Short Term Traders, what is your homework?

[havaiana]

Wanted to exchange information and ideas about how short term traders trade.

Rather than only a couple of experienced people contributing and everyone else asking them questions on their entires and exits, i'm thinking more about what study/research and homework people who are still in the learning process like me are doing.

Hopefully we can give eachother some ideas and pointers on things to research more so than handing out answers. Things we have found effective, not effective, resources etc

 

[havaiana]

I will start with some of the things i'm looking at at the moment


Pre Trade

-Check what happened over night. Where are we in terms of longer term trend/range. Are we in a medium term range or a trend, is a new trend developing etc
-What are the key levels from the day before. This is usually just previoud session and/or days highs and lows. Sometimes an area where a previous High/Low was taken out and might become support/resistance,50% levels of moves or an area where alot of volume traded.
-Is there any news out today? Is the market waiting on some important news the coming night etc


Post trade

-Print out chart. On them i annotate or have annotated my trades, a certain Dom Pattern i am looking into at the moment
- I note on charts moves that are over a certain number of ticks and how many ticks the move was. Then i add this into a longer term table where i keep note of the distribution of moves in ticks.
-At regular intervals i do some crunching on things like (i really need to automate this) average number of ticks of ranges, or pullbacks during trends, chop, certain times etc

I will also note down anything i noticed about the market during the day. How did i trade? what i did wll and bad. What would have made the day better (then will look at how it would have panned out if i had that change on previous sessions)

Maybe we can also post or attach any resources that have helped us along the way?

 

[CanOz]

Great topic mate...your records, is this your journal? Lots of talk in the last year that journaling is the holy grail of trading....

For me it's...

Market structure, these are today's levels
Trade plan, what do do if x happens at the level I'm watching
News, what's happening today
What happened over night and where could the market open

Afterword, a bit of a review, how did I feel? How many times did I drop into that little 'zone'

CanOz

 

[havaiana]

Some resources, i have a heap more these are just the first to come to mind or things i looked at recently

http://www.brettsteenbarger.com/trader_performance.htm
http://www.brettsteenbarger.com/articles.htm
carol osler research papers (google)
http://www.youtube.com/user/BigMikeTrading (futures trader71 stuff)
http://www-bcf.usc.edu/~lharris/Trading/Book/Book-extract.pdf Market Microstructure for Practioners pdf by Larry Harris

 

[CanOz]

Really like the FT71 stuff, as well as L2ST...

Big fan of John Grady as well, have you seen his course, no BS Daytrading?

Jigsaw trading, have you seen that?

CanOz
Sorry no links...on the iPad...

 

[Gringotts Bank]

Almost all my homework has gone into my system, so I don't really need to do anything but watch as things unfold and place an occasional override order.

In regards to if/when I place that override order, I put a huge emphasis on how I feel. When I reflect on bad trades, my gut feel was always in direct opposition to my actions.

Ongoing work is to do with reading about flow states and how they are most readily entered. Mark Douglas' book was good. But I don't think you're really into that (or most others here! They like the numbers and stats).

 

[havaiana]

Great topic mate...your records, is this your journal? Lots of talk in the last year that journaling is the holy grail of trading....

At the moment it's just a little notebook i handwrite in. I do a page every day for the pre trade stuff and things i want to remember to concentrate for the day, and then thought sduring the day and how the session turned out, so pretty much a journal. Other pages are just number crunching, ideas for study etc. I really should do it in excel, but it's not working at the moment on pc and i like the old fasioned pen and paper.

Due to the bond market being next to static i've been looking solely at the Taiwan index the past few weeks. Have not yet found any decent (free) news resource for Taiwan markets yet in english

The thing i'm having the least success with at the moment is my plan for how the day might go. Generally levels work ok, but alot of times the big trending days and inside days come at times when i least expect them too.

Need to add 2 of your threads to the resources list:


https://www.aussiestockforums.com/forums/showthread.php?t=24819 Scalping the DAX (SIM)https://www.aussiestockforums.com/forums/showthread.php?t=24827 Scalping the HSI & the K200 (SIM)

 

[havaiana]

Really like the FT71 stuff, as well as L2ST...

Big fan of John Grady as well, have you seen his course, no BS Daytrading?

Jigsaw trading, have you seen that?

CanOz
Sorry no links...on the iPad...

Yep seen them both, agree

http://www.jigsawtrading.com/lessons/lessons.html
http://www.youtube.com/user/NoBSDayTrading (he also has a website, not sure if i can post commercial links?)

Some propex/Guy Bower stuff:
http://www.propex.net.au/market-education
http://www.youtube.com/user/GuyBower

SMB trading vid's http://www.youtube.com/user/smbcapital

 

[CanOz]

Mark Douglas' book was good. But I don't think you're really into that (or most others here! They like the numbers and stats).

I've got both the ebook and the audio version of Trading in the Zone. I listen to the ebook at least twice a week.

CanOz

 

[CanOz]

Some propex/Guy Bower stuff:
http://www.propex.net.au/market-education
http://www.youtube.com/user/GuyBower

LOL! Guy Bower fan too! Lots of good YT stuff...all for free.

 

[Gringotts Bank]

I've got both the ebook and the audio version of Trading in the Zone. I listen to the ebook at least twice a week.

CanOz

Cool. Most of the trading psychology threads I've started go dead or get attacked mercilessly!

Maybe we should chat about our findings some time.

 

[CanOz]

Cool. Most of the trading psychology threads I've started go dead or get attacked mercilessly!

Maybe we should chat about our findings some time.

I think its a bit of a fickle subject...sometimes its difficult for me to articulate my thoughts on it.

I also have used a trading coach in the past, he's actually a pretty good friend now. He's helped me out on other personal issues as well. He is a clinical psychologist.

CanOz

 

[havaiana]

Cool. Most of the trading psychology threads I've started go dead or get attacked mercilessly!

Maybe we should chat about our findings some time.

I think psychology is important, but not as important as it's made out in the trading selling industry and forums. Sometimes it's made out to be the edge rather than something that helps you to take advantge of the edge more efficiently.

I remember Trembling Hand (i think, can't find post now) made a post once something like, if you were held hostage and offered release if you could shoot an apple off your partners head, would you rather the shooting skills to hit the apple from the distance or the skills to be able to do it calmly. Psychology will help your skills if you have them, if you don't have the skills or the edge it will just help you lose (or shoot the head off you partner) with a clear head.

Edit, I still suffer from psychology problems during trading, but i think someone with a decent edge in trading will be less likely to be effected by psychology. Does the psychology cause the losing problem or does the losing cause the psychology problems? When i fix some of the problems with my trading skills i think psychology wil be a non issue if i maintain a daily stop limit.

Edit 2, found the post http://tremblinghandtrader.typepad.com/trembling_hand_trader/2009/02/fin-disapline.html

 

[Gringotts Bank]

I think psychology is important, but not as important as it's made out in the trading selling industry and forums. Sometimes it's made out to be the edge rather than something that helps you to take advantge of the edge more efficiently.

I remember Trembling Hand (i think, can't find post now) made a post once something like, if you were held hostage and offered release if you could shoot an apple off your partners head, would you rather the shooting skills to hit the apple from the distance or the skills to be able to do it calmly. Psychology will help your skills if you have them, if you don't have the skills or the edge it will just help you lose (or shoot the head off you partner) with a clear head.

Edit, I still suffer from psychology problems during trading, but i think someone with a decent edge in trading will be less likely to be effected by psychology. Does the psychology cause the losing problem or does the losing cause the psychology problems? When i fix some of the problems with my trading skills i think psychology wil be a non issue if i maintain a daily stop limit.

Edit 2, found the post http://tremblinghandtrader.typepad.com/trembling_hand_trader/2009/02/fin-disapline.html

Yes a good edge will give you confidence. Or at least it should give you confidence. A good edge with no confidence and no discipline will tend to lose money (as demonstrated by the Turtle experiment). No edge/system with good confidence will tend to make money. I've seen it in myself and other traders.

 

[skc]

No edge/system with good confidence will tend to make money. I've seen it in myself and other traders.

And you wonder why your psychology stuff gets shredded to pieces?

 

[Joules MM1]

.... a good edge will give you confidence.

eventually

A good edge with no confidence and no discipline will tend to lose money

for some

No edge/system with good confidence will tend to make money. I've seen it in myself and other traders.

oh dear

while there were no children injured in the making of that post, many shall be if they give any credibility.....there are many confidently broke people in the world...they remain that way.....competent confidence and incompetent confidence look very similar, application is quite different.....

and here's the bit that counts

I've seen it in myself

something past-tense about that ....especially with all the chartlines .....they dont really fit together....

how do you say GB ?

 

[havaiana]

Now a bit to the problems side of things... I have found the biggest problem for me is execution and finding enough of an edge to make up for it

When I first took my short term trading method that has made me millions of sim dollars to my live account I was in for a bit of a shock. At first I put it down to bad luck, psychology, slow reflexes etc. It took me longer than it should have to realise that i'm just not profitable enough to go live with my backtested and SIM profitable system because for reasons which are obvious to me now but for some reason i failed to understand then, there will be a tendency to get fills on all your bad trades and not get fills on all your good trades. This will have a significant effect on your win loss ratio, or on your R:R if you chase

That's where i am now, so close, but yet so far. I have a method that will make me money on a simulator, market replay or when backtested on a chart, but it's just not good enough yet for the real market. I just need a touch more edge, but that touch more is so illusive it's driving me crazy. Hence the hunt for more ideas and resources...

It actually amazes me the kind of edge big traders must have, to also have to deal with slippage and maintain your edge must take some serious skill

 

[Trembling Hand]

That's where i am now, so close, but yet so far.

Open up your time scale. Stop playing the tick chart and go to the 5 min for targets for example.

OR

Just think positive!! lol!

 

[Gringotts Bank]

Jules when I say confidence I'm not talking about reckless abandon and bravado (which is basically the opposite of confidence). People often confuse the two.

My statement is based upon meeting people who have traded from real confidence and made a pile of money.

There is no system that can't be ruined by someone with low confidence. And the most green newbie can do fantastically well on his own, with nothing but gut feel. I've seen it. Judging by what you say, you not seen this happen.

 

[Gringotts Bank]

And you wonder why your psychology stuff gets shredded to pieces?

I used to wonder, but then I came to realize people will defend their precious beliefs with more gusto than they would their own offspring.

It's like walking into a mosque and saying "hey guys, apparently the story about the 12 virgins is BS".