I would suggest you read a couple of the books and then try to execute the strategies they talk about. Then you could form your own conclusions about how useful they are
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EricP, Lescor, Patrickq, Dustin and gang..
- Thread starter ChkitOut
- Start date
I would suggest you read a couple of the books and then try to execute the strategies they talk about. Then you could form your own conclusions about how useful they are
Quote from ChkitOut:
Please tell me how to become an equity trader.
....
Whats the proper road? Start me on the right road.
http://www.stocktrading.com/
go for their 1 year program... $5K for training and $10K Capital... keep in mind you have to register... the biggest challenge will be to unlearn all the crap you were "taught"...
If I was allowed to do equities, that is what I would do myself... either that or this guys....
http://www.smbcapital.com/
OP.....
I am new to daytrading equities as well.
1. I think you need to drill down to what you can and cannot control.
2. HFT... is an arms race @ best and shady @ worst... either
way, they control the que and the ticks.
3. You can use "Daily" bars ONLY to give you an edge intraday.
OHLC data are more realistic tradeable price points.
4. Create a universe of stocks $30-$70 that are very liquid. $100+
stocks have less predictable spreads to test your skid and
fill rate. Point is if you cannot be profitable in this space then
"Stock of the day" should be avoided.
5. Clear your head! you need to be creative in what you test.
6. Develop several 5+ strategies that are not too correlated and
trade "small". trend, momentum and reversion.
7. Define your weakness..Are you too greedy? (my weakness) so
take profits more often. "Ride your winners" is very true but
for me I tend to ride too long! So reading this in a book would
actually be detrimental to me.
8. Can you make $500 in day on avg? on $100k bp, thats .05%
per day thats $125k yr. ..if you have 10:1 bp it's 5% !
9. I agree the markets are more efficient or controlled by Ben
Bernanke, but are they more efficient @ 9:30:00 or 12:00:00?
10. Trade less! trade smaller! The pros on this site or anywhere
might have $5mm+ buying power intraday? (me guessing).
i see little value in trading my tiny account like they do.
11. Once you get some consistency then start to ramp up share
size (you'll be confident) and playing with "house money".
Sorry to be lengthy but this helps me as well, good luck sir!
I am new to daytrading equities as well.
1. I think you need to drill down to what you can and cannot control.
2. HFT... is an arms race @ best and shady @ worst... either
way, they control the que and the ticks.
3. You can use "Daily" bars ONLY to give you an edge intraday.
OHLC data are more realistic tradeable price points.
4. Create a universe of stocks $30-$70 that are very liquid. $100+
stocks have less predictable spreads to test your skid and
fill rate. Point is if you cannot be profitable in this space then
"Stock of the day" should be avoided.
5. Clear your head! you need to be creative in what you test.
6. Develop several 5+ strategies that are not too correlated and
trade "small". trend, momentum and reversion.
7. Define your weakness..Are you too greedy? (my weakness) so
take profits more often. "Ride your winners" is very true but
for me I tend to ride too long! So reading this in a book would
actually be detrimental to me.
8. Can you make $500 in day on avg? on $100k bp, thats .05%
per day thats $125k yr. ..if you have 10:1 bp it's 5% !
9. I agree the markets are more efficient or controlled by Ben
Bernanke, but are they more efficient @ 9:30:00 or 12:00:00?
10. Trade less! trade smaller! The pros on this site or anywhere
might have $5mm+ buying power intraday? (me guessing).
i see little value in trading my tiny account like they do.
11. Once you get some consistency then start to ramp up share
size (you'll be confident) and playing with "house money".
Sorry to be lengthy but this helps me as well, good luck sir!
Quote from EricP:
I'll try to offer some real talk for you. No, I've never found 'popular technical analysis books to be any value. The books that I've found interesting (and maybe of value) were ones that provided the thinking process of a trader, and maybe lessons learned by traders (with blow-ups, etc, which make you respect risk). Books such as Market Wizards, New Market Wizards, Reminiscenses of a Stock Operator, When Genius Failed. I enjoyed reading Dark Pools in the past six months, just to better understand this element of the market.
if not, then how does someone even begin to know what to look for?
You think of various ideas, then test them either through backtesting, forward testing, or merely watching the market and paper trader. For example, (random ideas that I've never traded) it seems like after a big news related move for a stock, a large block trade or extremely large volume bar will often mark the end of the move. Hmmm... (another disclaimer, I don't trade this kind of move, have never tested it, and am not suggesting it has value) Maybe this is worth studying further, I would think, and pursue looking into the idea (without trading it with real money). Although you probably already have, read the thread, Characteristics of a Successful Trader for similar mental thought processes that can be useful.
could they teach what they do to their friend or brother or sister in a way that can be duplicated?
My trading is fully mechanical and computerized. So, yes, if I gave every single rule and basically the computer code, then a family member would be able to trade identically to how I trade.
would that ruin their edge?
While not entirely ruining the edge, it could certainly impact it. There are no markets in the world where a trader has the ability to size to infinity. Some trades are only available for 100 shares (or less), even though you may want many times this amount. Some trades may offer the ability to enter 1000 or 2000+ shares. However, every additional trader that uses a similar method will dilute the edge, offering fewer shares for the good trades, while not restricting the shares available on the bad trades (i.e. all traders using the same method will be able to max out their size on the losing trades). This is why it's do damaging to have the size on your winning trades limited. This, IMO, was the downfall of the OPG trading strategy. A certain trading prop firm widely promoted this trading strategy with continuous 'bootcamps'. They made lots of cash for the prop firm with seminar fees, as they simultaneously diluted the edge for all that were using the strategy, until the strategy became virtually useless for all.
should trading be mysterious like some gurus make it? how big is the averge edge? stuff like that. just some guidance really. im just tired of nonsense.
Not sure what you mean by mysterious, but I think every trader should keep the details of their successful trading strategy to themselves. The average edge varies by trading strategy. Obviously, anything over a net of zero is good. Systems with a longer trade duration will have the potential for an larger average trade (but larger trade variability, as well). Anyone with an average profit per share traded over a couple of pennies in the long run is a rock star, IMO. In my best years, I have averaged a couple of pennies per share and during a bad year I may average a small fractional penny per share.
Overall thoughts and guidance: While not what most traders want to hear... If you have been trading for 6-10 years and have not found success, you should find something else to be doing. There are several reasons for this. First, trading in 2007-2009 was about as easy as it will ever be (IMO). Anyone not able to trade profitably during those environments probably shouldn't be trading. Also, trading in the current environment is as difficult as at any time since I've been trading => Very few struggling traders will be able to find ways to be profitable in today's trading climate.
For those that choose to continue trying, the most promising directions (I would speculate) would be trend following methods. I tend to trade countertrend, and it's extremely difficult to successfully trading countertrend in a low volatility environment. Another potential direction (although more risky) would be to focus on only those stocks that have news or are moving sharply each day. Stocks with little movement will be extremely tough to trade without being chewed up by transaction costs.
Overall, I will again emphasize that trading has always been difficult. However, with the rise of HFT's and the decline of volatility, the current market is virtually untradeable (at least not profitably). I've only traded one full day in the past week, choosing not to trade when I suspect that the pending trading day will be a lifeless one, offering little other than grinding losses. (This is another point made in that thread I mentioned earlier). Successful traders can still make money in this market, but only a fraction of what was possible only a few years ago, and one must constantly be on defense, protecting capital by not trading when opportunities are few and risk of loss is increased. Personally, while I remain profitable (only two losing months since the end of 2010), the gains aren't nearly as large as they used to be. While I'm still trading today, if the deteriorating trend for trading conditions continue, I can certainly see a possibility that I'll spend my time golfing and quit trading in the next year or two. The market is not what it used to be, from a traders perspective.
Good luck.
+1
great post. this is the most difficult time to trade in my total 6 years of trading experience.
Quote from EricP:
I'll try to offer some real talk for you. No, I've never found 'popular technical analysis books to be any value. The books that I've found interesting (and maybe of value) were ones that provided the thinking process of a trader, and maybe lessons learned by traders (with blow-ups, etc, which make you respect risk). Books such as Market Wizards, New Market Wizards, Reminiscenses of a Stock Operator, When Genius Failed. I enjoyed reading Dark Pools in the past six months, just to better understand this element of the market.
if not, then how does someone even begin to know what to look for?
You think of various ideas, then test them either through backtesting, forward testing, or merely watching the market and paper trader. For example, (random ideas that I've never traded) it seems like after a big news related move for a stock, a large block trade or extremely large volume bar will often mark the end of the move. Hmmm... (another disclaimer, I don't trade this kind of move, have never tested it, and am not suggesting it has value) Maybe this is worth studying further, I would think, and pursue looking into the idea (without trading it with real money). Although you probably already have, read the thread, Characteristics of a Successful Trader for similar mental thought processes that can be useful.
could they teach what they do to their friend or brother or sister in a way that can be duplicated?
My trading is fully mechanical and computerized. So, yes, if I gave every single rule and basically the computer code, then a family member would be able to trade identically to how I trade.
would that ruin their edge?
While not entirely ruining the edge, it could certainly impact it. There are no markets in the world where a trader has the ability to size to infinity. Some trades are only available for 100 shares (or less), even though you may want many times this amount. Some trades may offer the ability to enter 1000 or 2000+ shares. However, every additional trader that uses a similar method will dilute the edge, offering fewer shares for the good trades, while not restricting the shares available on the bad trades (i.e. all traders using the same method will be able to max out their size on the losing trades). This is why it's do damaging to have the size on your winning trades limited. This, IMO, was the downfall of the OPG trading strategy. A certain trading prop firm widely promoted this trading strategy with continuous 'bootcamps'. They made lots of cash for the prop firm with seminar fees, as they simultaneously diluted the edge for all that were using the strategy, until the strategy became virtually useless for all.
should trading be mysterious like some gurus make it? how big is the averge edge? stuff like that. just some guidance really. im just tired of nonsense.
Not sure what you mean by mysterious, but I think every trader should keep the details of their successful trading strategy to themselves. The average edge varies by trading strategy. Obviously, anything over a net of zero is good. Systems with a longer trade duration will have the potential for an larger average trade (but larger trade variability, as well). Anyone with an average profit per share traded over a couple of pennies in the long run is a rock star, IMO. In my best years, I have averaged a couple of pennies per share and during a bad year I may average a small fractional penny per share.
Overall thoughts and guidance: While not what most traders want to hear... If you have been trading for 6-10 years and have not found success, you should find something else to be doing. There are several reasons for this. First, trading in 2007-2009 was about as easy as it will ever be (IMO). Anyone not able to trade profitably during those environments probably shouldn't be trading. Also, trading in the current environment is as difficult as at any time since I've been trading => Very few struggling traders will be able to find ways to be profitable in today's trading climate.
For those that choose to continue trying, the most promising directions (I would speculate) would be trend following methods. I tend to trade countertrend, and it's extremely difficult to successfully trading countertrend in a low volatility environment. Another potential direction (although more risky) would be to focus on only those stocks that have news or are moving sharply each day. Stocks with little movement will be extremely tough to trade without being chewed up by transaction costs.
Overall, I will again emphasize that trading has always been difficult. However, with the rise of HFT's and the decline of volatility, the current market is virtually untradeable (at least not profitably). I've only traded one full day in the past week, choosing not to trade when I suspect that the pending trading day will be a lifeless one, offering little other than grinding losses. (This is another point made in that thread I mentioned earlier). Successful traders can still make money in this market, but only a fraction of what was possible only a few years ago, and one must constantly be on defense, protecting capital by not trading when opportunities are few and risk of loss is increased. Personally, while I remain profitable (only two losing months since the end of 2010), the gains aren't nearly as large as they used to be. While I'm still trading today, if the deteriorating trend for trading conditions continue, I can certainly see a possibility that I'll spend my time golfing and quit trading in the next year or two. The market is not what it used to be, from a traders perspective.
Good luck.
whenever I see posts of....hft's have ruined it for us....we are prey...this is the most difficult trading environment ever..it was much easier to make money years ago...I'm struggling.........my response is....speak for yourself
stfu & adapt or die
stfu & adapt or die
nice read. thanks for the link.
Quote from justrading:
Not sure what you will get from this with an attitude like yours, but anyway read the response to the question;
FM: Are there certain qualities that you have noticed successful traders tend to have? What are they?
http://www.futuresmag.com/2013/04/0...ing-trading-excellence?t=managed-funds&page=2
Quote from HurricaneUS:
whenever I see posts of....hft's have ruined it for us....we are prey...this is the most difficult trading environment ever..it was much easier to make money years ago...I'm struggling.........my response is....speak for yourself
stfu & adapt or die
+1
what worked yesterday wont work today and what work long ago might work again today... change is constant.. that is about the only truth in life...
has the OP thought about longer time frames? I assume he's day trading.