What is your edge ?

Quote from NoDoji:

To me this is a valuable question to address.

Let's say we just logged in to do some trading and we identify an uptrend in one's trading time frame: Higher lows, higher highs, such that a 20-period EMA in this time frame is rising. We want to put on a long trade to take some profit out of this trending move and would like to get in at a price level such that a reasonably placed protective stop doesn't subject us to more risk than our money management plan allows. In a nutshell, we want a really "good" price so we can capture as much of the next trending price swing as possible.

The nature of the trend (strong, narrow channel or wide channel) and the next key resistance level to be tested (I call this "airspace") determine how I and where I enter.

If the trend is strong (pullbacks are very shallow and only show up on a smaller time frame), and there's plenty of airspace to the next key level, I don't worry much about "confirmation". I have two methods of entry and if the anticipatory method doesn't fill (too much strength), then I'll take the confirmed entry any day. So I don't get my "ideal" entry price, but the win rate in this environment is ridiculously high and I have no fear. (To answer the question, "Then why doesn't everyone trade this way and become rich": Entering in a strong trend is one of the most difficult things to do psychologically; all but the most experienced traders will either be afraid to jump in or will be trying to trade counter-trend.)

If the trend is moving in a narrow channel, I can get some real precision entries and exits and it can look like magic to an observer.

If the trend is moving in a wide channel (back and forth through a slightly rising 20EMA), I often trade both directions, using a smaller time frame to get tighter stops because these sorts of trends can break down rather easily.
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Thanks for taking the time to explain.

So you're really just trying to pick off the lows right?

It seems its a question of comfort level. If youre happy only risking 2-3 ticks then youve got to be fairly precise and will need the skills of a scalper. Nothing wrong in that - but if you have those skills, you may as well scalp surely? Either way, I digress.

In Oracales post he seemed to refer to wait for a setup - as if you were defending the idea of sitting round waiting for some odd sequence of candle sticks to occur or something. Thats pretty much what the issue was about. - Thats a whole different scenario to seeing if the markets going to retrace to achieve alpha, or foregoing alpha by taking the position and being able to sit out a possible retracement
 
Quote from TheBlackHand:

Thanks for taking the time to explain.

So you're really just trying to pick off the lows right?

It seems its a question of comfort level. If youre happy only risking 2-3 ticks then youve got to be fairly precise and will need the skills of a scalper. Nothing wrong in that - but if you have those skills, you may as well scalp surely?
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What can beat entering trade as a scalp, but riding it as a swing if it shows the potential? :p
 
Quote from NoDoji:



If the trend is strong (pullbacks are very shallow and only show up on a smaller time frame), and there's plenty of airspace to the next key level, I don't worry much about "confirmation". I have two methods of entry and if the anticipatory method doesn't fill (too much strength), then I'll take the confirmed entry any day. So I don't get my "ideal" entry price, but the win rate in this environment is ridiculously high and I have no fear.
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Donna are you talking about a buy or sell bracket?

For example, a buy bracket has a buy limit order and a buy stop. Price is in-between the 2 orders upon submission to the broker. Whichever order executes first automatically cancels the other one on the broker's side (aka OCO order).

Yep, that guarantees you're not going to miss an entry into the next leg of your intended direction.
 
Quote from cornixforex:

What can beat entering trade as a scalp, but riding it as a swing if it shows the potential? :p
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Thats a great point.

Its a question of comfort level IMO. Some scalpers will just get out as soon as the momentum stops after a few ticks, then wait for the next asymmetry. Perhaps riding the swing in a few scalps if they see opportunity.

Trying to ride the whole swing from one scalp is going to take either good luck, or more likely a few attempts as the market rotates in all probability - especially in a liquid market like ES which I believe (but could be mistaken) NoDoji refers to. If one is paying retail costs, that could well be expensive over time and youll end up paying for say 5x round trips when you could have done it in 1 and taken the heat. That may not be a sound business proposition.

OK OK I know the man in the foil hat will say he can do it, and the SEC monitor his trades, and he gives millions to the poor yada yada yada, but Im not going to take anything from someone who cant even pay his tax bill. If he was as wealthy as he claims to be, he would have figured out how to pay less tax of course through paying for a good accountant. Clearly he's not quite there yet!
 
Quote from cornixforex:

What can beat entering trade as a scalp, but riding it as a swing if it shows the potential? :p
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Which trade do you let run and how do you achieve it? you don't know if the market is going to range or trend.

There is a random distribution between wins and losses for any given set of variables that define an edge. In other words, based on the past performance of your edge, you may know that out of the next 20 trades, 12 will be winners and 8 will be losers. What you don’t know is the sequence of wins and losses or how much money the market is going to make available on the winning trades. This truth makes trading a probability or numbers game. When you really believe that trading is simply a probability game, concepts like ‘right’ and ‘wrong’ or ‘win’ and ‘lose’ no longer have the same significance. As a result, your expectations will be in harmony with the possibilities. - Mark Douglas: ‘Trading in the Zone’
 
Quote from SteveH:

Donna are you talking about a buy or sell bracket?

For example, a buy bracket has a buy limit order and a buy stop. Price is in-between the 2 orders upon submission to the broker. Whichever order executes first automatically cancels the other one on the broker's side (aka OCO order).

Yep, that guarantees you're not going to miss an entry into the next leg of your intended direction.
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I don't use a bracket order in this situation. I place a limit and a stop and manually cancel the other. If I get a fill at the limit price and it immediately flies through the stop as well before I can cancel, that's fine with me, if the "buy bots" are that excited may as well ride the move with extra size. :p I think Al Brooks says somewhere in his book, there's no bad entry in a strong trend. The important thing is to get in because missing a strong move can place a discretionary trader at a psychological disadvantage. At least it used to place me at a disadvantage because I'd then be afraid to get into the trend anywhere (it's gone too far...) and I'd end up waiting for a reversal signal to trade the other way. A turning point came for me one day when I watched a trend in progress for 2 hours and had no part in any of it.

Now I will trade in the direction of a strong trend over and over again until I either have several scratch trades or a losing trade. This tells me the trend is getting tired (at least for a while).

Thursday in CL (oil) was a good example of a solid trend day in my 5min trading time frame. Shortly after 10:00am ET price had tested near the 94.00 round number twice and found ready buying off a higher low. I had no idea whether this signaled a reversal of the previous down trending move or not, but a setup appeared on a smaller time frame and allowed for a comfortable .10 stop so I assumed the risk and the break through previous resistance was quite strong, offering me twice the profit I expected. This was a sign that buyers were clearly in control and I continued to trade profitably long for the next 3 1/2 hours.

Steve, I know that you were just adding and adding, while I was just scalping and scalping, but the important thing is we weren't trying to guess based on our opinion when price was "too high" to keep buying!
 
Quote from oilfxpro:

Statistical homework on intraday noise is unlikely to produce any reliable information .
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Do you know how big of a fool you sound each time you condemn day trading as "noise" or "you would be a billionaire"? I'm sitting here reading this in my pent house -wanna take a guess where the money for my house came from?
 
Quote from colonial dr:

Do you know how big of a fool you sound each time you condemn day trading as "noise" or "you would be a billionaire"? I'm sitting here reading this in my pent house -wanna take a guess where the money for my house came from?
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Baron's rebuttal Knob!Somebody hired you to post positive threads and comments abut trading IYHO.

http://www.elitetrader.com/vb/showthread.php?s=&postid=3588351#post3588351

Go re-read your own posts and see the phoney .
 
Quote from oilfxpro:

Baron's rebuttal Knob!Somebody hired you to post positive threads and comments abut trading IYHO.

http://www.elitetrader.com/vb/showthread.php?s=&postid=3588351#post3588351

Go re-read your own posts and see the phoney .
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No one hired me -I'm just commenting on my perspective as I read your posts on my expensive pc paid for by day trading.

There is no question this business is tough, and that like all great things, profitable trading takes time.

I have not read through this thread, but I am sure it is great.
 
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