Mental break-down from TA

Quote from Cheese:

However I note your search for a system giving you entry signals. Firstly, lets move to a focus of clarity. The money is in the gyrations, that is the intraday sequential upswings and downswings following each other (eg ES, YM, CL). Secondly you are concentrating on MA cross-overs apparently as your signalling system. By themselves MA cross-overs have their limitations.
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I don't really use crossovers.

You can base a successful methodology on a smart use of indicators and clever chart configurations. This could more reasonably take you towards a solution.
:)
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Sometimes when using MAs and their slopes there is a lot of information to process so I write little studies to express all that information in binary.

For example, this one gives yes/no information for 6 different pieces of information. From top to bottom:

- Is the absolute value of the differences between the MAs increasing? Green dot = yes. Red dot = no. So if they are expanding it will be green. Contracting = red.

- Is the fastest MA above the middle MA. Green = yes, red = no

- Is the middle MA above the slowest MA. Green = yes, red = no

- Is the slope of the slowest MA up or down?

- Is the slope of the middle MA up or down?

- Is the slope of the fastest MA up or down?

The bottom 3 rows are squares because they deal with individual MA slope. The top 3 rows are points (circles) because they deal with functions of each MA relative to another MA.

(ok this isn't a real trading system, I just threw this together to give you an idea of what is going on in my head. As you can see there aren't really any signals generated from this anyway)


I guess I'm still on the part of the journey where I'm thinking that with some simple (or complex) formula I will be able to express with definite certainty to buy, sell, short, or cover.

I have no problem pulling the trigger or holding through drawdown as long as whatever system I'm using hasn't given me the sell sign yet. It sucks but I do it. In the "Day Trading 2.0" thread in the main forum I've posted many screen shots of 20-30 tick adverse excursion trades that I held on to because I wasn't given a sell signal that later turned into +50-80 tick winners and then I got the sell signal, (and plenty of +10 tick trades that ended in 20 point losses).

In fact, in one post in that thread, I wrote out every single rule for the MA system I've been using in that thread. Setup, entries, and exits are all given clearly with no room for interpretation or question. Those aspects which I could not program myself for auto-triggering of trades I handled with discretion, but that discretion was just "has x condition been met" and not "oh gee how do I feel about this trade." It was simple a matter of me not being able to code what I wanted to do so I had to handle that analysis manually. In other words, my system would fire a "trade" signal and I would either take it or not take it based on my manual observation of the aspect of the system that I could not program.

I have no problem following a system. I am expending all my effort on coming up with that system.

I ranted in another post about how there is no such thing as a discretionary system because if it's based on anything other than random entry it would be possible to be programed, or at least have the rules written down. "I entered the trade because I felt like it was going to go up" is not discretionary. The user was subconsciously processing data acquired from previous experience in the market and using that as a basis for his decision.

Honestly, maybe that's the next hurdle I have to overcome.

It seems like most profitable traders describe themselves as at least somewhat "discretionary," but I just explained above how they're not actually discretionary because they're evaluating conditions and parameters in their brain and forming a decision about the course of action they think has the most probable successful outcome. They're probably analyzing 1000s of pieces of data which would be nearly impossible to program anyway, but it could still be done. It's probably just easier to rely on their brains rather than electronic buy and sell signals. After all, humans can draw curves and MAs and trends in groups of data because "it's obvious just from looking at it." But the average human couldn't program a trendline algorithm or MA formula to do it for them. But that doesn't mean that the trenline they draw is discretionary. The brain can curve-fit and do calculus and trigonometry every day without realize what it's doing. I'm ranting now.

Advice, please :(
 

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a few reasons i dont like ma's as a trading system is because they dont work if the market is not in a clean up/down trend..so you get a lot of chop. Second, you said you dont trade crosses, but ill say it anyway is that the ma's either give a signal too soon or too late...sometimes it will cross right at the top/bottom, but not always....usually not, so you either get stopped out because you get in too soon or miss profits becuse you missed half the move waiting for the cross...or even worse, you get the cross, enter the trade, then the stock reverses stopping you out again before it goes lower....you wait for your cross, but again like last time you are too late..you get the cross, then it reverses yet again.....you get mad and look for the next indicator. lol


......yea this happened to me over and over again till i said f--k this.

IT CAN work but you need to know when it works best, and how. Example, when trading fibs, I know it works BEST to wait for a 50-68% pullback....could it bounce off the 38.2% and NEVER fall back to the 50 or 60?..sure, but I know that this usually isnt the case, as the stock, or currency will retrace then continue its trend lower or higher to the 50-60% levels..then i take my position
 
here is a chart of usd/jpy...the yellow and orange lines are the 66 and 68.2% retrace levels...as you can see, it bounces nicely from its lows and closed right on the line. If you know anything about candel analysis, the long lower shadows are an indication that bulls are pushing the pair upwards. So, long lower shadows + price resting on support = low risk entry. I didnt take the trade but its an example
 

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Here is EUR/JPY, again nice bounce off the 50%. Not magic. Fibs have been around for 100+yrs, but I cant say how well they work in futures, but they work beautifully in fx.

...and just one indicator..a 50ema. I dont even really need it. I dont know why i keep it on there :confused:
 

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Personally, I see indicators as levels of bureaucracy. The more indicators there are, if any, the more layers of bureaucracy that exist between the decision maker and the market. Flat organizations have a better pulse of current market conditions and are, characteristically, more responsive to any changes that may occur.
 
Oh no - not the "gut feeling trade.
I have been in same boat with day trading. What I did, and everyone is different, when my system started to break down I took time off and built a new system that works for me now with current markets and my lifestyle - it took a few months to build and prove but runs like a charm now. The point is it seems like maybe you emotions are getting in the way and your old technique might no longer be valid.
I see others have suggested their systems - I think it is too personal of topic to use others systems blindly.
Take some time and build a new business plan. Be creative and find a new edge. Good luck.
 
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