On Don Bright & his trading methods

Maverick, whats sorts of things do you see working? What holding periods? You recommend using both long/short directional plays?

I'm at my best in calling direction (in all time frames). I've always excelled in the 1 day (1 day swings) to 3 day market swings. I can also read the tape (time & sales-- not l2). My shortest time frame trade is of measured moves - i.e about 4 points. With that style I'm just calling the immediate direction and using a very large stop (i.e risk/reward skew to winning side). I shorten my holding period to decrease stationarity and drawdown risk. The 2 day was my b&B trade but recently I'm doing "true" day trades.

But, when I go back to some of the stuff Dr. Steenbarger wrote, he wrote about how he noticed the successful traders were trading larger size and looking for just you know measured moves -- but not scalping. If you look at what SMB is talking about then they are talking about "trades2hold". I honestly think scalping is a gimmick and a lot of the former floor traders weren't capable speculators.

I've heard of tales of traders trading large size in the ES and shooting for smaller targets. This is one style I haven't mastered: i.e using a tiny stop with very large size. I felt it couldn't work but I always hear these tells. This contrast with those traders trying to pick off the trend days which is more similar to what I'm doing, i.e predicting trend days.

So, it seems the consensus is that scalping doesn't work but there is some disparity on whether one should be shooting for smallish targets with larger size or trying to ride their trades for what they are worth. Obviously, if you have a large trend day and only shoot for a 1 target move then either you are done for the day or will have to try it again or watch the market blast off without you.

I'm primarily referring to the under capitalized trader. I can imagine trader with a larger account might do well building a portfolio and then trading around it. This would have worked well in the run up.

Maverick, also what do you think about trading the futures/options during reports? Many technical promoters do not trade during such periods. But, I have to think such events could provide significant profits. I don't pay any specific attention to the reports because but will often get an idea what the market will do regardless (i.e run up and then sell off.) However, I think this may be a hole in my game.

Maverick, I think you and Don also disagree on volume. I think Don reported his best traders were doing more volume and you really don't think volume itself is a worthwhile goal to work toward.

So, its good to get some ideas from this thread.
 
Quote from Maverick74:

Yeah I heard the same. most of these firms have scaled back big time in their hiring and got rid of all their dead weight. You know it's funny, there was a lawsuit awhile back that many of the prop firms had against Bill Gross at Pimco when he squeezed the shit out of these guys on a delivery. He bought up all the CTD's in the cash leaving nothing for the prop firms and they were all scrambling around like a chicken with their heads cut off. Incidentally, I think they won the lawsuit.
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I remember that very well. I have a buddy whose firm got absolutely obliterated. They lost a crazy amount of money.....They basically lost 7 months of work in a few day period.


I just cant imagine trading a strategy that can put you in a position to lose 6 months of work in a few day period.
 
Just to clarify (geez guys, I have a hard time keeping up with what you guys are referring to, LOL).... we haven't really played or pushed the "MOC" as a market on close order for years... we do, however, use the overall imbalances as an idea of whether the market will close strong or not. Yes, some still find money in the last 15 minutes with a laundry list, looking for massive imbalances, which seem to work, but we rarely actually use the MOC type orders.

Don
 
I find that very interesting.... I've given up on the idea of any intraday system that trades many times a day. I'm working on my system and I'm looking to only make 3 trades max per stock and only enter the market in the first 90 mins. My goal is to catch a decent chunk of the average daily range w/ limited risk.

Is there an article online about what Dr Steenbarger had wrote on this topic or is it in one of his books? Was he refering to measure moves intraday or holding overnights from an intraday trade or swing trading?

Look forward to others thoughts on this...



Quote from Lucias:



But, when I go back to some of the stuff Dr. Steenbarger wrote, he wrote about how he noticed the successful traders were trading larger size and looking for just you know measured moves -- but not scalping. If you look at what SMB is talking about then they are talking about "trades2hold".

More...
 
I'm sure its on his blog somewhere and got the impression from his emails. Here is one where he hints at it:

http://traderfeed.blogspot.com/2010/04/what-competent-traders-need-most.html

He wrote to the effect that the best traders traded larger when they were confident and reduced trading when they weren't. I.e the difference between the best and a good trader was sizing.

I've had mixed thoughts on the size issue. Gambling basics 101 stipulates that you bet more when you have a bigger edge. In fact, one just pure logic would dictate betting as much as possible. In trying to figure this out, I came up with the idea of confidence based betting within predefined limits.

I feel this is especially important for the discretionary trader. I find that my confidence highly correlates with the probability I'm right. If I were to bet large during those times of year when I'm very confident then the highest probability would be a large return.

Yet, for my systematic edges: I'm not so sure. I tend to trade them at the highest leverage possible, at any rate. Although, more logic could be built into such a system. You see one school of thought is taking advantage of statistics, the other of abnormalities.

I think that especially for small accounts, the discretionary trader who is going to make it big will use selectivity and confidence based bets within limits. Systematic biases become more expensive but that if the testing says they can work then that seems reasonable too. One advantage with systematic trading is one has a more quantitative assessment for calculating and understanding the risk.

What is probably less likely to work is trading average opportunities using discretion, i.e trading every single day. This can work with a larger account because the cost of doing business is lower and the edge extraction required can be smaller. But, this is a good question, and I'm not fully satisfied I have the right answers. Fx one of my trade types is "hypothesis based or speculative". These are ideas that can't be backtested but are often valuable. With a large account, one could take more of these trades and do okay, benefit from the diversification. I'm less likely try these with a small account because the size traded would make them either too risky or not worthwhile enough.

Grid form

Static betting, confidence betting
Statistical edges, abnormal event edges
Systematic, discretionary
Volume, size
Net profit optimization, Profit factor optimization
------------------------
Quote from ucf_student:

I find that very interesting.... I've given up on the idea of any intraday system that trades many times a day. I'm working on my system and I'm looking to only make 3 trades max per stock and only enter the market in the first 90 mins. My goal is to catch a decent chunk of the average daily range w/ limited risk.

Is there an article online about what Dr Steenbarger had wrote on this topic or is it in one of his books? Was he refering to measure moves intraday or holding overnights from an intraday trade or swing trading?

Look forward to others thoughts on this...
More...
 
Lucias,

I think there is something to what you quoted below. I recently have made a heat map of my trades (automated trades).

It takes time to make a forward-tested heat map, but I am finding out that putting on trades at certain times of the day give me more confidence to increase my lot size (Spot Forex).

ES


He wrote to the effect that the best traders traded larger when they were confident and reduced trading when they weren't. I.e the difference between the best and a good trader was sizing.
More...
 
Quote from Lucias:

Maverick, whats sorts of things do you see working? What holding periods? You recommend using both long/short directional plays?

I'm at my best in calling direction (in all time frames). I've always excelled in the 1 day (1 day swings) to 3 day market swings. I can also read the tape (time & sales-- not l2). My shortest time frame trade is of measured moves - i.e about 4 points. With that style I'm just calling the immediate direction and using a very large stop (i.e risk/reward skew to winning side). I shorten my holding period to decrease stationarity and drawdown risk. The 2 day was my b&B trade but recently I'm doing "true" day trades.

But, when I go back to some of the stuff Dr. Steenbarger wrote, he wrote about how he noticed the successful traders were trading larger size and looking for just you know measured moves -- but not scalping. If you look at what SMB is talking about then they are talking about "trades2hold". I honestly think scalping is a gimmick and a lot of the former floor traders weren't capable speculators.

I've heard of tales of traders trading large size in the ES and shooting for smaller targets. This is one style I haven't mastered: i.e using a tiny stop with very large size. I felt it couldn't work but I always hear these tells. This contrast with those traders trying to pick off the trend days which is more similar to what I'm doing, i.e predicting trend days.

So, it seems the consensus is that scalping doesn't work but there is some disparity on whether one should be shooting for smallish targets with larger size or trying to ride their trades for what they are worth. Obviously, if you have a large trend day and only shoot for a 1 target move then either you are done for the day or will have to try it again or watch the market blast off without you.

I'm primarily referring to the under capitalized trader. I can imagine trader with a larger account might do well building a portfolio and then trading around it. This would have worked well in the run up.

Maverick, also what do you think about trading the futures/options during reports? Many technical promoters do not trade during such periods. But, I have to think such events could provide significant profits. I don't pay any specific attention to the reports because but will often get an idea what the market will do regardless (i.e run up and then sell off.) However, I think this may be a hole in my game.

Maverick, I think you and Don also disagree on volume. I think Don reported his best traders were doing more volume and you really don't think volume itself is a worthwhile goal to work toward.

So, its good to get some ideas from this thread.
More...

I've never been a fan of gimmicks. They come and go too quick. The risk space is full of opportunity. Good old fashion buying low and selling high still seems to work. Sometimes the reverse does too. LOL. Don't over complicate things. Good discretionary traders will always find opportunities to make money. Just don't over leverage and don't over trade. Best technique that seems to have worked from the 1600's to the present is good old fashioned price action. I don't think that will ever go out of vogue.
 
Thanks Lucias.

Quote from Lucias:

I'm sure its on his blog somewhere and got the impression from his emails. Here is one where he hints at it:

http://traderfeed.blogspot.com/2010/04/what-competent-traders-need-most.html

He wrote to the effect that the best traders traded larger when they were confident and reduced trading when they weren't. I.e the difference between the best and a good trader was sizing.

I've had mixed thoughts on the size issue. Gambling basics 101 stipulates that you bet more when you have a bigger edge. In fact, one just pure logic would dictate betting as much as possible. In trying to figure this out, I came up with the idea of confidence based betting within predefined limits.

I feel this is especially important for the discretionary trader. I find that my confidence highly correlates with the probability I'm right. If I were to bet large during those times of year when I'm very confident then the highest probability would be a large return.

Yet, for my systematic edges: I'm not so sure. I tend to trade them at the highest leverage possible, at any rate. Although, more logic could be built into such a system. You see one school of thought is taking advantage of statistics, the other of abnormalities.

I think that especially for small accounts, the discretionary trader who is going to make it big will use selectivity and confidence based bets within limits. Systematic biases become more expensive but that if the testing says they can work then that seems reasonable too. One advantage with systematic trading is one has a more quantitative assessment for calculating and understanding the risk.

What is probably less likely to work is trading average opportunities using discretion, i.e trading every single day. This can work with a larger account because the cost of doing business is lower and the edge extraction required can be smaller. But, this is a good question, and I'm not fully satisfied I have the right answers. Fx one of my trade types is "hypothesis based or speculative". These are ideas that can't be backtested but are often valuable. With a large account, one could take more of these trades and do okay, benefit from the diversification. I'm less likely try these with a small account because the size traded would make them either too risky or not worthwhile enough.

Grid form

Static betting, confidence betting
Statistical edges, abnormal event edges
Systematic, discretionary
Volume, size
Net profit optimization, Profit factor optimization
------------------------
More...
 
Quote from Don Bright:

Just to clarify (geez guys, I have a hard time keeping up with what you guys are referring to, LOL)....
Don
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Don, if you want to get caught up on things, perhaps I could interest you in my 3 day boot camp? :)
 
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