvat
^ Thanks!
I see some differences now. In your chart you are taking trades in the direction of the 240WMA regardless of if price is above or below it at the time.
At your 7th arrow, why did you go long here? It was preceded by a lower low. I thought a higher low was required to go long. Or does this rule change because of crossing the 240WMA or the 240WMA changing color?
Looking at your chart I see a few entries with more than 6 ticks drawdown to the stoploss, however I'm more concerned right now with why my chart, which I've set with the same settings as you, is looking slightly different.
500 constant volume bars.
240WMA, 17HMA, both calculated based on the close (last) price.
OHLC bars (I don't have HLC) colored based on 17HMA.
Click here for chart comparison:
http://img.photobucket.com/albums/v326/ironfistx/differences.jpg
A - You have two red bars here (thus triggering an entry when they change back to green) and I don't.
B - I have a green bar in surrounded by red bars and you don't
C - I have a random red bar in here surrounded by greens and you don't.
D - Your green bars don't start until the 240WMA is crossed and mine start before.
Weird. I would think data such as this would be identical regardless of provider and charting package.
I see some differences now. In your chart you are taking trades in the direction of the 240WMA regardless of if price is above or below it at the time.
At your 7th arrow, why did you go long here? It was preceded by a lower low. I thought a higher low was required to go long. Or does this rule change because of crossing the 240WMA or the 240WMA changing color?
Looking at your chart I see a few entries with more than 6 ticks drawdown to the stoploss, however I'm more concerned right now with why my chart, which I've set with the same settings as you, is looking slightly different.
500 constant volume bars.
240WMA, 17HMA, both calculated based on the close (last) price.
OHLC bars (I don't have HLC) colored based on 17HMA.
Click here for chart comparison:
http://img.photobucket.com/albums/v326/ironfistx/differences.jpg
A - You have two red bars here (thus triggering an entry when they change back to green) and I don't.
B - I have a green bar in surrounded by red bars and you don't
C - I have a random red bar in here surrounded by greens and you don't.
D - Your green bars don't start until the 240WMA is crossed and mine start before.
Weird. I would think data such as this would be identical regardless of provider and charting package.
JJrvat , I have been a consistent lurker for some time but your thread is so fresh helpful and educational it has enthused me to contribute.
Great thread please keep it up and I am looking forward to you input on psychology and stops.
On your previous post arrows 7 + 8 appear to be going against price action as described.
7 appears to be triggering long of a lower low
8 also appears to be triggering long of a lower low .
Price action for this swing shows a downtrend but you are taking longs.
Is it that the 240wma in an uptrend is overidng the price action and you are therefore taking longs ?
Again Jjvrat well done keep up the excellent thread .
Richard
Great thread please keep it up and I am looking forward to you input on psychology and stops.
On your previous post arrows 7 + 8 appear to be going against price action as described.
7 appears to be triggering long of a lower low
8 also appears to be triggering long of a lower low .
Price action for this swing shows a downtrend but you are taking longs.
Is it that the 240wma in an uptrend is overidng the price action and you are therefore taking longs ?
Again Jjvrat well done keep up the excellent thread .
Richard
Hi JJvrat,
Thank again for a great post a few comments though hope you'll answer them:
1) The second trade (the loser) could have been easily avoided by entering only one tick below the low of the bar that changd the slope, this is how I trade to avoid whipsaws. But I do notice that this entry method might have turned the 5th trade into a loser. What do you find better? entering right on the close or waitnig for a new low?
2) Talking about the 5th trade, where exactly is your entry point? I guess it's not in the long red bar since you have to wait for it to close in order to know a new wave had started, so if you entered only after the long bar closed how do you know this trade was a winner? Because from what I see the trade had merley made a few tick (2-3) before going back up.
3) As someone else mentioned before the 8th and the 9th trade are not valid longs as price makes LL, LH, moreover, I would have entered a short trade right after you made trade 8, which would have been a winner.
4) And one last question, what R/R ratio, from your exprience, one should aim in the PBP method? my current risk/reward is 2/1 (usually 18-21c stop for 11c profit) and I'm doing good since my success rates are pretty high (more then 80%) but I still feel this is a poor ratio and that in tougher days to trade I will get banged, my problem is I can't enter earlier since I'm already entering pretty early and entering more early will produce too many whipsaws, and I can't tighten the stops since I place them in a very logical postion (one tick above/below last high/low),
I'm thinking of scaling out but problem is that too many times the second half will go out B/E thus making the scaling out less profitable then the fixed targets in the overall trading...
Trading SPY BTW.
Thank you again.
Dear IronFist, I'll try to contribute my 2 cents:
1) As I tols you WMA's are simply not good just look what would have happned if you only used the 17HMA for entering, you would have had, 7 trades, 6 of them winners.
2) Even if you'll still enter by the 6WMA there are still at least 2 winning trades that for some reason you didn't take...
3) Another comment about waves. In my trading I want to see a retracement wave of at least 2-3 bars in order to enter, for example if the direction is long and I want to enter I'm waiting for at least s 2-3 bars down wave before I enter. This thing alone can help you avoid many whipsaws (although it might, sometimes, avoid winners also), just look in your first half of the day with the 17HMA, by doing what I've told you would have had 3 trades, all winners, each of them at least 12 ticks.
4) Your R/R ratio is simply poor (about 1:4 if i'm now mistaken), in this ratio even a 90% of success won't make you profitable. You might comsider either tightening your stops (not recommanded) or exiting when a new wave against you direction had started and not waiting for your stop to be hit. But what I'll recommand is findind a faster indicator that will use you for enteries (but not for waves analysis), this could be a faster HMA, a stoch, a candle formation etc. This might give you more losess, due to the early entry, but they will be much smaller and your winners will be much bigger.
Good luck!
Thank again for a great post a few comments though hope you'll answer them:
1) The second trade (the loser) could have been easily avoided by entering only one tick below the low of the bar that changd the slope, this is how I trade to avoid whipsaws. But I do notice that this entry method might have turned the 5th trade into a loser. What do you find better? entering right on the close or waitnig for a new low?
2) Talking about the 5th trade, where exactly is your entry point? I guess it's not in the long red bar since you have to wait for it to close in order to know a new wave had started, so if you entered only after the long bar closed how do you know this trade was a winner? Because from what I see the trade had merley made a few tick (2-3) before going back up.
3) As someone else mentioned before the 8th and the 9th trade are not valid longs as price makes LL, LH, moreover, I would have entered a short trade right after you made trade 8, which would have been a winner.
4) And one last question, what R/R ratio, from your exprience, one should aim in the PBP method? my current risk/reward is 2/1 (usually 18-21c stop for 11c profit) and I'm doing good since my success rates are pretty high (more then 80%) but I still feel this is a poor ratio and that in tougher days to trade I will get banged, my problem is I can't enter earlier since I'm already entering pretty early and entering more early will produce too many whipsaws, and I can't tighten the stops since I place them in a very logical postion (one tick above/below last high/low),
I'm thinking of scaling out but problem is that too many times the second half will go out B/E thus making the scaling out less profitable then the fixed targets in the overall trading...
Trading SPY BTW.
Thank you again.
Dear IronFist, I'll try to contribute my 2 cents:
1) As I tols you WMA's are simply not good just look what would have happned if you only used the 17HMA for entering, you would have had, 7 trades, 6 of them winners.
2) Even if you'll still enter by the 6WMA there are still at least 2 winning trades that for some reason you didn't take...
3) Another comment about waves. In my trading I want to see a retracement wave of at least 2-3 bars in order to enter, for example if the direction is long and I want to enter I'm waiting for at least s 2-3 bars down wave before I enter. This thing alone can help you avoid many whipsaws (although it might, sometimes, avoid winners also), just look in your first half of the day with the 17HMA, by doing what I've told you would have had 3 trades, all winners, each of them at least 12 ticks.
4) Your R/R ratio is simply poor (about 1:4 if i'm now mistaken), in this ratio even a 90% of success won't make you profitable. You might comsider either tightening your stops (not recommanded) or exiting when a new wave against you direction had started and not waiting for your stop to be hit. But what I'll recommand is findind a faster indicator that will use you for enteries (but not for waves analysis), this could be a faster HMA, a stoch, a candle formation etc. This might give you more losess, due to the early entry, but they will be much smaller and your winners will be much bigger.
Good luck!
ERRATA
Before I answer your questions I would like to post a correction in my last chart, winners 7 and 8 ARE NOT PERFECT SETUPS !!!
I didnât want to mislead anybody here and I am sorry for the mistake. It was 12:30 AM and I post this chart after reading Ironfist post which I perceived (or misperceived) as a post with sarcasm of somebody that was trying to imply that the info in this thread is ambiguous with the purpose of taking a commercial advantage in the future or something else ⦠(Ironfist if this was not the case I apologize). In any case this is the correct chart.
jjrvat
Before I answer your questions I would like to post a correction in my last chart, winners 7 and 8 ARE NOT PERFECT SETUPS !!!
I didnât want to mislead anybody here and I am sorry for the mistake. It was 12:30 AM and I post this chart after reading Ironfist post which I perceived (or misperceived) as a post with sarcasm of somebody that was trying to imply that the info in this thread is ambiguous with the purpose of taking a commercial advantage in the future or something else ⦠(Ironfist if this was not the case I apologize). In any case this is the correct chart.
jjrvat
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