Was staring - in disbelief - at the daily profit target I had set for myself some time back.
$1000.
What a joke.
A revision to "NOT LOSING $1000 per day" is in order.
My hyperactive brain started churning out one idea after another on how to get to the bottom of what trading is really about, when I was supposed to be in dreamland.
I desperately need and want to, get a full grasp of the basics of trading: how all the biddings and offerings move price up and down, what the motivations surrounding buying and selling are, what strategies to employ at 1)the open of the trading session, 2)half hour after that, and 3)during the last 2 hours.
Charts, I decided, are literally useless at 930am EST as far as daytrading goes. And news - as always - are just distractions at best. There's always the option of not trading the first half hour of the session of course. But that's a hell lot of opportunities to give up.
Candlestick patterns - that is the first thing I'm going to start ignoring from now. Even failed patterns FAIL miserably these days.
There is nothing you can get from any sort of patterns anymore. I'm not even talking about using a chart to get some sense on what's likely to unfold next (which one really SHOULDN'T do), I'm talking about using it to get some clues as to what market sentiments were like minutes, hours and days ago.
There are all sorts of reasons people buy and sell at specific price levels and I don't have to know why. It could be because it's a support or resistance, or because that's where the profit zone is, or where it's the best place to puke. I don't care. I just want to know who wants to make a killing where, and how many want to puke that day and where they will end up puking.
The people who move the market don't look at charts - seriously, this is what I am starting to believe. Some I think, can't care less about fundamentals even. When Soros nearly brought down the HK market, he had either a) blatantly ignored that the company he was short selling had strong fundamentals, or b) KNEW that it was a good, strong company, and that by sending its price down 5% in a single day, it would surely fuel a panic sell-off - from which he would stand to gain immensely.
Back to daytrading.
The violent swing in intraday price actions we see these days is clearly caused by factors beyond general market conditions and sentiments.
I'm not going to start a thesis on the ills of interfering with what is otherwise an effective free market model, coz many are already doing that. Whatever the intentions and justifications, the market is now officially screwed.
The best I can do to stay afloat in this storm is to FIND A WAY to get on board a titanic vessel and take a ride with it to wherever it wants to dock.
If it sounds abstract, it's only coz that's what trading is about, essentially.
I'm going to be taking a 3-pronged approach.
Monday to start; details to be documented.
D needs to start a trading journal.
$1000.
What a joke.
A revision to "NOT LOSING $1000 per day" is in order.
My hyperactive brain started churning out one idea after another on how to get to the bottom of what trading is really about, when I was supposed to be in dreamland.
I desperately need and want to, get a full grasp of the basics of trading: how all the biddings and offerings move price up and down, what the motivations surrounding buying and selling are, what strategies to employ at 1)the open of the trading session, 2)half hour after that, and 3)during the last 2 hours.
Charts, I decided, are literally useless at 930am EST as far as daytrading goes. And news - as always - are just distractions at best. There's always the option of not trading the first half hour of the session of course. But that's a hell lot of opportunities to give up.
Candlestick patterns - that is the first thing I'm going to start ignoring from now. Even failed patterns FAIL miserably these days.
There is nothing you can get from any sort of patterns anymore. I'm not even talking about using a chart to get some sense on what's likely to unfold next (which one really SHOULDN'T do), I'm talking about using it to get some clues as to what market sentiments were like minutes, hours and days ago.
There are all sorts of reasons people buy and sell at specific price levels and I don't have to know why. It could be because it's a support or resistance, or because that's where the profit zone is, or where it's the best place to puke. I don't care. I just want to know who wants to make a killing where, and how many want to puke that day and where they will end up puking.
The people who move the market don't look at charts - seriously, this is what I am starting to believe. Some I think, can't care less about fundamentals even. When Soros nearly brought down the HK market, he had either a) blatantly ignored that the company he was short selling had strong fundamentals, or b) KNEW that it was a good, strong company, and that by sending its price down 5% in a single day, it would surely fuel a panic sell-off - from which he would stand to gain immensely.
Back to daytrading.
The violent swing in intraday price actions we see these days is clearly caused by factors beyond general market conditions and sentiments.
I'm not going to start a thesis on the ills of interfering with what is otherwise an effective free market model, coz many are already doing that. Whatever the intentions and justifications, the market is now officially screwed.
The best I can do to stay afloat in this storm is to FIND A WAY to get on board a titanic vessel and take a ride with it to wherever it wants to dock.
If it sounds abstract, it's only coz that's what trading is about, essentially.
I'm going to be taking a 3-pronged approach.
Monday to start; details to be documented.
D needs to start a trading journal.
3 comments:
Jules,
Totally agree. The first priority of any trader is not to lose money. As Alex Elder says - do not be a loser. This is the first step to winning. This is different than having "business risk" losses. The key to this is having a consistent method and discipline.
If you are scalping on a 1 min chart - I agree patterns are useless. Stick to reading the tape. But be warned - the big dogs know how to hide their trail well in the tape. Pulled orders, lot incrementation (automated of course) and other tricks abound.
I have found patterns highly useful on 5 min and higher timeframes. I use a 15 min candlestick pattern combined with an EMA bounce that is highly profitable on the ES. Of course you gotta have the stomach to ride 10 car losses that occasionally crop up (especially with todays market volatility).
In an earlier thread I asked you to think about what type of trader you were. Are you a scalper, a momentum daytrader, etc. I think you are getting closer (assuming you like and are profitable at scalping). Be warned - there is no easy money anywhere.
LT
No 10 car losses for me, LT!! I'll lose my soul!!
I'm a control freak, and letting my trade go auto-pilot is out of the question. Hence I don't rely on indicators to give me signals to get in and out of trades.
But I do like the 5min charts - although they too have become quite a pain to read these days.
I hardly scalp on 1min - I use it mainly for timing of entry base on pattern I see on my 5min. Yesterday, I used it along with booktrader and it's good :-) The support and resistance lines on 1-min were where I find big dogs cleaning up.
Gone are the days when you can tell if this min is up or down by just following the 1min candle. 1 min candles can change from bullish to bearish and vice-versa within seconds. 3 and 5 min charts are worse. 15min I have not really used. I know a few long time ER2 traders use the 10min. But ES is a different animal. My nightmare :-)
Agreed that there's no free lunch. I was telling D how much you've spent on education and the necessary equipments (ie. the COST of doing business) to get started, and how he has paid his in a different way: to the market.
You see, he's wiped out half our account last month (BLACK OCT!!), and was really disheartened. I asked him if he's learned anything that has helped him become a more prudent trader, and he said he did. I gather then that that's the cost he has to pay to learn how to trade :-)
Jules,
Yes this is precisely the problem. The easiest timeframes (highest) to compete on require a sizeable account to trade. However, the beginning trader rarely has that type of account size. So they go to the shorter timeframe. Here they can risk relatively little on a per trade basis. But finding an edge is difficult - razor thin because this is where the big dogs play and instead of paying 5% in transaction fees you pay 35-50%.
Personally I go where the easy money is. And people get too fixated on $ or cars and not %. After all 10 cars is a 3% loss on a $33k account or a 1% loss on a $100k account. And with an average of 1-2 trades per day I am not stressing out about getting in and out of the market many times per day. It is not hard to make 10% per month this way. Way, way harder to scalp 10% per month IMHO. Of course you must be capitalized and willing to withstand reasonable drawdowns (most traders can't do the latter).
I got a lot of feedback from other traders about that thread regarding start-up costs. Hopefully it has helped put some things in perspective for folks. And yes part of my startup expense was paying the market for my lessons.
LT
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