What is your edge ?

[logic_man]

Quote from TheBlackHand:



An extreme example I know, but it illustrates the point. Why wait for your set up when the market is trending/initiating/out of balance/how ever you want to describe it?

All Im saying is that youd be leaving money on the table.

I keep a running tally of the absolute amount of distance between the highs and lows of each hour of the futures markets I follow. I don't look at it that often, but it makes for the following observation. In a given month for the ES, if you add up those fluctuations, it comes to something like 2,000 to 4,000 ES points per month, depending on how volatile the month is. And that's just for the amount between the absolute high and low of each hour, without considering the fluctuations at a lower timeframe than that.

So, talking about "leaving money on the table" in that context is kind of meaningless when you consider that a trader catching even 40-50 (1-2% of the total) ES points per month and the judicious use of leverage can be pulling in close to 7 figures a year. You don't actually NEED to capture all that much of the movement. What you do need is to be able to resist the temptation to chase false positives and give back your gains, thus creating an everlasting vicious circle until you basically end up pissing your account away on commission over hundreds and hundreds of breakeven trades.

You're never going to catch every move and, to go back to your flash crash example, there has been exactly 1 flash crash in history. I like to base my actions on market processes that are typical, not processes that are extreme outliers.

Just like, as a business person, you don't chase every person who walks down the street to get them as a customer. You watch to see what they're wearing or whether they seem to have the right "look" to be a customer of yours. If I'm running a store selling men's suits, I'm not going to get a lot of 18 year old kids as customers, so even if they've got money to spend, I'm actually not leaving any of it "on the table" by not advertising my suits in whatever magazines or websites those 18-year olds read. It's the same with moves in the market. Some look like they could be your "customer" and others don't. Discerning the difference is an important part of learning to observe details.

 

[NoDoji]

Quote from TheBlackHand:

Why wait for your set up when the market is trending/initiating/out of balance/how ever you want to describe it?

All Im saying is that youd be leaving money on the table. What good business person would do that? Youd also be increasing risk. What good business person would do that?

This is the trouble with TA you see. No serious trader/business person would go near it.

My setups are based on extensive research that determined the optimal method of extracting the most overall profit from the market in my trading time frame (5m chart) each day.

Why wait for my setup? Because to trade any other way would be at best placing a bet on black or red and spinning the roulette wheel.

From your posts it appears (to me) that you are a serious trader who has a method of trading that allows you to extract every possible tick of profit from the market in your trading time frame. Although I've never seen this done and although I've never seen proof that someone is able to predict complete price moves in advance, I can't know whether it's possible or not.

I'm curious what methods you use to do this.

I do know that my methods of day trading provides a six-figure annual income using a five-figure trading account.

 

[TheBlackHand]

Quote from NoDoji:

My setups are based on extensive research that determined the optimal method of extracting the most overall profit from the market in my trading time frame (5m chart) each day.

Why wait for my setup? Because to trade any other way would be at best placing a bet on black or red and spinning the roulette wheel.

From your posts it appears (to me) that you are a serious trader who has a method of trading that allows you to extract every possible tick of profit from the market in your trading time frame. Although I've never seen this done and although I've never seen proof that someone is able to predict complete price moves in advance, I can't know whether it's possible or not.

I'm curious what methods you use to do this.

I do know that my methods of day trading provides a six-figure annual income using a five-figure trading account.

Of course I dont extract every single tick. Theres no need to be sarcastic is there? I dont know why you feel threatened.

Optimisation tends to be a fools errand. It doesnt cater for the times when the market behaves outside of your 'optimal conditions'.

However, it must be a great system if it also caters for market cycles changing. In fact, it almost sounds text book. Most traders seem to get their ideas from text books. Most traders also fail.

Anyway, answer this (honestly): If you have identified a trend -
1. Why is entering ASAP a 50/50 proposition over waiting for a setup? Surely, as you wait, the trend ages and comes closer to ending. So, If I'm at 50/50, you and your waiting game MUST be less than 50/50 over time.
2. You are in fact implying by saying it is 50/50 without observing your setup that some set up is needed to confirm the trend. But weve already established in Oracles post the trend is already in effect. I dont understand where youre coming from.


As for your stated results - well firstly, Im not going down that road, secondly, your results are not impressive. Believe me. The reason is, is that if you were a successful trader, youd have position limits, yet it appears your positions are based on margin as you seem to correlate size of account with returns. FYI, pro day traders keep as little as possible in the account to cover unexpected loss only. Investors correlate investment to returns, not traders. This is something the books dont tell you.

Let me guess - you only risk 2-3% per trade too right? Text book.

Good luck

 

[Handle123]

Quote from TheBlackHand:

Youve missed the point. Im perfectly aware he didnt describe a setup. Its really irrelevant anyway.

I'll make it easier for you:

Its the 'flash crash' of a few years back. Do you just sell instantly, or do you wait patiently for your setup to appear, thus missing out on $x0,000?

An extreme example I know, but it illustrates the point. Why wait for your set up when the market is trending/initiating/out of balance/how ever you want to describe it?

All Im saying is that youd be leaving money on the table. What good business person would do that? Youd also be increasing risk. What good business person would do that?

This is the trouble with TA you see. No serious trader/business person would go near it.

No serious trader that does size trades after volatily, when markets are running wild, there is total lack of volume. If was to have gone short 2,000 contracts and market reverses hard, I could sustain 3-8 points of slippage with a hard stop. What business person would do that? And why would any smaller trader do this, their greatest concern first is capital preservation before profits.

And that is the trouble with people who have not mastered the skills of everything dealing with trading, knowing what TA offers to show what other traders are doing and lets the skilled trader understand why markets move when they do. Good business people plays "what ifs" all day long and they want to know what the competition is seeing.

I have never understood people's term of "leaving money on the table", all I can gather is absense of thorough backtesting. I rather have a very smooth equity curve than something that is ragged. More trades, longer duration of trades equate to more risk and less reward over long term. My goal each day is 2-4 points then cut size back 80%, do I care there are huge moves missed each day, heck no, LOL, much more important to me is reaching my goal each day.

 

[TheBlackHand]

Quote from Handle123:

No serious trader that does size trades after volatily, when markets are running wild, there is total lack of volume. If was to have gone short 2,000 contracts and market reverses hard, I could sustain 3-8 points of slippage with a hard stop. What business person would do that? And why would any smaller trader do this, their greatest concern first is capital preservation before profits.


...

Thats why I said it was an extreme example! It needed some emphasis and exaggeration to illustrate the point.

 

[logic_man]

Quote from Handle123:



I have never understood people's term of "leaving money on the table", all I can gather is absense of thorough backtesting. I rather have a very smooth equity curve than something that is ragged. More trades, longer duration of trades equate to more risk and less reward over long term. My goal each day is 2-4 points then cut size back 80%, do I care there are huge moves missed each day, heck no, LOL, much more important to me is reaching my goal each day.

I consider "leaving money on the table" to be when I break my rules and it costs me money, not when something happens in the market that I "could" have participated in. Other than that, I agree that the phrase is meaningless. I developed my rules to get me in to moves that I want to be in, but no rule set (at least as far as I can tell) could ever be so generic as to get a trader into every worthwhile move.

I'd rather expand the number of markets I follow (something I have been doing these past 5 months) and find the same conditions in those markets that I originally identified in the ES and trade those conditions in other markets than chase random moves in the ES. My rules are generic enough for that to work.

 

[NoDoji]

Quote from TheBlackHand:

Let me guess - you only risk 2-3% per trade too right? Text book.

Yes, the total amount I could lose per trade if my stop loss is hit and I get no more than two or three ticks of slippage is never more than 2% of my trading account value. If a surprise news release or institutional fat finger trade caused a large price gap, then of course the slippage could result in a greater loss.

I did learn quite a lot from trading "textbooks", but put a lot of my own effort into converting knowledge to profitable practice.

 

[TheBlackHand]

Quote from NoDoji:

Yes, the total amount I could lose per trade if my stop loss is hit and I get no more than two or three ticks of slippage is never more than 2% of my trading account value. If a surprise news release or institutional fat finger trade caused a large price gap, then of course the slippage could result in a greater loss.

I did learn quite a lot from trading "textbooks", but put a lot of my own effort into converting knowledge to profitable practice.

You have still to explain why, given a trend has been identified (ie were looking for a continuation trade, not a trend reversal as outlined in Oracles original post), that waiting for a setup is superior to just getting straight into the trend ASAP.

My impression is that you seem to need a set up to confirm the trend. You seem to feel that its safer to wait for this confirmation given by your 'optimised' setup. I say this, as you mentioned jumping in is akin to a roll of a roulette wheel or similar.

Now, my point is, even if your setup was 90% accurate, you'd be more profitable entering before that setup, not after it (ie as soon as you detect a trend, before you start the waiting game). And, if that is the case, then your 90% setup is worthless, and so is the concept of patterns and indicators you see?

If your 90% setup never occurred, and the trend stopped soon after entry, you'd still be able to scratch the trade at worst. Over time though, youd be way up. Do you see the logic?

Why is your method of waiting better?

Im here to learn.

 

[jack hershey]

Quote from TheBlackHand:

Youve missed the point. Im perfectly aware he didnt describe a setup. Its really irrelevant anyway.

I'll make it easier for you:

Its the 'flash crash' of a few years back. Do you just sell instantly, or do you wait patiently for your setup to appear, thus missing out on $x0,000?

An extreme example I know, but it illustrates the point. Why wait for your set up when the market is trending/initiating/out of balance/how ever you want to describe it?

All Im saying is that youd be leaving money on the table. What good business person would do that? Youd also be increasing risk. What good business person would do that?

This is the trouble with TA you see. No serious trader/business person would go near it.

08-17-12 05:48 PM





What a neat illustation of 06MAY.

you say at that time you were on the sidelines.

It reads like you entered a trade.

And I am sure you left out what that trade did for you on purpose.

What % of the RTH are you sitting on the sidelines?

And on 06MAY what took you back to the sidelines.?


please do not post a print. I am not expecting you to answer me, but I am asking.

the reason why Donna quoted her performance to you the way she did was to help you understand her approach.

She wanted a system her husband could program for them to use. they have that and it covers their life styles quite nicely.

Do you have a life style that can be expressed in digits per annum? No you don't. Donna does.

I do not have an income related to my life style either. I do not keep money I extract. I do not need to.

there are lots of points of view. for example, Donna has paid her dues many times over. If you have, let us know where to look. It certainly isn't here in any way whatsoever.

 

[cornix]

Speaking of trend and setups:

1) You never know it's a trend until it has been under way for some time at least. Quick move is very often just a spike, which just as quickly turns back. Entering based on the fast spike alone is.... well, maybe it works for someone, good luck then.

2) With trend setups almost always are based upon the fact that those who cause the trend don't blindly buy buy buy all the time at price getting worse and worse for them. They buy some, then wait for price to pull back some so that price is relatively attractive again, then buy again. Vice versa for sells.

Now what is more reasonable: to wait for such a logical pause, which looks very typically and more often than now demonstrates activity of market participants who caused the trend or blindly buy any spike in hope it's going to be the trend?

Setups are not some stupid "magic" they are based on actual observations about what market more often than not does as "Y" in the case of condition "X" (actual setup) occurs.