Trading has been exceptionally simple lately, at least in terms of the SLA and AMT. I try strenuously to avoid posting to others' journals unless I'm invited. My posts generally stop as soon as I've asked if the journalist has a (thoroughly-tested and consistently-profitable) trading plan and I receive no reply (this is almost always the case).
I do, however, read others' journals, mostly out of boredom when my trade is on auto-pilot. And it occurs to me that virtually all the journalists I read could do quite nicely if they did nothing more than wait for higher lows to go long and lower highs to go short. Lines or no lines. And if they coupled this tactic with a basic knowledge of support and resistance, which is something else hardly anyone understands, they would likely not only turn the corner but speed straight for the Promised Land.
But everybody trades for the money. They trade to get rich. And so they fail, accomplishing the exact opposite of what they intended to accomplish.
But that's the way of it, and always has been.
This has been an extraordinary week - an extraordinary month, actually. A good friend of mine visited me a few weeks ago, and the one thing he wanted to do while with me was learn how to trade. I had him read your SLA/AMT and study both Wyckoff's big course and his active trading course prior to his coming up here. I had sent him charts and he had spent several weeks prior to coming up here just watching the NQ for the first couple of hours each day. I would say he started studying about the middle of November - it was before Thanksgiving, so about two and a half months.
Two weeks ago, he sat and watched me for a few days trade in the morning, and then we spent the afternoon watching and observing. In my journal here at ET, some of this activity is recorded in the first 26 or so charts.
Then, he went back to his home, spent the week before this week doing exactly what I was doing in the charts I posted here. This week he started trading live, using a very small account - $5K to be exact, trading 2 contracts at a time with a broker that has reduced day trading margins (not my broker - I use IB). He figured with his broker, he could trade 2 contracts and lose $4K before he would not have enough margin to trade his plan which requires an even number of contracts and a minimum of 2. If he lost his $4K, he would stop. I imposed a similar cap of myself when I started as well.
Monday he took 1 trade, and made 8 points average with two different exits, or $320 before his broker commissions. Since it was just 1 trade he obviously was able to figure out in his head about how much he made. Now, one thing I told him was to turn off his profit/loss, do not look at his account balance, not to open his daily statement when it arrives in his in-box. I wanted him not to look at any money related stuff until he got his last daily statement for Friday on Saturday morning. I told him to just trade his plan for the week, and not to concern himself with the money.
We spoke every night, and we discussed his trades. He knew he was ahead but after Tuesday he really seemed to have no idea by how much.
He called me this morning after he opened his daily statement as of the end of the day Friday, and what do you know - his little $5K account is now a little $11K account. Not bad, right? Of course, I had to calm him down, and I spent the better part of 45 minutes reminding him that this week there were multiple 50+ point intraday swings, and that I've seen weeks where the range for the whole week was 30 - 50 points low to high, and that while there will be weeks like this, he should not expect them to be the norm.
The point is that he simply traded as though it were a job. When you do your job, you are not worried about your paycheck at the end of the week. You are not constantly fretting over whether your boss is going to dock your pay or whether you'll get that raise at the next review - who could work well under such mental conditions? He did his job: "Here are your duties and responsibilities, here is what is expected of you, here is what you do if X, and here is what to do if Y." His daily chart looks just like mine, which looks just like DbPhoenix's posted above - daily trend channel and weekly trend channel. On our intraday charts, he and I add the prior days highs and lows, and of course the globex high and low. Then it just a matter of drawing lines, making a trade, closing the trade. Repeat.
From what I have read in the journals here at ET, there are three consistent and persistent problems keeping people from doing this. 1) They have no idea what they are doing - SLA, even without AMT, is an easy way to learn what to do and when, but many who try fail because either 2) they are too afraid of losses to allow themselves to win or 3) they insist on making this far more difficult than it is.
I many who try this might be better off if they started their observations from a five minute bar interval chart - though I hesitate to say this because most will want to over complicate it and start thinking in terms of the bars individually and not the transactions which are being recorded to make the bars. But I spent almost a year trading nothing but stocks from a 5 minute bar interval chart before I started using SLA to trade the NQ. My friend doesn't even look at anything but the 5 minute bar interval which is where I started him. It might be a good place for some to start. But if you are trading the money, and not the chart, I think you're screwed and you ought to use the money to buy your wife something nice instead, because from what I have read in the ET journals, you're going to lose it anyway.
And before someone says that my friend has done well because of his access to me, I'll say right now I can take no credit for what he is doing or how well or poorly he does it. He studied the same things I studied. If anything, DbPhoneix is more responsible for my friend's education in trading than I, even though DbPhoenix has never contacted in been in contact with him. But the bottom line is this: He did the work required to learn the job, and he did it without dragging in ideas and emotions that would have prevented him from learning and doing his job as a trader, and he made it through his first week without his individual profits and losses ever being an issue for him. If he keeps it up, he should be able easily to replace his salary trading just 2-4 contracts even under more ordinary conditions.
