ES Journal Archive (2006 - 2008)

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Agreed trend was long all day but there were key retracement and extension levels presented within that warranted low risk entries. Every trend or continuation starts and resumes with an absolute, that is what I seek. I maintained the trend was still up this morning getting long at 546, 540 was my line in the sand. For me it is more difficult to define the continued extension from my entry, or just have the balls to hold it.

Maybe I'll just try being in the market at all times, always on the right side! Until then, slinging the 9's! Good points and well taken b1s1, what are your thoughts on scaling in as oppossed to out. I find missing clusters of s/r if I don't scale.

Fwiw, got out of my last short on the reopen at 13778, huge volume for several minutes there, not a bad day all and all. Thanks for starting this thead b1s1, learned and reaffirmed alot here from apex and the like. Heading out to Cabos and taking off the next week. Will spend more time posting here upon my return, if I do!



Quote from Buy1Sell2:

I have made some observations and would like to disclose those here: There are quite a few areas where I think that improvement could be made. This is not to say that I don't need to improve, I do, but here are the mistakes as I see them.

1) Trend-- was clearly long all day based upon the 60 minute charts. Extended gains are what traders should be looking for and thus , shorts should not have been taken at all today.

2) Overtrading--a trader can actually trade with as little as one trade each day or of course no trades at all.

3)Stops are being placed well within the noise--- Most traders would be better off placing a stop outside of daily noise and just putting one large position on during the day. This would be better most of the time than the back and forth commission eating trading that is going on. Once the trend is defined then find good entries in that direction only. It is very difficult to lose LARGE sums of money when correctly identifying the trend. The identification of the trend is a personal endeavor and you must find your own way to do that.

4)Trading to not lose any money---- This is an incorrect way to trade. There will be losses-- Embrace them as a necessary evil, but don't let them mount up. My biggest concern here is taking one contract off at profit target , then moving stop to breakeven when breakeven is within the noise. That doesn't make any sense whatsoever. First of all, trades should not be scaled out. This provides a level of comfort, but will choke off winning trades.
Secondly, it is impossible to trade with no risk. Take the risk, that's what you are here for--

5) Scaling out-- No way does that help get you to your winning goal quickly. In fact, it slows you down. So what if you give back profits on this particular trade--you'll make it up and then some on the next one.

6)Trying to guess what is moving the markets-- It doesn't matter. If the trend is up, then look for longs, if the trend is down, look for shorts. Period. If big boys are moving it up, help em out. If they are moving it down , jump on!

I am hopeful that this will help some of you. You may trade in any manner that you wish to however--

:)
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excellent points B1S2,

A ton of money wont be made scalping, your broker may be more apt to get rich off you then you will.

Usually during a given session there is a underlying bias or trend to it as you pointed out.

One quick way to identify it is, place some minimal size staggered trades early on, like 1 lot trades, and see which ones are winners. This is the easiest way to identify whos winning. The winners always have the edge, and the probability is in their favor since, they may have hopped on to the big money pool decision for the day.

There were lots of reasons to be short today. And any of them can be used as a excuse to drive it down hard today. Usually the cup formation I was talking about, technically on a global speculative basis is a high probability formation for continued upside. But those cup formations have been created before on downward moves and broken.

If you look at todays action, its very similar in price structure to the previous downward range trades. Very similar if you look at the 60 minute graph for continued downward attempts. In after market we are sitting at 32.50. A nice sizable gain from 27 entry. A lot more money can be made position trading then scalping.

It as easy as taking the previous days high low, and using a 3 point stop, on some size, and letting the position run for the day. The goals will be reached faster then sitting infront of the comp trying to make 1 point 2 points even though its entertaining. We are here so we can buy that island off Belize.

Calculate what 1% of your account is in dollar terms. Then use the noise size wave to calculate what the stop should be. In ES the noise level is around 3 points usually. Then pick a resistance zone and place a trade at the periphery with the trend identified. Some days your trade will hit and some days it may not. And some days your trade may hit and the sL with it. But if your a decent trader most times then not, it will go in your favor. Usually your TP should be 3 times your SL or 3% account equity.

If you've identified a intermediate term zone entry. Then if the trade runs in your favor you can leave it alone for mutliple sessions..

Just some stuff.

Chris
 
I was wondering what you saw that made you flip long?

Thanks.


Quote from Buy1Sell2:

Covered ES Sep Short at 1520 for 24 pts. I have reversed and am long here as well.:)
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thanks.....for the advice
... yesterday I was so busy thinking about protecting my 1522.25 entry....
.... I failed to notice that when my entry was threatened.... indicators still were clearly signaling long trend.
.... looking to get long again if the opportunity presents itself next session.
Quote from Buy1Sell2:
I have made some observations
:)
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Quote from Dean80:

I was wondering what you saw that made you flip long?

Thanks.
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I'm wondering the same. I do have a very important turning point line near there. That would have gotten me in, had I been watching at the time.
 
Quote from Buy1Sell2:

I have made some observations and would like to disclose those here: There are quite a few areas where I think that improvement could be made.
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B1S2, your post strikes me as a mixture of items that are clearly true and items that are quite controversial.

First, the clearly-true ones:

- Yes, there is a strong urge to overtrade, and most traders would do well to learn the art of patience and sitting on their hands for hours at a time. Tough to do, but crucial.

- Yes, trading not to lose money is self-defeating, and acceptable of losses as part of the game is essential. There's no reward without risk, and taking risk means accepting losses.

- Yes, trying to guess what's moving the markets can make you crazy. You have to make up your mind whether you're a technical trader or a fundamental investor. If you're a technician, then you need to turn off CNBC and Bloomberg and focus on the charts and the price action.

But then there are the controversial ones:

- Never trade counter-trend.

- Use wide stops to stay out of the noise.

- Don't scale in or scale out.

- It's difficult to lose large sums if you've correctly identified the trend (so you don't really need tight stops).

These recommendations are predicated on a model of the market in which there is a dominant trend and the trend is accurately identifiable prospectively (not just retrospectively). If the market always behaved that way, these recommendations would be valid and even self-evident. The question is, does the market really conform to this model?

It seems to me that there's a different model that many here subscribe to, with Apex82 being a prominent example. That model says:

- The market moves briskly from one S/R zone to another, and then consolidates in the S/R zone before making another brisk move.

- Through dilligent research, we can often identify where those S/R zones are.

- However, we're not smart enough to know in which direction the market will move between S/R zones. Whenver the price action is consolidating within a zone, there are always two possibilities: it will move sharply higher to the next R zone, or it will move sharply lower to the next S zone. But nobody is sufficiently prescient to know which of those two things will happen, or exactly when.

- Trends can only be identified retrospectively (e.g., since February, more upward zone transitions occurred than downward ones), but not prospectively (we're not smart enough to predict the future).

Think of a stink bug walking around on a corrugated washboard. He spends most of his time stuck in a valley, and occasionally musters the strength to surmount one of the corrugations and wind up in the next adjacent valley, but it's a coin-toss whether he winds up moving higher or lower on the washboard.

If you trade with this kind of mental market model in mind, then tight stops are essential because each trade you enter has a non-trivial probability being in the wrong direction, so it's essential to "stay with the winners and cut the losers short" via tight stops. In such a model, a scaling-type money management approach makes perfect sense, because it modulates the size of your bets to be commensurate with the risk of each bet. (I'm willing to bet $3 that the bug moves one corrugation higher by the end of today, but only $1 that he moves three corrugations higher by then because that's far less likely.)

On ES Journal, we clearly have some extremely successful adherents of each of these camps. (We also have some folks who trade without any mental model and their trades are unpredictable.)

I'm just trying to point out that neither model is right or wrong, any more than Catholicism or Judaism is right or wrong. The market is far too complex to model accurately. To trade successfully, you need to have a simplified mental model of the market that, while inherently inaccurate, correlates sufficiently well with market behavior to be useful. Then you must develop a trading plan consistent with that model, and stick with it.

There are multiple useful models, and multiple successful trading plans. The diversity is one of the things that makes ES Journal such a fascinating place.
 
Buy1Sell2 said it well. The fact is, the low was made early in the day and that was a retest of the overnight low. There was also a retest in the afternoon of a pivot low, and that too failed. Classic bull market action.

Just because it is called daytrading does not mean that one has to go in and out several times a day (or is it an hour?). Some days, esp in the summer, are not meant for trading at all.
 
I thought I would put in my 2 cents....

B1S2, you have some great points and you are very successful at trading a certain way. However, most people ( I as well) do not have the patience to wait a month or 2 to make 60-90points yet alone having a 20-30 pt stop trading large size. Most traders are attracted to scalping because of the amount of trades and they think they can capture the days range consistently. However, most dont realize that daytrading is going to have the most competition due to the lifestyle it provides. Scalping will have a higher % winners which we were brought up believing that this is the only way to life. So its only natural for new traders to gravitate to that direction. However, trading is the opposite, I think this is what you are trying to get at.. and its essential.

I believe the markets are fractal so I want to trade like a casino. The more trades I take the more effective my edge will be. This is why I mainly daytrade but also have some commodity and stock portfolios for catching the large runs while remaining diversified. One persons "noise" is another persons income.
 
Quote from apex82:

I thought I would put in my 2 cents....

B1S2, you have some great points and you are very successful at trading a certain way. However, most people ( I as well) do not have the patience to wait a month or 2 to make 60-90points yet alone having a 20-30 pt stop trading large size. Most traders are attracted to scalping because of the amount of trades and they think they can capture the days range consistently. However, must dont realize that daytrading is going to have the most competition due to the lifestyle it provides. Scalping will have a higher % winners which we were brought up believing that this is the only way to life. So its only natural for new traders to gravitate to that direction. However, trading is the opposite, I think this is what you are trying to get at.. and its essential.

I believe the markets are fractal so I want to trade like a casino. The more trades I take the more effective my edge will be. This is why I mainly daytrade but also have some commodity and stock portfolios for catching the large runs while remaining diversified. One persons "noise" is another persons income.
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Great post, I became a "superior" trader (in comparison to what I could achieve before) when I started using an "inferior" method. So how can anyone tell me - Yeah, OK, but you are achieving this using an inferior strategy, you could make more by not scaling out...Do I care? :)
 
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