Quitting Trading

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<i>"In eight years, I have looked at every indicator. Followed every rabbit path. None of those has proven to me that they have any edge to speak of. I have never understood how people trade with support and resistance. It seems so subjective.

That's where I am today. One point per day just seems like it should be totally do-able and working it up to 10 contracts would be a nice living at $1000 per day less commissions."</i>

There is a monumental edge to trading S/R... once you learn how to measure correctly. It is the holy grail, bar none. Price action alone with nothing else necessary (volume studies, etc are ok but totally extraneous) measured correctly has worked since markets' inception and will continue to work forever.

It is impossible to overwhelm or "burn out" price action as your method, for obvious reasons. Learn that, and you'll be fine. Intraday, swing trading, trend trading... it's all the same. Success or failure comes the same regardless of timeframes.

For the ER specifically, your -1pt initial stop on every trade is too tight. From what you shared with us here, your fixation is focused on loss limitation as opposed to seeking profit. In other words, you are trading not-to-lose. That will result in missed profits (like Friday's example) and inevitable loss overall.

Widen your initial stops and let the trades run for at least +3pts ER if not more. Every day with almost no exceptions the ER makes 5pt or wider swings at least once, if not several times. Hold every single trade you take as if that one will catch the +5pt move.

Some of them will... you would be happy to catch one such trade per calendar week according to your stated minimum goals here. Is that correct? If so, trust every single ER trade regardless of all else will reach +5pts from entry to exit. Some of them will, it is a sure thing. Your selected market does that (and much more) every single day.
 
Quote from jho:

I am going to have to agree with all the other posters that said your stops are too tight.

1pt stop in the ES will get taken out a lot, it's just the noise. Try looking for larger intra day moves. Maybe you can use your range charts for entries but watch a higher time frame for exits. Obviously anything more than a 1pt stop in your time frame would open yourself up to a negative R/R ratio. So you will have to adapt. Try testing a 2pt stop and look to take trades at support/resistance areas. Find out when chop happens and try to avoid it.
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chop happens between 11 and 1 cst
 
Your post touched me.

I will try to give a shot as to explaining my method and hopefully this helps your trading out.

When dealing with trading you will face several hurdles.

To name a few:

- Commissions

- Slippage

- Psychology

- Monthly Fees

- Technical Glitches

- Bad calls

Due to the above when trading you must shoot for positive risk reward expectancy. This means that for every dollar you risk you must be certain you can get more out of it than what you risked.

In order to accomplish this you need strategic entry points, patience and a very good understanding of the big picture.

I recommend you use two charts. One chart should let visualize the trend of the past 3-10 days and the other chart a much faster one, should let you examine in detail the specific area where you want to enter your trade.

You must be very patient because the following conditions must be met. The multiday chart must be in trend mode, not trapped in a range and if trending you must be at a point where the entry is clearly optimal as you want to buy low when the market is uptrending and you want to short high when the market is downtrend. For this you need massive amounts of patience, but if you want to make it, you must do what I tell you.

Now, how do we do this.

Well, let us suppose the multiday chart is uptrending. In this case, you must wait for price to retrace to a clear support area, this could be a support pivot or an important uptrendline and when you finally reach this point, you are ready to move to the intraday chart.

In the intraday chart, I want you to look for reversal formations. This formations will go against the immediate trend but in line with the big picture, giving you pretty good accuracy and extreme risk reward.

You won't win them all, but a good chunk of them and since your reward should far outdo your risk, in the course of several trades you will come out positive.

When buying a support area target higher highs. When shorting resistance target lower lows.

When studying reversal formations you need to be aware and well educated on reversal patterns, which are nothing more than a summary of price action, and of course price action itself. This will help you determine when the reversal formation might not work and where your stop placement will be. I'm not a big fan of scaling out as this will reduce your risk reward and the market will almost always give you an opportunity to cut winners short, which is something you do not want to do. Just stick to your stops and targets, there is just too much noise between pivotal areas. Too hard to trade, probably why many fail to succeed at trading. You as a trader, must understand, that you cannot just enter anywhere but only at certain places where there a line in the sand has been drawn.

Make sure you have a clear understanding of volume distribution as this will help you determine when sellers or buyers are done when examining those reversal formations.

Never go against the big picture, use smart money management and discipline on every second of your trading.

In summary.....

Wait for multiday chart to trend, if it is not trending, stay out, do not trade.

Wait for a strategic entry, when you are finally there, move to the intraday chart and wait for reversal patterns to confirm.

Pull the trigger and shoot for higher highs when buying, and shoot for lower lows when shorting; not on the intraday chart but lows and highs on the multiday chart, you want your reward to be a good run.

As you see consistency add contract size that you have earned in order to increase your returns. Do not increase car size unless you are deserving of it. No reason to go cash until you have proven yourself in the simulator. Once this has been accomplished, you can start with minimum contract size and add as the returns plile up. You do not become rich by increasing points per day, you do this by increasing size, but size must be increased due to consistency and not greed. In other words, for every so and so points you have gained, allow yourself a new car unit.

I believe I have given you a working system.

After your 8 years of trading you must have a solid understanding of technical terms but just in case I will leave you with some homework.

Make sure you know and understand how to play the following key terms:

- Trendlines

- Pivot determination in multi day chart

- Reversal patterns including price action and volume distribution

- Do not, I repeat, do not use indicators.

The rest is up to you.

Ever heard the famous phrase, "you must get it" ? I just presented it to you.

Your friend wishing you success,
NN
 
Quote from jasper6:



I have no idea where to turn from here. What am I supposed to put on a resume - eight years as a daytrader? I don't even want to work for someone else, anyway and don't know what else I would do.

All I ever wanted was to find a consistent way to pull one point from the market and trade size as my account built up. I only need $200 per day to keep going.

I'm sure I'm not the first failed trader being faced with these options. I could sure use some words of advice, though.
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ok, seems you're one step away from contemplating suicide.

First: you do understand most here don't make any money. So any "advice" should be taken accordingly.

Then step away, take a deep breath. get a few hookers. get laid.

Your losing is more than a need for a better system. Losing for such a long time wires your neurological processes to lose.

so, step away. Take a break. Take a long break. Like I said, get laid often, at your age, you don't have many good days left. use them wisely.

get a job. any job. meet people. meet many people. stop thinking about trading. visit places. forget trading.

after a few years, review your notes, your ideas. start fresh. re-wire your neurons to trigger correctly.

of course, you'll never do anything of the above. you're wired to lose in the markets, it's an addiction now more than a profession.
 
Quote from jasper6:


In eight years, I have looked at every indicator. Followed every rabbit path. None of those has proven to me that they have any edge to speak of. I have never understood how people trade with support and resistance. It seems so subjective.
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You said you don't care why the market is going up or down...this is exactly why you don't understand s/r. It's far from subjective, but it does require getting under the hood of the market.

I think it might be time for you to get away from the market while you still have a little cash.
 
Quote from nitro:

I have nothing more to add, except that I would find a way to get a job at a trading firm where you are surrounded by people that make a living in the markets trading them.

Imagine that when you were born, your survival depended on you being able to walk and talk from the get go. The reason we survive is that we have parents that give us the time to learn to walk and talk without having to worry about anything else. Plus, they mentor us with infinite patience. That is the situation you are in - you are a newborn learning to walk and talk with non one to hear the language from, and no one to prop you up when you make mistakes.

On a positive note, you appear coachable. Don't underestimate that.

Good luck to you.

nitro

PS Your trading "experience" may actually be detrimental to finding a job at a trading firm. You may find no wants to hire you when they learn that you have traded before. That may seem counter-intuitive, but it isn't and one day you may understand. Many firms want a clean slate, a "nimrod" if you will. FYI. Do what you will with that information.
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This is the best advice you have received thus far. Your 8 years of wandering in the market wilderness tells me 2 things.

#1) You have a passion for the markets and how they work, this is key.

#2) If you don't want to wander for another 8 years you need to immediately get with a mentor who will/may be able to take the knowledge you have acquired and tie all the pieces together for you.

The advice you have recieved here about stops and technical indicators is valid. However, it won't be enough. You need a mentor, without one I don't see the results changing much.
 
One thing that has made a world of difference in my trading is to find a system, ANY system, that works... and trade it with discipline for a while. It will give you a new perspective entirely.

We can have a tendency to choose the indicators we like.. the charts we like... but you dont build a system out of bars and indicators. You build a system then pick the indicators that help you trade it best.

Take the other folks advice here and either join a prop firm or take a class. The first few times you mechanically trade a system and see the money come in ... I guarantee you will have a completely different perspective.

Also - read and maybe even try trading this: http://www.elitetrader.com/vb/showthread.php?s=&threadid=99283&perpage=40&pagenumber=1


I started making money consistently after I applied a lot of those techniques to my own system.

All the best my friend - do what you love and have fun doing it. Dont go broke though.. money management is very important.

Cheers.
 
Another good read is "The Dip" by Seth Godin. He discusses pullbacks and helps to identify 'dips' that continue to mastery; or dead ends for your plans.

A good discussion of the book and the related decision can be found at:

http://blog.guykawasaki.com/2007/04/the_big_dip_ten.html

Better to read before facing 'the dip' but may be helpful nevertheless. I liked the book and have the audio version on my ipod.

Good luck!
 
Quote from Red_Ink_inc:

This is the best advice you have received thus far. Your 8 years of wandering in the market wilderness tells me 2 things.

#1) You have a passion for the markets and how they work, this is key.

#2) If you don't want to wander for another 8 years you need to immediately get with a mentor who will/may be able to take the knowledge you have acquired and tie all the pieces together for you.

The advice you have recieved here about stops and technical indicators is valid. However, it won't be enough. You need a mentor, without one I don't see the results changing much.
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I agree nitro/redink some traders form bad habits that are hard to break. 8 years and walking away with 75k left is not as bad as it could be. IMO walk away for 6 months- one year and come back and re-learn from a mentor with a proven 5-10 year track record or get in an office with some good traders. I wish you luck with this and hope all works out for you
 
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