Quote from ChartingMarkets:
I think what people are getting away from here is that Jai is talking about having a trading plan. For me that means having a number of stocks that you follow and know what the support and resistance of those stocks to determine where the "actionable hotspots" are that will cause imbalances in supply and demand that you can then take advantage of as the price of the security trends either up or down to settle that imbalance. Hey guys I have been doing this for 11 years now and probably 15 years in total following the markets this is the essence of trading in a nutshell no matter what you trade period. You have people who are talking in this thread that they scalp the S&P eminis and do it with low risk yada yada yada. I do something differently I swing trade and you know what I do it with the same low "consistent" risk. Meaning if I lose 2 points for arguments sake because a stop is hit well then over time my swing trades are taking 4-6 points for my winners. My brain is less taxed by not making 50 trades per day and talking like a nut case who probably is shaking at the end of the trading day from an OTB adrenaline rush. I really don't understand how the trend overtime has been to get away from the obvious and not hold things for swing trades. I guess its all this great equipment that we have available these days that allows us to see too much and feel we have to capture every single wiggle and waggle. So many traders don't have it mentally to survive because they can't understand that a market does not go up in a straight vertical line on any time frame. Instead it back and fills when in trends and is range bound when consolidating. Most traders can't live with that ebb and flow and don't understand when things are consolidating to take off again or pulling back to provide reentry for either long or short positions. I sit here and wonder why the failure rate is so incredibly high for people who try to trade and the main reason is that as stated above so many of you try to scalp or daytrade in fear in order to only get "half pregnant" you're afraid to ride out the trends when you see them and take a larger chunk of the trend in profits. You feel as if you can capture every wiggle and be in and out thus keep your risk lower. Let me tell you something the truth is you will burn out of this profession very quickly doing it and most likely you wont make much money in the long run as the human brain is not geared to think that fast and thats the limiting factor. As far as using a computer to analyze all the risk I don't do that. I have a really high end computer its called my brain. My brain has been soaking up "input" "experience" whatever you want to call it for 15 years now. My brain aka intuition as it now lends its itself to be, works on automatic pilot to weed out trading opportunities that are high probability and those that are low probability. My Pentium 4 really cant compete in that area, so all the great discussions on ET of backtesting using TradeStation or WealthLab does not mean anything to me when I see it. Bottom line everybody has their style of trading and thats always going to be the case. The truth is in the long run the consistent winners learned to live with the fluctuations and like Jai says have a trading plan. Slow the game down and look and what you guys are doing stop turning the game of trading in to a nickel slot machine at Vegas. You know the kind where you have those old folks with half smoked cigs in their mouth pressing the button over and over again. All the while they make a few coins here and there but net net all they end up with is the breakfast comp for their playtime.
ChartingMarkets - You sound very experienced, yet don't seem to have the experience to be more open to other possibilities, rather than imposing your harsh opinion on day traders!
You take 4-6 points for your swing trades? Well, in what timeframe? And, do you risk overnight exposure? To make you realize why people day trade, it's not to get "half pregnant", but to maximize profit potential. Swing trading is an easy game. Every decent day trader started off that way. As you get better, you can move onto smaller and smaller (ergo more difficult) timeframes. As you trade smaller timeframes, you get to use more money velocity, more leverage, less timerisk, less per-trade risk etc etc. Comments like "half pregnant" I would replace at this point with "double pregnant", or "quadruple pregnant". Admitted, day trading is the "hardest", but it's not without rewards if done properly. Talking about "ebb and flow", you think that only exists in swing trading? Give me a break! It exists in any timeframe you choose to trade. The market is like a fractal encapsulation, one smaller fractal within the other, and even you couldn't tell if a chart is 1m, 5m, 15m, 60m, or a daily (except for the gaps maybe).
Is it exhausting, and will I burn out? Well, it can be exhausting, particularly if you're losing or not knowing what you're doing. Yes, day trading, particularly scalping, can take its toll. But you know it's extremely rewarding, and I'll probably very gracefully retire before I turn 30. And then I can still move onto swing trading and the like. Until then, I can actually sleep at night, without fear of horrible gaps or overnight exposure. But of course I fully agree with Jai as to having a plan. That's the A and O of it all. The most important thing.
Regarding backtesting with systems: I have neither TradeStation nor WealtLab anymore, and I don't develop or test any mech systems, for I (just personally) consider this a waste of time. I do all my backtesting of my discretionary approaches by-hand, drawing on charts (often printed!) and in Excel spreadsheets specially for the purpose.
I print out the 1-min and 5-min bar chart of my market every day and fill in all the trades, missed opportunities, and improvement comments. I have a detailed digital log archive, with diaries, comments, everyday observations, every day execution logs and every day charts. It works for me, beautifully. I still improve every single day.
FYI, I often do over 100 RT/day, and I net more than any swing trader can do. I do well enough to be satisfied. Thank you for your considerations.
Have a great week.
