The TREND is your friend.. The biggest lie ever!

[i am nobody]

The worst percentages for me are trend trades often having the greatest risk, so we have difference of opinions and or study.

All depends on how you describe risk.
If I have a good trend and my open P/L is over 5 points I can put a stop at my entry to reduce the risk to zero. I also know that, when I do that, mathematically I should not close and take profit, but let the profit run by following the system. Because that will give me the highest possible return in long term. For me risk is from initiating the trade till I can put a stop.
I agree that every second you are in a trade is risk as anything can happen (black swan). But in my +25 years of trading it never happened to me. Secondly, because of my money management, I can wipe out my account three times in a row without having any problems at all. And thirdly, if I proceed like I do, I will make within X trades enough money to have enough savings to wipe out again without any harm.

It is all about math. You should compare the potential losses with the potential profits. If you can make 100% a month (if you don't you should not daytrade), for each month you survive you can wipe out 1 time your complete account without losing anything but profits. So if the disaster does not happen withing three months you can wipe out your account three times in a row without any issues. So what's the risk?
But you should always use only a part of your total wealth, that's essential. So you should give up the dream of becoming the richest man on earth.

 

[Eddiemorra]

strong trend on the fdax this morning

 

[Handle123]

All depends on how you describe risk.
If I have a good trend and my open P/L is over 5 points I can put a stop at my entry to reduce the risk to zero. I also know that, when I do that, mathematically I should not close and take profit, but let the profit run by following the system. Because that will give me the highest possible return in long term. For me risk is from initiating the trade till I can put a stop.
I agree that every second you are in a trade is risk as anything can happen (black swan). But in my +25 years of trading it never happened to me. Secondly, because of my money management, I can wipe out my account three times in a row without having any problems at all. And thirdly, if I proceed like I do, I will make within X trades enough money to have enough savings to wipe out again without any harm.

It is all about math. You should compare the potential losses with the potential profits. If you can make 100% a month (if you don't you should not daytrade), for each month you survive you can wipe out 1 time your complete account without losing anything but profits. So if the disaster does not happen withing three months you can wipe out your account three times in a row without any issues. So what's the risk?
But you should always use only a part of your total wealth, that's essential. So you should give up the dream of becoming the richest man on earth.

Billionaire? naw, never could make that, and 100% returns, haven't done that since crude oil hit 147, I think it was first fifteen years I was doing at least that, day trading only account for like half my profits in my accounts and it going to be tougher to make bigger returns long term and many markets be either coming down or are already, so long term will be less, and can help doing more selling options spreads. Yes, have reams of stats of what works out best and it all are numbers game. The monies I have allotted for day trading, risk each day when you add all contracts and signals traded exceed 10% of the account, but even on any five signals taken together, risk doesn't exceed 3% and reward varies a great deal as my current manual method is geared to accept 50% plus one tick trades while risk is 8.5 times as much. So as much as others don't want to read, risk is always in day trading overall for most traders hugely risky to amount of possible reward. I am just too old to want to change my approach for less trades and waiting for more profits in day trading.

Opps, late to go to Starbucks now.

 

[i am nobody]

Billionaire? naw, never could make that, and 100% returns, haven't done that since crude oil hit 147, I think it was first fifteen years I was doing at least that, day trading only account for like half my profits in my accounts and it going to be tougher to make bigger returns long term and many markets be either coming down or are already, so long term will be less, and can help doing more selling options spreads. Yes, have reams of stats of what works out best and it all are numbers game. The monies I have allotted for day trading, risk each day when you add all contracts and signals traded exceed 10% of the account, but even on any five signals taken together, risk doesn't exceed 3% and reward varies a great deal as my current manual method is geared to accept 50% plus one tick trades while risk is 8.5 times as much. So as much as others don't want to read, risk is always in day trading overall for most traders hugely risky to amount of possible reward. I am just too old to want to change my approach for less trades and waiting for more profits in day trading.

Opps, late to go to Starbucks now.

Well, there are many ways to skin a cat.
It is interesting to see that there are a lot of different ways of trading. I think the main reason for that is because you cannot go to university and learn to be a trader. A big part of us are "do it yourselvers" trying to find an edge. This also results in hefty discussions because there is no otpimal system that suits everybody. And those who would find it would keep it.

 

[Pelt]

I trade on a purely mathematical model. This model identifies a big number of scenario’s that are grouped around different strengths of the trend. The system identifies, based on past data, which scenario is most likely to develop. Basically it starts by eliminating all the scenario’s that don’t fulfill the conditions....

Ok. Some general observations in hindsight that I would like to be able to recognize at least partially in foresight in the future. It goes to my prior question in how to go about understanding how a trend may develop on a given day. Also how one might reduce the number of trades taken to begin to match that of the 'meat' of the movement on a day.

About 'the trend.' I have more or less dismissed it over the years, as it seemed to me as if the trend was something that always exists, but more or less exists in various states or duration. But then again, 'the trend' when discussed on forums seems to devolve into a discussion of semantics where people may generally may mean the same thing, but argue about strict definitions. But in the end, in its simplistic form, to profit in directional trading, one has to be aboard some type of trend or another to be able to profit. Weather that trend lasts for 5 seconds and 4 tics, or 5 hours and 50 tics. It is the only way. But I digress...

In what I was saying before about isolating types of days, let me post a few pictures of what I mean. Simple little indicator that just plots the Main Moves of the day. The premarket Main Move, the RTH main Move, and then everything encompassing 24 hours. This idea was spawned by an older poster from many years ago PB who no longer posts under that name.

So here is just one type of trend day(exhibit 1). You will notice the RTH Open, and then the market just goes straight up with minimal pullbacks, and closes near its highs. Specifically I was looking @ days where the Market opens, and drops no more than 3 points(shallow open) before rallying the entire day(shallow close). The illustration of the charts or TF I'm showing isn't important, just to visualize what I am explaining. I have noticed for the UP CASE ONLY, this type of day occurs between 2-4 days per month. Also typically an equal number for the down case. A good strategy could be buying near open and holding all day.

On a similar vein, there are days where the Market will open, sell off a larger number of points(ES), 3-9 points, and rally higher and close near its highs(exhibit2). I wouldn't call this a short squeeze day, but similar to the first, just that there is a smaller trend counter to the main trend on the day. These days I have noticed occur on a similar frequency of the one listed above. A good strategy could be selling near open(or waiting), buying near the low and holding all day.

Another type of day(exhibit3), is where the market could open, sell of slightly(<3ES), rally nicely for a portion of the day, but then kinda 'stop short,' and reverse into the counter direction. This also seems to occur with a similar frequency(for the up case) as the two mentioned above. A good strategy could be buying near open and possibly selling the healthy counter move.

A shallow selloff can also be attached to a deep closing, and vice versa. There are also other types of ways I have observed the trend developing on any day, but that would be a lengthy post to list them all.

So, I'm wondering if there is any use in delimiting days this way in order to begin understanding the trend? Or more generally, just food for thought for anyone else doing their own market studies.

 

[Pigsky]

Everyone I've worked with (including myself) who was drilling down to 1-min or similar tick-based bar intervals, was focusing on finding a way to use the smallest stop loss and feel a sense of comfort and even certainty on individual trades.

Not necessarily.... when I tried using 1-min bars it wasn't to reduce stoploss size. When I was trying to trade intraday momentum/trends I noticed that in some moves the pullbacks/pauses were brief enough that a 5-min chart did not give any entries. But looking at a 1-min.... I noticed that there were clearer pullback patterns that looked very tradable. So that is what drove me to look at 1-min in some situations.

In trying to trade 1-min setups I found that reality was nothing like the static bar-by-bar analysis I did where there was plenty of time to think about course of action. Everything happened too fast.... Not enough time to decide what to do... and even if I did decide in time price can jump around a few ticks or more in a second so sometimes limit order must be placed instantly in order to have a fill at desired price. Same problem on entries as well as exiting losing trades.... often was not possible for me to get the same price that hindsight analysis would indicate because I wouldn't always be able to place my order in time or decide what to do in time. As a result what was a highly profitable plan in hindsight analysis ended up being a lot less profitable than I thought and very nerve wracking.... and not worth pursuing further.

 

[Geoff9]

I always try to trade in the direction of the trend, but find I need to be open to the counter trend setup if that's what the market gives me. the trend is your friend..... until it ends.

 

[DoubleTop]

As being mentored by NoDoji several years ago, I agree with the small stop loss helps with comfort to define risk. Emotional side of things really matters a lot more hitting targets is so important. As far as defining risk goes, the market is so fractal that it's not even funny. Therefore, defining risk can literally be done on any timeframe with the key concepts of smaller targets will always have a higher percentage of winners and bigger targets 2:1-5:1 will always have a smaller winning percentage. Trend is relative to your perspective/timeframe of the market.

 

[ZenMusic]

I always have the history chart in one window, 1 hour, 5-min and 1-min in others... I do lots of momentum trading ... couldn't make decisions without the 1-min (or even 30-sec) displayed. But I'm online watching it all everyday.

I have been trading (day and swing) for about 3 months, easing in, I started with $10K (over the $15K base) and have increased it to $42.4K ...
Using TA, but also I've had many "lucky" large trades because I know a lot about the technical companies and have followed for many years (as an active trader through my broker, a VP at a major investment firm) .. also using my own program that allows me single-key , instant, buys (with /without stop loss and profit takers) and single-key scaling in /out ... I'm doing about 15-20 transactions a day, today I had the largest number of open positions (around 10) which reached my max attention. I have done better as I gain experience. The program could run without me, but I never leave it unmonitored unless I'm in solid positions with the sell (stop loss and profit taker) in place.

A couple stocks I trade nearly every day (hi and low patterns my program detected) ... seems that the automated systems buy and sell in the last hour of trading in patterns ... I'm being rather conservative and have tight stop-loss settings .. that have probably lost more profits than saves against bad turns ..

Once I decide to enter the trade .. the rest is automated ... the buy, set of stop-loss is pre-done in templates that I choose with a key (F4, F5, F6) and usually I let the program trail the stop-loss which becomes the sell point if it turns down.. though in the last few days I've had many stocks "soar" and I'm holding them... I've also found some good bounces recently (AAN, SCTY) that the program handled for me better than I would. It recognizes consolidation and doesn't make knee-jerk reactions.

 

[carrer]

All depends on how you describe risk.
If I have a good trend and my open P/L is over 5 points I can put a stop at my entry to reduce the risk to zero. I also know that, when I do that, mathematically I should not close and take profit, but let the profit run by following the system. Because that will give me the highest possible return in long term. For me risk is from initiating the trade till I can put a stop.
I agree that every second you are in a trade is risk as anything can happen (black swan). But in my +25 years of trading it never happened to me. Secondly, because of my money management, I can wipe out my account three times in a row without having any problems at all. And thirdly, if I proceed like I do, I will make within X trades enough money to have enough savings to wipe out again without any harm.

It is all about math. You should compare the potential losses with the potential profits. If you can make 100% a month (if you don't you should not daytrade), for each month you survive you can wipe out 1 time your complete account without losing anything but profits. So if the disaster does not happen withing three months you can wipe out your account three times in a row without any issues. So what's the risk?
But you should always use only a part of your total wealth, that's essential. So you should give up the dream of becoming the richest man on earth.

i am nobody,

You have been trading for over 25 years, did you use the same system back then?
I am just curious because back then it would be difficult to get an access to a powerful computer considering what you have said, where your strategy is computational intensive.