Why do 5% of Traders Win?

[NoDoji]

Quote from ssrrkk:

nodoji, I echo the thanks for the great example. I also would have thought that in keeping with the "no prediction" mindset, one might have shorted at the failed breakout, then seeing the reversal failing @10:45, get out, then next seeing that the resistance is breached @11:00 one might go long at that point. Wouldn't that be less "predictive" than going long at 108.87? it could have easily bounced again for a triple confirmation of the top too...

Oh I have no problem with several potential shorting opportunities during the run up; I just happened not to trade them, choosing to trade only to the long side until that final failed breakout near the pit close (my charts are two hours behind EST, by the way). I do take counter-trend short trades, but frankly they tend to be usually tedious and often result in break even or losing trades.

Even the hypothetical counter-trend trader's initial short at the close of the shooting star bar in the first chart I posted wasn't a "wrong" trade. What was "wrong" in my example was not exiting the short when price tells you the move up isn't over, and better yet, switching to a long position to cover the cost of the losing short trade. What was "wrong" was trading with no stop and averaging down based on an opinion that price was "due" to reverse.

If the hypothetical trader in my example stopped out of the short trades properly when trading against a well-defined uptrend (when the high of a previous 5-min bar broke), the end result would've been a .10 loss on the first trade, and a collective .06 loss on the three-car average down that followed. This is a total loss of $160 plus commissions instead of the $3200 loss incurred by holding stubbornly against the price action and puking out the position at a very bad level.

Going long at 108.87 was based on 1-min price action. I missed the earlier long entry on that trade.

 

[NoDoji]

Quote from bhardy307:

Thanks for your answer. Good info.

I also find it interesting that you chose to wait until 109.47 to go long. Seeing three red hammers in a row in an up trend, I would have immediately gone long if the next bar opened green, with a stop equivalent to the open of the previous green bar at about 109.15.

Yes, the better entry was 109.26, but I overthought that trade and ended up getting in rather late, when the weak breakout of the previous HOD @ 109.47 sparked no selling pressure whatsoever. Price just hung around there in the .40's and .50's and I held my nose and clicked "buy" because, to paraphrase Al Brooks, there is no bad entry in a strong trend.

 

[SimpleTrades]

Quote from NoDoji:

Yes, the better entry was 109.26, but I overthought that trade and ended up getting in rather late, when the weak breakout of the previous HOD @ 109.47 sparked no selling pressure whatsoever. Price just hung around there in the .40's and .50's and I held my nose and clicked "buy" because, to paraphrase Al Brooks, there is no bad entry in a strong trend.

Understood. Always so much easier to look back at something in hindsight. Would I have actually taken that trade in real time? Don't know.

I have to master this price action approach. Every time I chip away at it while using my limited understanding of price action, I make money. Every time I try and predict, I get chewn to pieces.

Thanks again for clobbering me back in November. I have learned from it and as a result I haven't lost any money.

 

[NoDoji]

Quote from Mr Super Trader:

If you look at the two pull backs you will see once a green bar reverse pivots towards the trend there's a sweet gain to be made.This is very common. I Set stop below the support of the previous pullback bars and let the trade ride with a good r:r trade.

I agree intraday trading can gain momentum and you can continue to buy higher. Personally though after a couple reverse pivot trades with the trend and some money in the bank. I like to wait for some true confirmation to short instead of buying higher. If confirmation never presents itself i don't trade.


That's just how i trade. Not at all saying it's the right way to trade. Everybody trades differently and perceives charts in a different way. Also people know how to trade there own setups.They have a good idea when to take em and when to leave em.

hopefully you don't mind me re posting your nice charts and great commentary just wanted to illustrate an easy entry.

Just a quick question. What do you think about scalping Forex verse scalping futures? I have never traded futures nor have i looked at futures charts.

Any opinions would be highly appreciated

I've never traded Forex, but I traded 6E (euro futures) and it trades very much like CL.

I understand what you mean about not wanting to keep buying higher and instead waiting for a confirmed short.

My progression as a trader followed a similar route.

First I was the counter-trend trader who had an opinion and held without a stop until price eventually came back to let me out b/e small loss or small profit, or I puked out the position at a "disaster stop" level where I was certain price couldn't possibly go.

Later I learned to trade properly, but if I had a bias, thinking price had gone too high or low and was due to reverse, I'd wait patiently for a reversal setup, even if it meant watching a fantastic trend run for the longest time.

Finally, I learned to keep buying or selling in the direction of a well-defined trend until I either stopped out break even a couple times or took a loss when a with-trend setup finally failed to produce follow-through. The advantage of trading this way is you can pack on profits over and over again (or leverage gains with gains by adding to a winner).

My final long @ 109.71 was a break even trade when price broke out the previous high by just a few ticks and came back down through my entry price. Even if that final trade was a loser, it would've been totally meaningless in light of the nearly full point ($1000/contract) profit leading into it.

 

[Mr Super Trader]

Quote from NoDoji:

I've never traded Forex, but I traded 6E (euro futures) and it trades very much like CL.

I understand what you mean about not wanting to keep buying higher and instead waiting for a confirmed short.

My progression as a trader followed a similar route.

First I was the counter-trend trader who had an opinion and held without a stop until price eventually came back to let me out b/e small loss or small profit, or I puked out the position at a "disaster stop" level where I was certain price couldn't possibly go.

Later I learned to trade properly, but if I had a bias, thinking price had gone too high or low and was due to reverse, I'd wait patiently for a reversal setup, even if it meant watching a fantastic trend run for the longest time.


Finally, I learned to keep buying or selling in the direction of a well-defined trend until I either stopped out break even a couple times or took a loss when a with-trend setup finally failed to produce follow-through. The advantage of trading this way is you can pack on profits over and over again (or leverage gains with gains by adding to a winner).

My final long @ 109.71 was a break even trade when price broke out the previous high by just a few ticks and came back down through my entry price. Even if that final trade was a loser, it would've been totally meaningless in light of the nearly full point ($1000/contract) profit leading into it.

Thanks so much for your reply!

Right now in my scalping strategies I really like to wait for a good set up. A good setup with an even R:R or better.

The only reason why is because i probably don't see the opportunities that you see. As i progress i will probably take more trades.

I trade the Forex market and Stock market. I hold trades usually for about 12 hours up to a couple days. I do fairly well due to understanding the volatility which allows for smart stop placement and good exit strategies.

Recently though I have enjoyed scalping trades as well!

I have also enjoyed your literature and know I can learn from your posts how to add more probable trades to my simple arsenal.

Have a good one! Once again thanks for the reply!

 

[ssrrkk]

Quote from NoDoji:

Oh I have no problem with several potential shorting opportunities during the run up; I just happened not to trade them, choosing to trade only to the long side until that final failed breakout near the pit close (my charts are two hours behind EST, by the way). I do take counter-trend short trades, but frankly they tend to be usually tedious and often result in break even or losing trades.

Even the hypothetical counter-trend trader's initial short at the close of the shooting star bar in the first chart I posted wasn't a "wrong" trade. What was "wrong" in my example was not exiting the short when price tells you the move up isn't over, and better yet, switching to a long position to cover the cost of the losing short trade. What was "wrong" was trading with no stop and averaging down based on an opinion that price was "due" to reverse.

If the hypothetical trader in my example stopped out of the short trades properly when trading against a well-defined uptrend (when the high of a previous 5-min bar broke), the end result would've been a .10 loss on the first trade, and a collective .06 loss on the three-car average down that followed. This is a total loss of $160 plus commissions instead of the $3200 loss incurred by holding stubbornly against the price action and puking out the position at a very bad level.

Going long at 108.87 was based on 1-min price action. I missed the earlier long entry on that trade.

I see, thanks. It makes sense when the trend is strong not to bother with the counter-trend moves... And the point about never to fight the market is well taken.

 

[SteveNYC]

Quote from NoDoji:

I’m not falling for this shake out of the weak hands. They’re just running it up to hunt all the stops…

What is a Doji?

I saw a trader wearing a shirt that said, "I like it Doji style".

 

[loogling]

Why do 5% of traders win? - 62 pages of posts.
Why do 95% of traders lose? - 7 pages.

That's about 9:1.

Hmm!!!

 

[trader198]

nodoji, ironically. to my knowledge, that is what amteurs are doing. keep shorting into the strength since they try to pick a top.

I can feel the pain of those short sellers, that is why I bought those to be thought as tops, those are the easiest money to make. one more tick up, they can easily give up.

in last half hour when i finished AAPL option, I can not resist to buy crude.
I omit my contract number since I do not trade 1 lot.

I bought 109.68 and make money, high? we already saw it at 145 years ago!

at this level, I see those guys who shorted and keep shorting (amateurs!), get the most pain, the easiest money to make from their hands.

i heard obama may release emergency inventory next week, but that is just a temp band aid, no one can stop a trend!

110 is already printed there. be prepared to buy and make money.


friday's reversal is at 108.1. the confirmed intra-day reversal is at 108.44. unfortunately my rule is trade one thing one time. FOUCS.
I did not trade that intra-day reversal. since my aapl option trade produce better.


up 8days, then why just bought it 8days ago, your 10k account (1lot) is just doubled, while not 400/day*8=$3200. do you get it?

I do not get it. I want the 9k also easier ( I just need make one decision, when the market is in my favor, put my stop loss at b/E, there is no risk at all!), not the $3.2k ( I need make lots of decision, hard to make every one right, everytime you put on a trade, there is chance to be stopped out, the more you do, the more you will be stopped out, why just stay there when b/E ?).

3:1. that is why 95% lose. they think they are right. but I heard wall street 's wisdom is: the market is always right.

Quote from NoDoji:

Oil’s gone up 8 days in a row, up 9.00 in 8 days! It's nothing but a big f*cking short squeeze, bunch of idiots buying this! Amateurs! The professionals are selling into this short squeeze. Sell into strength, they say, that’s what the pros are doing, while the stupid herd keeps buying into this fake rally. This thing is gonna sell off big time and I’m gonna hit me a home run!

Ha, there’s the reversal signal! I’m shorting right here, close of this reversal candle, 108.84. Patience pays off. Wait for the final blowoff top where all the bonehead stops are, and short when you see a bearish candle. Look at those stupid early shorts who had their stops at 109.01 and they got stopped out at the top! Just a big stop run at the end of a short squeeze and those morons who bought this thing are gonna get screwed now!

 

[RCG Trader]

Quote from NoDoji:



Later I learned to trade properly, but if I had a bias, thinking price had gone too high or low and was due to reverse, I'd wait patiently for a reversal setup, even if it meant watching a fantastic trend run for the longest time.

This is why you make money, trader.