Mastering your method means you're the star

http://www2.oanda.com/cgi-bin/msgboard/ultimatebb.cgi?ubb=get_topic;f=16;t=001149#000000
It seems to me that the new traders (Novices) get a lot of crap here. I don't want to sound conceded but i was a 40 year professional floor trader in the S&P pits. now (retired) now days i only trade forex.
when i feel like it.


Honestly, if you were to have total freedom to design the most ideal market for short-term trading, your dream market would probably fall short of what the forex has to offer the day trader.


No pit or floor broker involvement.
Tight spreads.
Minimal slippage.
No accounting mine fields.
Hedging opportunities.

Plus, these markets are, and always will be, totally fair. No corruption, no manipulation, no inside trading and no scandals to deal with. That alone is worth the switch from futures and stocks.


I can't understand what all these at home traders are thinking about, it's really amazing to me. I'm not really sure how they think they can buy some trading system, or attend a seminar and instantiy start making money. I've been on the trading floor for a lot of years and i made a lot of money, (I know the trading pits and forex are not the same) If some guy off the street thinks they are going to read some book or attend a seminar over the weekend and be able to take money from me, they are sadly mistaken!


Every guru who told you that their system or methods would make you a lot of money has been lying to you. they promise they can make you a successful trader overnight. How can that be true?? It took me a good solid five years before i started making really good money! And that was on the trading floor being exposed to many profitable traders. How are you going to learn to be successful in a couple of days or weeks with some book or trading system?


All i can say is find your own trading method, and KEEP IT SIMPLE. mastering your method means you're the star. You're in total control of your trades and your financial destiny.


What works for some people may not work for others. this is what works for me.
I am a Day Trader. I use a 1 minute chart of the EUR/USD, because of the tight spread.
2 moving averages. and some times a stochastic. Most traditional methods of trading use multiple time frame charts. the 5-, 10-, and 30 minute charts are all supposed to somehow give us some magical power and accuracy when these charts confirm a certain price movement. The biggest disadvantage of those methods, general, is missing a lot of opportunities.


Take a look at a one-minute chart of the EUR/USD, and you'll notice something. The vast majority of the time, the EUR/USD moves up and down at least 10 points or more every 5 to 20 minutes. For instance, if we have a total 10 point move on a 1 minute chart. I can get in and outof that move and make a 10 points with ease. But,if i wait for a 5 minute chart, etc., by the time it shows the confirmation, guess what? the 10 point move is over! Even if i use a single, five-minute chart, 90% of our signals are never seen.


With multiple time frames, I miss a lot of opportunities to catch the small movements, that could mean a substantial gain, depending on how many pips are being traded.

A single, one-minute chart and two tuned indicators combine forces seek out even the slightest moves in the market and lets me turn them into quick, in-and-out trades.


I don't use pattern recognition methods. candlesticks. I don't try to predict trends or the future, or resistance and support levels, or pivots, when the market moves i move with it.


The best trading hours for me are the first and last two hours of the market. (the london session and New York session).


Thanks for reading my stuff, now maby my wife will get the Hell off of my back.

Fired 2 shots

1st shot was breakeven, 2nd shot played according to POP's rule 1...
Even though slightly negative, its according to the System.
I have reason to celebrate,because my aim is TRADING THE SYSTEM, without questions.

Curing Frozen Trigger

How about this....
"Role play"

My 3 set ups as 3 different traders
And myself as a broker.

The Art of Growing A Day Trading Account

http://www.sooperarticles.com/finance-articles/day-trading-articles/art-growing-day-trading-account-9918.html

(By Markus)

One of my day trading students told me he was disappointed. He has been trading $10,000 for six weeks, but realized only $600 in profits. He told me that he was considering getting out of day trading because he thought he could make much, much more. After all, $600 in six weeks is only $100 a week, just a fraction of the money he set aside to invest. He could work as a fast food clerk and make more money, so, he thought, why bother with such an inefficient form of income?

I told him he was dead wrong.

When it comes to day trading, consistency is more important than the dollar amount of your profits at any given time. This trader was already making a fortune, but he didn't know it. In fact, he was already an incredibly successful day trader, and I told him that I could likely learn something from him. All he needed to do was recognize that he was making consistent profits, determine where that consistency came from, and then apply those sound money management strategies to achieve stellar results.

We took a look at what he was doing, and I did, in fact, learn from what he was doing. He did, as well. And I want to share that lesson with all potential day traders: learning how to recognize strategies that produce consistent profits, no matter how small, rather than earning profits from individually large trades, is the key to trading success.

This is what we discovered about his plans:

First, $100 per week would amount to $5,200 per year; a 52% return on his account. That's already excellent, but it is only a sign that he could translate those profits into larger gains.

The first way to do that would be to apply sound money management techniques and increase his contract size. He was trading the e-mini S&P, 1 contract at a time. A reasonable plan in this instance would be, according to the money management system promoted by Ryan Jones' Fixed Ratio Money Management Technique. Using this technique, he would increase the number of contracts every $800, or approximately every 8 weeks assuming that he is making consistently $100 per contract per week per contract.

Using these rules, he could hypothetically grow his account from $10,000 to $26,800 in just one

year by consistently increasing the position size and achieving "only" $100 per week per contract. Here's a quick summary of how it would look:

Starting on September 1, with an initial account of $10,000 and a profit per contract of $100, he could make $800 by November 1. If he then put that $800 back into the account, he could now trade 2 contracts, earning a potential $200 per contract for a total o $1,600. If he then put that $1,600 back into the account, he would now have $12,400. So, come January 1, he could start trading contracts, this time expecting $300 for each, with a total profit of $2,400 at the end of the next 8 weeks. If he follows that pattern each 8 weeks, at the end of the year, his account would be $26,800, and he could be trading 7 contracts for a profit of $700 each. Expand that to two years, and his account would grow to $27,400. We're certainly making more than a fast food employee at this point.

Most traders think this kind of growth is impossible, which is unfortunate. The logic is sound: even if a trader would not achieve his goal of making $100 per week and miss it 2-3 weeks in a row, it would simply take a month longer to grow his trading account to $27,400.

Traders fail to realize these kinds of results because they let their emotions and desire for quick success get in their way. "Only $600 in 6 weeks" can sound demoralizing. But rather than giving up, he capitalized on what he was doing well and exploited it, making more trades and increasing his contract size. Now, of course, he is thrilled.

But the problem is that this growth takes time to realize. If you start with a profit target of $100, that may seem just like a dinner for two – not the supplemental income most of us want. But as the profit target slowly grows to the equivalent of a washing machine, then to a trip to Las Vegas, and on and on, things get easier to stomach. But day trading profits start out small, and we have to be tough, to endure the slow start and resist the temptation to either make a huge risk or to give up altogether.

Slow increases are the way to successfully and consistently grow your trading account.Start increasing your position size slowly from 1 contract to 2 contracts. Make sure that you are still consistently profitable when trading 2 contracts. And then increase your position size from 2 to 3 contracts when you're ready. Go in single steps, and never "jump" from 2 to 4. Increasing the position size slowly will help your brain to adjust to increasing stop loss and profit amounts, without getting emotional, and it will also you maintain your consistency.

There is one and only secret to growing a trading account, and it is something that both I and my student have taken time to realize: patience.

(Markus)

B) CASE STUDY: Learning from other's experience

http://www.aussiestockforums.com/forums/showthread.php?t=12683&page=5

(By Trembling Hand Trader)

Ok so I'm posting these results with some reluctance. As I said all the results will be verified by a Mod so when the statements come through they will get them.

I need to explain my system a little bit before I continue so as to put todays action in context of how I trade. I have three basic rules to my system,

1. I never want to start the day having to get back more than 1% of my account from the previous days trading. NEVER.

2. I want a system that has few as possible down days.

3. I want to be very aggressive with my trading capital.

Now point 1 and 2 you would think would rule out point 3 but it doesn't have to. This is how I manage to stick to all 3 rules.

Firstly point 2 as I have stated already becasue I trade so often eventually the stats of a positive expectancy, although slight, system works in my favour. I may be down at some points during the day but mostly it works in my favour.

Point 1 I have a daily stop of 1% of capital. If I lose that its over for the day. PERIOD. Now the down side of that is I can easily have 5 losers in a row at the start so I trade very very small to start with so as not to be taken out before the slight positive expectancy has a chance to work in my favour. As I build profit I increase lot size.

And as you will see this is where the aggressive use of capital comes into play.If I have 50 or more ticks in the bag I increase size then again at 100 and on and on. The end result is if I can keep it together I can have some really large days compared to my MAX Daily Risk. Works for me.

(TH)

How Many Markets Should You Trade?

http://www.sooperarticles.com/finance-articles/day-trading-articles/how-many-markets-should-you-trade-9914.html

 
Too often, I hear from traders who insist that they "specialize" in a single market. Although they may feel a sense of comfort and even mastery by trading exclusively in one market, this kind of approach is a serious mistake. As day traders, we are interested in profitable markets. But what defines a profitable market has nothing to do with the kind of market it is; rather, it depends on how it is trending. Consequently, a successful trader should commit him or herself to trading trending markets, no matter what they are.

By limiting yourself to only one market, you limit your chances to profit. There are times when a market is trending and easy to trade, but there are times when markets are just moving sideways. The more markets you watch, the more opportunities you get to locate a trend each and every day. As I like to say, "Finding good trades means de-selecting the bad trades," but you can only stay away from bad trades by having a number of sources of good trades.

You can see the problem with only trading a single market with the following analogy. Let's say that you want some ice cream. You walk to the corner store and ask the lady behind the counter, "Do you have ice cream?" The lady responds, "Sure. What do you want: strawberry or vanilla ice cream?" Actually, you were looking for chocolate ice cream, but since you only have these two flavors to choose from, you compromise and pick the vanilla ice cream. That's not exactly what you were looking for, but it's close enough. After all, it's ice cream and you don't walk away empty handed.

Now think about the following scenario: You are in the mood for ice cream and walk into a Baskin Robbins. You say "I want ice cream" and the man behind the counter smiles and says: "Of course! What flavor do you want?" You respond: "Chocolate" and he asks you "Dark Chocolate, White Chocolate, Belgium Chocolate, Milk Chocolate or Truffle Chocolate?" Now you have choices and you will get exactly what you want.
When you are trading only one market, you have limited choices and you will be forced to compromise. After all, you don't want to walk away "empty handed," and you might take a trade that only partially fits your trading plan. You will constantly be forced to settle for a less than an ideal trade because you've limited your options by looking at only a fraction of the available markets. Trading only one market means that you implicitly accept the limitations of that market, allowing it to set your possibilities rather than looking around for the best opportunities available for profit.

Once seen in this light, it should be obvious why trading only one market is never an advantageous strategy. Trading multiple markets is like walking into a Baskin Robbins if you want ice cream. You have many choices and can pick the market that fits your own personal style and trading goals. You will only take the best trades, and, therefore, increase your chances of making money with day trading.

(Markus)

Tuesday 23/2 New CLJ0

Good day for swing trading, 20 to 30 ticks
However, I missed this session.

Monday 22/2

I'm trying to classified trading  by its day. Starts by today.
Its better than enter the market blindly (for me lah).
I will check the accuracy of my prognosis at the the end of the day/week.
So I will save my screen time. :-)

Monday - slow market, no clear trend (till 10.23am NY time).

ZZzz..

*******
Post-session : my assumption is correct

Entry @ Trendline

My idea is to enter away from SR line, as entry @ SR line is quite risky

Focus on being profitable for the week

My mental set-up : checked
My trading set-up: checked
My trading goal: checked

 It seems more practical if I'm focus on being profitable for the week 
Accordingly, the weekly PnL in this blog will be up updated weekly. The official monthly PnL is as usual.

*************

Another Dr Brett's note:


http://traderfeed.blogspot.com/2006/12/three-pieces-of-trading-wisdom.html

Focus on being profitable for the week - Individual trades may go against you and individual trading days can offer little opportunity. As a senior trader once explained to me, for the active trader, however, there are enough fresh opportunities in a week to make it reasonable to set a goal of being profitable for the week. You won't reach your goal every single week, but the mere act of setting the goal keeps you focused. For example, you don't want to lose so much money in a single day that you can't make it back during the other days of the week. You also don't want to lose so much money on a single trade that you can't come back during the remainder of the day. When you really push yourself to be profitable every week, you don't let individual days get away from you. And when you don't let individual days get away from you, you start managing each trade carefully to ensure that your largest loss won't exceed your largest gain. Time and again I've seen a consistent sign of progress among developing traders: they stop digging themselves into holes.

The Edge

 

After slogging countless hours in countless lonely nights and when I thought I have to give up....I think I found my edge last night.  

In the picture, the edge a bit looked dangerous (Hmm...risky is a better word)

BTW, my broker sent me a note to say "HI - how are you doing ?".

I will SIM trade this 'edge' to know its limitation.
My broker can wait.

2 Rules from Phantom of the Pits

Among the simple set of rules, but a powerful one. I have used these mental rules during FKLI days...I forgot this rules until CL reminding me to bring back this 2 rules from my trading library...

************

1. In a losing game such as trading, we shall start against the majority and assume we are wrong until
proven correct! (We do not assume we are correct until proven wrong.) Positions established must be reduced
and removed until or unless the market proves the position correct! (We allow the market to verify correct
positions, we don't allow market to verify wrong positions.)

2. Press your winners correctly without exception. Being right  (Rule 1) does not, in
itself, make the most amount of profit.

 In trading most of you have a greater chance of being wrong than right! Trade
accordingly . . . which means expect the limit (being wrong more likely) in your trading.
How can you come out ahead? In the short run, you can only with luck. But in the long run, luck tends to even back the other way. You must trade in the long run!
So what is a trader to do in a losing game? You must trade in the long run! How can you trade in the long run? Only way I know is that you must keep your losses small and take more small losses than small winners to come out ahead. This often means washing a position for the sake of being able to keep in the game.

The theorem now is to assume your position is wrong until the market proves what you positioned is correct. Keep your losses quick and small. Don't ever let the market tell you you're wrong. Always let the market tell you when your position is correct. It is your job to know you are wrong and not the market's job.

The other side of the coin is that you will get positions that are correct. You must be bigger at that time. This will require a Rule Number 2, which is designed around adding to winners in an unfavorable game to come out ahead in the long run. When you are correct, you must continue to use Rule 1 to keep losses small. It's okay to be wrong small but never okay to be wrong big if you expect to trade in the long run.

Trading is not easy. Most traders just let the market do its thing. The correct way is that you do your thing and control your positioning. You control your positions by using rules that keep you in the game.

Rule 1 is the most important rule in any trade plan. Rule 2 will be the other side of the coin, which must be dealt with if you are expecting to remain in the game in the long run.

(POP)

Stairways to Heaven

CL is in a quite unique pattern today.

Stanley Kroll

I put a statement from Stanley Kroll below my blog title yesterday...as I thought that I have to use that strategy on the beast (CL). Its a different  strategy than I used before in my previous contract TF...
At core, my strategy depended on the behaviour of the contract.

It also helps, as  I dont waste my 'focus' energy in this 'kroll' way.

Another note, I shut down the PC at 12 mn malaysia. This morning I found that CL move at 12.15 am..
only 15 minutes away...

I will 'Kroll' ya !

CL - sim trades

I have other commitments nowdays so I can't concentrate
So I will sim trades CL with FAKE 5000 USD.
I hope the fake result is good. ;-)

Top Five Trading Mistakes

I'm in the midst to correct the #1 mistake in CL trades. I don't have the other 4 problems :-)

 *****

 www.letstalkfutures.com/2009/06/30/top-five-trading-mistakes/

by Ben Kim

Over the years I have seen some repeated mistakes new traders make, and most are relatively easy to avoid if you are disciplined. Before I get into my list of the top five trading mistakes, I’ll mention one more that applies to trading as we move closer to the 4^th of July holiday and the summer doldrums. In holiday markets, volume tends to be quiet at times, and that means markets can whipsaw, especially overnight. One large order can move a market significantly. We often see a lot of “noise” going on as we head into a holiday that might not be a true reflection of market fundamentals. It’s a time that’s harder to trade, and might not be the best time to initiate new positions if you aren’t an experienced trader. But if you do want to trade, avoiding the pitfalls is even more important.

1. Trying to Pick Market Tops and Bottoms

This is a very common mistake with rookie traders or investors. People think they can perfectly time the market. Ask yourself: can the market go any higher or lower? Of course it can. Crude oil is a perfect example. Last year the price of crude oil rose to above $147 a barrel, then in just six months, fell to under $35. People were trying to pinpoint the top from about $90, and many got run over. Trying to pick tops and bottoms in any market is a losing cause; the odds are against you. There are only two points on a chart that have an absolute top and bottom. There is more profit potential in the meat in between the trend, once you identify it.

To identify a trend, I look at chart patterns. The entry and exit are the harder parts to identify. I use moving averages, MACD, and the Relative Strength Index to help me determine whether a market is overbought or oversold. Study different technical indicators. Find ones that you are comfortable with and that work for you.

If a market is trending, I’d want to buy on pullbacks. Watch for profit-taking in the markets within the trend, and see if your indicators show it might be a good time to get in. If I see a big economic report coming up, I might avoid that trade until the dust settles. Then I’ll look at specific support points on my charts to help me determine exit points.

2. Overtrading

You don’t want to let your emotions dictate your trade. That’s part of the reason people overtrade. People tend to over-react to market movements, and it affects their psyche. Trading futures is a very mental game. You need to keep your emotions in check. Trade based on what you know, and what you see. Overtrading tends to be mainly a problem for day traders.

To avoid overtrading, have a plan and stick to it. Trade the chart, not the money. You don’t want to become overconfident. Once you get overconfident, you start trading more, and it’s not the right way to approach the markets. On the flip side, many traders who are on a losing streak try to make the money back and overtrade, adding to their position. They are not trading with the right mindset and a small loss becomes a big one.

If you see yourself doing these things, step away from the screen, take some time off and reassess. The trades will come. Be patient. If the setup is not there, there is no reason to trade. Get out of losing trades before they become big problems; don’t try to dollar-cost average when trading futures.

3. Over-Leverage

The basic definition of leverage is the use of various instruments to increase one’s rate of return. In futures, that means you can put up a small amount of capital to control a much larger contract value. In regards to business, leverage refers to using heavy financing for various activities. While leverage is an appealing characteristic of futures markets, leverage is a double-edged sword in futures trading. It can be great, because you are using a small amount of money to control a large investment, but on the flip side, you can lose a whole lot more too.

Being able to define and control your leverage is key to longevity as a trader. If you have a small account, you need to know what markets are reasonable for you to trade. Know your risk tolerance, and know your limits.

4. Improper Money Management

Sound money management can be the difference between success or failure, even if not all your trades are winners. Make sure your account size fits the particular markets you want to trade. You have to be able to assess your risk tolerance. Always have an exit strategy on every trade before you get into the trade. Use protective stop orders, which can take some of the emotion out of trading. It’s not how you get into the market, it’s how you get out that can make the difference in your success. Even the best traders aren’t always right. A professional trader knows when to get out of a losing trade quickly and lets the winners ride.

Be able to take losses. You aren’t always going to be right on every trade. That’s just reality. The reason you want to cut your losses early is that a few big winning trades can offset many losers, but one really bad trade can wipe you out completely. It’s not fun to get stopped out of a trade, but you’ll be glad you got out when the market keeps moving against you. You’ll be able to trade the next opportunity when it comes along. Live to fight another day.

5. No Trading Plan

Many people have a “get-rich quick” mentality when it comes to futures trading. That’s the absolute worst mentality to have. You need a plan. If you don’t have a trading plan, you are going into a gunfight with a blindfold on. If you have a trading plan, you will have a strategy for entering and exiting positions, and you’ll know your risk tolerance on each trade. I also recommend keeping a trading journal. You can’t improve as a trader unless you know what didn’t work in the past. You can look back and determine what you should correct going forward.

These are just a few of my thoughts on trading. Feel free to contact me with any questions that you have about the markets.

Ben Kim is a Senior Market Strategist with Lind Plus, Lind-Waldock’s broker-assisted division.