I am a man of average intelligence. Obviously, not as knowledgable as you and an average Joe. I did read this post this morning. Did not laugh or cry. I can not understand the message in your response above. Maybe it would help me if you explain how you trade, without indicators or charts I assume. When I read a response like this from you or others, I respect it, but it is rarely, almost never, followed by an explanation of the authors actual method, or a suggestion that I can learn from. I am not envious of this higher lifeform and it does not impress me. Please tell me your method, or better yet, suggestion in "plain old words" that will help me on this journey.
Need Help Developing a New Trading Style for the ES
- Thread starter VisionTrader
- Start date
I am a man of average intelligence. Obviously, not as knowledgable as you and an average Joe. I did read this post this morning. Did not laugh or cry. I can not understand the message in your response above. Maybe it would help me if you explain how you trade, without indicators or charts I assume. When I read a response like this from you or others, I respect it, but it is rarely, almost never, followed by an explanation of the authors actual method, or a suggestion that I can learn from. I am not envious of this higher lifeform and it does not impress me. Please tell me your method, or better yet, suggestion in "plain old words" that will help me on this journey.
VT,
reading this thread a few things come to my mind. You said you want to move away from the 1 min chart, although you have been profitable, because you find it to demanding emotionally. IMO you should give youself a little more time to learn to deal with the emotional side of trading than the two weeks you've given yourself now. I think trading a system that gives a lot of trades is a good thing to learn to deal with the stress, that comes with being in a trade. Going to a system that gives fewer trades will not speed up this process. You will still feel stressed no matter whether you take 2 or 10 trades a day. What you look for is confidence and experience, which will make the stress go away. the ultimate goal is to be able to trade in a neutral observative mode.
About the hooking of the stochastic: although i've tried it many times i can't derive an edge from divergences. why not focus on DT's and DB's itself, without paying attention to some diverging indicator? Try watching T&S and major pivot points in conjunction with them.
reading this thread a few things come to my mind. You said you want to move away from the 1 min chart, although you have been profitable, because you find it to demanding emotionally. IMO you should give youself a little more time to learn to deal with the emotional side of trading than the two weeks you've given yourself now. I think trading a system that gives a lot of trades is a good thing to learn to deal with the stress, that comes with being in a trade. Going to a system that gives fewer trades will not speed up this process. You will still feel stressed no matter whether you take 2 or 10 trades a day. What you look for is confidence and experience, which will make the stress go away. the ultimate goal is to be able to trade in a neutral observative mode.
About the hooking of the stochastic: although i've tried it many times i can't derive an edge from divergences. why not focus on DT's and DB's itself, without paying attention to some diverging indicator? Try watching T&S and major pivot points in conjunction with them.
Ditch,
Thanks for the input. I see your point about giving up a little too quickly. I am probably (as usual) giving the wrong impression here. I am not going to abandon my current style. I am simply trying to enhance it. I do know one thing. I overtraded big time.
Double Tops and Double Bottoms are my foundation. I like these formations, they give me greater confidence on direction changes. I am really just trying to consider longer time frames and the big picture instead of just the 1M chart.
I am working on automating my software to signal me on Double Tops and Double Bottoms thru multiple time frames so I can make decisions on entry/exit.
I realize that indicators have questionable value and most are laggards. So I try to intelligently make decisions at any moment in time. Say what you will, when a stochastic hooks in a direction, particularly a longer time frame, it is a good "indication" to be alert.
I compare the market to my wife. When she wakes up, I don't know what kind of mood she is in. I need an indicator from her to at least give me a clue. If she says nothing, as the day wears on, I can make an accurate prediction of her direction during the day without her saying anything. It takes a little longer and requires a little more patience this way.
Appreciate the time.
Thanks for the input. I see your point about giving up a little too quickly. I am probably (as usual) giving the wrong impression here. I am not going to abandon my current style. I am simply trying to enhance it. I do know one thing. I overtraded big time.
Double Tops and Double Bottoms are my foundation. I like these formations, they give me greater confidence on direction changes. I am really just trying to consider longer time frames and the big picture instead of just the 1M chart.
I am working on automating my software to signal me on Double Tops and Double Bottoms thru multiple time frames so I can make decisions on entry/exit.
I realize that indicators have questionable value and most are laggards. So I try to intelligently make decisions at any moment in time. Say what you will, when a stochastic hooks in a direction, particularly a longer time frame, it is a good "indication" to be alert.
I compare the market to my wife. When she wakes up, I don't know what kind of mood she is in. I need an indicator from her to at least give me a clue. If she says nothing, as the day wears on, I can make an accurate prediction of her direction during the day without her saying anything. It takes a little longer and requires a little more patience this way.
Appreciate the time.
Love the analogy on the wife !
Vision,
I traded with you the other day in the futures trading room.
Got a little feel for you there. (it was fun by the way !)
Noting that our styles are somewhat similair, you referred me to your Journal, Chronicles of an Idiot.
I read through a lot of it.
After this exposure to your strategy, and I am certainly not a Master Trader, but do think any perspective may help, it seems like the strategy that you are currently going with may not fit your personality. I believe you're still trading from 1m or 3m charts (?) which does require a lot of attention and more trading, but this area of 'more' seems to be what you would like to change. Is this correct ?
It does seem that your strategy would work without changing anything but the timeframe in which you look for entries. Of course larger timeframes usually means larger risk to reward and different money management (risk per trade x % of capital stuff) but like some others have replied here, a 5m timeframe may suit you better.
I don't know if I'm just stating the obvious or not but from tradin' with ya the other day, it's just what comes to my head.
Regards.
Vision,
I traded with you the other day in the futures trading room.
Got a little feel for you there. (it was fun by the way !)
Noting that our styles are somewhat similair, you referred me to your Journal, Chronicles of an Idiot.
I read through a lot of it.
After this exposure to your strategy, and I am certainly not a Master Trader, but do think any perspective may help, it seems like the strategy that you are currently going with may not fit your personality. I believe you're still trading from 1m or 3m charts (?) which does require a lot of attention and more trading, but this area of 'more' seems to be what you would like to change. Is this correct ?
It does seem that your strategy would work without changing anything but the timeframe in which you look for entries. Of course larger timeframes usually means larger risk to reward and different money management (risk per trade x % of capital stuff) but like some others have replied here, a 5m timeframe may suit you better.
I don't know if I'm just stating the obvious or not but from tradin' with ya the other day, it's just what comes to my head.
Regards.
I compare the market to my wife. When she wakes up, I don't know what kind of mood she is in. I need an indicator from her to at least give me a clue. If she says nothing, as the day wears on, I can make an accurate prediction of her direction during the day without her saying anything. It takes a little longer and requires a little more patience this way.
Vision, you are able to make me smile here. I have been married to a wonderful woman over 15 years and she is "changing" like your example above. The lagging indicator does not help to change that, but it confirms what kind of day you will have. lol
However, the market with a divergence might be like this:
She wakes up and gives you a signal but its a lagging signal. She really feels opposite, but does not know what she really feels yet.
You take a chance and pick the divergence and your correct over 50% of the time. You say to yourself, I wish I could filter this to get less divergent mornings and see the odds of her finding her feelings. This would be less risk(not work) to achieve the same.
Michael B.
Vision, you are able to make me smile here. I have been married to a wonderful woman over 15 years and she is "changing" like your example above. The lagging indicator does not help to change that, but it confirms what kind of day you will have. lol
However, the market with a divergence might be like this:
She wakes up and gives you a signal but its a lagging signal. She really feels opposite, but does not know what she really feels yet.
You take a chance and pick the divergence and your correct over 50% of the time. You say to yourself, I wish I could filter this to get less divergent mornings and see the odds of her finding her feelings. This would be less risk(not work) to achieve the same.
Michael B.
Good One.
Well Vision, I can think of three ways to solve your backtesting dilemma:
I actually trade via the first method. Sometimes I just sell near the high/buy the low with a tight stop... no more than a tick or two beyond the high/low. Usually I take my smallest trading size for tops/bottoms, because if it works out it is usually a great move.
I have not found any advantage to using the stochastic in my own testing. The only indicator that helps sometimes is something that uses volume. I believe this is so because volume is an independent source of data, whereas a stochastic, RSI, CCI, etc. all take price as input. That being said, I know there are plenty of folks who trade with price indicators (Woodie's being a prime example) who are more successful than me.
Summary: there are plenty of ways to trade double tops and bottoms, including ways without the stochastic or other price based indicators.
- abondon the stochastic, as others have suggested. You can still trade double tops and bottoms. Just wait for your favorite reversal pattern near the hi/low (candles: inside up/down, hammer, shooting star) or to stick with bars, breakout of the low/high of the previous bar.
- If you still want the stochastic you can use only closed bars for you backtesting. Then if you take it live you can get your backtested signal, which is not jumping around, and eye the current bar (which is jumping around) for your gut feeling-- to pass on the backtested signal if you feel it won't be good.
- (The most complicated option.) You can backtest with time and sales, and somehow characterize the movement in the current bar.
I actually trade via the first method. Sometimes I just sell near the high/buy the low with a tight stop... no more than a tick or two beyond the high/low. Usually I take my smallest trading size for tops/bottoms, because if it works out it is usually a great move.
I have not found any advantage to using the stochastic in my own testing. The only indicator that helps sometimes is something that uses volume. I believe this is so because volume is an independent source of data, whereas a stochastic, RSI, CCI, etc. all take price as input. That being said, I know there are plenty of folks who trade with price indicators (Woodie's being a prime example) who are more successful than me.
Summary: there are plenty of ways to trade double tops and bottoms, including ways without the stochastic or other price based indicators.
"Maximum Adverse Excursion" and "Maximum Favorable Excursion", just looked this up.
Heh. My columns are labelled "Pain" and "Max".
Very important I agree. A statistical study may show, say a two point loss on a trade in the results, when you could have closed it for a ten point gain (if you were psychic).
In fact, this is the key to moving average trading. Take it as an entry but not neccessarily an exit.
I heard one seasoned trader say (and I love it and practice this)
"Invent one way to get in, AND FIFTEEN WAYS TO GET OUT!"
Let me translate.............
Find a filter based on a longer term to filter your current intraday signals. This will help you pick the signals you want to take.
Try a MACD oscillator....this would be a different type of measurement independent of stochastics.
I do not know if you are trying to avoid hitting the buy/sell button or to eliminate work. But this method I am suggesting will keep you out of the platform more but with the same amount of work.
Your system is a good one Vision and I have added it to my charting platform as just another winning set up. There are so many, that I never find myself out of the market very long.
Michael B.
Find a filter based on a longer term to filter your current intraday signals. This will help you pick the signals you want to take.
Try a MACD oscillator....this would be a different type of measurement independent of stochastics.
I do not know if you are trying to avoid hitting the buy/sell button or to eliminate work. But this method I am suggesting will keep you out of the platform more but with the same amount of work.
Your system is a good one Vision and I have added it to my charting platform as just another winning set up. There are so many, that I never find myself out of the market very long.
Michael B.
Direction of the price action can be determined with only 60% -65% accuracy no matter what method is used .
Time window in which price action will change direction can be determined with 80% accuracy .
Your method is a good one but there is nothing you can do to improve it by adding or removing stoch. or any other indicator , including volume .
Try to look into cycle and geometric analysis, there is an answer to what you are looking for .
Walter