Sticking to the Plan...NOT!!!
- Thread starter John9999
- Start date
I really don't think anybody at this forum is qualified to be a trader psychologist nor a psycho therapist that works with traders with the psychological aspects of trading.
About the only thing we as traders can do is talk about our "experiences" in similar situations involving the mental game of trading and talk about things that worked for us even though each trader reacts differently (psychologically) in the same situations.
I have a psycho therapist since a near death experience (illness) the fall of 2016. All I can say is that any trader having problems with their mental game of trading...go see a professional especially if the trader is serious about trading or have had damage to their memory.
Yet, the issue here is slightly different...he's making profits via bad trading behavior and that instills further bad habits. Simply, tough thing to work with until the disaster happens...account blow up or losses so severe that he's unable to trade.
wrbtrader
To expand on my comment, there are those that come to day trading thinking they can get good at reading charts, order flow or whatever and that will be the key to profits. Of course this requires a lot of screen time because they do not have the ability to quantity and test their ideas without actual paper trading and analyzing the results. These traders are essentially bringing a knife to a gun fight as they are competing against algorithms and machines that can analyze way more data and execute trades in an unemotional, consistent manner. Note that I am talking about day trading which the OP is doing. With swing and longer term trading, automation is not as important. One has to ask themselves what is their competitive advantage. As you mentioned, there are those that are successful without automation and that is great for them. The OP is clearly not in that category based on his postings.Actually, if you're not automated...you do not need to "stare at the screen all day".
In fact, if you see people say they "stare at the screen all day"...they aren't just talking about trading. They are talking about learning, studying, hanging out online at social media trading sites.
The last newbie that said they stare at their "screen all day" and worried about getting burnt out...
After questioning him further...I discover he actually only traded 2 hours per day, 1 hour surfing Elitetrader.com and ForexFactory.com, 1 hour reading articles online about the financial markets at CNBC.com & Bloomberg.com, 1 hour of lunch and then heading off to his part-time job for 3 - 4 hours of work.
That's the typical schedule of those that stare at their "screens all day".
Yet, reality is that if you're efficient in your trading...you really only need to put in about 2 - 3 hours per day of trading even if you're not automated. Therefore, those that stare at their screens all day are actually doing other things not related to actual trading via the example of one particular trader.
Think about that statement very carefully...stare at the screens all day. Everybody has to eat and then go to the toilet and later sleep. Just not possible to stare at the screens all day. Its a statement often misused by us traders to validate (merit) traversing into automated trading.
Today's trading environment much different then that 20 years ago...less full time retail traders...more part-time retail traders with another job. Besides, we all know what happens to a person that attempts to stare at their screens all day...they'll become a zombie by end of week due to the lack of sleep, lack of exercise...resulting in randomly pushing buy/sell orders after easily getting confused by 1 tick in the DOM or 1 interval on their charts...crazy emotional swings, mood swings and then they can't figure out why they can't get an erection when there's a hottie lying next to them in bed...in the nude.
Yet, those that work as professional traders at an institutional trading firm...they are the ones that can come close to staring at the screens all day althought they really only work 8 - 10 hours per day plus a mandatory 1 hour lunch break.
wrbtrader
How do you program your algo to stop you out? Can it tell the difference between fake out spike vs. a real move? Are you telling me that flash crashes are unemotional responses? Can someone give me an example of an algo specifically designed to compete with a manual day trader?
Something thinly traded is more likely for a fakeout.
Sometimes a fakeout appears a fakeout but it isn't, it drops but bargain hunters rush in to capitilize on a bargain.
There is no general rules as quality positions behave differently to something speccy or something too pricey.
Lots need considering, eg, is the 'fakeout' at support or resistance, is it subject to bullish or bearish news, how is it behaving to peers, etc etc.
Experience is what it takes to code or trade these situations.
Exactly, that's my point. How do I rationally code my system to take this kind of situational awareness into account? It boils down to something like - if price exceeds 3 times ATR, get out. That's a very "emotional" exit even if it is the correct thing to do based on your backtesting. Day Traders should try to spot these kind of situations.
Actually, if you're not automated...you do not need to "stare at the screen all day".
In fact, if you see people say they "stare at the screen all day"...they aren't just talking about trading. They are talking about learning, studying, hanging out online at social media trading sites.
The last newbie that said they stare at their "screen all day" and worried about getting burnt out...
After questioning him further...I discover he actually only traded 2 hours per day, 1 hour surfing Elitetrader.com and ForexFactory.com, 1 hour reading articles online about the financial markets at CNBC.com & Bloomberg.com, 1 hour of lunch and then heading off to his part-time job for 3 - 4 hours of work.
That's the typical schedule of those that stare at their "screens all day".
Yet, reality is that if you're efficient in your trading...you really only need to put in about 2 - 3 hours per day of trading even if you're not automated. Therefore, those that stare at their screens all day are actually doing other things not related to actual trading via the example of one particular trader.
Think about that statement very carefully...stare at the screens all day. Everybody has to eat and then go to the toilet and later sleep. Just not possible to stare at the screens all day. Its a statement often misused by us traders to validate (merit) traversing into automated trading.
Today's trading environment much different then that 20 years ago...less full time retail traders...more part-time retail traders with another job. Besides, we all know what happens to a person that attempts to stare at their screens all day...they'll become a zombie by end of week due to the lack of sleep, lack of exercise...resulting in randomly pushing buy/sell orders after easily getting confused by 1 tick in the DOM or 1 interval on their charts...crazy emotional swings, mood swings and then they can't figure out why they can't get an erection when there's a hottie lying next to them in bed...in the nude.
Yet, those that work as professional traders at an institutional trading firm...they are the ones that can come close to staring at the screens all day althought they really only work 8 - 10 hours per day plus a mandatory 1 hour lunch break.
wrbtrader
Good post this.
You do NOT need to stare at the screen all day!
Set up your charts at the beginning of the week with your S and R levels and record what you are looking for and you will cut down on your chart "staring" time.
Three dimensions to the market. Time, volume, price. Markets are being bullish, bearish, or neutral. The bias is what a trader should want to ferret out. That determines the strategy and tactics the trader will use in that particular environment. The idea is for a trader to sync his trading with the market’s sentiment for the TF in which in which he is trading and/or looking at. I say this because, for example if a trader is an intraday day trader the sentiment may be bullish on a 30 min TF and neutral on a 5 min TF. What TF is a the trader going to trade in this case? Maybe both? Maybe one or the other?
A trader does well to understand the basic relationship between relative volume and price. Volume helps a trader to gauge the “sentiment” of what price is doing. The level of interest at that price indicates the bias. Thus relative volume is ..well..a “sort” of indicator. Markets are bullish, bearish, or neutral. Volume = $. Generally $ = pressure. He who holds the money bag ..well, he generally ....dictates. “Money makes the world go around” as the saying goes. Pressure relative to price behaviour indicates sentiment. The winning sentiment is what a trader wants to “discover.” On BO’s a trader a see BIG volume on BIG range, in SHORT time. This can indicate bullish or bearish depending on the direction of the BO. However, you can also have grinding price action up or down on ...lets say ...so...so relative volume (i.e. not great amounts) all day long. Price stays above intraday MA’s ( in the case of bullish) and most PB’s stay above intraday MA’s. But price continues to rise. This is indicative of institutional buying. It is, in other words, indicative of institutional sentiment. If it wasn’t price would not be going up on relatively low volume. This is actually one of the STRONGEST and SAFEST trends TO TRADE but traders will ignore it because volatility is so low and volume is not so good. They keep thinking a reversal is soon due and they will counter trend trade and keep getting stopped out all day long. The reason is they have not “seen” the market sentiment. They are trading against INSTITUTIONAL sentiment. If price is rising and CONTINUES to rise on relatively low volume or so..so volume...AND PB’s are shallow and stay above MA’s, AND PB’s are composed of very few bars WITH signs of bears and bulls active in the PB’s then the bulls are winning and institutions are buying and THAT is the sentiment. Lots of dollars are going into the market but in smaller junks at a time. This is different than BO’s and strong reversals. And of course Algos come into play in BO’s too. They can be swift and fast. Traders keep waiting for PB’s to then jump on board and get none. Then a reversal takes place and they have missed the entire BO and thus enter on a reversal and soon find themselves nursing a loss they thought was a good entry, on what they thought was a PB.
LOOKING AT TIME: The more TIME that price trades at a particular level the more significant that level generally becomes in determing the bias or sentiment, especially in terms of support or resistance. Also “WHAT” price does on relative volume within the concept or framework of time is indicative of sentiment or market bias. If I am looking to take a trade on a 5 minute neutral chart that sits within a 15 min bullish chart that in turns sits within a 30 min bullish chart i am wanting to see some bullish action on the 5 min. However, i may buy when price is at the bottom of the 5 min range bound chart and scalp out at least a portion of the position at the top of the 5 min range until I see a continuation of the bullish sentiment on the 15 and 30 min charts. If price keeps going to the top of the 5 min range and BO’s keep simply being bull traps then I will short the top providing the range is broad enough to scalp with a short. Remember most BO’s fail within a few bars. Nevertheless, sooner or later, one of them will succeed.
INSTITUTIONS create volume which they try to hide but cannot always do so. In the end price and volume and time will help a trader determine their sentiment. THEIR sentiment is important for obvious reasons. The market has many players at any point in time. It is of special importance “the sentiment of the institutions.” Again, the markets are bullish, bearish, or neutral. Thus are the institutions ALSO. Bullish and bearish institutions will be pressing their bias. It will show up on the charts. Sooner or later one side wins..for a bit..
...so goes trading.
A trader does well to understand the basic relationship between relative volume and price. Volume helps a trader to gauge the “sentiment” of what price is doing. The level of interest at that price indicates the bias. Thus relative volume is ..well..a “sort” of indicator. Markets are bullish, bearish, or neutral. Volume = $. Generally $ = pressure. He who holds the money bag ..well, he generally ....dictates. “Money makes the world go around” as the saying goes. Pressure relative to price behaviour indicates sentiment. The winning sentiment is what a trader wants to “discover.” On BO’s a trader a see BIG volume on BIG range, in SHORT time. This can indicate bullish or bearish depending on the direction of the BO. However, you can also have grinding price action up or down on ...lets say ...so...so relative volume (i.e. not great amounts) all day long. Price stays above intraday MA’s ( in the case of bullish) and most PB’s stay above intraday MA’s. But price continues to rise. This is indicative of institutional buying. It is, in other words, indicative of institutional sentiment. If it wasn’t price would not be going up on relatively low volume. This is actually one of the STRONGEST and SAFEST trends TO TRADE but traders will ignore it because volatility is so low and volume is not so good. They keep thinking a reversal is soon due and they will counter trend trade and keep getting stopped out all day long. The reason is they have not “seen” the market sentiment. They are trading against INSTITUTIONAL sentiment. If price is rising and CONTINUES to rise on relatively low volume or so..so volume...AND PB’s are shallow and stay above MA’s, AND PB’s are composed of very few bars WITH signs of bears and bulls active in the PB’s then the bulls are winning and institutions are buying and THAT is the sentiment. Lots of dollars are going into the market but in smaller junks at a time. This is different than BO’s and strong reversals. And of course Algos come into play in BO’s too. They can be swift and fast. Traders keep waiting for PB’s to then jump on board and get none. Then a reversal takes place and they have missed the entire BO and thus enter on a reversal and soon find themselves nursing a loss they thought was a good entry, on what they thought was a PB.
LOOKING AT TIME: The more TIME that price trades at a particular level the more significant that level generally becomes in determing the bias or sentiment, especially in terms of support or resistance. Also “WHAT” price does on relative volume within the concept or framework of time is indicative of sentiment or market bias. If I am looking to take a trade on a 5 minute neutral chart that sits within a 15 min bullish chart that in turns sits within a 30 min bullish chart i am wanting to see some bullish action on the 5 min. However, i may buy when price is at the bottom of the 5 min range bound chart and scalp out at least a portion of the position at the top of the 5 min range until I see a continuation of the bullish sentiment on the 15 and 30 min charts. If price keeps going to the top of the 5 min range and BO’s keep simply being bull traps then I will short the top providing the range is broad enough to scalp with a short. Remember most BO’s fail within a few bars. Nevertheless, sooner or later, one of them will succeed.
INSTITUTIONS create volume which they try to hide but cannot always do so. In the end price and volume and time will help a trader determine their sentiment. THEIR sentiment is important for obvious reasons. The market has many players at any point in time. It is of special importance “the sentiment of the institutions.” Again, the markets are bullish, bearish, or neutral. Thus are the institutions ALSO. Bullish and bearish institutions will be pressing their bias. It will show up on the charts. Sooner or later one side wins..for a bit..
...so goes trading.
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Can it tell the difference between fake out spike vs. a real move?
If you can define in rules a spike vs a real move, you could certainly automate the exit.
Are you telling me that flash crashes are unemotional responses?
Flash crashes are the result of stop orders getting hit, margin calls resulting in more selling, more stop orders getting hit, etc. Likely a combination of algo and manual traders.
Can someone give me an example of an algo specifically designed to compete with a manual day trader?
Hard to know who is on the other side of the trade (manual vs algo), but where the algo can shine is the testing that went into validating the algo, execution speed and the amount of data that can be analysed in real time.
There are also those that come to day trading thinking they have a back-testing engine and automated trade entry software and spend a lot of time testing and curve fitting random shit that implodes in live trading.
Then their are those that observe order flow, price action, etc, to form their questions that are then tested and traded via automation.
So maybe using a knife to dissect something to find its weak spots and then a gun to kill it when it comes time would be better than an either or approach.