I have read a lot of posts on here, weeded thru a lot of junk, and have picked up some info too. I wanted to see if I could inspire some of the experienced successful posters to contribute to this thread to give insight onto their trading strategies. I know some people like RS7 and a few other have already given a little insight into what they are doing and that was great. I have read a lot of threads and posts talking about the mental side of trading, on finding a strategy that fits your personality, and on some more interesting subjects that a lot of times is good info but does not translate into how I can take this and start making money with it. I know there will be some that think this is a dumb post because the are not about to share their "secrets". So I would hope to have posts from those you that have trading styles that are more scaleable so as not to effect your results and who really believe there are no trading secrets (which I have heard many times on ET). Also I think several people using the same strategy won't all necessarily be successful with it. Being more specific than "just trade the trends" would be nice. People using indicators would define a trend in a different way than someone who uses indicators. So what makes you get in a trade? What makes you take profits? What makes you not trade? What kind of swings or pain do you have to endure? There are still people making money in choppy markets to so obviously they are doing something differnet. Questions like these would be insightful. I am asking this because even a person with the greatest mindset and view of the market still won't make money if they are using the wrong strategy that does not fit the market. Anyway hopefully we can get some good posts on here and stop the indicator/non-indicator trashing argument by showing there are ways to make money with both methods. It would make more sense for posters to actually be trading real money and not paper trading.
Real Trading Strategies
- Thread starter downtickboy
- Start date
The way to make money is to accept the reality that people want to buy and not sell stocks that are going up, and sell and not buy stocks that are going down.
Add to winners. Do not buy more of losers.
I have made so much money this year based on this.
It is hard to lose big if you do the above. The days that i have lost big is because i didn't do the above.
It is so simple.
Add to winners. Do not buy more of losers.
I have made so much money this year based on this.
It is hard to lose big if you do the above. The days that i have lost big is because i didn't do the above.
It is so simple.
cut losses short and let profits run ... thats all there really is to it... i read a book that filpped a coin on to enter the market long or short at random and made money as long as they cut loss quick and let profits run... its mentally hard to do tho. thats where experience comes in.
I am looking for more specifics. What you said was pretty general. I know you trade more of the trend so revealing info should not really effect your trading. What makes you decide when to buy the stocks that are up on the day? I am sure you are not arbitrary seeing the stock up so go in and buy it. Is it a chart pattern and indicator? How clean of a trend are you looking for? Many stocks can be trending up but have bad whipsaw knocking a lot of MA followers out of the trade. What makes you pick your price. A lot of stocks that are going up can have fat pullbacks too. Stocks down on the day and trending down can reverse and start trending up. What are you looking for to tell you that you picked the wrong stock. Is it an arbitrary stop loss point or more of a feel to get out when wrong. How many positions do you trade -- 3 positions, whole sectors, or a little of everything?
I am not wanting to repeat the "Holy grail" thread and to be really general. Are you saying you just randomly get in trades like that and use money management? When is a trade considered to be a losing trade -- at 2 cents, 5 cents, 20 cents? You never really know how long profits are going to run, but your losers should be less than your winners. So when do you decide when your winners have stopped running? These answers would all be different depending on your strategy. What do you do?
bigscalper
Guest
trading success does not come from a specific method... comes more from having a plan for everything...
you must do many things correctly...
1) do you have a strategy for position sizing...
2) do you a method for measuring volatility...
3) cut your losses sure... but... where? how far do you let losers go against you... how do you decide how much to risk...
4) how do you add to winners... how much do you add... when do you add to winners...
5) how do you deal with a losing streak... how do you deal with a winning streak...
6) what plan do you have when a stock gaps right through your stop...
If you start designing a plan for some of these issues you will find that a strategy creates itself.
you must do many things correctly...
1) do you have a strategy for position sizing...
2) do you a method for measuring volatility...
3) cut your losses sure... but... where? how far do you let losers go against you... how do you decide how much to risk...
4) how do you add to winners... how much do you add... when do you add to winners...
5) how do you deal with a losing streak... how do you deal with a winning streak...
6) what plan do you have when a stock gaps right through your stop...
If you start designing a plan for some of these issues you will find that a strategy creates itself.
The basic underpinnings of my strategy is that stocks trend during the day. Stocks going up tend to keep going up, and vice versa.
The trick is to get in early with small shares. Then add to the position as it goes in your favor. Then after you have a large position you monitor for signs of trend reversal. This is based on "feel". Tone of the market. Momentum. Futures analysis. If it is after 2:30 pm and the position is still moving in my favor i try to hold into the close. I want to hold my positions as long as possible. I will look to get out when the stock's move is approaching its typical daily range. Unless i see extraordinary buying or selling and determine that this is a "special" day for the stock.
So how do you get in early? You have to watch your stocks very closely. Watch to see how they "feel". Do they "want" to go up or not relative to the ticks in the futures. You want to buy stocks that don't want to go down with futures and vice versa. This is holy grail and tells you whether there is big seller or buyer. You want to play the sectors that are moving the most.
So basically i'm using alot of gut instinct to establish positions. Then i use a trending system. This combined with basic tape reading allows excess returns.
What the poster suggested about taking random positions and then adding to winners and cutting losers is very interesting. Basically it is what i'm doing. I take alot of positions long and short among different sectors. Then i "fish" for the trend. Add to my winners and build huge positions.
As long as the market is volatile enough this system will make you good money. It is human nature for people to not sell stocks today that are going up today and vice versa. That creates excess returns for day traders that play the trend.
The trick is to get in early with small shares. Then add to the position as it goes in your favor. Then after you have a large position you monitor for signs of trend reversal. This is based on "feel". Tone of the market. Momentum. Futures analysis. If it is after 2:30 pm and the position is still moving in my favor i try to hold into the close. I want to hold my positions as long as possible. I will look to get out when the stock's move is approaching its typical daily range. Unless i see extraordinary buying or selling and determine that this is a "special" day for the stock.
So how do you get in early? You have to watch your stocks very closely. Watch to see how they "feel". Do they "want" to go up or not relative to the ticks in the futures. You want to buy stocks that don't want to go down with futures and vice versa. This is holy grail and tells you whether there is big seller or buyer. You want to play the sectors that are moving the most.
So basically i'm using alot of gut instinct to establish positions. Then i use a trending system. This combined with basic tape reading allows excess returns.
What the poster suggested about taking random positions and then adding to winners and cutting losers is very interesting. Basically it is what i'm doing. I take alot of positions long and short among different sectors. Then i "fish" for the trend. Add to my winners and build huge positions.
As long as the market is volatile enough this system will make you good money. It is human nature for people to not sell stocks today that are going up today and vice versa. That creates excess returns for day traders that play the trend.
I know what you are saying. That is what I am trying to ask from the other traders. Lately it seems that ET has had a lot of threads on the mental side, controling emotions, and there are a a lot of very generalized posts on letting your winners run and cutting losers short. However I can get that info out of a book. I am more interested in the specifics of how certain traders, according to their method, decide when a loser is a loser, when to add to trades, when to get our of a trade or when not too. Like I said in the first post a person can have all the mental characteristics of a good trader yet still fail because they are using the wrong method. The market keeps evolving requiring different strategies than it did a year ago, especially in the shorter time frames.
Trading is about having an edge and a set of market conditions that favors your strategy - period. Remeber this well, markets chage, and nothing lasts forever - try to find those traders that have survived 5, or preferably 10 or more years doing this - THOSE are the guys you want to emulate because they are the ones that have the "creativity" [for lack of a better word] to have adapted and have survived their "strategies" being "arbed" out, or simply the market conditions have changed.
This stuff you read about adding to losers and managing your money, etc, is for people that started trading two weeks ago and just read Van Tharps book or Douglass's book. The stuff about flipping a coin and managing your money to make a living trading is just inane.
It is incredible how many times the same generic answer gets given on these boards. TRADING IS IN THE DETAILS, and the details are not in indicators. They are in ever changing strategies that at their core give you an edge that you can milk until they stop "letting you." That coupled with your talent to interpret the story that is being told better than the guy/girl that is taking the other side of your trade - period. There is no shortcut to this state thru indicators, etc, only through the pain/joy of experience of trading day in and day out.
nitro
This stuff you read about adding to losers and managing your money, etc, is for people that started trading two weeks ago and just read Van Tharps book or Douglass's book. The stuff about flipping a coin and managing your money to make a living trading is just inane.
It is incredible how many times the same generic answer gets given on these boards. TRADING IS IN THE DETAILS, and the details are not in indicators. They are in ever changing strategies that at their core give you an edge that you can milk until they stop "letting you." That coupled with your talent to interpret the story that is being told better than the guy/girl that is taking the other side of your trade - period. There is no shortcut to this state thru indicators, etc, only through the pain/joy of experience of trading day in and day out.
nitro
Nice post Silk. This is the type of post I am looking for. So what do you use as a stop loss to get you out of a trade when wrong? What kind of money management are you using? Is it a set price limit, ect? Since many stocks and sectors on the NYSE do not necessarily trade with the futures are you only getting in the ones that are following the futures direction at that time? It sounds like you are using a relative strength method in some fashion. If a stock or sector is holding up strong on a futures down move, would you wait until the futures turn around to buy them? Are you pinpointing entries or getting into them around a range?
Thank you for answering the questions. Sorry for so many but this is the type of dialog I was looking for. I have been trading in a scalping timeframe mode, but want to widen it out more so I don't necessarily have to fight the noise of the market and worry so much about specialists fills, ect. I would also be interest though in entries by other scalpers or short time frame traders. Noise to one person is the gravy train to another.
Thank you for answering the questions. Sorry for so many but this is the type of dialog I was looking for. I have been trading in a scalping timeframe mode, but want to widen it out more so I don't necessarily have to fight the noise of the market and worry so much about specialists fills, ect. I would also be interest though in entries by other scalpers or short time frame traders. Noise to one person is the gravy train to another.