Weekly income from trading - is it possible?

[MRC & Co]

I think that is discipline taken way out of context

I am not talking about sticking to something you dont like.

I am talking about having the psychological discipline to stick to something you know works, without altering to try and increase expectancy.

Here is a quote from the famed Gary Smith: "My losing months result not so much from being out of synch with the rhythm of the market, but from psychological miscues, which could include anything from fear of pulling the trigger to over-trading". - hence, psychological discipline. He did not following his trading plan within these months, despite KNOWING it had been effective nearly every month for several years! This man LOVED and BREATHED the market, much as many here do. Inclusive of myself.

IMHO

You may not need as much discipline, because it may be inherent in your genetic make-up, but for many discretionary traders, discipline is still a vital tool in the game.

 

[kingie_d]

I think both of you are correct.
The beginner at anything (trading, sport, their job etc) needs discipline.
They need discipline to learn (how to trade their plan, how to kick a footy properly, how to re-loom those electrical wires etc) both theory and practical. The discipline part is important until someone gets really good at doing whatever it is that is important.
That, I think is where motivation comes in and takes over. When someone is really good at their thing, then discipline isn't so important because they will do what they need to do naturally. They then need to motivation to become one of the 'elite' (traders, sportsmen, worker etc).
Combining the two is what will make someone really good at what they do and continue to improve.

my

 

[korrupt_1]

Imagine that 500 people read and tried to copy TH's method of scalping the SPI, exactly. The market is not thick enough for everyone to do this.

wouldn't that add liquidity to the system? for example, if TH's method showed a BUY signal, all 500 would buy on that signal, the inevitable result is that prices will be pushed higher?

 

[prawn_86]

wouldn't that add liquidity to the system? for example, if TH's method showed a BUY signal, all 500 would buy on that signal, the inevitable result is that prices will be pushed higher?

There would not be enough liquidity in the market, hence driving prices hgher as you suggested.

This would then cause the 'system' to not work, due to the fact that the market has changed, due to the vast number of people using the exact same method.

All theoretical of course

 

[MRC & Co]

There would not be enough liquidity in the market, hence driving prices hgher as you suggested.

This would then cause the 'system' to not work, due to the fact that the market has changed, due to the vast number of people using the exact same method.

All theoretical of course

Yes, fallacy of composition I beleive.

Check out Black-Scholes formula example.

Though, doubt it would ever happen. That example of TH seems to have sent the pollyanna on a rampage (sorry Chops, had to steal that one)!

Even if everybody knew TH trading methodology, I'm sure the application would be various.

 

[Trembling Hand]

Even if everybody knew TH trading methodology, I'm sure the application would be various.

Yes. In my little old opinion my method is of little importantance to everyone. What thinking works in my head will make another persons head schitzophrentic. :nuts:

But here it is. Take a good dose of the do no harm line as far as money management goes and religiously keeping and tracking results to ALWAYS have something to work on. Either repeating the positive or avoiding the negative. Very simple charts patterns mostly 1 min candle. also 5 min and 15 min for bigger view (and helps to fill up my 4 screens)

Absolutely nothing fancy about the chart patterns. Simple HH, LL, Support & resistance etc. AS far as indicators BolBands and a couple of EMA(20& 50) & Volume, very important.

BUT with all that said I can trade 30 or more times without looking at a chart. Probably my biggest edge is reading the DOM. I would think I have had close to 8000 hours staring at the DOM. How do I put that in writing? All the patterns I have internalized and the reactions to them are automatic. Without any angst over the action needed. Catch a falling knife no prob, Standing in front of a freight train, often. take a 0.5 R loss hundreds of times a day. A 2 R loss yep about 10 times a day.

And that is back to my brussels sprout v choc ice-cream example. You ain't going to get anywhere if you haven't found your niche. If I had to tell you or make you watch a DOM for 8 to 10 hours a day for years then trading off the DOM isn't for you.

Hope you can see that my method is of little importance to anyone else. There is no secret just basic trading rules & practise.

 

[MRC & Co]

Brilliant TH.

K.I.S.S rules. Including finding your niche and becoming an expert in your given market(s). Tracking results important also.

That one post basically summarises most books out there from expert traders.

 

[dojara]

well thanks Trembler for the input as I have been really trying to get good at this scalping ever since I had my first taste of it back in late jan when it was easy to scalp the SPI as everything was dropping like a tonne of bricks. Made a few grand while demoing this method on my CFD provider in a few hours then lost it all and more over the next few days. But I caught the bug and feel this is a style I'm suited to as I have loads of free time .

Now I'm trying to learn all about basic price patterns like you mentioned here mainly HH/HL and support/resistance. I've been following the popular AHG method at http://www.elitetrader.com/vb/showthread.php?s=&threadid=99283
which is all about riding intraday swings using basic HH/HL patterns. Thats how I'm scalping now just waiting for HH/HL or LH/LL and breaks of support/resistance.

I've also read up on trading off the DOM using the ratio of bid volume to ask volume as discussed in the 'Scalping My Way with ACV' thread over at
http://www.elitetrader.com/vb/showthread.php?threadid=68098
This is based on the premise that the market tends to trade towards size. ie if the ratio of volume in the ask is about twice that on the bid then you would initially expect price to go down since there 'appears' to be more selling pressure. However the reverse happens in that the market will move towards the higher offers since the markets exists to facilitate trade so since there are more volume on the ask then price will have to rise to maintain liquidity.

Anyway enough of me blabbering just would like to know if you can shed some more on how you trade off the DOM alone. I know this is asking too much but like I said this would suit my trading style or like your analogy this would be my Rocky Road icecream. Even if you've internalized most of it can you still atleast walk us through just some of the things you were looking at the time you made a trade. I can understand you not having any angst over pulling the trigger every time since you've already proven to yourself the system works so you can more easily catch a falling knife if it turns out that way. I also dont think if you share this to others it would eventually take out any edge it has since your really trading off noise and if the method works on something as liquid as the S&P500 e-minis then it really would have a very minimal impact even if hordes of traders are taking the same signal.

 

[Trembling Hand]

Made a few grand while demoing this method on my CFD provider in a few hours then lost it all and more over the next few days. But I caught the bug and feel this is a style I'm suited to as I have loads of free time .

For true scalping you have to use the Futures to get fills. You simply cannot develop a system scalping CFDs, your are down right from the entry. I would say if your system Target is any less than 10 times the spread you are at a big disadvantage using CFDs. (in spite of the CFD example I posted ) That is if you are really scalping. I would classify scalping as a target of 1 to 3 times the spread and a stop = to the spread.

I've also read up on trading off the DOM using the ratio of bid volume to ask volume

I'm not so interested in whats sitting in the DOM but rather what is hitting the market and what is being pulled. Just a note my avg time in a SPI trade is less than a min & 25 sec on the HSI. And that is greatly skewed higher by just a couple of keepers.

 

[Timmy]

Probably my biggest edge is reading the DOM. .

You can't trade like that.

Catch a falling knife no prob,. .

You can't trade like that.

Standing in front of a freight train, often,. .

You can't trade like that.



Now, given that you are, it is great to see see someone succeeding against the commonly accepted (and rarely questioned) 'wisdom'. I hope to join you there someday TH. Good to see you beating all the can'ts (he types, carefully checking the spelling).

 

[Trembling Hand]

Now, given that you are, it is great to see see someone succeeding against the commonly accepted (and rarely questioned) 'wisdom'.

There are lots of good R:R setups trading against the accepted 'wisdom'.

Good to see you beating all the can'ts (he types, carefully checking the spelling).

LOL

 

[alwaysLearning]

Its possible.

That gives you 6 mths to read as much as you can, learn as much as you can about a few stocks and papertrade for a while.

what does papertrade mean in this context? Is one not still trading by electronic means such as etrade.com.au etc?

Or does papertrade mean that you are not using a computer software program to track stocks in more detail so that you see changes to stock in real time?

 

[Trembling Hand]

what does papertrade mean in this context? Is one not still trading by electronic means such as etrade.com.au etc?

Or does papertrade mean that you are not using a computer software program to track stocks in more detail so that you see changes to stock in real time?

It means taking pretend trades. Can be as simple as writing down your entries & exits on paper or using a real time simulator.

 

[alwaysLearning]

It means taking pretend trades. Can be as simple as writing down your entries & exits on paper or using a real time simulator.

Cool, thanks for the explanation.

I'm going to play with pretend trades for at least a year before I get down and dirty with investing my hard earned wages.

There appears to be a lot to learn hence the one year time frame.

I especially want to get good at analysing charts and more of the maths side of things along with finding out what the best predictors are for success for a given trade.

 

[Sean K]

This thead seems to have concentrated on 'trading', which is fair enough considering the title.

Let's not discount the possibility of making an income from 'investing' also.

I have been a full time 'investor' for 3 years with no signs that I will not be able to continue as is, into the future. I think YT is probably in the same situation, and will not need to find a 'real' job from here on in. It will depend on your personality I feel as to which type of business (investing or trading) works for you, but you may need to try both to find your niche.

 

[tech/a]

This thread seems to have concentrated on 'trading', which is fair enough considering the title.

Let's not discount the possibility of making an income from 'investing' also.

I have been a full time 'investor' for 3 years with no signs that I will not be able to continue as is, into the future. I think YT is probably in the same situation, and will not need to find a 'real' job from here on in. It will depend on your personality I feel as to which type of business (investing or trading) works for you, but you may need to try both to find your niche.

Carrying on from this Kenna's.
TH once posted his scatter chart of results.I asked what his results were like if the outlier very high R/Rs were removed.
TH admitted that without these the results were very average.

The trick really is to get these outlier moves.
25secs to 1 min in the market sounds glamorous,exciting and maverick but the reality is that this is not where the money is to be made. Sure risk is absolutely minimised but in the end reading Market depth will have very little impact on a larger outlier move.

On to your point about investing.
I closed T/T (my own account) last year and those returns on investment were substantial.If I were living solely off of the income Id still be going---bored to death but still going.

Each have their way of trading the markets as we see them,and from what we have gained and are gaining as experience.
Nothing is necessarily more right than another.(If its profitable).
As Howard Bandy says we must find our own Objective Function---mines not infront of a screen reading M/D but more so set and forget conditional orders,something I never knew was viable till recently.

 

[Trembling Hand]

Carrying on from this Kenna's.
TH once posted his scatter chart of results.I asked what his results were like if the outlier very high R/Rs were removed TH admitted that without these the results were very average.

Very Average are your words. It was still $500 bucks profit with out the big hits after brokerage in a day, is that very average?

The trick really is to get these outlier moves.
25secs to 1 min in the market sounds glamorous,exciting and maverick but the reality is that this is not where the money is to be made. Sure risk is absolutely minimised but in the end reading Market depth will have very little impact on a larger outlier move.

I would disagree. Unless of course taking a couple of thousand out of the market reliably day in day out on avg, no matter what the market is doing is not making money. :

Buy the way concentrating on one method doesn't exclude participating in another ie momentum trading or investing.

 

[Timmy]

risk is absolutely minimised

taking a couple of thousand out of the market reliably day in day out on avg

I think these two points are intricately linked.

Each have their way of trading the markets as we see them,and from what we have gained and are gaining as experience.
Nothing is necessarily more right than another. (If its profitable).

Spot on there Tech.

 

[professor_frink]

Carrying on from this Kenna's.
TH once posted his scatter chart of results.I asked what his results were like if the outlier very high R/Rs were removed.
TH admitted that without these the results were very average.

The trick really is to get these outlier moves.
25secs to 1 min in the market sounds glamorous,exciting and maverick but the reality is that this is not where the money is to be made. Sure risk is absolutely minimised but in the end reading Market depth will have very little impact on a larger outlier move.

Where would you say the money is to be made then tech?

 

[tech/a]

The money is made from R/R and frequency.
The aim is to increase R/R (minimising loss is important in the overall calculation of return to risk over many trades),and increase frequency.
If you can increase frequency of outlier moves then you'll have the "Holy Grail"
Volatility becomes your friend.

Let me explain this a little clearer.
If TH can find 200 moves of 1 tick in a day then he's happy.
If he could find and trade 190 moves of 1 tick and 10 of 10 ticks or more
he'd be happier.
Frequency may dictate that your only going to be able to trade as TH does taking a tick or 2

So

Higher R/R
Increased Trade Frequency
Then Increased Capital on each trade (Or number of contracts)
Then add leverage (which you already have with Futures)
Then Compound and use profits.
This maximises return.
Really this is what we should all be aiming for.

TH
"Average" compared to when they are included.