I'm back! Trying to trade NQ

[dbphoenix]

I think you misunderstood where I am coming from. I see many newbies trading both long and short all day long, trying to capture these short term moves, and I see few having any kind of success over a long period of time.

The stock market in general has a very long term, upward bias. Therefore, just by playing the long side alone, you have at least a tiny edge in your favor.

In regard to developing a bias for the day, I refer to the work of Toby Crabel, Mark Fisher and similar traders who employ quantitative methdologies to develop a bias for the day.

Once you develop a bias for the day, then employ a strategy to exploit that bias. Some days it will work, other days it won't, but over the long run, you should come out ahead, assuming you've done your research and have developed a sound entry and exit strategy along with proper risk management.

I'm afraid that I must disagree again. Yes, we've been in an uptrending market for six years now. But the countermoves could have been and probably were for at least some traders devastating. If one is trading a weekly chart then, yes, think long. But the weekly trend has little significance to the intraday.

All that aside, you're one of the few people I read, so I hope you don't take this as any sort of personal attack.

 

[ScottColeFTA]

I'm afraid that I must disagree again. Yes, we've been in an uptrending market for six years now. But the countermoves could have been and probably were for at least some traders devastating. If one is trading a weekly chart then, yes, think long. But the weekly trend has little significance to the intraday.

All that aside, you're one of the few people I read, so I hope you don't take this as any sort of personal attack.

Again, I don't think you understand where I am coming from. Many quant traders approach a market like this simple example.... If yesterday's close is below yesterday's open, then today's close should be above today's open. Quantitative traders will have an understanding of that type of statistical bias. It may only be 50.1% of the time that this is the case, but it's still a directional bias.

They then build a strategy around that bias. Yes, there will be losing trades, just as there will be with any strategy. However, in the long run, with the proper strategy, you should come out ahead, if you trade in the direction of a statistical bias, even if the expected result of each individual trade is just a few points.

These types of traders are not concerned with the results of an individual trade. They approach trading more like a casino...develop an edge for themselves, and stick with that edge over the long run. Newbies clearly don't get this.

 

[dbphoenix]

Again, I don't think you understand where I am coming from. Many quant traders approach a market like this simple example.... If yesterday's close is below yesterday's open, then today's close should be above today's open. Quantitative traders will have an understanding of that type of statistical bias. It may only be 50.1% of the time that this is the case, but it's still a directional bias.

They then build a strategy around that bias. Yes, there will be losing trades, just as there will be with any strategy. However, in the long run, with the proper strategy, you should come out ahead, if you trade in the direction of a statistical bias, even if the expected result of each individual trade is just a few points.

These types of traders are not concerned with the results of an individual trade. They approach trading more like a casino...develop an edge for themselves, and stick with that edge over the long run. Newbies clearly don't get this.

That may be fine for quant traders, but how many beginners are quant traders? How many apply statistics to their trading plans? How many have any sort of trading plan at all? Of course, I may have misunderstood the OP. Perhaps he does want to become a quant trader, in which case it would be beneficial for someone to explain to him how to go about putting together the necessary statistical database.

 

[ScottColeFTA]

That may be fine for quant traders, but how many beginners are quant traders? How many apply statistics to their trading plans? How many have any sort of trading plan at all? Of course, I may have misunderstood the OP. Perhaps he does want to become a quant trader, in which case it would be beneficial for someone to explain to him how to go about putting together the necessary statistical database.

Well, from my point of view, I think it's a good idea to study what successful money managers do before just plunging right in to trading. Most newbies don't seem to take that step, and I think they should before they just start pissing money away. This doesn't mean they need to be a quant trader, or trade exotic options spreads, or anything like that. But, they should be aware of what real professionals do before putting their hard earned money at risk with ideas they read about in a magazine or online. They should probably also learn how to test some ideas as well. It's really not that difficult and not expensive to do. JMHO

 

[amitman]

Didnt trade yesterday (monday)

Everyone is different, experience, price knowledge, emotional control, losing percentages, aggressiveness etc... At this time in my life I have radically changed four years ago from very aggressive to drop of 60% of what I was. Aggressive works if you are younger and have emotional control, so you can take signals on next bar, you will usually make more profits BUT you will have more losses(providing your methods are profitable to begin), so it comes down to one's system, if R:R is same, you will be draining money out of your account, have to at bare min. have 1.5 to 1 reward to risk, So I am much much more conservative and have to wait for my conservative signals. That doesn't mean I trade one trade an hour cause I scalp and in 90 minutes of trading I ave 10-33 trades, but but am not going to take trades I use to do cause I know R:R was better than what I do now, but losing percentages were much higher.

What often is not discussed in forums when not to trade strategies, having equal R:R and 60/40 win rate is like breakeven with fees and slippage in day trading. Many want to pull the trigger, but does your Trading Plan lack a chapter of when not to take signals, I have backtested other acquaintances methods and they often lack when not to take good signals. I often think most new traders are 1.5 trades per day they wished they didn't do as that would make them into breakeven traders. So I trade ES the most, but it does transfer same concept to any market, just different values and regarding Nasdaq being more sloppy cause lack of volume so a bit longer in ranges. One minute bar in ES is 10 points or greater, I won't trade for next twenty minutes, I keep ten period ave of day session range, so say price is near the high ten day range and I get a long signal, I will do either check price structure to see if continuation exists, seek greater pullback by 50% or pass on the trade. I also keep track of upswing and downswings of past ten days. A swing is one completed trend, so ES been of late 9-12 points, at 8.75 I am taking regular trades, at 9 and depending on price structure I determine what is going on. If I see Head & Shoulders, I am looking for reversal, so there are times where if there is 2 ticks from where I will sell it, I will go long for 2 ticks to reverse into short. If downsloping trendline on 60 minute chart is coming in where I want to take a long, I will pass on the trade. If I see each previous pivot high only being broken by 1-2 ticks, price gives rounding appearance and to me trend is near ending and looking for shorts. So these strats will stop me or change signals for deeper retracement and risk half as much, but I don't get hoggish, I maintain same 2.00 point targets.

An awaful lot of good ideas and insights. Thanks! This is great

 

[Scaleout.Scalper]

Stop and reverse in indices? A quick trip to the poor house.

 

[amitman]

I want to thank everyone in this thread so far for the repsecting and highly educational posts.
Hope we can continue this way.

Didn't trade friday (can't trade on fridays) and yesterday wasn't able to trade (very sick)

My 2 cents (as a complete beginner) on the db scott discussion .
Regading the bias issue. In my honest opinion, a daytrader is trying to perform better then the ordinary buy & hold investor. This is why is willing to put time money and bery high effort to this matter.
In the prespective while trading with the overall bias should be profitable (for example go only long as markets do go up statistically more often then not), it might be just as profitable as a but and hold strategy which doesn't require any time or effort. Which in the overall calculation is like losing (time if not money).
This does mean that a daytrader must, by definition, take advantage of much smaller swings in movement then the normal inverstor.
That being said, I often found that is many days (not all) market direction is very clear, and one could really benfit form trading only in one direction (at least in terms of stress and commisions if not by overall p/l) . Evatually it all comes down to what time-frame your'e trading and the ability to locate yourself in the bigger picture, for example what looks like a reversal at the 1 min chart in only a pull back of the current trend in the 5 min chart.
One can use higher time-frame trenlines or other stuff to deteremine what is the current bias, and also be ready for days that there are no bias at all (at least in the traded time frame) and then either:
Don't trade (not a bad option)
Move to higher time-frame
Adjust targtets/stops
Or some combintion of the above.

Bottom line, daytrader needs to know how to make profit from small movements, but must know how to see the bigger picture, best negative example for this case of course is the simple fact that most fund managers are unable to "hit" the market index they are following in spite of the high effort they are putting into it.

Regarding quant and statistical method. Each trader must be willing to put effort to the following:
Take you trading setup, backtest is (with market replay, not on hindsight), gather statisitcal information, change profit targets/stops see how well your systems performs .

This is I feel is the most massive psycological barrier to a lot of traders (including me), being unable to follow your plan as you're not certain it actually works.
I do beleive that gathering a large amount of statistical data can really help here. (I'm still not there completely, not for NQ at least)

Second phase can be (but is not a must) to use a more sophisticatd quant methods. I'm still not there but sure they can be very benficial.

 

[WWarrior]

Hello all,
After almost a year of break I'm back to the game, trying to trade NQ.

I've been trading for the past 2 month (30 trading days overall).
And currently down -888$. This was mostly due to 3 days when I broke my rules entirely and lost 1120$

Overall these are my stats so far:
Best Day 66.96
Worst Day -619.12
Profit days 18
Losing days 12
Av daily profit 36.0
Av daily loss -138.9

As you can see I have more profitable days but they are much less profitable then the loosing ones. but mainly due to those 3 horrible days.

I'm starting this journal in hope to get feedback and to keep myself trading according to my plan.

The setup
I use a combination of 4 charts: 1 min, 8 Range (or 10), 750 Volume and 125 ticks.
I usually address the range and tick charts for entries but like to have all the 4 for the a better prespective.
I still consider if to abandon the volume and minute chart and to stay with range aand tick charts only.

The plan
I'm trading max 1.5-2 hours per day (don't have more time), usually in the beggining of the day.
Trading 1 contract at a time.
I was hoping to average 5 points per day (Seems reasonable)
Also max loss per day = 10 points
Trade setups: pull backs of the current trend. With target 2-5 points (usually 3), depends on volatility. Stop should be 1:1 with target or better

So far I found that either I'm unable to follow my plan, or the plan itself is not working.

So, all feedback is appreciated

Attached are trades for today:
1) Not sure if was a valid short setup -4.25
2) Reversed but again not sure if was a good idea -4
3) Reversed again - Good trade +3
4) Good trade, a bit early exit +2.25
5) Marginal trade +1.5

Overall -2 points for today.
Timeline is +8 hours (meaing 17:15 is actually 9:15)

View attachment 149079

Hi amitman


Could I add that you do seem to chase price around with your trades , you need to be in more control of your trades and wait for price to come to you..

good trading

 

[Turveyd]

Object of daytrading to me is to make a profit, every day pretty much, like making a wage at a job.

M1, micro managing your trades, tight risk control really try to keep your losses cheap, jumping on the market as its moving is key, if its going down, dont wait for it and try to pick a bottom, short it and ride it, if it stalls or turns bail, simple as.

Learn when the market is chopping or trending and how to profit from both.


Thats all there is to it, but it takes years to realise this.

 

[dbphoenix]

My 2 cents (as a complete beginner) on the db scott discussion .

Regading the bias issue. In my honest opinion, a daytrader is trying to perform better then the ordinary buy & hold investor. This is why is willing to put time money and bery high effort to this matter.

In the prespective while trading with the overall bias should be profitable (for example go only long as markets do go up statistically more often then not), it might be just as profitable as a but and hold strategy which doesn't require any time or effort. Which in the overall calculation is like losing (time if not money).

This does mean that a daytrader must, by definition, take advantage of much smaller swings in movement then the normal inverstor.

I haven't followed your journal because it really isn't any of my business. But I responded to the idea that the daytrader should/must have a bias entering the day as I thought it was a bad one. I don't, however, want to get into that again. I think everybody understands everybody by now.

But before I depart, I do want to point out that in twenty years I have never known anyone to do well with an SAR strategy. Those who pursue it generally don't understand what they're looking at and are therefore afraid of it. This may or may not apply to you. If the market environment is such that the swings are wide and clean, then, yes, it can work. But if one doesn't know how to characterize the market environment, this particular nugget will be of no practical value. He is more likely to rack up so many commissions that he goes broke.

So take care.