How to teach yourself proper technique

[IndexSwing]

For all you newbie’s and more experienced traders who wish to improve their performance, here is what I suggest. Forget trying to get someone else to teach you how to trade because chances are they don't know themselves and even if they do, their style may not work for you.

Here is what you need to do. Print the chart of the market that you trade and mark where you should have entered and exited that market and then jot down all the data/evidence that was available at that time that would have indicated that was the correct course of action.

Here is my chart of ES for June 19. Ideally I would have entered short at 10:40 Chicago time at 920. The evidence that was available to me at that time was: a) at 9:10 price formed a lower low and moved further down than it had been able to all morning. b) Price moved back up but was unable to make a higher high, instead price formed a lower high at around 10:00 c) Price is moving down off of the lower high and the MACD has crossed down below the zero line.

 

[MandelbrotSet]

This is wrong.

You have to:

1. Take extensive notes when trading real time.
2. Take your trades during real time.
3. Review your trades after the sesssion/over the weekend, making note where you "coulda-shoulda-woulda".
4. Repeat, rinse and wash, always taking trades during real time, and using that as your "acid test". Do this until you have a system which generates more winners (for a greater amount of money) than losers.
***
Static charts are the worse to learn how to trade off of, they're worse than paper-trading.

 

[IndexSwing]

Quote from MandelbrotSet:

This is wrong.

You have to:

1. Take extensive notes when trading real time.
2. Take your trades during real time.
3. Review your trades after the sesssion/over the weekend, making note where you "coulda-shoulda-woulda".
4. Repeat, rinse and wash, always taking trades during real time, and using that as your "acid test". Do this until you have a system which generates more winners (for a greater amount of money) than losers.
***
Static charts are the worse to learn how to trade off of, they're worse than paper-trading.

Well I know that doing this exercise has improved my performance. I also agree that you should do all of which you describe. It is of course important to only take into account evidence that was available at that time, as I have done.

 

[IndexSwing]

Quote from MandelbrotSet:

This is wrong.

You have to:

1. Take extensive notes when trading real time.
2. Take your trades during real time.
3. Review your trades after the sesssion/over the weekend, making note where you "coulda-shoulda-woulda".
4. Repeat, rinse and wash, always taking trades during real time, and using that as your "acid test". Do this until you have a system which generates more winners (for a greater amount of money) than losers.
***
Static charts are the worse to learn how to trade off of, they're worse than paper-trading.

Practice doing the wrong thing only makes you better at doing the wrong thing. The key is to discover proper tecnique and then adjust your behavior accordingly. This exercise helps in that regard.

 

[Eight]

Trade a day live then replay it about ten times faster and trade it again... I did that for awhile, it helped me to overcome shattered nerves from stressful times, if you can trade at ten speed the ordinary day will put you to sleep rather than stress you...

 

[liujs]

I think a good suggestion would be to read extensively and incorporate new techniques that you know other people are not using that much yet. The markets get competitive more and more so everyday. As people react faster to news and information, trends becomes more volatile and harder to detect.

This article that I wrote up in my blog http://finance4traders.blogspot.com/2009/06/why-most-technical-indicators-do-not.html used the example of the simple moving average. Used to work in the 70s then stopped by the 90s. Now academics are recycling the same indicators but using them much more intelligent, incorporating AI or artificial intelligence into the picture.

 

[liujs]

I have great respect for academics because when I look at the most successful people in the trading business, such as

Jim Simmons of Reinassance

Goldman Alpha

Dryfus

the list goes on....

They are all filled with people who are former academics who were at the forefronts of their field and have managed to apply their knowledge to finance.

That is why I encourage very extensive reading, teaching yourself many new things and suffering lots of pain teaching yourself finance, programming, math all over again IF you can learn things fast. In my belief, a good trading system takes years to develop. Not something that can be accomplished overnight.

 

[NihabaAshi]

Quote from MandelbrotSet:

This is wrong.

...Static charts are the worse to learn how to trade off of, they're worse than paper-trading...

If more traders understand the above quote they'll be far ahead of every body else.

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#1 - Make live video recordings of your real-time trading session that includes every thing (charts, broker platform, spreadsheet or any thing you have open on your screen) occurring on your monitors.

#2 - Take notes of what occurred in other key markets or market events that have impact on the price action of your trading instruments especially around the time of your trades.

If you don't know what these are...join a forum and ask others for help with this.

#3 - When saving static charts for later review...save them exactly the way they looked on your monitor at the time of the trade signal, entry and exit instead of saving them as a maximized chart.

#4 - Use maximize charts only for sharing with someone else and if that other person wants to learn from your charts...tell him/her to do the above steps #1, #2 and #3.

#5 - First signs of trade problems like a drawdown, discpline problems, not reaching your goals et cetera...

Start a public trade journal and ask for help. However, be very careful about taking advice from those that are not profitable (blind leading the blind) and don't use your journal for arguing.

Most folks that give advice have a post history that can be reviewed and you'll be looking for past trading related advice that make sense (fits your trading style), documented trades or real-time market commentary they may have posted any where online.

Be careful about hindsight traders and their charts because they make things look easy.

#6 - There's more to successful trading than entry and exit signals. Simply, treat your trading as if it's a business just like any other business profession.

Last of all, if you can't do the above...don't bother traveling down the road of self-taught because trading is just a hobby to you.

Mark