Making of a method

[dbphoenix]

Quote from game:

Could you suggest some questions I should consider in order to choose a contract to trade? Compiling character stats on a specific market takes time so your response gives me a reason to pause and reconsider.

My current reasoning is:

CL is volatile with a lot of daily swings
It is liquid enough for my current scale and anticipated scale in the near future.

My concerns are purely personal and may not apply to you.

I know some say that if one can read and trade a chart, he ought to be able to read and trade any chart. I may have said it myself back when I was young and stupid. And I suppose that theoretically it's true.

However, it's important to me to understand the subject of the chart. If one is trading indicators and patterns and so forth, then it doesn't matter what the subject is. But if one is trading behavior, it's important to understand those who are trading whatever it is that one is interested in. I don't understand oil traders or what they want so whatever trades I might make would be largely guesses. I don't have to guess with the NQ, so why bother risking money on a pig in a poke?

If you understand stocks and stock traders, then the NQ is not a huge leap. If the NQ isn't providing you with the ops you want, I suggest you look at the YM or something else based on stocks rather than a commodity, unless it's a commodity you understand and keep up with. Or you could look at DIA or SPY or QQQ.

Again, it's not so much what you trade as your confidence in what you trade. Only with confidence will you be able to trade size, and that's where the money is.

 

[smallStops]

Quote from game:

... Compiling character stats on a specific market takes time
...

Very interesting : can you list some examples of character stats ?
actually as many as possible. This would be very useful.

 

[game]

Quote from dbphoenix:


However, it's important to me to understand the subject of the chart. If one is trading indicators and patterns and so forth, then it doesn't matter what the subject is. But if one is trading behavior, it's important to understand those who are trading whatever it is that one is interested in. I don't understand oil traders or what they want so whatever trades I might make would be largely guesses. I don't have to guess with the NQ, so why bother risking money on a pig in a poke?

If you understand stocks and stock traders, then the NQ is not a huge leap. If the NQ isn't providing you with the ops you want, I suggest you look at the YM or something else based on stocks rather than a commodity, unless it's a commodity you understand and keep up with. Or you could look at DIA or SPY or QQQ.

Again, it's not so much what you trade as your confidence in what you trade. Only with confidence will you be able to trade size, and that's where the money is.

What of the argument that all trader behavior is reflected in price and is in turn affected by it?

What is it about the underlying asset that needs to be understood if one is trading PA? You did say that in theory it is all the same. Just trying to get a sense of what this other 'outside' element of trader behavior may be?

Your point about confidence and size makes sense. If the long term goal was to scale up big, then it would be valuable to understand NQ from the get go. From what I read on this forum, it seems others have run into size constraints on CL.

 

[game]

Quote from smallStops:

Very interesting : can you list some examples of character stats ?
actually as many as possible. This would be very useful.

I have been trying the following approach:

Think of a problem and then imagine the type of data that would help in finding a solution to the problem. Then think about how to collect it efficiently.

But things are often less clear that that. Perhaps the collection of data itself sparks off new ideas.

I would spend effort on first making the question clear before digging into the collection process.

 

[ammo]

imagine a fisherie,they build pools,feed salmon and when they are fat,just the right weight,they collect em,and sell em to the market,wall street is the same biz,you have to look at the big picture and work your way smaller for entries at key prices, try to think like the banks running the (fisherie) show,not like the fish in the pond,he thinks everyday at the northwest corner at 11 am the feeder comes out and swims to that corner,the fish has no sense to understand the biz,you do

 

[game]

Quote from ammo:

imagine a fisherie,they build pools,feed salmon and when they are fat,just the right weight,they collect em,and sell em to the market,wall street is the same biz,you have to look at the big picture and work your way smaller for entries at key prices, try to think like the banks running the (fisherie) show,not like the fish in the pond,he thinks everyday at the northwest corner at 11 am the feeder comes out and swims to that corner,the fish has no sense to understand the biz,you do

I think I understand this analogy a bit, but just to make sure I am not missing anything, could you state the main point again?

What does it mean to work your way smaller for entries at key prices?

 

[dbphoenix]

Quote from game:

What of the argument that all trader behavior is reflected in price and is in turn affected by it?

Fine. But what is the application? What characteristics does the behavior have? Can it be understood? Can it be anticipated? What are the probabilities in trading it? All the message board blah blah about random entry and expectancy and trade management and so on is all well and good, but what exactly are you going to do and when and how? Yesterday, for example, why did price fine support at 106.3? Why did it find resistance at 107.5? Was it trending? What were the characteristics of the trend? Was it ranging? What were the limits? What represented value? If you don't know, why mess with it? The long and the short on the NQ yesterday were duhs. If trades like that are boring, then there are other issues here besides the selection of trading instruments.

Quote from game:

What is it about the underlying asset that needs to be understood if one is trading PA? You did say that in theory it is all the same. Just trying to get a sense of what this other 'outside' element of trader behavior may be?

Why do people want to buy it? Sell it? If you don't know that, how are you going to anticipate what they're going to do and when and where they're going to do it? I said a month ago that we were going to reach 3150. We got to 3148. I haven't the slightest idea where oil is going to be this afternoon, much less next month.

 

[fortydraws]

Quote from dbphoenix:

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The long and the short on the NQ yesterday were duhs. If trades like that are boring, then there are other issues here besides the selection of trading instruments.

_____________________________________________

I said a month ago that we were going to reach 3150. We got to 3148. I haven't the slightest idea where oil is going to be this afternoon, much less next month.

So this indicates that there is a cumulative knowledge base that beyond the mere S/R and supply/demand lines that comes to one over time when focusing on the same instrument. Thank you.

 

[dbphoenix]

Quote from fortydraws:

So this indicates that there is a cumulative knowledge base that beyond the mere S/R and supply/demand lines that comes to one over time when focusing on the same instrument. Thank you.

I wouldn't say that. Just a trend channel, the one I posted on 7/14.

 

[ammo]

Quote from fortydraws:

So this indicates that there is a cumulative knowledge base that beyond the mere S/R and supply/demand lines that comes to one over time when focusing on the same instrument. Thank you.

when focusing on several instruments spx,,dow,bonds,xlf,trans,nq,nikkie,there is cumulative knowledge in accumulating multiple instrument data