The basic dilemma of a typical beginner

[panzerman]

I have only one comment. Never, ever enter a trend without waiting for a pullback.

Right, This is buying low within the context of a longer period up trend. Here is a simple algorithm that follows this concept. Buy after five consecutive down days and close > 100 day moving average. Perhaps you could also wait for the first up day after N-down days, and then go long with your stop just below the low of the up-day bar.

You can play around with number of down periods and length of the moving average, but the concept is to go with the trend by using a moving average, and yet buying weakness. Of course you need to incorporate money management with any form of technical trading.

 

[ER9]

I would highly suggest reading the book 'Way of the Turtle - the secret methods that turned ordinary people into legendary traders' by Curtis Faith. its a very quick read....week to get through it and easy to understand plain english.

not for any secret trading methods but for its serious emphasis on risk and money managment. you may or may not have an advantage in this area beause of your poker experience but this area is often overlooked or not understood by begginers and arguable the biggest reason many begginers dont last very long.

i could go on but the reading offers many, many other valuable insights as well. i wish i would have read it before i began.

 

[FXTraderWill]

You need to use hard stops. Even if they're not ordered manually - I'm a pure scalper/daytrader, and I use a stop loss order on less than 5% of my positions - I have on every single one of my trades a defined out at which I will press the button to sell, once the stock trades above or below a certain level I am OUT of the trade.

When you say you don't use hard stops... do you enter a trade without a specific level at which you'll bail? It sounds like it, because you're scaling out of losers. You don't scale out of losers, you get the fuck out entirely... you scale out of winners. A good setup is a situation in which, if you're wrong, you lose a precise amount that's equal to your position size *the distance of your entry to your stop, and if you're right, you make several multiples of that, and probability wise the winners more than pay for the losers. If it doesn't have a single defined out, your trading is most likely based more on luck. I know of at least 15 profitable setups, and all of them have single precisely defined exits in terms of stops.

 

[Kirkrrr]

Okay, first off, thanks for the replies guys. I am still learning to navigate this forum and it took me a day just to figure out where the hell I posted b/c I was trying to post in "Trading," but looks like things worked out for the best. I am going to break up my post in two or three in interests of semi-brevity.

TIKITRADER,

If your interested in candlesticks, you might want to search for posts from this person.
NihabaAshi
You might get a little direction as far as interpreting candlesticks.

Duly noted, although I will be trying to learn how to use the Tick charts in the near future as most traders on here seem to be using those. Does anyone even use Candlesticks for day-trading?


Steve,
Wow, a lot of really great advice and I had to pick and choose what I want to reply to most.

This isn't the best place to get answers....Why...because most of the people responding are retail traders, amateurs who know little more than you..

Yes and no. I spent a few days lurking and quickly started to get a feel for who's who, especially since I have a lot of experience with this type of stuff from 2p2. I don't take anything at face value or follow blindly, but there's always an amazing amount of knowledge in these forums and quite a few outstanding posters.

I think you need to fill in the gaps in your education...Your licenses, well they mean less than nothing when it comes to making money...

I am well aware, trust me. Up until a few months ago I still though MLCO always acted in the best interests of its clients. Live and learn.

Do you know how to use Excel to model price action? If not, that is where you should start.
Go to a community college and learn to use Excel.

They teach you how to use Excel to model price action? I'll look into it.

 

[Kirkrrr]

traderNik,

I say this because in your situation, one of the best things you could possibly do would be to keep a detailed trade log and take printouts at each stage of your trades. However, most guys won't bother with this because it's 'too much work'.

I've started to keep track daily of my results for the day, net after commissions, but I'm hopping in and out so many times (I only trade one stock, though) that it's next to impossible to take notes on every trade. It's part of a much larger problem, I am starting to quickly realize that, but I am still learning which trades are good and which are not, and the quickest way to do that in the long-term, imo, is to put money on it and find out. I do need to start taking fewer trades, however, and having better reasons to take the ones I do. Just read "How I made 2M in the stock market" by Darvas, an awesome book and brought home some lessons.

Also write down your trading plan in plain English.

I did that in the beginning, setting up price targets the night before for long/short moves etc, then the stock would gap up 3 points and my whole trading plan went out the window. Now I've been trying to trade simply using market/stock momentum, which I'm pretty sure is a viable strategy with enough experience, on which I'm working.

Are you actually able to take 3 losses in quick succession if that's what the markets are telling you to do? Do you ever hang on a few extra bars after the voice inside your head says 'Get out now'?

Yeah, I see the market start to move against me, I'm gone instantly. If the stock moves by itself, though, then I will simply reduce my position perhaps and wait and see what happens, as a lot of times it will reverse and follow the overall market.

I would actually be consistently profitable if I knew how to let my winners run. I scale out of my winning trades in roughly 33% increments, the problem is I start way too soon and always leave a LOT of money on the table. That I would say is my #1 pitfall. I'm like a bad poker player that loses the most on his bad hands and makes the least on his good.

The hardest thing to do is not trade.I would say that that's harder in the markets - you can't bully them.

Yeah, it sucks

 

[kidPWRtrader]

I never knew money management before I started trading so you are way ahead of me when I started 1.5 years ago with pure technical stuff...

I had a mentor that recomended a few things to me initially that were really of value that for a long time I didn't pay attention to.

I hope you use this better than I did... it will save your ass many times.

1. Dont call tops or bottoms. Wait for a break down and short into a rally. Wait for a breakout and buy a pullback

2. Theres only 2 ways to be profitable. High probability trades or when your winners > losers to offset losses. Pick whichever style fits your personality. If you can take lots of losses before a huge gain, go for it. I need to have my winners be more than 50% for psychological reasons.

3. Follow the trend. This is the easiest trading style to learn, builds good habits, and doesn't require intense skill.

4. Don't gamble. If you find yourself violating your rules, go to paper until you can show yourself that you will not break your rules.

5. Overhead supply. Learn how this applies to the psychology of the market.

Hope this helps a little. The first part is knowing the what (profitable setups, targets, stops, market condition you willt rade in, etc... anything in your plan), the second part is applying it consistently and taking from the market only what it will give to you and nothing more.