I checked some of your post history and it looks that you are against scaling out and in favor of trailing stops. Can you please post how you trail your stops in detail? Thank you
Thoughts on where to initiate a trade...
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I checked some of your post history and it looks that you are against scaling out and in favor of trailing stops. Can you please post how you trail your stops in detail? Thank you
Yup... TWT is exactly where I'm at, guilty as charged!Here are my thoughts just before placing an order when I'm trading in the zone, so to speak (I have two methods of entry):
1) There's a first entry setup. Stop order at [price at which a buy/sell stop order is to be placed]. Click.
2) There's the signal. Limit order at [price at which a buy/sell limit order is to be placed]. Click.
Here are my thoughts when I'm not in the zone just before I'm supposed to place an order :
I think I'll watch and see how price reacts first. Sh*t...there it goes, why didn't I just place the damn order???
I should really place an order now, that's a qualified first entry. I don't know, looks kinda weak...
There's the signal. I should place a limit order down there at [price]. You know, if price goes all the way back down there, I don't think that's a good sign...
TWT (Thinking While Trading)...definitely a "capital" offense
I think I can explain it as well. So first I don't yet have a firm set of rules that I've tested, so I'm iffy about my entry trigger. Next is that I'm still hunting for the perfect trade, hoping to find something that will make the win rate at least 80%, even if just for a small profit. It might very well be that I could have a 30% or so win rate with a R:R ratio of easily 5:1, which would be fine with a 30% win rate, but I'm just not happy with this. And of course, because I've made so many bad trades in the past and lost a good chunk of change, its pretty much paralyzing everything.
I am 100% unsuited for trading, and yet, because I know it can be learned, I have to find a way to push forward.
Yes, I see where you are going with this and this is certainly where I'm stuck.
From what I'm reading by those helping, I am under the impression, albeit false impression it seems, that when you understand what's going on, most trades work out, and those that don't can either be exited for BE or a tiny loss. Without seeing their entries and exits, its really difficult to put this into context. So I'm given the impression that this is the level I should be able to attain, a perfect read of the market with precise entries, and yet whatever I have is nowhere close, so this makes me second guess.
I know so many have told me to just focus on what I can accomplish, which is absolutely right, but I'm still struggling with it. Simple as that.
Stop taking setups, looking for 100% profits/winners, start looking for setups where if you lose, you lose a small amount but if you profit you make a much larger amount.
Learn to accept the risk of losses.
Learn to hold for longer when the momo is in your favour.
Not losing the plot, after a string of small losers, the next trade could make up for all pretty quickly, remember that and stick to the plan.
Keep it simple, trade with the prevailing trend, don't look to far back, 24mins is enough for me.
Price drops 10pts, trades in a tight range ( I call it a cluster ), MoMo slows down, so the odds are, sellers dry up, buyers should take over and push it higher, look for a sign that there are buyers, ie starts to move out of the cluster go long.......
2 events are possible here...........
1. Buyers push price up 10pts and you take profit.
2. Market puts in a fake 2pts stalls again, makes another cluster, sellers take back over and DOWN she goes FAST!
If......
1. Hold, look for a cluster to show Momo moving back to selling ( I exit on Spikes to, exhaustion spikes I call them ), then exit.
2. Try to exit before the selling starts ( you'll sell some that go higher, get over it ), or let your SL which should be at new low's or move it up under the new cluster, be warned when it reverses it'll be QUICK to kill the fellow bottom fishers, expect SL slippage.
When I stick to this and don't get creative I make good $$$'s.
Then you can use the same logic on stronger moves, say move is DOWN, look for a pull up small 1, cluster, join short, tight SL
REPEAT!
REPEAT!
REPEAT!
Learn to accept the risk of losses.
Learn to hold for longer when the momo is in your favour.
Not losing the plot, after a string of small losers, the next trade could make up for all pretty quickly, remember that and stick to the plan.
Keep it simple, trade with the prevailing trend, don't look to far back, 24mins is enough for me.
Price drops 10pts, trades in a tight range ( I call it a cluster ), MoMo slows down, so the odds are, sellers dry up, buyers should take over and push it higher, look for a sign that there are buyers, ie starts to move out of the cluster go long.......
2 events are possible here...........
1. Buyers push price up 10pts and you take profit.
2. Market puts in a fake 2pts stalls again, makes another cluster, sellers take back over and DOWN she goes FAST!
If......
1. Hold, look for a cluster to show Momo moving back to selling ( I exit on Spikes to, exhaustion spikes I call them ), then exit.
2. Try to exit before the selling starts ( you'll sell some that go higher, get over it ), or let your SL which should be at new low's or move it up under the new cluster, be warned when it reverses it'll be QUICK to kill the fellow bottom fishers, expect SL slippage.
When I stick to this and don't get creative I make good $$$'s.
Then you can use the same logic on stronger moves, say move is DOWN, look for a pull up small 1, cluster, join short, tight SL
REPEAT!
REPEAT!
REPEAT!
Experience. I think you're building intuition based on a growing amount of exposition. I remember getting to a point where I was calling reversals in UTSI in 2003 without patterns or technical studies. I think it was from having seen it go in real time for months prior.
That's a great example of a good entry and a typical premature emotional exit (which we've all been guilty of!), and a useful lesson to build from: you scalped the first bit of relief into the black that the market finally gave you, yielding an inverted risk-reward. Probably hadn't mentally written off the stop's cost before you entered, which made the congestion painful. Assuming that your stop was some measure of noise above the ultimate high, you'd still be in at the right edge. Speaking of which, when you exit early like that, keep managing the trade mentally and take note of each further spot where "well now for sure, I'm out" and also note why.
I say great example because this experience reinforces the soundness of your entry and of your stop-loss placement. Positive reinforcement which helps you trust your own plan next time. (That's partly what back-testing in replays provides: trust that following the plan yields the expected outcome, so in real-time we know better than to doubt it. The brain needs repetition.)
I don't want to promote anything specific, but this reminds me of a specific (free) webinar by Tim Morge. Which one was it... (Oh wow, there's already a half-dozen others which are really good in there, but I'm looking for a specific one.) Darn I just can't find it. I don't want to delay this response any further so I'll get back to you with the specific one I have in mind when I finally will find it.
I basically ended up going through all the PDF notes to find it because I missed it initially (it was the first one I checked!), which reminded me that I should review them all thoroughly soon. Screw it, I'll vouch for the guy a bit...
Now that I'm studying Wyckoff in-depth I realize that what he calls the "language of price" is exactly the same narrative behavior reading, he just adds slightly fancier geometric tools to filter entries and set profit targets. Slope, he calls "frequency". Modified-Schiff median lines are what the "SLA" would call a trend channel and its median. Single-bar "reactions" he calls "separation" between an extreme and the close. He hides his stops behind structure the same way as Wyckoff (something he credits Amos Hostetter Sr. (1902-1977) for teaching him).
If like me you learn best by example, going through his presentations in order could be a very profitable way to spend 100-ish hours, over half of which are narrative reading and money management. (If you look at a 2007-2008 presentations first, don't let its crappy sound deter you; it quickly improves. We also see his style get refined over recent years; I prefer his 2013's and especially 2014's, except very few like the "3D" one.) I like how he makes price "reach" for a really good level to enter and exit with limits. His favorite expressions are "relax, be patient and wait for price to tell you" and "what are the positions now?" I mistakenly focused initially on his median lines (they're rather rare out there) but the real value here is in reading price and money management.
Okay, enough with the infomercial. I'm not affiliated with the guy, I just benefited a boatload from his little-known education last year.
Anyway back to psychology, here's a link to the one presentation I was looking for. It's a WebEx playback of the entire thing (2+ hours), and the PDF notes of his slides.
Argh, JavaScript sorting!
Here's the list of webinars at I.B.: https://www.interactivebrokers.com/en/?f=/en/general/education/priorWebinars.php - From there select the tab "Industry Sponsored", then select filter drop-down "All speakers" and refine it to just "Tim Morge" about dead last.The specific one, June 2014 is the 4th one down, The Importance of Discipline in Your Trading Plan and if you're pressed for time, the bit about execution psychology starts around slide 58.
If you like his style but not to the point of going through it all, the one from January 2014 Back to the Basics is very informative about risk management in one's trading plan.
Enjoy!
Edit: Forgot to specify: WebEx asks an e-mail address it seems, for playbacks. Unlike some other IB webinar sponsors, this one doesn't add you to any list at all.
KP, this post came from another journal (gears). Chances are you've seen it, but regardless, its worth another read, and then another if it still doesn't sink in. Don't get so hung up on those micro timeframes you seem to keep gravitating toward, keep the bigger picture in mind.
http://www.elitetrader.com/et/index...ce-action-via-sla.282101/page-32#post-4092760
http://www.elitetrader.com/et/index...ce-action-via-sla.282101/page-32#post-4092760
Yup... TWT is exactly where I'm at, guilty as charged!
I think I can explain it as well. So first I don't yet have a firm set of rules that I've tested, so I'm iffy about my entry trigger. Next is that I'm still hunting for the perfect trade, hoping to find something that will make the win rate at least 80%, even if just for a small profit. It might very well be that I could have a 30% or so win rate with a R:R ratio of easily 5:1, which would be fine with a 30% win rate, but I'm just not happy with this. And of course, because I've made so many bad trades in the past and lost a good chunk of change, its pretty much paralyzing everything.
I am 100% unsuited for trading, and yet, because I know it can be learned, I have to find a way to push forward.
Kp,
Can I ask you, why are you using the 5 sec chart? If you can give me a great answer, then I will leave you a lone about the 5 sec.. Anyways, regarding your first chart... There's nothing wrong with taking the opposite side of the trade.. But from my experience, you will be stressed out from all of the small losses and breakevens.. Basically, what I'm trying to say is it's a waste of time.. Unless you have a big account..
Where is your 5 min chart? Are those s&r lines base on the 5 sec chart?? If so why? Are you looking at the bigger picture?... 80% win rate is hard.. Only the elite are able to achieve those results.. You will need more screen time...
Yes.. I have seen this, but for me personally, I have a few problems with it that make it not all that ideal for trading in real time. First, the 50% level is wrong, price does actually penetrate the 50% level as per my chart here.
But to follow the logic of calling the next bar a lower high just because it opens lower doesn't make much sense to me. Sure it opened lower, but since this is just the opening of the bar, what does it matter? By the time the bar closes, often the opportunity to enter is gone.
Look at what I call my lower high on this chart. It too opens lower than the previous bar... so sure this is a lower high as this bar opens, but the high of this bar goes above the previous bar, and it also closes higher than it opens. So I'm not quite sure what the significance of any of this is. Is the idea to take a short just because the bar opens lower than the high of the previous bar?
I simply don't understand often what any of these observation charts that are drawn after the fact have anything to do with making your decision in real time. This may very well be a failure on my part which is fine. But when you're faced with placing a trade, I think the deficiency of all of this comes into the forefront.
I don't mean to pick on 40D at all... I'm just out lining that none of this is helping me place a trade. He also mentioned a few days ago how price made a double bottom/higher low at 41.25 which is a great observation, but this post was made 12 minutes after it happened! I'm not saying that he was intending to make a live call, but the point is, a double bottom can only be called after its obvious that price bounces, and after its obvious, you can't do anything about it.
http://www.elitetrader.com/et/index.php?threads/observations-an-example.288938/page-28#post-4092341
So what can I do something about? I can plot an extreme level, and I can watch and price approaches this extreme level, and I either figure out a way to take a trade thinking that it will either bounce off, or penetrate. But once I say look at the failure, look at the rejection, the trade is gone, unless I wanna get in 5 points lower and accept a big stop.