Nov Shameless Self Promoting Guru Journal
- Thread starter Brandonf
- Start date
Thanks for your response.
The main point I was making is that it was difficult to believe that a trader going for a few points wouldn't have had some opportunities on a day like today....or for that matter, on most days. You seem to confirm that there are various traders doing exactly that...and I've noticed it myself. If the average one minute bar is 1 point it's a little hard to believe that nothing presented itself. In fact, if I take just the major swings from the one minute chart...it looks like the ES travelled something like 78 points today, give or take!!
What you bring up though is an important point. It may well be that some can do as you evidently do, successfully trade these smaller moves. I call this "gaming" the futures. These smaller type moves are more apt to occur because the locals ran some stops, there's a temporary supply/demand situation in the futures, there's a small pullback in the overall context of a larger move...etc etc. You may have been able to identify the conditions under which these moves take place...and you're to be congratulated for that, it takes intelligence, and your post shows that.
But my opinion would be that these moves really have very little to do with the stock market. And the result of focusing on these smaller moves is that no sooner than you identify a successful trade for a few points, take your profit, then the future kites up a quick 10 more points. Ever had that happen?
I don't want to personalize this to you...because I don't know you. So understand I address this to the "average trader" who's focusing on these smaller moves. Ever wonder why one of these guys gets so nervous about holding a position? I believe it's because he doesn't understand WHY the market made it's move, or why it's likely to either continue or terminate. He has no clue was to WHY this particular 2 point move might be the start of a "real" big move, as opposed to just some locals gunning some stops.
Do you really believe that in the basic scheme of the stock market that a 20 bar moving average of a one minute chart means a thing? Or is it just one method of many which attempts to "game" the futures for a few points?
You know one day on one of these boards I read an interesting comment: The guy said that he didn't understand why it was that he could be bearish (at the time), the market would go way down, but at the end of it all after all his trading in and out, he hadn't made a dime. That may not resonate with you...but my guess is that it resonates with a whole lot of traders. Here's why: you short the ES, make a quick 3 points, and leap out. Unfortunately, the market goes on down another 7 points, and then bounce 3, sets up again, you take another trade lower than you just covered at...and unfortunately this one doesn't work. You lose 2 points.
So now, here you are, you're up a point, less two commissions, on a move you had right to begin with. And if we extend this hypothetical scenario out further, I'm sure we could illustrate how it's possible to be bearish in a down market and still lose money. (or vice versa).
The idea I'm trying to advance here is that when you play these smaller moves you're competing with guys on the floor, guys who have more advantages than you do, more speed and more knowledge about the temporary supply/demand of the market. On these small moves you lose the advantage that an off floor trader might have....the ability to monitor enough different items to give him an edge where speed is not the determinant to success.
Anyway, I hope none of this seems to personal to you...I don't intend it that way at all. I have nothing but the utmost in respect for all successful traders, regardless of how they do it. I'm just expressing an opinion.
OldTrader
Ah, yes, I agree 100% with you here. I think since Brandon's biggest edge is his gap statistics, he does not take many trades on days without a tradeable gap. Personally, I find very few days without good short-term trading opportunities. In fact, I'm actually more interested in Brandon's other intraday strategies than his gap methods, as there are a variety of known ways to trade the opening gaps (OOPS, volatility/range breakout) which could lose its edge at some point in the future as more traders understand these methods.
On your general about the "average trader" looking for small profits or using small stop-loss, I also agree. Most traders should be looking at the larger intraday moves. I thought you were saying that because 2.00pts in ES is only about .2% then it is only noise, and therefore untradeable. I just wanted to show that on short-time frames 2.00pts in ES is very similar to what many day traders trading other stocks use as a stop-loss (10-20c) which is about 1x ATR.
To profit on the short-term moves is much harder, but there are a lot of full time traders that do just that. For example, most prop traders I know never let a stock move more than 20c against them if they can get out (i.e. it doesn't spread worse on them). This is equivalent to 2.00pts on ES.
As with all techniques, YMMV.
You need to look at volatility instead. For example, on 5m charts the ATR(24) of ES is 2.07pts. I think 1x ATR as a stop-loss or profit target is reasonable for certain short-term trading methods.
Volitility number is a real thing, not an indicator....gives you profit and loss potential. Trade management was a key to allow me to take a trade, take some off, and leave some at break even for the longer move. Made all the difference.
Volitility number is a real thing, not an indicator....gives you profit and loss potential. Trade management was a key to allow me to take a trade, take some off, and leave some at break even for the longer move. Made all the difference.
OK, you guys forced me to look at the average true range on the 5 minute chart. Obviously it varies, but it looks like most of the time it's around 2-2.5 points or so.
I'm not sure that I see the value of this particular number as a number to be used in setting a stop. What's more important is to understand that when the market goes through the simple act of "breathing" while it consolidates a move it can easily move 3-5+ points contra trend without changing a thing. If you have your stop set a couple of points away, you're gone...and nothing has changed an iota other than the market did what it always does, it makes a move, it takes part of it back, it makes a move, it takes part of it back.
Granted, if you trail your stop and it moves a couple of points, stop you out, it then goes on to move a total of let's say 5 points, you made a good temporary decision. The question is whether you get back in....and even if you do get back in, where you get back in at. Because the trend is not going to make it easy for you to do this. My feeling is that this is attempting to fine tune things too much. In fact, the moves where these close stops make the most sense would be the contra trend type of move, the one you probably shouldn't have been attempting to play to begin with, the one that ends very quickly and abruptly when the underlying trend re-emerges.
Again, it reflects a different style. I'm willing to sit while the price moves against me, takes back part of the profit, until I see a reason to get out. The market will always give you a clue as to when to exit, if you're attuned to clues and what to look for. But I try to play the dominant trend, do my buying on setbacks against the trend, and then give the trend some room to work.
OldTrader
the beauty of the market is that there is not ONE correct way to do anything. one guy average 9 points on a move and another averages 3 pts, but makes 3 times as many trades... some slippage, additional fees to argue about, but my point is they end up about the same.... and its kinda foolish for one to point at the other and say their way is BETTER... no one knows which way is better for someone else; hell, they are way ahead of the herd if they can figure out what might be best for them...
time in the trade and position size impact risk.... scaling out accomplishes the goal of "shedding" risk for me... others hold for 100% of their price objective, or they breakeven or take an acceptable loss.... i am not going to attempt to point out how "wrong" that seems to me....
the point for the scalper may be that they are "almost" totally ambivalent to overall market direction for whatever time frame - the market meets their trade parameters and they get in and out fast... they are not less "worthy" because they cant decipher the "trend" - they may not even care.
time in the trade and position size impact risk.... scaling out accomplishes the goal of "shedding" risk for me... others hold for 100% of their price objective, or they breakeven or take an acceptable loss.... i am not going to attempt to point out how "wrong" that seems to me....
the point for the scalper may be that they are "almost" totally ambivalent to overall market direction for whatever time frame - the market meets their trade parameters and they get in and out fast... they are not less "worthy" because they cant decipher the "trend" - they may not even care.
Magna
Administrator
No need to be so amazed. If you follow the market and enter/exit on feel, on intuition, mostly as a discretionary trader, then I suppose there will always be "opportunities" throughout the day. But, instead, if you have time-tested setups that you follow, setups that have proven to provide you an edge, and you don't get a setup.... then you don't put on a trade. Simple as that.