Did you suffer before doing well or vice versa?

[MRC & Co]

1st is a guru maker the 2nd guru breaker. No drawn down in the account required to see some thing has changed.

Yes, but how do you know the trend has changed immediately? Surely there would be some account drawdown required to find that out.

Point at which you realise, is what I am interested in, sorry I just see a lot of useless rhetoric in this thread and not many trading strategies or examples.

 

[Trembling Hand]

Yes, but how do you know the trend has changed immediately? Surely there would be some account drawdown required to find that out.

Not wanting to float my own boat here but many did notice changes occurring all through last year. I had been banging on about the lack of strength in the overall market all year and the strength in a couple of big caps masking the changing market. Many others did too way before they got cleaned up.

From my blog on December 18th 07

Something happened yesterday that I am struggling to find an incident where it has been repeated in the last 4 years. Sure we have had plenty of nasty days in four year bull run thats not what I'm talking about. What happened yesterday is the first occurrence of a lower high followed by a lower low. The first in 4 years!
................... So that is a lower high, a very rare event in the last four years. Then bugger me we get the day from hell, if you are long that is, that takes out the last low. At the moment this could all be repaired in a week or to with a little bit of magic rally dust from Santa but its yet another sign that times are a changin'

Now don't go flaming me I'm just pointing out that quite a few traders have been adjusting there plans and expectations for sometime.

 

[IFocus]

I look through a lot of charts per day for different reasons but doing so you see the market and sectors change and it stands out all most black and white.

If you are trading breakouts you often see the same patterns run through the market or the same sectors the same for pattern failures.

The short patterns turned up well before the end of last year warning a change was coming look at the basket cases now and look when their down trends started.

I also look at the number of up trends verses the number of down trends so I get to see the change there, it comes out clear as day.

TH posted time and again the market breath I think it was showing what was coming.

And lastly I use Nick Radge who posts regular updates on where he thinks the market could go with a number of different possibilities but clear instruction where each possibility is proved correct or incorrect. I don't use Nick so much for trading ideas but more for education on EW and market sentiment, its invaluable listening to a long time professional who isn't caught up in their own opinions but just trying to gauge the market.

Ah Trembling you beat me too it

 

[Trembling Hand]

OK now I am just banging on but the blog post before last the one mentioned above is even better.
entitled "It is all over"

This is it. This is what it looks like at the end. This is what happens at the end of a broad bull run lasting close to five years. This is what we have all feared, the end of the good times. The just throw a line or two into the market and watch it land a winner. Well it is over.

LOL. My blog post are more accurate than my trading.

But as IFocus has pointed out if you trawl through stacks of analysis after awhile changes stand out like dogs you know what.

 

[Timmy]

Wyckoff distinguished between character and appearance
Appearance can be negative
While making a positive statement ( a down move could be accumulation )



It goes down to go up this time
next time it goes up to go up ( An up move is accumulation )


Wyckoff distinguished between mechanical methods ( pure appearance )
discretionary ( pure appearances of appearances )
And Judgemental... principles observed that proscribe

ever changing cycles...

Demand and Supply and nothing else...

No appearances .. They are artifacts

Character



Three Wyckoff Questions
What.........it goes down
How........... Price Volume Time
WHY....... Accumulation or distribution

Identify principles that proscribe

act..........NO DISCRETION

motorway

To MRC & Co,

I have quoted some of Motorway's post. MRC, I too am not yet at a point where I am happy with my 'experience and intuition' ... and I think these two words you have used are a big part of the key to successful trading. What I would say to you is that by studying Wyckoff's principles (start with Motorway's posts ... I would say you don't need any more than Motorway but he would disagree so I wont say that) I am accelerating my progress faster than I ever thought was possible (this is an honest observation I make of myself, not a throwaway line).

FWIW, and many will disagree so feel free to do so also, forget mechanical, forget the standard Tech. Analysis 'texts' (there are some valuable ideas, but you will get better ones from this forum), forget the common use of 'discipline'. Apply the discipline at the front end, at developing an understanding of the market, what moves price, WHY you can make money (thanks tech/a). Apply the understanding with skill in execution (MRC, I see you corresponding with TH on another thread, as well as improving my understanding of what moves price, TH's posts give me an inkling of what is required in execution skills). Money management ... thank goodness this is an anonymous forum so hopefully I wont get shot too quickly ... yeah, ummmm ... don't load the boat, don't bet the house ... but if you get an understanding of what moves price, and you can execute well, don't hold losers and don't get greedy on winners then thats pretty much it for mm (you see why I am fearful of getting shot) ...

Like I said, all the above FWIW, I got a lot out of writing it down.

 

[nizar]

Some people dont backtest, it does not mean they are not successful or that their system does not work.

There are 3 ways in which you can KNOW if a system has any probability of working.

1/ You backtest it.
2/ You paper trade it.
3/ You trade it.

Its only in part 3 where you are risking real money trading with a trading plan/style/system that may in fact have little probability of being profitable.

And paper trading introduces biases and takes a very long time.

That's why I and many others START with option 1 ie. backtesting.

 

[traydor]

How about putting things in paragraphs and then someone might actually read it.

Hi dhukka, I read it and understood it.

 

[nizar]

A truly scalping method. Taking a few points here and there on futures, with only the market depth to look at.

Not sure what you mean by "truly", but I'm actually in the middle of backtesting a scalping method myself.

Based on tick charts though, not the market depth.

The only problem Im having is that I bought 10 years tick data for 5 pairs, and the size of the data for each pairs is 9Gb! LOL.

Interesting thread guys.

 

[tech/a]

Its not the analysis.
Everyone of these traders above do something that ENSURES they profit.
They know WHY they profit.
Thats all you have to do.

act..........NO DISCRETION

If there is no difference in interpretation.
If every trader interprets every chart exactly the same way with Wyckoff analysis (in this case) then no discretion---if not then---?

Dont get me wrong its excellent analysis use it myself.

 

[MRC & Co]

Well I dont think it takes a genius to know the landscape was well and truly changing last year. High volatility is one very strong sign and then the crash cycle begun. I remember posts where I pointed this out myself, hence there was a period I was mainly in cash and another I was mainly in gold. So I have been adjusting and tinkering with my plan for some time also. Including far smaller position sizing, and tigher stops (too bad I cant say tighter trailing stops, which would mean I would still have trading profits for the year to date of around 30%). I will admit however, despite realising the landscape was changing, I was slow to act, a huge flaw and something which has been noted.

Still, many trading systems would be struggling, no doubt about it, its obvious and evident just from viewing the exodus of posts at ASF (this post and the gold thread seem to be the hub of activity lately, funny that) or the institutional investment world. The whipsaws alone are enough to disrupt a solid trading system! Many subtle trends have changed, for example the momentum I talked of earlier.

Timmy, thanks, I have studied the market myself for a few years (infact made my first trade 13 years ago), so know most of what you said. I havent learnt Wyckoff's principles (but am sure I will get to it) as of yet, however, I think I would need a book first. No doubt motorway understands it like the back of his hand, but I dont find it easy to read and comprehend his posts, very abstract (if thats the right use of terminology).

So to those who realised the subtle changes in the market without any drawdowns (I still find it hard to beleive, as there has to be a change in market movements (unless you got lucky and these changes in movements did not cause a loss to your equity base) and drawdown for you to realise your trading plan needs to be adjusted in the first place. If the part in brackets was correct, then your change must have been immediate, you must have known WHY to change and HOW to adjust your trading plan accordingly, without much recent data of this extraordinary trading environment to backtest with) and adjusted their trading sytem accordingly. HOW did you adjust your trading system? Examples are always the best use to everyone here. I have stated on numerous posts how I am forward testing new ideas and adjusting trailing stops, position sizing, trading downward breakouts etc. But mainly I still see rhetoric. Ifocus, I also look at sector trends when analysing a certain equity along with the broader market and US indicies, hence why I also espouse inter-market analysis myself.

Sorry, that post was a bit of a gramatical mess, but its just what came out.

 

[Trembling Hand]

HOW did you adjust your trading system?

You don't. If you are a chart trader with a system that includes playing on the short side your system/plan should/will give you short entries.

If you only play on the long side just the fact that more and more stocks started to trend down you shouldn't of been trading that many longs.

Then you also have all the position sizing and stop setting and max account exposure etc rules kicking in as volatility increased to protect you.

 

[IFocus]

Including far smaller position sizing, and tigher stops (too bad I cant say tighter trailing stops, which would mean I would still have trading profits for the year to date of around 30%).

MCR reducing position size is critical I am trading at 1/4 of what I would during raging bull market conditions I am looking for survival now not riches.


My stops don't change but I do use profit targets when going short this is also some thing suggested By Nick. I look at market time frame to help determine this others use other methods.

Still, many trading systems would be struggling, no doubt about it, its obvious and evident just from viewing the exodus of posts at ASF (this post and the gold thread seem to be the hub of activity lately, funny that) or the institutional investment world. The whipsaws alone are enough to disrupt a solid trading system! Many subtle trends have changed, for example the momentum I talked of earlier.

A good system or method should keep you out of the market as much as it should keep you in the market. Most traders make returns determined by the market not by their skill. This particularly applies to myself I am just not that clever if I am to trade to probability then I trade when conditions favor probability.

Timmy, thanks, I have studied the market myself for a few years (infact made my first trade 13 years ago), so know most of what you said. I havent learnt Wyckoff's principles (but am sure I will get to it) as of yet, however, I think I would need a book first. No doubt motorway understands it like the back of his hand, but I dont find it easy to read and comprehend his posts, very abstract (if thats the right use of terminology)

Wyckoff is an invaluable education

So to those who realised the subtle changes in the market without any drawdowns (I still find it hard to beleive, as there has to be a change in market movements (unless you got lucky and these changes in movements did not cause a loss to your equity base) and drawdown for you to realise your trading plan needs to be adjusted in the first place.

Drawdown is a part of trading at least for me I cycle regularly into draw down I don't need a bear market to experience this.

If the part in brackets was correct, then your change must have been immediate, you must have known WHY to change and HOW to adjust your trading plan accordingly, without much recent data of this extraordinary trading environment to backtest with) and adjusted their trading sytem accordingly.

Its more important that I don't trade now rather than to have positions its part of the plan.

HOW did you adjust your trading system? Examples are always the best use to everyone here. I have stated on numerous posts how I am forward testing new ideas and adjusting trailing stops, position sizing, trading downward breakouts etc. But mainly I still see rhetoric. Ifocus, I also look at sector trends when analysing a certain equity along with the broader market and US indicies, hence why I also espouse inter-market analysis myself.

For me main adjustment is to use profit targets, determine market time frame 1 bar 2 bars 3 bars or trend.

Reduce position size.

Don't get sucked into the news momentum bit its works some times but get creamed when it doesn't.

If you use charts timing now become critical IMHO using sectors and indexs to anticipate expanding volatility out of consolidations.

Hope this helps

 

[MRC & Co]

Ok thanks, similar to what I have been saying and implementing.

Cheers.

What an off-topic thread.

Back to you Blaster!

 

[wayneL]

I'll elaborate a bit further on your observation.

Everyone who places a trade has an initial expectancy of profit.
Few know how to best setup a trade for the best chance of returning a positive expectancy.
Even fewer have any idea of how to guage or design a trading plan with positive expectancy.

The singular preparation of any trade to return a positive expectancy is a far cry to completing many many trades and returning a positive expectancy.

You're playing with semantics. Expectation and Expectancy are two different things... and as I recall, it was only two or three years ago that you vehemently denied that a positive expectancy setup could be found in a discretionary setup, contrary to your assertions above. Now your an "expert" on the topic?

Let me reword your statement above, sans the implicit, self-serving and gratuitous chest thumping:

Everyone who places a trade has an initial expectation of profit.
It is best to learn how to best setup a trade for the best chance of returning a positive expectancy.
Even better to learn how to gauge or design a trading plan with positive expectancy.

FFS Tech, please give people some credit. I agree there are many who ignore the above principles, that's their problem. But please, continuously setting up some little elite band of those in the know and then including yourself in it is nauseating.

This is not to take away from those you mentioned, they are obviously elite, but notice that they don't continuously claim to be so. Let me tell you something; there are quite a few more here than you think.

 

[tech/a]

Here we go again.

Wayne I'm clearly up myself.
I agree infact many here will no doubt agree so I'm in good company---get over it!
Its the way I post the way Ive always posted and the way I will continue to post.

Was there anything of value you'd like to add or have I pretty well covered it.

MRC

I also find Motorways explainations difficult to follow although I have a basic knowledge,Particularly with the introduction of P&F which is not as commonly used as Bar analysis.

and as I recall, it was only two or three years ago that you vehemently denied that a positive expectancy setup could be found in a discretionary setup, contrary to your assertions above.

Recollection needs brushing up.
Positive expectancy in a singular trade of course can be found knowing that you have a positive expectancy in any plan and methodology by taking a trade with a percieved positive expectancy doesnt guarentee that plan will result in a P/E trading method.

Now your an "expert" on the topic.

Thanks.

Just made a minor adjustment to your wording to better describe your point.
That I'm up myself.
Subtle dont you think?

 

[peter2]

Every trader should have their own definition of the direction of the trend in the time frame that they are trading. When the trend changes you know what to do.

Events that should make you realise when the market is changing, for those who don't define the trend (investors). You should notice the number of stocks going up decreasing, number of stocks going down increasing, decrease in the number of new highs, decrease in 30d breakouts etc...

MRC & Co. Trading requires commonsense and a business like approach. I define the trend using the XAO and the 10,30d MA. When the trend is up I look for longs. When the XAO is below the 30d, but not yet defined as down I start a few shorts but I am still biased towards longs. As my longs get stopped out, (TS's above BE do not produce a drawdown) I notice more of the long trades starting well but being stopped out at BE (no drawdown). The profits from the shorts start to offset the losses from the longs (no drawdown). When the trend is down I predominantly look for shorts. There will always be a few stocks that continue up and I will be into a few of those. I have started making partial profits in all trades due to the current volatility and when I sell half at the predefined target my TS is moved to BE to minimise capital risk.

Currently my shorts in the financial sector are being stopped out but there are plenty of other sectors going down (eg resources).

This is not rhetoric and these types of actions have been mentioned in this thread by others. You say that you are looking after your trading business by testing ideas. Have you looked at alternate strategies for when the market trends down? Have you tested going short? Have you tested using cfds to short or hedge your long term trades? Have you looked at the US market? Have you considered EFTs?

I could go on... all of these topics have been discussed on ASF for months.

Do dept stores wait until they start losing money with their summer fashions before displaying their winter collections? Of course not, its commonsense.

ps: I have seen your cue to blaster and hope that we have helped him. My response is that you shouldn't suffer before doing something about it.

 

[wayneL]

Here we go again.

Wayne I'm clearly up myself.
I agree infact many here will no doubt agree so I'm in good company---get over it!

Was there anything of value you'd like to add or have I pretty well covered it.

Well, now that we've cleared up the basic difference between expectation and expectancy, that about covers it.

Its the way I post the way Ive always posted and the way I will continue to post.

Let me ask you some questions. Why do you post differently over at RC? Why should the mods allow you to continuously edge your toe over the code of conduct line here? What if we allowed everyone to do it? This forum would turn very quickly into HC.

I know you can post with respect to the majority. Please do so.

 

[MRC & Co]

This is not rhetoric and these types of actions have been mentioned in this thread by others. You say that you are looking after your trading business by testing ideas. Have you looked at alternate strategies for when the market trends down? Have you tested going short? Have you tested using cfds to short or hedge your long term trades? Have you looked at the US market? Have you considered EFTs?

I agree with what you said.

As far as this part, if you read my above posts, you would see I look at the US market on a daily basis, infact, moreso than analysing the XAO in itself. I have traded (you mean ETFs?). I have gone short. I dont use CFDs.

The strategies I am talking about are, whipsaws wiping out stops (larger % stops needed perhaps? Either initial or trailing in order to combat volatility, I realise this can be taken out of effect with price targets, if your initial directional call is right or by placing them near support, which in itself can be very shaky, unless its a strong support line). However, no real back-tested analysis or views on this. I posted others during this thread, short-term price momentum shifts now in-effective to some extent. Many breakouts/breakdowns being caused by sector movements (commodity falls, shifting assets) = divergence patterns can now be traded. As I have also stated, I am also looking a lot more into monthly seasonality and sentiment polls and ratios. So I have no doubt I am taking care of my trading business, whilst trying to understand the WHYs, so as to ensure it is consistently profitable, not erratic. I do not want large drawdowns, I simply cannot afford it while trading full-time.

All of the above I already have opinions formed upon.

I also do not beleive in diversification or hedging. For my own reasons, as stated in other threads. My version of that is tight stops and smaller parcels.

I would call most of this thread rhetoric, until the last replies, but each to his own unless you want to get into semantics. Not to mention, I am still well in the green, better than most I would think, but profits are definately being wiped out lately. Hence, my looking into the WHY.

Cheers

 

[It's Snake Pliskin]

Hence as I stated above, downward breakdowns are more reliable than upward breakouts.

Skillful traders are so due to experience and their intuition, picking up nuance's which others may miss or take more time to observe, including changing market dynamics.

I am the first to admit (some here enjoy willy waving too much to admit), I am years away from this kind of experience and intution yet. It takes a LONG time to gain this, not just a few years in the market, at least thats my theory and observation from studying actual successful traders.

With regard to breakouts and breakdowns the only ones worthy taking are the ones that hold and continue their intended direction. All else is pissing dollars away in brokerage and relying on luck. But that is a hindsight realisation which shows how hard it really is.

Yes, years it does take. Dispensing with dogmatic thoughts is a start. If you want to speed up your time in the market it can be done without actually trading the market.

 

[It's Snake Pliskin]

Everyone who places a trade has an initial expectancy of profit.
Few know how to best setup a trade for the best chance of returning a positive expectancy.
Even fewer have any idea of how to guage or design a trading plan with positive expectancy.

It seems natural that people would expect something from their trades - natural psychological thoughts. So above I think expectation would more accurately describe what you mean. But having expectations might be a bit flawed. Maybe, parameter is a better word, as in one parameter for the trade.

I agree that a lot don't have any idea about how to devise a plan, test a plan, or even know why a plan is the way it is. Telling beginners to get a plan is like telling a child to get a job without career counseling.(not in the above)