Looking for "edge" ideas...
- Thread starter k p
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Quote from bighog:
Excellent previous post by nodoji. Notice she calls price action by its given name, price movement. To place labels on the movement itself is not necessary in a game of chance based on probabilities. The moves either go toward your target or not. She uses filters, (we all do) in general those are as basic as letting the move "tag" your STOP or let it capture a target. Once a trade is filled, discretionary odds based intuitive tactics take over the trade.
Understanding why a move in price happens is really useless because there is no knowing what was behind the persons entry/exit thinking. Price moves happen, thank goodness for that.
Imagine this: if anyone or everyone could explain the individual thinking of why that order was placed what good would it do? In futures, there is a seller for every buyer, that smashes away the labels and leaves us all with what? Correct, odds based trading in a game of chance.
Momentum matters, either it tags the loser or rewards us. Reasons are for seasons, not short-time frame day trading.
Think back when you never kissed someone you admired and had the hots for. How nervous were you? How complicated was your thinking do make the kiss perfect? After all that thinking and complications what happened? Right, you kissed her and in an instant you both were playing "longue hockey" , WHO NEEDS REASONS, just play the game.
http://www.youtube.com/watch?v=tXmLRHnoSAs
Thanks bighog! Since NoDoji gave you so much credit in the past, a friends of hers is instantly a friend of mine!
This is exactly how I want to play it. Not think too much about why the price moves, but just knowing that it does in a certain direction based off of a certain setup with a certain probability of chance.
I sure do love the women/dating analogies... hmmm... very similar to trading! You learn certain things work over and over again, women are encoded to work a similar way. And of course the power of statistics is your greatest friend. I would bet that if any shy guy wants a date, given a simple non-threatening approach, if he stood on a street corner and chatted up 10 different women as they were waiting for the light to turn green he would get at least one number. Its just that most shy guys would never ask, or stop after the first rejection. But sorry all... off topic!
No, trading can be extremely simple. The original price action idea that led to my (now) very detailed trading plan was so simple I'd be able to teach an average 10-year-old the concept in about 5 minutes. Your double bottom idea is also very simple and powerful and I would imagine that if you implemented it with no filters at all and double reward to risk, you'd end up net profitable assuming you took every trade in your preferred time frame
To compare what I do to what Geez did: Geez had a regular IT job and traded from a laptop. Because he was an independent contractor his work hours were flexible enough for him to trade, but he was still frequently interrupted by calls he had to take or make, etc.
His day trading was part of a bet with his old boss who owed him money (as described in the intro to his journal), and the guy didn't believe such a large return (50%) was possible. (The final ROI by year end was over 100% as I recall and that included a $22K loss due to an accidentally uncancelled order that filled on an earnings call after hours - I remember that nasty surprise he got the next morning).
Since Geez had a job already and was only trading to prove a point and win a bet, he had nothing to lose and therefore didn't have to (and wouldn't have been able to) worry about a lot of detail. His point was that by buying strength and selling weakness you're on the same side as the big money that moves price, and by placing the R:R squarely in your favor, you more than cover the cost of slippage and commissions, leaving a solid profit behind.
I on the other hand am trading for a living. I have an average minimum daily profit goal to meet and as I spent more time studying and trading my simple core plan I discovered ways to improve my overall results. For nearly a year I spent at least 2 hours each day reviewing the days price action and keeping stats and notes on a spreadsheet.
My detailed plan evolved out of patterns I noticed during my years of screen time.
My core trading plan is based on the price action concepts I learned from Brooks. The setup I trade off one of his core concepts doesn't have a huge win rate because it often results in break even exits, but it has a very low loss rate. My favorite setup (win rate of 80%+ with 1:1) came from a few "asides" in his book, not even something he describes as a setup.
Again, my advanced trading and trade management tactics came from countless hours of real time observation and detailed after-market analysis. The core ideas though are the stuff found in Brooks' and Volman's books.
I feel that the geez method is the better approach for me, at first. I am very flexible with work, some days I can trade all day since I'm not working, other days I can't at all. But the thing I like is knowing that it will be hands off after the trade is on. I've seen you write it before as well, along with many people, that sitting on your hands after a trade is on is the best thing to do. Sadly my broker doesn't have OCO trades... so I will either have to watch it, or open up another account with someone else.
I would like to first buy the most simple setups.... trending up, succession of higher highs and higher lows, and buying on a retracement. I took particular notice of the fact that you said you are looking to short double bottoms, so this is perhaps not the best approach to be trading against you!
Throwing a chart out here randomly for DUST, after the gap up, it continues to go up nicely, although shallow, but seems possible to get out 20 cents with a 10 cent stop, but of course I only say this in hindsight.
I looked up the Volman book, I take it you mean Bob Volman and his book on Forex Price Action Scalping?
Are most of your trades 1:1? And also, do you trade off of channels everyday?
Quote from k p:
I would like to first buy the most simple setups.... trending up, succession of higher highs and higher lows, and buying on a retracement. I took particular notice of the fact that you said you are looking to short double bottoms, so this is perhaps not the best approach to be trading against you!
I looked up the Volman book, I take it you mean Bob Volman and his book on Forex Price Action Scalping?
I was confused about your "double bottom" edge. I thought you meant buying off a double bottom-type formation following a significant downtrend. But above you're talking about buying a pullback (retracement) in an uptrend, which is what I do, so you won't be trading against me, plus I only day trade futures, lol!
Also when I say I'm short into a double bottom it doesn't mean I'm shorting a double bottom. Price is clearly trending down and I'm shorting retracements in the downtrend. At some point the trend ends, and since V bottoms are fairly rare, the trend usually ends with a 1-2-3 double bottom formation which can be exact or it can be failed break of the last new low or it can be a higher low. When that happens I stop shorting, at least for a while because I expect a stronger pullback and a possible reversal into a new trend.
And yes, that's the Bob Volman and that's his superb book
