The intraday is a casino
- Thread starter TTT
- Start date
I'll share something I learned in my trading which was surprising and let me preserve capital while making decent gains.
Price-based stop limit orders should be used to avoid taking a devastating loss. S < K is not valid exit criteria. It's to protect you when you really screwed up and you aren't paying attention or whatever else (usually hope).
What turned out to be valid exit criteria is "Is the trade profitable after X units of time"? For day trades, it's at about 5 minutes for me, for swing trades, I am guesstimating 1 day though I haven't run the stats on swing trades yet. If the trade is not profitable after X units, I look for a good exit point immediately.
This means my timing has to be excellent. After monitoring these statistics, I have unfortunately added yet another discretionary rule for entry. Great. For hours and hours at a time the answer is no. Until it finally is yes.
I don't seem to be getting any closer to a fully automated system, it just seems to be 2 steps forward, 1 step back. For example, a few weeks ago I made a breakthrough that really helped choosing good entries which I thought was the final step to full automation. While it does work perfectly well, I found that it still requires manually choosing parameters. I suspect the next "breakthrough to give me full automation" will automate this parameter selection and then there will be some other problem.
Price-based stop limit orders should be used to avoid taking a devastating loss. S < K is not valid exit criteria. It's to protect you when you really screwed up and you aren't paying attention or whatever else (usually hope).
What turned out to be valid exit criteria is "Is the trade profitable after X units of time"? For day trades, it's at about 5 minutes for me, for swing trades, I am guesstimating 1 day though I haven't run the stats on swing trades yet. If the trade is not profitable after X units, I look for a good exit point immediately.
This means my timing has to be excellent. After monitoring these statistics, I have unfortunately added yet another discretionary rule for entry. Great. For hours and hours at a time the answer is no. Until it finally is yes.
I don't seem to be getting any closer to a fully automated system, it just seems to be 2 steps forward, 1 step back. For example, a few weeks ago I made a breakthrough that really helped choosing good entries which I thought was the final step to full automation. While it does work perfectly well, I found that it still requires manually choosing parameters. I suspect the next "breakthrough to give me full automation" will automate this parameter selection and then there will be some other problem.
The 1st picture is a weekly ES chart. The 2nd picture is a 5min ES chart.
The major differences are:
- "The cleanliness" of trends is great on a weekly chart.
- The slippage, spread, commissions and fees impacts on intraday positions, is huge on day trades.
- Weekly charts don't move much. Intraday chart moves, have large impacts on a position, making us act or react (too) quickly and under stress.
- Weekly charts have large stops and large rewards.
This was an amazing long signal at the close of the 1st blue candlestick and a great confirmation on the 2nd blue candlestick.
This long signal was good on the 5min chart, just less clean and more difficult to spot in real time. It was also difficult to act and go long, because of the market speed.
The below says the above is crap advice. It's hard enough to be in the right direction, add a strict time limit to that and you are just throwing out possible good trades, then day trading is indeed a casino.
Myself, I use fundamentals to determine the direction and symmetry of the daily charts to guide entry and exit. I stay committed to the trade unless the fundamentals change.
The bottom line is that day trading is essentially the art of continually picking the high and the low, and as we know, none can do that consistently.. double that if you also put a time limit in the mix.
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Maybe. But you're missing the point. Which is that if your trade is not profitable, move on.
Am I? I thought markets don't move in a straight line... if you have sound logic for entering into the position, you remain committed until your objective or the stop-loss is hit (which is also to be set on sound logic), can't expect markets to go your way in a straight line.
That sounds logical but also a good way to consistently hit your stop loss. I use stop loss as a backup with a manual exit most of the time.
Why should you consistently have the stop hit if you identify what is noise and what is the trend?
The objective is set on the trend, the stop is set to safeguard a trend reversal but wide enough so as not to be triggered by the noise. If there is no fundamentals to say the trend should reverse then you stick with the objective.
Many newbie traders get taught to t/p on 2X points and set the stop at X, they are told that this makes you profitable or even if you lose 2 out of 3 trades. This is not an "edge", it is a robotic method of casino trading... an average of 72% will lose all their money on this method in the long run.
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Depends what you consider your stop loss. A trade is often invalidated well before the stop loss. The stop loss in this case is "I forgot to manage this trade, and it went against me".
To put it another way, very rarely have I gotten out of a trade that was going against me, and then it went in my original direction
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You are kidding of course... if not then you're not a trader
Exhibit one, to-day's S&P500 futures movement... down... up.... down.... up
Either short or long... with you, then against you, then with you again!
If you look at Monday, it started off as a probable long play but then THE FUNDAMENTALS CHANGED (by tweet) so Mon was a day to get out of longs ASAP, but Tue movement was hold to the objective.
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