Short Term Traders, what is your homework?

[Trembling Hand]

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

Unbelievable. You have confused an external event (a bull market) with a miss-place and deluded mind set (confidence).

Its like saying today it rained and the market fell. Therefore the reason the market fell was due to rain.

 

[Trembling Hand]

Here is an example,

I've been making an effort to trade with a much shorter time frame... and be profitable. So far no luck with the profitable side of things but I'm still working on it. So many of my slightly longer time frame projects hit the wall about May this year and it's been extremely hard to make money as a trader.

What happened? Lack of confidence or change of market that you couldn't adapt to?

 

[Gringotts Bank]

Unbelievable. You have confused an external event (a bull market) with a miss-place and deluded mind set (confidence).

Its like saying today it rained and the market fell. Therefore the reason the market fell was due to rain.

You should put up a few of your trades live on ASF. The reason I say "live" is because then there would be real pressure to perform in front of everyone, and you'd start to make errors because you would be afraid of mucking it up (in the same way that it was when you started prop trading - remember how it was?)

 

[Gringotts Bank]

Here is an example,


What happened? Lack of confidence or change of market that you couldn't adapt to?

The market definitely changed in 2011. Ask any system trader - a very unusual year.

With confidence you adapt. Without it you crack. When I posted that i was doing the latter. Thanks for the reminder. I'll dig up some of your earlier posts!

 

[Trembling Hand]

You should put up a few of your trades live on ASF. The reason I say "live" is because then there would be real pressure to perform in front of everyone, and you'd start to make errors because you would be afraid of mucking it up (in the same way that it was when you started prop trading - remember how it was?)

Haha! Whats has that got to do with your belief that confidence is the reason for successful trading?

Why can you not make money then? Lack of confidence or lack of skill being able to adapt?

 

[PinguPingu]

As a psych major I must say the personalities on this forum are far more interesting than their trades/trading behaviour. :

 

[Trembling Hand]

As a psych major I must say the personalities on this forum are far more interesting than their trades/trading behaviour. :

Maybe we could have your soon to be professional opinion? Where does success start, skill development or deluded confidence

 

[PinguPingu]

I'll just say I've never found any 'trading psychology' material helpful or evidence based past the authors personal opinon and that in my Degree the compulsory statistic research units (e.g. using SPSS) have been more helpful than the cognitive aspects.

Anything more and that'll be 99/h please! :

 

[SuperGlue]

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

Havaiana you wrote on : Prop Shops in Australia

"So how is this actually done? At the prop shops, they have a mentor that will set you exercises. Examples of the exercises are:
Stay in the market all day. You cannot close trades, only reverse them. The idea of course is that you get in tune with the flow of the market."

To stay in the market all day with a small account will be quite difficult.

By the way Propex is advertising again.

http://www.seek.com.au/Job/proprietary-futures-traders/in/gold-coast-gold-coast/23590535

 

[skc]

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.

I think I've said before... but here it is again.

Confidence is very important and necessary for good trading. No confidence = no successful trading. No one is debating that. But it doesn't mean that confidence alone is sufficient.

To see the logic more clearly, substitute the word "confidence" in the above paragraph with "A good trading platform" or "A decent computer". See how logically senseless it is...

From your various posts, you read trading books, draw lines on a chart, program and backtest systems. If confidence is all you need, why do you bother doing any of that. Just close your eyes, buy 200 lots and stay confident.

 

[Joules MM1]

I'll just say I've never found any 'trading psychology' material helpful or evidence based past the authors personal opinon and that in my Degree the compulsory statistic research units (e.g. using SPSS) have been more helpful than the cognitive aspects.

Anything more and that'll be 99/h please! :

Brett Steenbarger is not currently publishing any works as he's under contract to a major firm....he's a successful trader (mostly es) and very smart trainer.....you'll learn a lot.....especially once youve dropped that know-it-all stance youre in......

http://traderfeed.blogspot.com.au/

 

[PinguPingu]

Hey, don't profess to know-it all, far from it. The typical undegrad psych course just doesn't look at concepts relating to trading. It's far more focused on the clinical side - more like a medical degree, learning the disorders, the big schools of thought, etc. Closest you'll get is fallacies like sunken cost or cognitive biases. That's why the statistical analysis part has been of more help in that context. The trading psychology stuff I've seen so far is akin to 'The Secret' and its self-help, positive thinking ilk.

Thanks for the link, will have a dig round.

 

[tech/a]

.

especially once youve dropped that know-it-all stance youre in......

?? cant see it.

Many under estimate the Bull Market.

When it returns everyone will be a crack trader with
confidence. Every line and squiggle will be correct.
Every valuation will be spot.

Every new book or technique a winner.

In the meantime many buy going down in the hope that one
day the market proves they're a genius.

 

[havaiana]

Havaiana you wrote on : Prop Shops in Australia

"So how is this actually done? At the prop shops, they have a mentor that will set you exercises. Examples of the exercises are:
Stay in the market all day. You cannot close trades, only reverse them. The idea of course is that you get in tune with the flow of the market."

To stay in the market all day with a small account will be quite difficult.

By the way Propex is advertising again.

http://www.seek.com.au/Job/proprietary-futures-traders/in/gold-coast-gold-coast/23590535

I took that from the jigsaw website of an example of the exercises prop get you to do. I have already applied and failed with propex back in October, don't know if i can apply again and probably wouldn't at this stage (not much more they can teach me unless i got to the inhouse stage with mentors would be good). I will try to get profitable enough by myself and apply the other route via trading records. The trainee trader experience was a good one and i would recommend it to anyone serious about trading

I agree to stay in the market with a small account size is difficult. I think 1 contract is damn near impossible and 3 contracts is better than 2. At the moment i am using 2 because my account size is not big enough to trade 3 contracts.

If i used 3 I would do something like this:

-Going for break: enter 3 contracts, exit 1 at a move back to my perceived value, exit the second where i would enter the opposite direction if i wasn't going for the break, hold 3rd for runner and look for spot to add.
-Trading range: enter 3 contracts, exit one at my perceived value, exit another towards opposite end of range, reverse at opposite end of range. Unless i luck into a break then will switch to the previous.

 

[havaiana]

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

I'm using 1 min charts, at the moment, but not trading for just a few ticks. Think i will extend out the range i'm going for by a tick, which should filter out some losses. This will be the second time i have extended the range, the first time didn't help much. This time the increase in the R:R i will be able to go for should mean that i can also increase my stop by a tick, so will see how that goes. Hopefully this does the trick, because extending by another tick after that i think would put me in the middle of the moves of the next timeframe up and probably have a negative impact.

My main problem is that my win/loss ratio has been rubbish. If this doesn't work i will try the larger time frame. Just trying to keep active enough so eventually i can reapply for prop.

 

[havaiana]

My approach to short term trading.

This is just a quick rundown for anyone more in the beginning stage of how i am looking at the market and trying to exploit it. I'm obviously not an expert so if anything that i say is BS i'm sure the more experienced guys can point it out.

2 of the most common prop execises for trainees:
-Stack the orderbook with limit orders every x number ticks for the whole day. Discretion on stop outs.
-Enter every retracement of x number of ticks for a whole day. Discretion on exits

What these exercise show you is that both will make money in certain (and usually opposite) market conditions and both will lose money in certain (and usually opposite) market conditions. Just using them willy nilly wont make you money

First you need a way to determine what the market condition is, and/or what the the market condition could likely be
Second you need to work out what ranges are best to use for x and a way to exit both winning and losing trades with a high enough R:R and win % to cover transaction costs and still leave you with profit
Third when you work out how hard the first 2 points are, you need to work out the sort of things which will skew x, such as time of day, news, key market levels, correlations, DOM games, where are the stops and many more things
Fourth when you have made millions on your SIM account, go live and soon enough start the process again from point one (hopefully not down too much $), only this time you need to do each of the points better and more efficiently

Good luck and PM me the details of your method once completed and making money live. Thanks.

 

[Trembling Hand]

What are you trading?

 

[Gringotts Bank]

I think I've said before... but here it is again.

Confidence is very important and necessary for good trading. No confidence = no successful trading. No one is debating that. But it doesn't mean that confidence alone is sufficient.

To see the logic more clearly, substitute the word "confidence" in the above paragraph with "A good trading platform" or "A decent computer". See how logically senseless it is...

From your various posts, you read trading books, draw lines on a chart, program and backtest systems. If confidence is all you need, why do you bother doing any of that. Just close your eyes, buy 200 lots and stay confident.

Some were saying confidence is of no influence - so this paragraph is for them. A quick look through sporting history will show thousands of examples of skilled people who have suddenly and inexplicably 'dropped the ball' during times of low confidence. The skill doesn't disappear, but it gets overrun by emotion. Greg Norman blew many big titles and lots of prize money by missing shots a good amateur could have landed. Kournikova couldn't get a first serve in during a whole game at her worst. Her serving yips were legendary. Then there's the skilled traders who knew all the rules and blew up everything. Skill can be gained slowly over time, but emotions can change in a split second and cause havoc. Any sportsman (or professional) will tell you about how the ball bounces your way when your confidence is high, and how the opposite occurs too. Even very strongly ingrained skill sets can be totally ruined by a run of low confidence.

In my trading I can feel when confidence is running low and it will invariably show up as:

-- poor or incomplete fills on limit orders
-- a sudden widening of the spread on the very day my system is telling me to sell
-- an unusual lowering of buyer volume on the very day I'm due to sell

You say that I use TA resources a lot, which I do. I use these to create confidence. And then I trade from this confidence. If I was to teach my system to a clever guy who is not good with money, he would mess it up somehow. He'd find a way to ruin it. I myself have found ways! And it's a good system. So I actually do see confidence as sufficient in itself. If I could create confidence from scratch, I would, but it's very hard to do in oneself. But I have done an experiment where I attempted to create confidence in someone with no market knowledge - and it worked. When I say it worked, the results were well beyond what chance would have delivered in a very short time frame. I've posted this on ASF before.

From no BS trading:

I know a guy who made a million and lost it. I know another guy who made 20 million and lost a whole bunch of it. I know another guy who had several years of triple digit returns on a small fund and then put together a 100 million dollar fund and blew it all. These guys were great traders. They didn’t get lucky when they made money. They understood the game and played it very well. They didn’t get unlucky when they lost. They broke their own rules and started making stupid trades. They stopped waiting for high probability trades and started taking shots. They started trading too much size. They started holding positions much longer than normal. They started thinking, “it has to come back”.

Why did these guys who knew the markets and knew trading inside out, suddenly become so reckless? If you asked them I bet they wouldn't even know. These examples are not so much about confidence, but other emotions will be at play. Emotions drive behaviour.

 

[havaiana]

What are you trading?

MSCI Taiwan index. Mainly because the low tick value means i can trade more than 1 contract without risking too much for my account size and the volatillity is decent (at least compared to bonds)

 

[Trembling Hand]

MSCI Taiwan index. Mainly because the low tick value means i can trade more than 1 contract without risking too much for my account size and the volatillity is decent (at least compared to bonds)

I'm using 1 min charts, at the moment, but not trading for just a few ticks. Think i will extend out the range i'm going for by a tick,

There IMNSHO is your problem.

Expectancy = (Probability of Win * Average Win) – (Probability of Loss * Average Loss)

The easiest, well relatively easiest, way to get your expectancy positive is by working on your 1 in 10 winners that just blow the doors off all your small losses and hugely add to your avg win.

Getting in a trade and just taking the same old target IS the recipe for losing long term.

You can believe all the BS you want about discipline and confidence till your account is drained by the pros. What you have to be able to figure out and fast and on the minute by 5 minute basis is the stuff you have listed in your second last post.

Remember, support, resistance, range and trend are dynamic. As they shift so to should your approach (stops, targets and size)