S/R Emini Journal

[4re]

Quote from KyivTrader:

Thank you Gary! I will be around on Monday. Yes, I have something that could use some input from an experienced trader.

I know this might sound strange , but I like the ES exactly for the "choppy" phases like this week, since I more or less fade highs and lows.

I recognize though that this only makes sense if you do it in the direction of the underlying trend.

So here is my quandary: how do you define that in a simple and clear way, with as little ambiguity as possible?

If you have, or anyone else has, any tips for a "novice daytrader" on how to trade on the right side of the intraday trend, I'm all ears. Of course, I read on this topic, and it appears there are many possible ways, but I would like to hear from real traders not some book authors!

Who knows, I might give up "fading" altogether, since I really get warmed up with the idea of buying strength and selling weakness. I guess, you just have to do it at the right place, where there is little risk of a breakout/breakdown failure, at least for a small move of two points.

Well, happy holiday to you and everyone from Kiev!

Kiev,
You have touched on a very dicey subject and I am sure several other will probably chime in on this one. You will see that everyone has their own idea of a trend and it usually differs due to the time that you are looking at. If I was looking for an intraday trend today which I always do it would have been up for the day as you can see by my chart.

Here is the problem I see in your question. Days where you can do the fading like you are talking about usually don't have any defined trend they are range days and lately really bad range days. If you are trying to fade on trend days you will find yourself in big trouble one day. It is not a matter of IF it is a matter of WHEN it will happen. Now if you really have to do the fade thing I would probably wait for lunchtime when there is a small range going on and do a couple of 1-1.5 scalps. But I am a little more conservative than some and looking more for survival and building a large bankroll for th long haul. Traders that do it for a living might tend to be more aggressive. This is where every individual has to define their own risk tolerance for each day and each trade. Don't let anyone else define theat for you.

Gary

 

[romik]

Quote from 4re:

Kiev,
You have touched on a very dicey subject and I am sure several other will probably chime in on this one. You will see that everyone has their own idea of a trend and it usually differs due to the time that you are looking at. If I was looking for an intraday trend today which I always do it would have been up for the day as you can see by my chart.

Here is the problem I see in your question. Days where you can do the fading like you are talking about usually don't have any defined trend they are range days and lately really bad range days. If you are trying to fade on trend days you will find yourself in big trouble one day. It is not a matter of IF it is a matter of WHEN it will happen. Now if you really have to do the fade thing I would probably wait for lunchtime when there is a small range going on and do a couple of 1-1.5 scalps. But I am a little more conservative than some and looking more for survival and building a large bankroll for th long haul. Traders that do it for a living might tend to be more aggressive. This is where every individual has to define their own risk tolerance for each day and each trade. Don't let anyone else define theat for you.

Gary

I agree, just to add. The only thing I understand about an intraday trend is this:

If you get a bullish signal for the day, then buy the first pullback and stay long and either exit at entry or a relatively tight stop. I don't believe there is ANY math formula out there that can predict a possible presence of an intraday trend in the outset of the trade session. One can only hope that trend will be present. We can all see a definite trend pattern, especially afterwards, hindsight. How the hell can one see a trend in the making (30 minutes after the open bell) I haven't got a clue. I envy anyone who has this ability, as it is close to the 6th sense.

 

[4re]

Quote from romik:

I agree, just to add. The only thing I understand about an intraday trend is this:

If you get a bullish signal for the day, then buy the first pullback and stay long and either exit at entry or a relatively tight stop. I don't believe there is ANY math formula out there that can predict a possible presence of an intraday trend in the outset of the trade session. One can only hope that trend will be present. We can all see a definite trend pattern, especially afterwards, hindsight. How the hell can one see a trend in the making (30 minutes after the open bell) I haven't got a clue. I envy anyone who has this ability, as it is close to the 6th sense.

I totally agree. I can tell you everytime we have a trend after the fact. I can even tell you while it is going on but the only way I can determine how for it MAY go is through the use of S/R and chartpatterns. And that is just a best case senario at best. That is why I just go for 2 points because that way I just need to be with the market for a small amount of the intraday trend. I do know you can have a trend one minute and a reversal the next. I would rather take my chances staying with the trend instead of fight it.

 

[belavia]

I saw this in another thread from a seemingly well off trader.
What do you guys think:

Quote from lescor:

I have yet to see one consistently profitable futures or forex trader on the P/L thread making decent money.

I've said it before on this site- Newbies and struggling traders who are focused on futures and forex- quit while you're ahead. Those markets in much more efficient and harder to trade than equities, why do you want to stack the odds against yourself? Again, I'm not saying it can't be done, but unless you are very experienced you are fighting an uphill battle.

 

[4re]

Quote from belavia:

I saw this in another thread from a seemingly well off trader.
What do you guys think:

I totally agree with him. I get PM's all the time from new traders wanting to get into futures the first thing I do is explain some of my trading method and then let them know how difficult the futures market really is. I think you will be more successful if you start out in stocks using little or no leverage. Once you become successful at the strategy then move to futures. The more leverage you use the more likely you are to fail. But daytrading futures are very decieving also and soooo many people look at a chart and decide wow that is easy I can see this move and that move I can take this market and turn 1,000 into 1,000,000 in one month. I won't lie I saw and said the same thing. And I knew that the futures market was probably the hardest and most competitive market there is.

Second point: I/we don't tend to post in the PnL thread for the simple fact that I don't need nor do I want to feed my ego in trading and that is just one way of doing so. I don't post PnL in this thread or how many contracts I trade in this thread because I think it leads to others trying to one up everybody. A lot of times falsely. I think it is a lot better to show my entries the night before and let people know how, when and why I am entering and let them watch the charts as I do so. Once you start showing that it is working it doesn't matter if I am trading 1 or 50 contracts they see my trades working. That is all that matters. IMO...I also run a company as my main source of income. I make more money than most of the doctors I do testing for but I don't go to them every month and tell them this because they probably wouldn't do business with me anymore if they knew. And it really isn't any of their business how much I make. All that matters is that I am doing the job properly. Same with trading.

 

[LondonUSTrader]

Quote from KyivTrader:

Thank you Gary! I will be around on Monday. Yes, I have something that could use some input from an experienced trader.

I know this might sound strange , but I like the ES exactly for the "choppy" phases like this week, since I more or less fade highs and lows.

I recognize though that this only makes sense if you do it in the direction of the underlying trend.

So here is my quandary: how do you define that in a simple and clear way, with as little ambiguity as possible?

If you have, or anyone else has, any tips for a "novice daytrader" on how to trade on the right side of the intraday trend, I'm all ears. Of course, I read on this topic, and it appears there are many possible ways, but I would like to hear from real traders not some book authors!

Who knows, I might give up "fading" altogether, since I really get warmed up with the idea of buying strength and selling weakness. I guess, you just have to do it at the right place, where there is little risk of a breakout/breakdown failure, at least for a small move of two points.

Well, happy holiday to you and everyone from Kiev!

When I started daytrading futures I was purely a trend reversal trader or fader.

I would write down the high and low for the first hour. And then look to fade that once either the high or low was breached. This method worked very well for a long period of time. But, then sometime in 2004 it stopped working. I should say I also got absolutely killed on trend days. It took me a long time to realise this was a fundamentally flawed way to trade.

Forget fading or reversal trading. Try and trade with the trend.

I very rarely do reversal trading now. In my last 49 trades there have been 2 trend reversal trades and these have very specific criteria. I concentrate solely on catching a chunk of any trend (according to my stats usually 30-50% of the trend).

When you enter an order, you never really know whether that trend will continue. You may be entering at the end of the trend. But, the judgement you are making is that you believe that trend will continue. The other complication is it may seem a trend on the timeframe you use, but another trader using a different timeframe might see it as an opposite trend.

Classic example. I gave one live call on the ES journal. To me, it was a classic short trend continuation move. Yet, Spike was long and was of the opinion that it was just noise (he generally uses much higher timeframe charts than me).

 

[LondonUSTrader]

Quote from 4re:

I totally agree with him. I get PM's all the time from new traders wanting to get into futures the first thing I do is explain some of my trading method and then let them know how difficult the futures market really is. I think you will be more successful if you start out in stocks using little or no leverage. Once you become successful at the strategy then move to futures. The more leverage you use the more likely you are to fail. But daytrading futures are very decieving also and soooo many people look at a chart and decide wow that is easy I can see this move and that move I can take this market and turn 1,000 into 1,000,000 in one month. I won't lie I saw and said the same thing. And I knew that the futures market was probably the hardest and most competitive market there is.

Second point: I/we don't tend to post in the PnL thread for the simple fact that I don't need nor do I want to feed my ego in trading and that is just one way of doing so. I don't post PnL in this thread or how many contracts I trade in this thread because I think it leads to others trying to one up everybody. A lot of times falsely. I think it is a lot better to show my entries the night before and let people know how, when and why I am entering and let them watch the charts as I do so. Once you start showing that it is working it doesn't matter if I am trading 1 or 50 contracts they see my trades working. That is all that matters. IMO...I also run a company as my main source of income. I make more money than most of the doctors I do testing for but I don't go to them every month and tell them this because they probably wouldn't do business with me anymore if they knew. And it really isn't any of their business how much I make. All that matters is that I am doing the job properly. Same with trading.

The learning curve I went through in trading, which I believe has helped me is as follows: stocks, options then futures. Futures is without a doubt the most difficult. You should start with stocks and only move up to my sophisticated products once you prove yourself.

Why would any successful futures trader want to post their trades live?

Unless you are an egotist, that is. Successful traders have nothing to prove and so don't feel the need of doing stuff like that.

 

[4re]

Quote from LondonUSTrader:

The learning curve I went through in trading, which I believe has helped me is as follows: stocks, options then futures. Futures is without a doubt the most difficult. You should start with stocks and only move up to my sophisticated products once you prove yourself.

Why would any successful futures trader want to post their trades live?

Unless you are an egotist, that is. Successful traders have nothing to prove and so don't feel the need of doing stuff like that.

My trading also started with stocks in 1993 and my broher became an options principal in 94 so I started doing some options. I just started futures this year.

I do post all my trades live in here and I believe in doing that along with a chart explaining why. I just don't talk about the number of contracts I do. I will only mention full position or half position. I only recently started doing half positions fo rmy second trade. If I win my first trade and I see another opportunity then I will take it with half of my first position.

On this same note, yesterday was the 1st day of the month and I always compound based on my month end statement. Yesterday I doubled the number of contracts that I trade. I was very happy with the way it went.

 

[brandon12]

I've been reading theses notes for a while and the info is very good. But the reality is most people keep about 20-30k max in a futures account. With 30k you can control 60 contracts max on day trading. All will agree to take 30k to 60k in a year is a 100% and a hell of a year. The problem with futures it's not really scalable to the fact very few people will go from 10 lots to 20 to 30 to 40 to 50 lot size as or should i say if there accounts grow will they do it. You're whole trading style and reactions will change trading 10 contracts vs 50. $2500 a pt with 50 contracts changes peoples reactions to loses. Like gary even though most of your trades work you might be down 3/4 of a pt first before it works and on 50 contracts thats over $1700 which to many people would scare them out of the trade. Also many people never leave over 30k in there futures account. My pt is how many people really believe they can do 100-200% every year? so if you make 30k on a 30k account every year you're one of the best investors around. No different than a stock account with 200k. If you can make 200k every single year you're one of the greatest investors alive.I think many people read this thread and think"man these guys are nailing 90% of there trades and i can take my 30k account to 200K" . Experienced traders know thats not true. But gary you've done a good job and spent a lot of time on this board

 

[JimmyJam]

Quote from LondonUSTrader:

The learning curve I went through in trading, which I believe has helped me is as follows: stocks, options then futures. Futures is without a doubt the most difficult. You should start with stocks and only move up to my sophisticated products once you prove yourself.

Why would any successful futures trader want to post their trades live?

Unless you are an egotist, that is. Successful traders have nothing to prove and so don't feel the need of doing stuff like that.

Hey fellas, how's it hang'in?

While you make very good points, the truth of the matter is that Stocks, Options, Curriences and Futures, while they may look the same, are actually all very different animals.

I was great at stocks, and even put together portfolios for friends of mine, but when I transfered over to futures it took a long-time for me to put together something that makes sense to me, and now that I'm attempting to do it again, using a different processes in public, while it is easier (the learning curve is much faster) trading leveraged products period, is a thing unto itself.

Comparing the different methdologies of trading is like comparing trail riding with equestrian (my favorite) with wild horse bronco riding (thought might appreciate that analogy, Tex).

While they are all done on a horse, they are completely different disciplines.

Rainy days.

Later,

Jimmy