Hope the noobs are paying attention to you volpri. You are telling it like it is.It is useful for a trader to do an initial structure of a trade followed by a secondary step of monitoring the dynamics of the trade as it unfolds after entry and making dynamic adjustments to SL’s, PT’s and any successive entries such as scaling up or averaging down.
Doing this i.e. initially structuring a trade, followed by monitoring the dynamics to make adjustments, if needed, is an exercise that may give him an “edge”. An edge is a overall mathematical advantage. It is not just a chart setup pattern (like a wedge..Flag..etc) or a candlestick pattern like a doji or the myriad of other candlestick patterns. Neither is it based on indicators..Bollinger bands...MA’s etc.
It is a way to look at price on a chart and come up with a decision that will hopefully put the odds in your favor before you place your entry.
The markets by nature are filled with uncertainty and nothing can ever be for sure. This is so because there are too many reasons and variables for price to up and down or sideways. Some of these can be known but others cannot ever be known beforehand. For instance, maybe Jackrabbit is about to kick the bucket in 6 months so he decides to sell all his holdings...of several million ...buy himself a big yacht and hit the high seas. Or maybe Henry a fund manager is going through a nasty divorce and his wife is after the big bucks so he sells out, moving the markets. The point is we can never know ALL the variables of why price goes up or down. Therefore, the markets are fraught with uncertainty. Math, which some consider an exact science, ..others don’t...can never give us 100% certainty in the markets either. It is impossible. So, bottom line we operate in a sea of uncertainty. Like driving in a fog with glimpses or fleeting moments of clarity. Nevertheless, in all this uncertainty traders leave footprints. The chart will reveal these footprints.
This said, math can still be useful and utilized to put odds in a traders favor. So it should be used as a tool to do so.
Brooks teaches what he calls the traders equation. It goes like this:
Probability of the trade of an upcoming trade to be successful X the potential reward needs to be greater than the probability of the trade failing X the initial risk.
So say you had a trade that you figure has a 60% probability of making 4 points before your Initial SL would be hit. Say your SL was 2 points. So, plug these into the equation.
60%x4 = 240
40%x2 = 80
240>80
240 is greater than 80 so you have a positive traders equation. This is a mathematical advantage, which is an edge. If you see a setup you want to take then you may well find it useful to run the traders equation. There are 3 variables within the equation. They are: Probability, Reward, Risk. Lets look at them. Reward YOU set quite easily as it is what you think you can get out of the market using that setup you see on the chart. This may come from previously observing what this type of setup, on average, renders. The Risk you set quite easily too. It is what your are willing to risk on the trade. It may be a percentage of your account. It may be a set point amount like 2 points or 10 points...whatever. The hardest one to arrive at is the Probability. To arrive at a feasible and viable probability figure a trader needs to learn how to read the PA contexts in two areas. The larger context i.e. where price has been, what it has done. In summary, all the bars to the left. The next context Is the immediate context. You can have an intermediate context and an immediate context but I prefer to just lump them together and call it the immediate context. This context is the present price Plus any pattern PA is in at that moment while the setup is forming. And it includes things like the present volatility..etc. For instance, a range with price at the top of the range and price moving slow.
So, to arrive at some probability figure that you can assign to the equation you look at both contexts and assign your best guess. Usually, that will be between 40% and 60%. There are times in very strong BO’s it can go to 75% or 80% and on very very rare occasions it may be as high as 90% but that will disappear very quickly LOL.
This simple practice has the potential to help a trader have a high win rate. If you are a intraday scalper, like myself, win rate is quite important. It is a good metric to keep in mind. Probably the most important metric, overall. Ok I see the eyes rolling..LOL.
I took four trades this morning. They were all winners. I may not take any more trades today as I need to go to town for abit. I actually stopped trading some time ago this morning. I will see about posting a chart showing the trades and showing how the traders equation works. However, I will wait until after the market close in case I get a chance to place another trade or two before the close. That way you can see all the trades for the day. Anyway, I extracted 18 points which really was a poor performance, partially in part, because I was too occupied writing stuff down and the market was moving fairly fast. But it is what it is. I will try and post later.
Techniques for Day Trading the ES, NQ, YM, MES, MNQ, and MYM
- Thread starter volpri
- Start date
Hope the noobs are paying attention to you volpri. You are telling it like it is.
Well thanks. Hoping it will help some trader. They would do themselves a much bigger favor if they would really really really study brooks but I just can’t say too much about that as I would promptly be labeled a shill for brooks. And I am not. But I do have alot of respect for Al, his concepts and the concepts of 3 or 4 other known traders...authors..etc. I take what I have learned from them and what I have discovered myself from experience and weave it into a methodology that works for me and suits my personality. I am sure you have pretty much done the same thing.
Roger that amigo.
At least one is
I am posting ALL of yesterdays trades (5-27-2020). I took 6 trades in all. So no cherry picking here. All were winners. If I figure trades 5 and 6 and their averaging down and figure the profit from the average down BE (BREAK EVEN) point then I captured in yesterday's session 2 points on the 5th trade and 1.25 points on the 6th trade. Trades 1 thru 4 rendered 18 points so I captured 21.25 points (depending on how one calculates the averaged down trades) however, that really was not a good performance considering the moves made yesterday. It is very difficult at my age to track manually the elements of each trade (entries initial and any averaged down subsequent entries ..SL's initial and adjusted..Profit targets initial and adjusted..MAE...MFE..actual (ACR)risks... making notes... capture screen.....) well you get the idea. If I make a mistake just forgive me and overlook it. After all I am 65 and not the sharpest knife in the kitchen drawer! And I just don't have the energy I used to have.
Bottom line I made 6 trades (I count entries and subsequent entries and the exit of all those entries at one whack as one trade). So I made six trades (some were straight scalps and some were of the averaged down type) but all were winners even though some entries within a trade may have been BE or small loss. But, over all the trades were profitable. In the end what counts is did the strategies work to end the day with profits after commissions?
I somehow missed up on the snapshots so I am not going to use these trades to actually talk about everything I wanted to discuss but I do discuss some of the concepts. I am posting 3 charts. A 5 min chart of trades 1-4. Next a 1 min chart of trades 1-4 showing the ACR (actual risk or MAE in the individual trade plus 1 tick or exiting with a loss). Finally, a 1 min chart of trades 5 and 6 bit I have no 5 min chart of those two last trades. These 6 trades were ALL the trades I did that day. As you can see I missed many other opportunities using the same methods. I did have to go to town and it is extremely difficult to manually track all this stuff and write notes AND trade live. Opportunities abounded yesterday. Final R:R (reward to risk I prefer as opposed to risk to reward terminology...just sounds better..) I figure it from actual risks (ACR) not initial risk. I am interested in "how" the trade actually developed and ended and not the original structure I used as a plan to enter. See, plans must be flexible in trading in scalping because the market is filled with uncertainty and variables we cannot possibly factor in within our original structure. Variables known and unknown and unknowable until they happen.
Just look over the charts, maybe print them out, make an analysis, and maybe you will see some of the concepts I have been talking about in this journal. Specifically take note of the use of the initial structuring of the trade before entry using the traders equation and adapting the PT and SL so as to render a positive traders equation BEFORE you enter the trade. (I didn't figure this for each of the 4 trades but I put the data there and you can easily figure it for the straight scalps. It gets a little more complicated on averaging down trades.) and pay attention to especially the use of ACR or actual risk, in terms of exits and not following the trade too far when little actual risk is involved cause you entered at the high probability moment (that is why there was small actual risks!) and the trade can flip on you quickly and have your head underwater or your head barely treading water. Just grab them profits and don't worry about it if you see a good move after your exit. You can always enter again. You want to maintain a high win as a scalper (and I suppose even an investor would prefer a high win rate...who just wants a low one? ROFLMAO) so understanding that a high probability trade can flip quickly on you is a key concept. There are exceptions such in very strong BO's but generally the market is NOT going to just hand you high probability, little risks, and BIG reward! That generally is a fantasy. Too many smart people out there trading and us dummies have to checkmate them.
This morning 5-28 I took three trades. These I will post shortly and make some comments later. I am done for the day on trading but these three trades will make some good points I think.
One of the most important points I wanted to make with 5-27 trades 6 trades, and todays 3 trades, was the simple act of using the Traders Equation for each trade. On averaging down sometimes a positive traders equation will flip on you to a negative traders equation. That usually means DO NOT follow the trade too far (grab your profits) UNLESS the dynamics (the way it is moving after the averaged down entries are made) is extremely in your favor for holding for more profit.
Here are the charts. The instrument was MES. Will post today's three trades in a few minutes and make some comments on them probably even later.
First chart 5 min trades 1-4
Second chart 1 min trades 1-4
1 min chart trades 1-4
1 min chart for trades 5 and 6
Bottom line I made 6 trades (I count entries and subsequent entries and the exit of all those entries at one whack as one trade). So I made six trades (some were straight scalps and some were of the averaged down type) but all were winners even though some entries within a trade may have been BE or small loss. But, over all the trades were profitable. In the end what counts is did the strategies work to end the day with profits after commissions?
I somehow missed up on the snapshots so I am not going to use these trades to actually talk about everything I wanted to discuss but I do discuss some of the concepts. I am posting 3 charts. A 5 min chart of trades 1-4. Next a 1 min chart of trades 1-4 showing the ACR (actual risk or MAE in the individual trade plus 1 tick or exiting with a loss). Finally, a 1 min chart of trades 5 and 6 bit I have no 5 min chart of those two last trades. These 6 trades were ALL the trades I did that day. As you can see I missed many other opportunities using the same methods. I did have to go to town and it is extremely difficult to manually track all this stuff and write notes AND trade live. Opportunities abounded yesterday. Final R:R (reward to risk I prefer as opposed to risk to reward terminology...just sounds better..) I figure it from actual risks (ACR) not initial risk. I am interested in "how" the trade actually developed and ended and not the original structure I used as a plan to enter. See, plans must be flexible in trading in scalping because the market is filled with uncertainty and variables we cannot possibly factor in within our original structure. Variables known and unknown and unknowable until they happen.
Just look over the charts, maybe print them out, make an analysis, and maybe you will see some of the concepts I have been talking about in this journal. Specifically take note of the use of the initial structuring of the trade before entry using the traders equation and adapting the PT and SL so as to render a positive traders equation BEFORE you enter the trade. (I didn't figure this for each of the 4 trades but I put the data there and you can easily figure it for the straight scalps. It gets a little more complicated on averaging down trades.) and pay attention to especially the use of ACR or actual risk, in terms of exits and not following the trade too far when little actual risk is involved cause you entered at the high probability moment (that is why there was small actual risks!) and the trade can flip on you quickly and have your head underwater or your head barely treading water. Just grab them profits and don't worry about it if you see a good move after your exit. You can always enter again. You want to maintain a high win as a scalper (and I suppose even an investor would prefer a high win rate...who just wants a low one? ROFLMAO) so understanding that a high probability trade can flip quickly on you is a key concept. There are exceptions such in very strong BO's but generally the market is NOT going to just hand you high probability, little risks, and BIG reward! That generally is a fantasy. Too many smart people out there trading and us dummies have to checkmate them.
This morning 5-28 I took three trades. These I will post shortly and make some comments later. I am done for the day on trading but these three trades will make some good points I think.
One of the most important points I wanted to make with 5-27 trades 6 trades, and todays 3 trades, was the simple act of using the Traders Equation for each trade. On averaging down sometimes a positive traders equation will flip on you to a negative traders equation. That usually means DO NOT follow the trade too far (grab your profits) UNLESS the dynamics (the way it is moving after the averaged down entries are made) is extremely in your favor for holding for more profit.
Here are the charts. The instrument was MES. Will post today's three trades in a few minutes and make some comments on them probably even later.
First chart 5 min trades 1-4
Second chart 1 min trades 1-4
1 min chart trades 1-4
1 min chart for trades 5 and 6
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Here are todays 3 trades:
MES 5 min 5 RTH -28-2020
1 min RTH
24 hr chart with 3 trades of 5-28 on it
Chart 4 below is what happened on RTH's 5 min chart as I was tying after the three charts above, and some concepts to think about.
Chart #5 below is what happened AFTER my 3 trades. This chart #5 is from a 24 hour chart as opposed to the RTH's and some concepts to think about.
MES 5 min 5 RTH -28-2020
1 min RTH
24 hr chart with 3 trades of 5-28 on it
Chart 4 below is what happened on RTH's 5 min chart as I was tying after the three charts above, and some concepts to think about.
Chart #5 below is what happened AFTER my 3 trades. This chart #5 is from a 24 hour chart as opposed to the RTH's and some concepts to think about.
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Ok here are 6 charts pertaining to PA on 5-28 and they include my three trades (the only ones I made today and the only ones I will be making today). I have several things to comment on these 6 charts. Different perspectives as seen from different TF's and as seen as PA advanced throughout the day. See, a trader has to trade what is in front of him the moment but he must constantly be observing not only what IS happening but what is developing up TO be. Then he uses the tools, tactics, or techniques to then adapt to a different style of trading as it becomes obvious things are changing in developing PA.
For instance, in ranges different techniques are used. In BO's others are used. In SPBL (Small Pullback Bull Trends) and SPBR (Small Pullback Bear Trends) a trader employs different tactics than say in BO's or ranges. Today has evolve into a strong SPBTD (Small Pullback Trend Day) in the form of a SPBL.
The basic idea is to constantly be aware of the larger and immediate context with glances at other TF's (Time Frames) even though one is trading, or placing trades, on the five minute TF.
A scalper has to be prepared for many scenarios. Straight scalps, short and long, are usually quick like today's three trades. Intraday swing trades with 2 or more legs utilizing MM theories are usually longer. In both case averaging down can sometimes be beneficial IF one is aware of the both of the contexts (larger and immediate) and the odds of averaging down actually panning out in the traders favor. You just can't average down or hold onto to trades because they look good or went in your favor right away. Remember, the market usually isn't nice to us. It we want to extract profits we gotta to work and think, to be able to extract those profits, learning how to read PA..setups..and manage our trades. Many really smart people out there as well as them damn algos and HFT scumbags and we dummies have to outsmart them with our own manual HTF's and intraday trades. We dummies ain't never gonna have all the technology available to use that the institutions have. The really neat thing is they cannot hide their footprints. IF they step it is marked in the sand. ROFLMAO.
I will make some comments on these six chart tonight. Momma wants me working in the house painting..etc. If momma ain't happy ain't nobody happy.
For instance, in ranges different techniques are used. In BO's others are used. In SPBL (Small Pullback Bull Trends) and SPBR (Small Pullback Bear Trends) a trader employs different tactics than say in BO's or ranges. Today has evolve into a strong SPBTD (Small Pullback Trend Day) in the form of a SPBL.
The basic idea is to constantly be aware of the larger and immediate context with glances at other TF's (Time Frames) even though one is trading, or placing trades, on the five minute TF.
A scalper has to be prepared for many scenarios. Straight scalps, short and long, are usually quick like today's three trades. Intraday swing trades with 2 or more legs utilizing MM theories are usually longer. In both case averaging down can sometimes be beneficial IF one is aware of the both of the contexts (larger and immediate) and the odds of averaging down actually panning out in the traders favor. You just can't average down or hold onto to trades because they look good or went in your favor right away. Remember, the market usually isn't nice to us. It we want to extract profits we gotta to work and think, to be able to extract those profits, learning how to read PA..setups..and manage our trades. Many really smart people out there as well as them damn algos and HFT scumbags and we dummies have to outsmart them with our own manual HTF's and intraday trades. We dummies ain't never gonna have all the technology available to use that the institutions have. The really neat thing is they cannot hide their footprints. IF they step it is marked in the sand. ROFLMAO.
I will make some comments on these six chart tonight. Momma wants me working in the house painting..etc. If momma ain't happy ain't nobody happy.
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I will post yesterday's 5-28-2020 trades shortly but this morning I have taken 2 trades and in an averaging down losing trade. I took very small positions in this trade but averaged down 3 times after the initial entry. It is a great opportunity to show "how not to scalp" an averaged down position. So I am watching it. At 11:05 A.M. here is the chart showing the two trades and I have a 4 lot position in on the second trade which is the averaged down short trade. Win or lose I am going to point out the mistakes made and "how" it should have been managed but was not. I will show also how to initially figure the Traders Equation. I did not stick to it (greed) so I lost the edge. Now I have to wait and see what happens. Thankfully it is a small position.
Here is the 5 min chart of MES with the winning and the losing trade. You can see I have drawn in the 50% PB from the total move of the day. MY SL is 3018. At this point it has gone to 3017.75 and I have a 90% chance of getting it hit and exiting with an averaged down loss. But I may get lucky? But do you really want to trade on luck?
Here is the 5 min chart of MES with the winning and the losing trade. You can see I have drawn in the 50% PB from the total move of the day. MY SL is 3018. At this point it has gone to 3017.75 and I have a 90% chance of getting it hit and exiting with an averaged down loss. But I may get lucky? But do you really want to trade on luck?
11:31 Whew! I got lucky on bar 11:25. I finally get out at 3005 with an 1 point profit on my initial entry and a decent profit on the averaged down entries. Was this a smart trade? No it was a stupid trade. I gave up my mathematical edge for luck. That doesn't work too good in scalping. This is not the way to scalp an averaged down trade. I will explain in more detail shortly then I am done for today. More painting to do. Got to keep the wife happy you know.
The flow chart below is from Yvan Beyeajee. A pretty smart young man concerning psychology of trading. You might want to check him out. I can flow chart this trade and see it was a dumb trade management even though I got lucky and made a profit. Once I post the details of the trade you will see why it was lucky.
The flow chart below is from Yvan Beyeajee. A pretty smart young man concerning psychology of trading. You might want to check him out. I can flow chart this trade and see it was a dumb trade management even though I got lucky and made a profit. Once I post the details of the trade you will see why it was lucky.
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