Day-Trading 2.0 for small traders

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milimabuse
hence: always 50/50 chance per se

OHH, yes !!! a 50/50 probability scenario … Great you just discovered the solution for successful trading. The only thing you have to do is optimize MM. Find the right timeframe for four S/R levels with 8:1 or more R/R and problem solve!!!, given that you know your odds and are blindly trading S/R your stops must be very very very tight and your targets far away so just sit down and accept your tiny 50% bad trades because the other half will compensate and make millions. You will need an investor approach (longer timeframes) based solely on this and some extra fundamental analysis if you want, patience, consistency, capital, capital, capital and time. Just sit and enjoy the ride, you have discovered the Holy Grail.

Although milimabuse bitter comments clearly reflect some bad previous experiences daytrading, I must admit that he is right on the “TOO MANY upport and resistance zones in TOO MANY timeframes”. S/R and Trendlines are surprisingly misplaced and misunderstood, usually as consequences of problems recognizing the basics (High and Lows), or the implications of multiple timeframes.

In any case and to be relevant to this thread, this post just reminded me to a fellow French trader that once sent me CAC40 chart like this (this is not the one btw) asking me for comments on his trading approach:

2lktnoj.jpg


My opinion was and is “I don’t have a clue what are your doing or seeing but if the convergence of 100s of S/R, Trendlines, Fibs and Ganns lines are making you see the matrix, great just keep doing it”

I do agree with Big’s core concept but in my opinion more important that the validity of the assumption “ … when it comes to their money, men usually have a very good memory” is what are the implications (if any) of this levels and what do we do with that information. I am not an expert on trendlines but I will comment on what are for me the basic flaws when analyzing these levels.

I’ll continue later.
jjrvat
 
well jjrvat, not so sure it' s "the holy grail":

8:1 R/R implies that the stops are indeed super tight, which calls for tons of whipsaws and re-entries, and that kills the profitability.

sure, this would be the holy grail if you entered 4 times each day max with 0.20 stops targeting 0.80 gains...but,
quick TS backtests revealed regularly only 13-19% winning trades over 3 month periods

which again means: "sometimes" you eke out gains in positive series, and the other 50% of times the revenge of statisitics catches you..
 
jjrvat, that last chart you posted sure is one ugly chart! It reminds me of this ugly chart: http://uploader.ws/upload/200810/universe.jpg

Can we have a discussion on how to scalp using this method?

As I've mentioned before, I was only able to be profitable with these concepts by holding trades for longer periods of time.

I'm curious how you scalp for profit compared with how you know when to cut losses. In my backtesting and forward testing, when I reduced my profit targets, I ended up having overall losers because my losers were still too big.

I never figured out how to know when to take losses when scalping.

It wasn't an issue when I was holding onto winners, however, because I didn't care about losses because I knew the next 20-50+ tick winner was just around the corner.

So I'd try to limit losses by using tighter stops but there was always too much noise and I'd always get stopped out.

I'm interested to hear people's thoughts on this.
 
having read jjrvats thread many times (plus Anekdotens famous thread about a similar method using price action) I think it's obvious that you should place your initial stop at last swing high (shorts) or swing low (longs)... so now fix stop. If this stop is too big (in % of your total equity), just skip this trade...

The bigger problem is to have a method for trailing the stop if the price leaves the initial price level (how to let the winners run...).
 
Trend? Definitely go long and you cant lose in this market. 3 weeks with barely a pullback? This screams of a bull market! After fighting the tape the last 3 weeks I finally "wised" up and am now 100% long. At the rate we are going I will be the proud owner of a nice shiny new BMW after another 2 weeks of nothing but clear blue skys up up and away! :cool:
 
IronFist,

I will try to address you question in the next posts on Trend and S/R lines but just a quick comment on your post: If you are holding trades for longer periods of time you’re not” scalping” and you will be better off trading a slower timeframe. There is not holding anything when “scalping”, pull the trigger grab your 2 to 8 ticks (depending on how fast is the instrument) and run, and run fast. Scalping is based on % of winners not in Homeruns.

Millimabuse,
OF COURSE NOT !!!. I Was just being sarcastic with your oversimplified comments …

S/R levels and Trendlines

At first glance, they are very efficient and so simple to understand that it seems impossible to deny their validity. But as you know, in a live chart they can be very difficult to recognize before is too late (lagging) or they can spread faster (too many contradictory “swings”) than swine flu, blurring the analysis of any rational trader.

1. S/R Levels are not the same as support or resistance points in a trendline

It’s amazing how these 2 basic TA concepts are usually misunderstood and misinterpreted. A typical example of this problem is newbies (and sometimes not only them) calling the top or the bottom of a trend because a trendline got broken (just quickly glance at some the 1000s threads calling tops or bottoms). But before go in details, we need again to go back to basics.

In order to identify S/R levels and Trendlines, it’s necessary to define the only variable involved in this analysis: Swings (Highs and Lows). And like always, in the foundations is where all problems start. What is a swing? What is the faster and efficient method to determine a swing?.

The simple and more effective way that will cover 90% of the swings is the one shown on the chart. So you need 3 bars and the only “rule” for a swing high is a Lower High in the Bar [-1] a Higher High in the bar [0] and a confirmed LH in the bar [-1]. The opposite for Lows.

This is one of the core fundamentals on Price Analysis. Once you have determined this points you can start defining (but not analyzing and even worst trading) S/R levels and Trendlines. To define S/R levels you just need Horizontal lines on those swings. For a trendline you connect the 2 swings (in the case of the chart Highs).

2imbadk.jpg


I know these are basic concept but in these very essential notions you can find the roots of most problems in this analysis. For example, based only in this chart you may think to go short in the next test of that trendline (which is valid idea) but price can go but not break the Horizontal Resistance level, breaking the trendline and still be a valid short setup. In other words the valid setup for shorts is because price is making LH and LL !!! ; and not because the trendline is broken you should start looking for longs, not until you have new swings pointing to a different scenario!!!!.

The second and probably indispensable fundamental in S/R and trendline analysis is defining the relation between swings and timeframe. Here is when everything gets messed up: All swings in your current timeframe will be reflected in a lower timeframe but NOT ALL swings from your current timeframe will reflect on a higher timeframe.
This means that you can connect and “unlimited” numbers of swings but you need to recognize which swings correspond to your current timeframe and which one are from a higher timeframe. In other words if you connect a major swing to a small swing you may end up with an INVALID trendline.

I’ll continue later with details

jjrvat
 
Quote from jjrvat:

IronFist,

I will try to address you question in the next posts on Trend and S/R lines but just a quick comment on your post: If you are holding trades for longer periods of time you’re not” scalping” and you will be better off trading a slower timeframe. There is not holding anything when “scalping”, pull the trigger grab your 2 to 8 ticks (depending on how fast is the instrument) and run, and run fast. Scalping is based on % of winners not in Homeruns.
More...

jjrvat,

The problem I had with trying to scalp was that I didn't understand how to cut losses when scalping. Price is always bouncing all over the place (noise) within the trend, so what happens if I'm aiming for "2 to 8 ticks" but as soon as I enter it goes against me 10 ticks? Do I sell as a loss? Do I hold on and wait for it to bounce back up? If so, how long do I hold on? What if it goes 15 ticks against me? If I sell then, I'll have to wait until I get two more winners just to break even.

But when I was holding them longer, until the trend ended regardless of what price did in the meantime, I wouldn't care if price went against me 10 or 15 or 20 as soon as I entered. Say I'm long: Is price making a LL? No. Well then keep holding. And usually it would go back in my favor for a win which is why I was profitable.

It just seems to me that, if you're scalping, that there are going to be small winners and occasional huge losers. So I'm curious to know how you decide when to cut losses and how you deal with all the "noise" while scalping for 2-8 ticks.

Thanks!
 
Hi I wont to ask from jjrvat
somebody told me that the best think to practice is to go to elite trader & search for jjrvat to learn the reel way of trading based on price action so I camed hear & start reading but the think is that its very long
so I wont to ask U if U have like a pdf what explaines the most importent info in your method or if U can direct me to the most importent posts
thanks
 
Quote from ybforex:

Hi I wont to ask from jjrvat
somebody told me that the best think to practice is to go to elite trader & search for jjrvat to learn the reel way of trading based on price action so I camed hear & start reading but the think is that its very long
so I wont to ask U if U have like a pdf what explaines the most importent info in your method or if U can direct me to the most importent posts
thanks
More...

You really should read all of jjrvat's posts and view all of jjrvat's images in this thread, but the general idea is:

price moves in waves consisting of higher highs, higher lows, lower highs, and lower lows (HH, HL, LH, LL). Your best place to enter a long position is after HHs and HLs and the best place to enter short is after LLs and LHs.
 
Thanks for the great thread.

I've been reading this thread for several days and am currently on page 58. I just read a post from more than a year ago where jjrvat said he was planning on posting a pdf summary. Was that done? If so, could someone either attach it again or point me to the page where I can find it.
 
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