ES Daytraders: How many indicators?

Originally posted by Sophomore Jinx
Maybe this will clarify a little bit where I'm at...if you have any additional input, it sure would be welcome! Thanks again.
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Given the skipping around you've done, it's possible that you may never have given anything you've tried enough of a chance to determine whether or not it's right for you.

I suggest you start by recalling what your successes have been, and why you believe that you were successful in those instances. Then recall what your failures have been and why you believe that you failed in those instances. This sort of analysis, if properly done, will provide the best clues as to where you should go from here.

--Db
 
My problem in the past has been, my puke point is all the way down to zero! HA HA! I have had a great stomach for sitting through a losing position - sometimes for 6 months (I was trading long-term straddles) - while rationalizing that why, of course, it will turn around.

In doing some personality analysis, though, I've determined that I really do not like or want to sit through drawdowns. I like to be right more often than wrong. I like to take quick pops and make the money fast. I would also like to take my losses fast as well, precisely and with businesslike coldness - which I admittedly had a hard time doing before. In the end, I feel that, personality wise and with my account size, I'm probably best suited to trade intraday as a volatility trader.

So yes, at this point, my questions are academic and conceptual, because I'm in that phase of the process - trying to brainstorm, plan, and build a system (or possibly modify an existing one). Later, of course, my questions will be more real-world. But thanks for indulging me at this level of the game!
 
Originally posted by Sophomore Jinx
In doing some personality analysis, though, I've determined that I really do not like or want to sit through drawdowns. I like to be right more often than wrong. I like to take quick pops and make the money fast. I would also like to take my losses fast as well, precisely and with businesslike coldness - which I admittedly had a hard time doing before. In the end, I feel that, personality wise and with my account size, I'm probably best suited to trade intraday as a volatility trader.
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Knowing what's wrong for you is just as important--and just as time-saving--as knowing what's right for you. You'll need to define "quick" and "fast", but, generally, it sounds as though working with Quah's system and tweaking it to your specifications may be a good start.

--Db
 
Great point, I agree, and I have tried to do some of that analysis.

I have been pretty good intuitively and with charts - I have made money on about 70% of my trades (there haven't been that many since they were all longer term positions). But I had no trade management plan whatsoever. I have not used a stop loss. I've traded by feel, and usually been right. I've been able to nurse and massage a position for months, and see it turn around from a loser to a big winner. But that has gotten me in trouble, obviously, in the cases when it doesn't turn around!

I've taken huge losses by being greedy and overly optimistic on the upside, and huge losses by being so confident in my abilities to "feel" the market that I couldn't bring myself to take a loss. This is why the idea of strict profit and loss targets are appealing to me.

I've had sufficient time since my last trading experience to pull back, take a look under the hood, and see what fits me and what doesn't. I've had the opportunity to sit in front of real-time 1-minute charts every day for the last month (not a lot of time, but enough to get a feel for the speed of that timeframe). And I THINK I feel comfortable with the idea of trading a system - but I want to know that I've designed it well, that it worked in the past, and that I've forward tested it enough in real-time to feel confident in it.

In other words, I know enough to know that I don't QUITE know what I'm doing yet, and need help! HA HA! That's why I appreciate so much all the help I've been given on this board.
 
I use:

Parabolic SAR for confirmation on trend breaks
MACD and ROC for divergence signs

However, I buy solely on price action and trendlines.
 
If you're looking at trading timeframes <= 5m bars, try looking at strategies that yield 1:1 risk-reward and see if you like it or not.

I originally came from the swing-trading camp and would target 3:1 risk-reward and would always trail my stop loss. But as I made the transition to day trading, I found that on the smaller time frames <= 5m, it was much harder to find those trend moves. Often I'd watch a position be profitable then stop out at break-even or slight loss.

Then I decided looking at 1:1 risk/reward scenario and discovered that was my preferred way to trade! If you can get your % success in the 60-65% range I think you'll love trading this way (with >70% setups being a definitely obtainable goal... I used 60-65% as an initial goal). I call it "instant gratification trading". Sure, about 15% of the time you reach your profit target and the market keeps on going... but you feel real good when the market would've stopped you out for a loss and you were able to lock in that profit target. Depending on your method, you may also find that a short-term strategy allows you to take a little out of the market at various points that a swing-trading approach may just ride out (i.e. take a trade on the initial leg up, the correction, and the continuation).

Another thing you can try to do is to have a very tight trailing stop. For example, for my method I could substitute using a one bar stop (place stop below previous bar's low) rather than a profit target and achieve a 1.5:1 risk/reward but a lesser %win rate. Net profits are about the same, but I like the concept of putting on a trade and then entering an OCO order at profit target and stop-loss.

Just some thoughts for you to consider. :)
 
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