Starting from scratch

[AAAintheBeltway]

Deciding on the size of your stop is one of the benefits of backtesting. You can vary your stop and see the effect. Most are surprised by the result.

Personally, I hate to exit on a stop. I would rather have a fairly wide, disaster stop that is hit very infrequently. You exit when a trade is not doing what you expected or seems to be stalled, etc. There is nothing wrong with a scratch or small loss.

Most newbies who come on here have very unrealistic ideas about being able to do dozens of trades a day, taking the "easy" one point, all the time protecting themselves with very tight stops. If that worked, do you think 90% would blow out?

If there is a key to being successful trading the futures, it is respecting risk. Typically, it's the big loss, the one you keep giving extra room to because you were so sure of the setup, then you hate to exit because you just can't afford that big a loss, that wrecks you. But you can just as easily, if more slowly, be wrecked by an endless line of small losses and commissions that are not offset by big enough winners.

Successful trading is about making money, not entertaining yourself or proving what a genius you are. If you truly want to make money, the single best way is to learn how to identify trend days and restrict your trading to them. Most here probably couldn't make money if Goldman sent them an email alerting that tomorrow would be a trend up day. They would get out too soon and try to fade it, or try to scalp 27 times when the big money is made by sitting tight in a winning trade.

I am sure there will be some who disagree with everything I've written. I'm not really interested in arguing with them. I accept there is more than one road to success.

 

[crgarcia]

Quote from dtrader85:

I am 24 and I have just set aside about 7200 for a trading account and the appropriate computer systems. I have been reading a ton of books on the subject ( I have some market experience as I have been following stocks since I was young).

I was going to start using tradestation to trade SP Mini Futures as my initial focus.

Can I have any advice from people who already do this for a living?

Thanks!

The best advice is this:

Paper trade until you develop a winning system (if you ever do).

 

[Eight]

You have to do your own due diligence in all areas of life, the crowd here is very mixed and way too many will tell you that something is impossible even though they are virtually entirely clueless about the subject...

We've had professors from Wharton Business School I think it was, come to this site with all sorts of wonderfully rigorous proof that trading is impossible.. on this site.. which is owned by guys that made $100 million trading starting with savings from corporate jobs... One thing I really learned from studying trading all these years is that the world is full of a lot of DUMB ASSED FOOLS at all levels of education. Many of them pose as experts and many are considered to be experts. Like I said, do your own due diligence in all areas of iife, that is what google and the library and bookseller system, not to mention the educational system, is for.

If you can scrape together $15-$30k you can join Bright Trading, they have a boot camp which you pay for and they will set you up with some long coin to do pair trading and opening range breakout trading or whatever it all is they do. They say they have long term success stories by traders that learned from them. I'm not with them so I am just passing along what they say... they are the only prop company that I know the slightest about so I mention them.... there are broker reviews on this site...

If you can learn to trade and demonstrate your skills there is money available from various sources for you to trade with all sorts of different arrangements regarding the profit split and costs...

 

[JScott]

Quote from Swan Noir:

You say with 4-5 tick targets to plan on eventual ruin. Do you believe that 7 to 10 tick targets are also too tight?

Not necessarily, but try using a 7-10 tick stop and see it work against you. I will hit a first target in this range actually.

But I don't subscribe to the camp that you can have an "inverted" reward/risk ratio. Not because it's not mathematically possible or it's "traditional" or anything . . . simply because of the psychology. The pressure of having to have a high win percentage I believe wears out a trader. It took me awhile to personally work through this, but after seeing drawdowns that evaporated my profits much faster than they were created was an undue burden. It makes you try to recover quicker by overtrading and taking risks that aren't appropriate.

I'm pretty sure more traders have flamed out this way than the other.

There are multiple paths for sure . . . I can only speak generally with my own experience and belief system in mind.

 

[itsbearabull]

Quote from dtrader85:

thanks for the help so far-

I have been paper trading for a few weeks now and have had a very sizable return. Granted, paper money is easier to part with than real money =)

I am pretty determined to make a living out of this and will put in the necessary work to do so. I have looked into prop trading, but something about some of those firms sound a little "boiler room" to me.

It's a good way to practice with paper trading. However, nothing can really match to trading with your own hard earned money since a lot of emotions will be involved. It's good that you read a lot of trading books and your starting capital of 7200 is pretty sufficient. good luck to you!

 

[Swan Noir]

Quote from JScott:

Not necessarily, but try using a 7-10 tick stop and see it work against you.

Are you suggesting that using tighter stops makes a better overall outcome more likely?

If you decided to trade NQ a single contract at a time what would be the rough outline of the parameters you might set?

1) Would you have a preset profit target with a limit order getting you out?

2) would you use a natural support point as your stop, key it off a signal bar intead or even a preset number of ticks?

 

[Specterx]

Quote from Arthur Deco:

Dtrader85, you are on a roll so far. You have come to the best trading discussion board on the web, bar none. Once here, you chose exactly the right formum to post in. Your next decision is much harder: you must choose to ignore all negativity you encounter here. And I will help you find ET's positive places. Go to the search function and search on poster Jack Hershey. Go back as far in his posting history as there is. He also at one time posted as Grob109. Concentrate on his posts about daytrading ES. Do not attempt to absorb what he says, merely sample his early posting. Form a gestalt in your mind of his approach. Then search on poster Spydertrader. Find his threads on the Hershey ES method, starting about two years back. Or simply PM him and ask for a link, Todd is a very helpful fellow, tell him I sent you. A veritable howling shitstorm will follow my post. Ignore it. There is nothing better on ET about ES than Hershey. Ignore the bilious criticisms that invariably accompany Jack's posts. They come from jealous anklebiters who attempt to stymie with all their devious talent the hope of riches that Jack offers to all who have the courage to believe. Go for it!

Now this is just mean... tricking the poor guy into pissing away months to years of his life on Hershey.

 

[JScott]

Quote from JScott:

Not necessarily, but try using a 7-10 tick stop and see it work against you.

Quote from Swan Noir:
Are you suggesting that using tighter stops makes a better overall outcome more likely? Probably lost in translation but I meant that 7-10 is too tight. You can use 10 with NQ and 15 with YM at minimum on a fairly small timeframe.

If you decided to trade NQ a single contract at a time what would be the rough outline of the parameters you might set?

1) Would you have a preset profit target with a limit order getting you out? I trade NQ (profitably for a year now, so take it fwiw) . . . I use all-in and two exits. First exit at about 80% of risk and I try to swing the second, using a little discretion about when to move stop to break-even or trail. I say 80% because I adjust based on changes in ATR, it's not always a fixed number.

2) would you use a natural support point as your stop, key it off a signal bar intead or even a preset number of ticks? Everybody has their own philosophy. I use support/pivot point or preset number of ticks based on the setup. You'll get many opinions on the topic, but you won't find any quantifiable evidence that one matters much over the other over time. I personally think it doesn't really matter as long as you find one tht suits you so that you can stay disciplined to use it. You hear this kind of rhetoric repeatedly I know. . . learn a setup inside and out to find an edge. If you keep changing your approach, setup, entry/exit method, timeframe, etc, you will go nowhere guaranteed.

You know that stuff about "finding your trading style"? it's actually true and you need to figure out what that means. If you've spent as many hours as you claim, then I sure hope it has been with a learning eye with regard to a setup or two or three . . . .

But don't try to make money on a 3 - 5 - 7 tick stop . . . worst possible thing you could do.

Keep trading.

js

 

[TheROTrader]

I only trade stocks.....what is a 3 or 5 or 7 tick stop??? I sound like a newb, but i dont want to google it.......just explain it, thanx

 

[NetTecture]

A tick is the smallest move a price can do. THat varies by contract.

On the ES a tick is 0.25 points, on the YM it is one point - ES is in the range of 980 now, YM In the range of 9000. Note that in futures value per point also varies - defined by contract. Example: ES a point is 50 USD, YM a point is 5 USD.

Actually, without how SENSIBLE it is, foing for ONE Point in the YM is a theoretically viable approach IF you have 100% profit. NOT saying one would - just putting comissions into perspective. It one pays more than USD 5 per round trip (buying and selling) even as beginner, he needs another broker.

I have a very nice YM strategy by now that uses a 16 point stop (which I may raise - it basically gets nearly never hit) and goes for 7, 11 and a trailing stop (3 cars / contracts minimum). Profits? Dont ask That setup alnone was netting way better than 500 USD a day the last days.