Day trading difficulties

wrbtrader · May 31, 2011

Quote from oilfxpro:

...Finding trends and direction can be easier to trade and place real money on the table , they are also more profitable.

If that's the case...why are you having so much problems at trying to catch trends via whatever day trade method you're using or designing for automation/mechanical day trading system ???

Regardless, the few profitable day traders I've met...do not approach day trading the way you're approaching it...chasing trends via trying to design an automation day trade method based upon a trend signal because they know without that market context...day trading will be extremely difficult or a losers game as you've been discovering "so far".

Mark

bone · May 31, 2011

I used to trade 400K round turns a month - since about 2007 I have completely turned face and now 'swing trade' much more.

In my mind, stepping away from the HF 'turbulence' definitely has merit. Why play to the strength of the automated strategies ?

oilfxpro · Jun 1, 2011

Quote from wrbtrader:

If that's the case...why are you having so much problems at trying to catch trends via whatever day trade method you're using or designing for automation/mechanical day trading system ???

Regardless, the few profitable day traders I've met...do not approach day trading the way you're approaching it...chasing trends via trying to design an automation day trade method based upon a trend signal because they know without that market context...day trading will be extremely difficult or a losers game as you've been discovering "so far".

Mark

The answer is very simple and it has to do with the random distribution of buyers and sellers , and appearance of trends where none exist.

http://www.elitetrader.com/vb/showthread.php?s=&postid=3198674#post3198674

There are two ways to day trade . One is a betting method where the punter bets on the form of the trend , this is the method which has most problems .Set ups , patterns, systems,trends ,support and resistance all fail on a regular basis, or newer versions are required to trade profitably..The distribution of these failures can magnify randomly to specific periods

There is no automated method which will work consistently for day trading , automated methods require inputs , random inputs will give losing systems due to the spread.

The other method is service/liquidity provider method, where a trader sets up a system to take on risk and provides liquidity and places his trades.His system will have a positive expectancy for day trading.

Now I know the problem of t/a , I have created a method to trade randomness.In fact I always had a profitable day trading method to trade randomness , but I was not sure why it was working in fx day trading, so I tried t/a form betting method and found difficulty.If t/a worked the whole world would be day trading using t/a.

Visaria · Jun 1, 2011

As usual, you have lost me. I have no idea what you are talking about.

Good luck to you whatever you do.

ammo · Jun 1, 2011

Quote from oilfxpro:

The answer is very simple and it has to do with the random distribution of buyers and sellers , and appearance of trends where none exist.

http://www.elitetrader.com/vb/showthread.php?s=&postid=3198674#post3198674

There are two ways to day trade . One is a betting method where the punter bets on the form of the trend , this is the method which has most problems .Set ups , patterns, systems,trends ,support and resistance all fail on a regular basis, or newer versions are required to trade profitably..The distribution of these failures can magnify randomly to specific periods

There is no automated method which will work consistently for day trading , automated methods require inputs , random inputs will give losing systems due to the spread.

The other method is service/liquidity provider method, where a trader sets up a system to take on risk and provides liquidity and places his trades.His system will have a positive expectancy for day trading.

Now I know the problem of t/a , I have created a method to trade randomness.In fact I always had a profitable day trading method to trade randomness , but I was not sure why it was working in fx day trading, so I tried t/a form betting method and found difficulty.If t/a worked the whole world would be day trading using t/a.

2 ways to daytrade....[bracket,mean reversion,trend,countertrend...] to your knowledge....no automated....to your knowledge....don't confuse is not , with i don't know...thinking outside the box requires accepting that things are not what they seem...your jumping ahead and saying what seems to be ..is

wrbtrader · Jun 1, 2011

Quote from oilfxpro:

The answer is very simple and it has to do with the random distribution of buyers and sellers , and appearance of trends where none exist...

I do not understand what this statement is all about and that may be due to the fact that I do not day trade via automation and you're reply is via automation. Regardless, can you show me a chart example of the appearance of trends where none exist because your statement is way above my head. Simply, I would like to "visually" see what you're trying to explain.

Quote from oilfxpro:

...There are two ways to day trade...

This is a false statement because as stated earlier...the few profitable traders I've watched consistently in person "do not" chase trends but they do have a very strong understanding of market context and such allows them to understand when trends are most likely to occur.

Simply, there's obviously more than two ways because they do not fit into any of your described categories of profitable day trading. Yet, the difference in opinion could be the fact that they are not automation system traders whereas your statement could be exclusive to automation trading.

Think outside the box.

Quote from oilfxpro:

...In fact I always had a profitable day trading method to trade randomness, but I was not sure why it was working in fx day trading, so I tried t/a form betting method and found difficulty..

I see statements like this often by traders losing in other areas of day trading. Yet, they continue trying that new route while knowing they have something that already works (profitable).

My point is that I like to keep it simple. If I have one method that's profitable and 10 methods that's not profitable...I'm the type of trader that likes to make money. Simply, I will use the profitable method and not waste any more time & energy on other methods when I discover they are not profitable.

Seriously, I never can understand why some traders with an existing profitable method have this need to keep hammering at something else that's not working...is it an ego thing.

Mark

jokepie · Jun 1, 2011

WHat difficulties ??

soldsoldsold · Jun 3, 2011

If you're looking for experienced traders' advice you should look into what brokerages provide for free online. A lot of them will provide a free service for a week or two and usually its pretty good. My broker does a daily futures trading webinar where the VP does a live explanation of what he's thinking about the market/trades/signals at the start of the market opening and during periods of high volatility.. then during the entire trading day his personal trading signals are streaming live so if you need a sort of 'GPS' to guide you and keep you on track, I can personally vouch for this one.

I know there are others out there. I came across a thread in another forum (for the record ET is better) that has a giant list of video services.
http://www.traderslog.com/forum/showthread.php?t=2997

Quote from oilfxpro:

The market changes from bullish to bearish bias several times a day.It is really difficult to keep changing biases from long to short , several times a day.The mind can remember the previous market bias , and often rejects the change in bias and direction, hoping it is only a ranging market.

Small stops get triggered frequently, and changes in market direction frequently results in losses.Wide stops hurt positive expectancy , although probability of wider stops getting hit is low.

4 out of 5 trend set ups fail on a daily basis on intra day trading , leaving the one set up to make up the losses and a profit.There is too much bad news coming out during day time, sending the prices reversing frequently , to be profitable from trading currencies intra day.Some of the large trends breakout , in the middle of the night when I am asleep.

Should I just trade only when the trend has broken out?Often this leads to catching trends late.What is the solution?Should a day trader trade only in the direction of the longer term trend?

The difficult market conditions with so many fake moves, create psychological problems ,leading to stress and emotional responses and a breakdown in discipline.

I am thinking of changing to swing trading in the direction of longer time frame trend , i.e using daily time frame and wider stops.

Any opinions would be welcome.

NoDoji · Jun 4, 2011

Quote from oilfxpro:

The answer is very simple and it has to do with the random distribution of buyers and sellers , and appearance of trends where none exist.

When the distribution of buyers and sellers is random in your chosen time frame, the price footprint is random (back to back dojis and up/down price bars in a range around a flat 20-period moving average).

On a smaller time frame, these random price bars form small tradable micro-trends. You can trade them or wait for non-random action, designated by buyers overwhelming willing sellers or sellers overwhelming willing buyers. This is known as a trend. When this appears, the trend exists.

Although I generally trade trends that actually exist, I'm quite happy to trade the appearance of trends even if none exist.

"If it looks like a duck, and quacks like a duck, we have at least to consider the possibility that we have a small aquatic bird of the family anatidae on our hands." - Douglas Adams

oilfxpro · Jun 4, 2011

Quote from NoDoji:

When the distribution of buyers and sellers is random in your chosen time frame, the price footprint is random (back to back dojis and up/down price bars in a range around a flat 20-period moving average).

On a smaller time frame, these random price bars form small tradable micro-trends. You can trade them or wait for non-random action, designated by buyers overwhelming willing sellers or sellers overwhelming willing buyers. This is known as a trend. When this appears, the trend exists.

Although I generally trade trends that actually exist, I'm quite happy to trade the appearance of trends even if none exist.

"If it looks like a duck, and quacks like a duck, we have at least to consider the possibility that we have a small aquatic bird of the family anatidae on our hands." - Douglas Adams

In these situation and intraday trading one needs a very small stop of 8 to 12 pips, some can use smaller stops.These help keep the losses down , more experimenting/experience is required.

I am having a bit more success with small stops on trends, but still need to work on fear and greed on position sizes.

If one can get away with 8 pips stops and be rewarded 16 , and the hit rate is 40 % , day trading fx can be good.

The profit targets have to be small , and winners should also be allowed to run.