The transition to Futures trading

[barney]

I'm glad you posted this. Very glad.

I am very much leaning towards this thinking now also.

I have found that analyzing market direction is my strongest point.
My biggest weakness that creeps in is thinking that I have to nail almost every move. Because of this flawed thinking and lack of perspective, I have incorporated the hedge.

It distorts the initial (correct) analysis.
I start seeing things that aren't in the chart because I'm in a "hedge" trade.
It causes confusion.
Not only does it cost me precious points, but it also often causes me to reverse my thinking and exit my good trades in the opposite direction!

Another cause of this confusion is watching the screen too closely. For me, I trade best when I do my analysis, back my position, take my trade, move stop to BE and then WALK AWAY and set alerts or profit take orders.

I'm amazed at how often watching the screen too closely costs me. I start second-guessing and that's when I look for a hedge trade that isn't there.

Last night, I took a trade in the first 10 minutes (I think 3 minutes actually), and I went and had a nap, set my alerts and checked the trade about an hour later to see that it was well in profit. Had I remained at the screen, I likely may have thought the first "stalling" of the move was signalling that price was about to come off and then put on a stupid hedge.

Bolded a few bits and pieces for reference Pav ..... Your points pretty much sum up my own findings

 

[tech/a]

Pretty common to all of us.

Look for patterns
Outlier volume and range.
Everything else is noise.

Setting a trade
And shutting down the screen
Is a wise move.

 

[Newt]

I reached the end of Al Brooks' 3rd book (Reversals) recently.

It struck me in his final "bring it all together" section that he goes out of his way to emphasise beginners have to ONLY trade with the broader trend until (if) profitable.

Anyway, Brooks mentioned the case of a friend how had been trading for many years with mixed success, but when he took out all his countertrend scalps, only then was he profitable. In other words, the trades you DON'T take and the time your DON'T spend 2nd-guess can definitely be important.


When you've only been at it <12 months, I like to think any screen time spent with trading real (minimal) funds is educational though.


Its pretty quiet in these halls lately. I'm missing the chat!

 

[>Apocalypto<]

I reached the end of Al Brooks' 3rd book (Reversals) recently.

It struck me in his final "bring it all together" section that he goes out of his way to emphasise beginners have to ONLY trade with the broader trend until (if) profitable.

Anyway, Brooks mentioned the case of a friend how had been trading for many years with mixed success, but when he took out all his countertrend scalps, only then was he profitable. In other words, the trades you DON'T take and the time your DON'T spend 2nd-guess can definitely be important.


When you've only been at it <12 months, I like to think any screen time spent with trading real (minimal) funds is educational though.


Its pretty quiet in these halls lately. I'm missing the chat!

Newt,

i review every month... there's one common pattern with me. the less i trade the better my results are... the more trades i have the lower the return to losing overall for the measured period.

so i agree less more thought out trades better my figures are. Over trading is imo a big killer and opens up the bad things of no patience no discipline creating trades instead of waiting for them ect.

 

[pavilion103]

Agree 110%

 

[fiftyeight]

I have been playing around with the SPI the last few weeks and have a few general questions.

Why are opens more all over the shop generally than the rest of the day?

And once the market closes who is trading? Why are they trading after close? If you can trade why are more people not?

 

[tech/a]

I have been playing around with the SPI the last few weeks and have a few general questions.

Why are opens more all over the shop generally than the rest of the day?

And once the market closes who is trading? Why are they trading after close? If you can trade why are more people not?

There are 4 participants maneuvering
(1) Buyers
(2) Sellers
(3) Covers of shorts
(4) Covers of longs

All reacting to European and American over night trading.

Off market trading does happen and is thinly supported during European and American opening times.
As such you'll find it pretty gappy.
Market movement is generally in line with anticipation of reactions to overnight markets.
The SPI is a pretty small futures market --- while the S&P is open the SPI will be ignored.

 

[fiftyeight]

Thanks for that.

Any particular reason these participants need to trade the open and not say 30 mins or an hour before? If they for example want to sell and they can why wait for a specific time?

Not enough volume before the open until the SPI traders get to work and start trading?

 

[tech/a]

Thanks for that.

Any particular reason these participants need to trade the open and not say 30 mins or an hour before? If they for example want to sell and they can why wait for a specific time?

Not enough volume before the open until the SPI traders get to work and start trading?

Yes the larger participants need volume

 

[fiftyeight]

Long 6811

What do I do now, really should of studied exits haha

 

[tech/a]

Study really fast!

 

[Jasonm2310]

Guys I need your help.. I seem to consistently be able to pull little scalp trades out of the market, with a pretty high win rate of 82.05%( my style being - 85% DOM, 10% chart levels and 5% VSA methodology). My problem is I keep wiping my account back to breakeven or slightly negative due to not being able to cut my losses quickly. When I look at my stats I know that the best option would to be cut my losses around the same value as my winners but I can't seem to physically be able to pull the trigger when I'm in the trade. Has anyone ever experienced this and are there any suggestions on how to overcome this mental block?

 

[fiftyeight]

Newb myself but I am on the lappy at the moment.

Is part of your high win rate because you let it move so far against you then taking small wins. How many of those small wins first went way against you?

 

[tech/a]

You have two choices
(1) pull the trigger quicker to negative exits.
(2) pull the trigger slower on your positive exits.

There is a third.
(3) Complete an exhaustive test series varying entries/exits/risk parameters.
In other words add some systematic rules.
When you know you have a positive expectancy to implement.

 

[Jasonm2310]

Thanks Tech I may try to implement a combination of 1 & 2, although easier said then done . Most of the time they are usually little pockets that don't always have major upside and if they do I'm usually out kicking myself for exiting. Fifty Eight - My winners mainly go straight in my favor with the odd split second tick back. Just frustrating when I feel I may have an edge but keep going back to square one.

 

[barney]

- My winners mainly go straight in my favor with the odd split second tick back.

That being the case, I reckon most Traders would kill to achieve your Scatter chart You obviously know your DOM

 

[tech/a]

Your problem is very clear.
Try setting a 5 tick or so max stop
If the majority fly off with the odd
Back tick you should see a huge
Difference in drawdown from
Losers. Should cut it in half.
If you see pullbacks often below 5
Before turning around then you will need
To test to find the balance.

Why do you only close after a few ticks
What happens if you keep the trade on
For a few more?

 

[Jasonm2310]

Thankyou Barney. Tech -Appreciate the different perspective. I feel as though what I'm doing is micro so it has to be in and out, also I see the momentum stall/ size thicken so I quickly exit . There have been a few instances where it's taken off massively in my direction but also it has done the same for the opposite.

 

[tech/a]

Thankyou Barney. Tech -Appreciate the different perspective. I feel as though what I'm doing is micro so it has to be in and out, also I see the momentum stall/ size thicken so I quickly exit . There have been a few instances where it's taken off massively in my direction but also it has done the same for the opposite.

Yeh get that

Just saying add say 2 ticks to your average of winners
And cut 5 ticks from your average losses and you have a massive swing
Still micro I'd have thought.

Anyway let us know what happened.

 

[ThingyMajiggy]

Thankyou Barney. Tech -Appreciate the different perspective. I feel as though what I'm doing is micro so it has to be in and out, also I see the momentum stall/ size thicken so I quickly exit . There have been a few instances where it's taken off massively in my direction but also it has done the same for the opposite.

What are you trading?