Most Difficult Trade

[trader198]

the most difficult trades to me are those slow times in the day or the market is consolidating whether in an up trend or a down trend.

eevne I believe the market will finally go up ,but it does not break up, when it touches some price, feel strong,but it falls quickly, just when you think you want to buy, often you bought a false upmove,when you cut your loss, it quickly recovers to where you bought,make you very confused: almost lost any confidence or frustrated.

those fast market or breakout actually is the easiest, it will quickly show you lots of profit, normally 1st target easily get hit.

I hate no-where market! easily suck you lotsof your profit if you over-act to it!

 

[NoDoji]

Quote from trader198:

what is consistency, I do not understand what you guys are talking about?

Consistency is the ability to choose a setup or basket of setups you plan to trade whenever they appear, trade them every time they appear, and manage them according to your trading rules.

Today CL put in a pattern from my basket of setups. I saw the setup, I saw the best price at which to enter the trade, the stop was very small, yet I assumed that since the previous bull flag failed leading into this bullish setup, this setup would also fail and I didn't trade it, leaving very easy money behind and skewing my daily statistical edge which is based on me trading every appearance of my setups.

Say 50% of your setups result in a minimum .40 profitable move and 50% of your setups fail and result in a max .20 loss. You have an awesome statistical edge if you trade every setup.

But if you choose which of the valid setups to trade and choose to trade only 70% of them and among that 70% you choose the 50% that fail, you end up with a losing day.

That's why consistency is important, both in trading all valid setups and following your trade management rules for every trade.

 

[SnakeEYE]

Quote from trader198:

what is Discipline, I do not understand what you guys are talking about?

 

[Notes123]

Quote from DGunz:

I'll bite, please give me 1 set up for active trading with an edge sharpness rating between, sharp and very sharp. Specifics please, you said "set up", not general strategy. Very excited to hear what you have to say. And thank you for sharing as when I start trading your set ups, it will dilute your own profitablility, you are so selfless. The truth is, If I were you I wouldnt give away any, yet you are willing to give away 10. You are an amazing person. I never expected anyone to be this giving on an anonymous forum, thank you!

If I tell you a setup, it will NOT dilute the effectiveness of the setup, it only reinforces it.

But if I tell you a setup, you will lose your pants trading it. Then you will blame me for giving you false information. You will seek out another setup, trade it, and lose your pants.

So to save you, I will not tell you any setup. It's for your own good.

If you have traded from one setup to another for a long time and keep losing your pants, you will perhaps realize that the setup is not that important. If you are at that stage, I don't need to tell you a setup, because it doesn't mean anything.

 

[trader198]

setup?

most are false,or there is no stastic edge there. particularly breakout, breakdown, often the market will make many fasle ones, then it takes off or panics, so the chances are slim.

someone said 1-2-3 setup, 1high, 2low, 3high to1high, buy. or in reverse sell. but statistically very low. often it will dance waltz 2 to 3 times, then it take off, so the odd is far below 50/50.

the most statistically sound one is still the basic trading principle: buy low sell high, sell hig buy low.

what I learned: trade a small size, hold a little long to filter out those false signals. also write limit order under those stop losses or above, get good fill.like yesterday morning, crude toke off from 105.6 to 106.79, I did not trade the take off, I hang a sell limit order at 106.67, big bar shooting and my limit order get hit, late covered it at 105.73 and reversed it there, sold it at morning high 106.77, not bad, ignored all the small whipsaws.

last night evening, my limit order almost triggered at 107.67, never mind, did not get executed, move my limit order at 109.77 and went to sleep, wake up it is at 107.2, getrid of the limit order, wait for it to 107.67+, I get to sell at some point then wait a day or a two, crude may make significant puulback it falls back to my ema...buyback there

Quote from Notes123:

If I tell you a setup, it will NOT dilute the effectiveness of the setup, it only reinforces it.

But if I tell you a setup, you will lose your pants trading it. Then you will blame me for giving you false information. You will seek out another setup, trade it, and lose your pants.

So to save you, I will not tell you any setup. It's for your own good.

If you have traded from one setup to another for a long time and keep losing your pants, you will perhaps realize that the setup is not that important. If you are at that stage, I don't need to tell you a setup, because it doesn't mean anything.

 

[trader198]

I would say setup traders are lazy guys or those who try to trade with no-brain.

since in a setup, you clearly see where the stop loss is,where you stop buy/sell is: neat and nice.but the odd is not in your favor.

actually crude makes many false breakout signal this week and last week, it is going up, but it pullbacks to a descenting triangle,in intra-day chart, often when it touches former high, it retraces,in daily chart it touches upchannel line. if you count those false ones, you will see the odd of breakout is below 10%.

once a time, I am obsessed with EMA crossing trading (I saw sometimes the market crossed my EMA, then for longtime it did return to my EMA with significant and astonishing move), since I want to gain "you guys claimed consistency", but in reality most EMA crossing is nottradable. my method is get in at the crossing, get out at another crossing, very simple.

after I reviewed more than 500intra-day charts of crude, I realzied the odd is far below10% (yes if I caught one, it is nice, but many it isnot cautchable with loss, added up,huge loss) . so I gave up. I put my focus on those few extreme good fills.

 

[NoDoji]

Quote from trader198:

setup?

most are false,or there is no stastic edge there. particularly breakout, breakdown, often the market will make many fasle ones, then it takes off or panics, so the chances are slim.

Do you actually trade CL?

Today's CL breakouts from NYMEX pit open to pit close off the 5-min chart, all with an initial 20-tick stop, exits based on trailing 5-min bars to keep it simple, included seven trades and captured $880/contract before commissions/slippage. These include the pit opening bar break, breaks of the high/low of the day, and breaks of internal resistance shelves/support floors in the direction of the prevailing move.

This is a strategy you could teach a 10-year-old and the results don't even even involve smart discretionary trade management such as exiting break even if a breakout of the high/low of the day is weak (breaks less than 10 ticks). That alone would've added $400/contract to the day's breakout trading result.

Breakouts in CL are by far the highest probability setup there is. If they're weak or they fail, you take a small loss or exit break even; if they're valid, they can run well over a point before retracing.

How is this not a statistical edge???

 

[Notes123]

Quote from NoDoji:



How is this not a statistical edge???

I have to agree with trader198, breakout is not a statistical edge. 10% is the low end while 20% is the high end of the range. You have at least 80% losers.

 

[NoDoji]

Quote from Notes123:

I have to agree with trader198, breakout is not a statistical edge. 10% is the low end while 20% is the high end of the range. You have at least 80% losers.

This from someone who took a 27% hit to the account the other day fighting a clean, strong trend?

http://www.elitetrader.com/vb/showthread.php?s=&threadid=216483&perpage=10&pagenumber=4

With-trend breakout opportunities in CL on 3/29:

To keep it so simple a 10-year-old could do it, all trades assume an initial 20-tick stop, all entries by way of a buy or sell stop 1 tick outside the breakout bar, exits based on trailing a stop 1 tick below or above each closed 5-min containment bar (trailing an inside bar is optional if it's to lock in .20 or better):

1. 09:05am ET bar: NYMEX pit opening bar breakout, long @ 103.26, out @ 103.76 (+$500/contract)

2. 10:15am ET bar: High of the day breakout, long 103.98, out @ 104.11 (+$130/contract)

3. 11:00am ET bar: High of the day breakout, long 104.25, out @ 104.65 (+$400/contract)

4. 01:55pm ET bar: Bull flag breakout, long 104.57, out @ 104.72 (+$150/contract) This one ran over $400/contract, so without the 5-min trail rule, you'd likely get more out of it than the 10-year-old

So on a clean trending day, my low probability breakout strategy produced 4/4 winners for a 100% success rate.

To be fair, on a wide range or a chop day, breakout levels (S/R) are the definitely the fade points and will often fail, but these kinds of days are identifiable (there are no clear higher highs or lower lows), and if you choose to play breakouts at the extremes of a range, you'd simply exit near b/e if they fail, and reverse for the profit to the other side of the range.

 

[Notes123]

Quote from NoDoji:

This from someone who took a 27% hit to the account the other day fighting a clean, strong trend?

http://www.elitetrader.com/vb/showthread.php?s=&threadid=216483&perpage=10&pagenumber=4

You think I wanted to fight the trend?

First of all, that short trade was a winner first, then became a loser, then became a winner again, and I wanted to hold for more, then it turned into a loser. The holding of the loser was caused mainly by the bad Consumer Confidence # (down about 10 points)=I was convinced the bad number would bring down the market. I was trading the fundamental rather than the technical. Sometimes, the fundamental and the technical just don't mix. I shouldn't have turned on CNBC that day, for some reason I turned it on and my mind got infected.

ok, all those are execuses. I know what caused my failure. There is something you can do, but I just cannot do.