How do I develop my day trading strategy?

expiated said:
Let me just say right off the bat that I do not read every post, for reasons I will not mention, so I apologize in advance if any of this is redundant.

I actually trade foreign currency pairs in that I found it a lot easier to make money in the Forex market than trading stocks, but having finalized my approach in that market, I returned to equities just to see if my Forex charts (see first image) would work with equities as well.

They did not, and I had to modify them (see second image), so I will just give you the principles behind what I do. (I have no idea how my current approach would perform with Futures, though I suspect it would fare better since one does not experience the daily gaps that come with equities.)

One of the things I found most helpful was visiting the “trade rooms” of people like Anne-Marie Baiynd, AJ Monte, Scott Bartley, and Nick MacDonald when they opened them up for “free trials.” It completely changed my trading mindset and personality.

Something else I found helpful was viewing video clips on YouTube recorded by the likes of Stephen Whiteside and Harry Boxer.

As for the principles that turned my trading around: I developed a system based almost exclusively on statistical probability by comparing the spatial relationships between trend, typical price range, and horizontal support/resistance levels in multiple timeframes.

Consequently, the only indicators I use are simple moving averages, and simple moving average envelopes. (I found stuff like Elliot waves, harmonic patterns, MACD and the like to be extremely overrated.)

I like one-minute charts because they offer me the precision I need, though as you can see from the 15-minute EURJPY chart, I use other timeframes as well. I was told it’s impossible to find success using one-minute charts because you are just trading noise, but perhaps these were people who assumed that if they couldn’t do something successfully—no one could.

I start off by finding a single moving average that best represents trend at the daily, hourly, and four-hour levels, and then work my way down. For example, SMA (6) on a one-hour chart would be changed to SMA (72) on a five-minute chart. I do not bother with standard moving averages, like the 10-, 20-, 50-, 100- and 200-period simple moving averages because common sense suggests to me that there is no way the same moving averages can apply to every situation and every timeframe. I also don’t bother with looking for higher highs and higher lows, or vice versa, because I see no need for this.

On the second image (a TSLA one-minute chart) the first arrow indicates where I would have placed my stop loss—slightly below the most recent local low, for if price dropped below that level, it would indicate that I was obviously mistaken about which direction price was headed.

The second arrow indicates where I would have entered a long position. Note that I have moved from using a single moving average to using a range of moving averages, typically in sets of three. (I find that my eye has a much easier time tracking price if I use multiple moving averages instead of just one.) Were it not for the closing bell, I would have exited the trade when the three GREEN moving averages began to hook downward.

The three sets of three-fold moving averages make it easy to recognize when the asset is bullish and when it is bearish, but again, these moving averages were carefully selected by examining price action in multiple timeframes.

View attachment 177901 View attachment 177902

I am typically satisfied with a 1:1 reward-to-risk ratio when trading foreign currency pairs given that my daily success rate averages between 70% to 100%. But again, this is all hypothetical when it comes to stocks, indices, metals and futures in that these are markets where I am not currently active.

As for commodities, some of them can exhibit some rather, shall we say “interesting” behavior, so I pretty much stay away from them.
More...


Actually, none of it were redundant here. I'm not sure about other threads but this thread and myself is fairly new to ET and these examples and advises are greatly appreciated.
 
Good luck implementing all these awesome methods. Don't be disappointed after you wasted a lot more of your time discovering they don't work. You've already wasted two years of your life. If you want to waste more - "explore" these wonderful methods so graciously shared with you in this thread.

Don't be shy and post an update when you're done ;)
 
pursuit said:
Good luck implementing all these awesome methods. Don't be disappointed after you wasted a lot more of your time discovering they don't work. You've already wasted two years of your life. If you want to waste more - "explore" these wonderful methods so graciously shared with you in this thread.

Don't be shy and post an update when you're done ;)
More...

Thanking and appreciating doesn't have to necessarily conclude with me exploring all of the specific methods mentioned in this thread.

I am truly thankful of those who selflessly shared their methods in response to the help I have requested. This doesn't mean I will be able to apply what they shared as the devil is in the details like someone else mentioned.

In order for me to apply them I suppose would require me to view the markets the same way, execute the same way to the tick. Which would mean the method either has to be extremely simple or I'll have to spend hours with them to learn the ins and outs of their system. A burden I do not wish to impose on the posters here.

Whilst I can't say I have suddenly become a profitable trader in a few days since the start of this thread, the exchange of ideas and guidance from helpful individuals I find does inspire and help open my eyes.
 
No one gave out their recipes but I found a lot of very useful general rules that a new trader can use to build his/her own method. Some "God and motherhood" type statements are actually very important to anyone new to the game. For example:

Don't risk more than 1-2% on every trade, cut your losses early, let profits run.... plus the advice on this thread. The devil is in the details but to build details you need principles.

One cannot design a rocket without knowing Newton's laws.

Regards,
 
Nice post Chef of Iron. Not to worry, the OP has made excellent progress in his quest for the holy grail. I know, as he and I have worked privately for about 4 hours and NTL is well on his way to his goal of being consistently profitable. We covered rules such as "Don't Take Any Losing Trades" or in other words "Never lose". Not kidding this is an important rule particularly with those that have a relatively small account. Another Rule: "Know What Doesn't Work" -- Get Rid of ALL that Doesn't Work (stuff that doesn't make you Profitable). Of course, Keep It Simple. Understand the importance of setting Targets and Duration of trades. Enjoy Trading because it Really is Easy -- when done correctly and Rule-Based. NeedToLearn is a quick study, very smart, and hard working. He will soon be right there with you Ironchef, Xela, Soulfire, and all those "experts" who posted to his excellent thread here on the blog for Elite (as in Profitable) Traders.
 
MACD said:
Nice post Chef of Iron. Not to worry, the OP has made excellent progress in his quest for the holy grail. I know, as he and I have worked privately for about 4 hours and NTL is well on his way to his goal of being consistently profitable. We covered rules such as "Don't Take Any Losing Trades" or in other words "Never lose". Not kidding this is an important rule particularly with those that have a relatively small account. Another Rule: "Know What Doesn't Work" -- Get Rid of ALL that Doesn't Work (stuff that doesn't make you Profitable). Of course, Keep It Simple. Understand the importance of setting Targets and Duration of trades. Enjoy Trading because it Really is Easy -- when done correctly and Rule-Based. NeedToLearn is a quick study, very smart, and hard working. He will soon be right there with you Ironchef, Xela, Soulfire, and all those "experts" who posted to his excellent thread here on the blog for Elite (as in Profitable) Traders.
More...

Forgot one other point: "Masterful Trading is Sexy"! As well as healthy and Fun...
 
MACD said:
Nice post Chef of Iron. Not to worry, the OP has made excellent progress in his quest for the holy grail. I know, as he and I have worked privately for about 4 hours and NTL is well on his way to his goal of being consistently profitable. We covered rules such as "Don't Take Any Losing Trades" or in other words "Never lose". Not kidding this is an important rule particularly with those that have a relatively small account. Another Rule: "Know What Doesn't Work" -- Get Rid of ALL that Doesn't Work (stuff that doesn't make you Profitable). Of course, Keep It Simple. Understand the importance of setting Targets and Duration of trades. Enjoy Trading because it Really is Easy -- when done correctly and Rule-Based. NeedToLearn is a quick study, very smart, and hard working. He will soon be right there with you Ironchef, Xela, Soulfire, and all those "experts" who posted to his excellent thread here on the blog for Elite (as in Profitable) Traders.
More...
Very good posts and you have my respect for willing to share your rules and experiences.

I am no expert nor am I a professional, just a small mom and pop retail trader, i.e., a plebeian ekes out a living trading options, and I am still learning and trying to get better at it. :(

Regards,
 
If you really want to develop your own strategy then perhaps start by writing down around 10 of your most significant ideas on trading, then expand on them and refine them into different areas.

Then repeat the above in the light of forward testing, making notes as you go. No idea is too small to be worth writing down.

I would expect things will get less painful if you try an understand 'the why', hopefully the above process will help in that direction. But, a last word of advice, don't let things get too complicated. o_O
 
Lot of interesting things in this thread, but people forget it is all about you and your psycho.
If you want to day trade and win, my advices:

1 HARD WORK
You won't get your own edge without hard work.
Imagine you are looking for a Phd in finance. Many are called, few chosen.
Write your ideas, test them. I repeat : write your ideas, test them.
Don't take things for granted. Why does it work and when ? What did I miss?
It is important to write your ideas, because sometimes you will be close to the answer, you will give up your idea, and 6 months / 1 year later, you understand you were right (or wrong) from a new perspective / angle. You would even forget you wrote these goods (or bad) ideas months ago

2 DISCIPLINE
It means you need to react accordingly to your own rules.
Same signal to enter / exit, same stops / take profits, same reaction. Be a robot (with a brain). No ego, just do what you have to do.

3 PATIENCE
Day trading is boring and repetitive. You need to increase regularly your stack, don't search for big gains. If you got an edge, probabilities are in your favor. Law of large numbers : the longer you play the same, the more you win.

Good luck by the way! The road is really long but I can confirm there is a light at the end of the tunnel. "Eureka"

CM
 
You must log in or register to reply here.
Back
Top