https://www.peterlbrandt.com/modeling-another-trader/
Looking around I came across Peter Brandt's blog. Among the early entries, this resonated because I've been on quite a journey myself, and I see some here are on a journey too.
On ET we have the 'Only One Way Brigade', the lot who'll tell you there's only one way to do anything, the way that works for them. I have always disagreed.
When I first started trading, I day traded stocks. My strength is I analyse data to death, and I'm not afraid of hard work. It took 3 weeks for me to realise I made more money swing trading rather than day trading. Later, I started trading the ES (mistake, but what did I know). Dream come true, long or short at the click of a mouse, so I began day trading again. Dream became a nightmare, took a step back, confidence badly shaken.
Came across this thread, bought the book and read it, making notes just like a kid, then read all of this thread, making notes. Did about 6 months of work before I trusted ACD enough to put on a trade. Swing trading, mixed results, but I felt here was something. Then at some point Mav talked about derivative NLs, and since I had been trading options, the concept fascinated me. More work.
I've always been comfortable putting on a trade in the direction of the trend, or momentum. Fading is something I could never do. Catch a falling knife?
Yet Mav said fade the moves, don't pay the market for the entry. Hard that, until my derivative NLs fell into place. Once I had that confidence, that belief, I could have a long bias, wait out a sharp move down, and when the beast died, swoop in like a vulture to feast, making my long entry.
The single lesson:- I needed a quantitative basis to put on a trade with confidence. PA is too much like a video game for me. That is why Brandt's piece resonated, because I had spent a long time searching. Many would have said I was searching for the Holy Grail, I wasn't. I needed to find my comfort zone, which I now have, and I'm trying day trading again. It looks far more promising than my previous efforts, though I can't claim success at day trading yet.
To be clear, the issue is not ACD, it's managing entries, profit taking and R:R. Every day my data update, analysis, and chart review yields a watchlist. I trade from that, but regardless, after, I identify the ideal entry and exit, and compare what I did, record , then analyse the full watchlist. I'm staggered at the high percentage of ideal trades that yield less than 0.5 20 day ATR. So, it needs work, but I know what to work on.
A couple of years back, someone who no longer posts under the same monicker and may no longer be here, started a thread asking pros for advice about his failed attempts at day trading. I'm not a pro, but based on personal experience, I explained my experience to that point and asked if he had considered the possibility that day trading was not for him. He replied that since I wasn't a pro, he wasn't interested in my view. Fine. A senior trader here sent me a PM to say I had asked the right question, but I knew that from my personal lessons learnt.
So, find your style. Mine is the advanced ACD that comes from studying this thread and doing loads of research and analysis, yours might be PA video gaming on 1 minute charts. I've posted links to the Bloomberg pieces about the Japanese champion video gamer who is a huge day trader. Maybe that's you, it isn't me.
Don't take my word for it, but Brandt does make the same point.
Long story short I'm grateful I found my way here. If it's not working for you, your way may be somewhere else, or heaven forbid, not even trading.
Before you decide though, you must know exactly why it isn't working. You can know why it isn't working and yet not know what to do next. That is fine. You are half-way to the answer if you know why it isn't working.
I still have my core swing trades going, but it doesn't keep me busy, so I want to be able to day trade as well. Thanks to all I've got from this thread, I've never had a more clear eyed view of what I need to do to translate the win rate to positive expectancy.
One thing we haven't discussed enough here is what you use for the entry. ACD gives a directional bias, and keeps you out of marginal or poor trades. For swing trading, the months of work I put into refining an indicator works fine. I'm not there yet for day trade entries. For day trades, especially in mean reverting instruments like FX, don't believe this nonsense about amateurs worrying about entries. I spent close to a thousand hours on trade management alone in my first year, and as you see above, I do it as part of my daily work now.
If you want to day trade, a perfect entry, the right stop distance, and taking profits at the right time count. It's the closest to perfection you need to be, and that's why it's so hard. Right direction, wrong timing, you're dead.
1. For FX, if you get a confirmed A, more often than not price doesn't even cross the other A, which is why a C is unusual.
2. Unfortunately, until I find a better entry, putting my stop outside the opposite A yields a very poor R:R, too poor to profit given the 1:1 losses.
Thus far the best entries I have are entries at support and resistance, the closer to the limit the better. That's where the belief in my NL derivatives comes in. It's like skydiving. You jump trusting your parachute will open, except when it doesn't, I take a controlled loss, I don't die.
I do need that trust in my system. I found mine in ACD.
Have you found yours?
