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Psychology and Money Management

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New to Futures, but Hitting the Wall

  #44 (permalink)

Brisbane Queensland Australia
Trading Experience: Advanced
Platform: Ninja Bullcharts
Favorite Futures: Stocks
Posts: 9 since Dec 2014
Thanks: 0 given, 13 received

n7ekg View Post
BRAVO!!! FINALLY, after 4 pages of posts, something actionable!

I am stunned that almost EVERY SINGLE post on this thread has offered well-meaning, but ultimately useless advice without a strategy.

"Have a plan/strategy". Pretty obvious, huh - but ultimately meaningless. That's like saying "have a plan" when someone asks "how do I drive from point A to point B?" No one has offered any sort of trading strategy until this post. Do *you* have a strategy that is consistently profitable? If so, why don't your enlighten your fellow struggling traders, and help them out? Remember, with the trillions of dollars available in the markets, this is NOT a zero-sum game. There's plenty of money available for everyone if they use a consistently profitable strategy. Don't believe anyone who tells you "if I tell you my secret sauce, that removes my edge/takes money out of my pocket". Nothing could be farther from the truth. It's like telling someone, "hey, the bank has a cash giveaway going on - just go down there and ask for form XXX, fill it out, and they'll give you money". How's that taking money from anyone except the big institutions and governments (who wouldn't notice it anyway)? Your 1-lot or 10-lot trade isn't even going to be noticed in the markets unless you're trading Globex on a thin market.

"Have discipline". Discipline to do what? Stick to a non-existent or losing trading strategy? Gotcha.

"See what works for you". Um, that's not how the market works. It doesn't operate on the idea of "what works for you". There are only three basic styles of trading: (1) swing trading, (2) day trading to targets, and (3) scalping. Pick one. In a market like the ES, where the ADR is relatively small, scalping can work well. On other fast-moving markets like CL and NQ, you will get killed trying to scalp unless you really know what you're doing. Day trading to targets like pivots or VAH/VAL (as the quoted post references) can work very well, but be aware that sometimes you'll see a market go outside value, try and come back into value, and bounce off VAH/VAL - don't anticipate. Swing trading is said to be the safest, but you have to have a larger account to handle the overnight margin.

I'll offer my advice. Configure your chart for a 3-tick aligned Renko - this works well in a lot of markets. Start from there, and experiment with anything from 2-tick to 10-tick. Put 2 moving averages on it - like, for example, a 5 EMA and a 34 EMA. You can either (1) short when price crosses below the 5 EMA and long when price crosses above the 5 EMA, or (2) wait for the cross, then the pullback to the smaller or larger EMA to enter the trade. Look to only take shorts when the 5 EMA is below the 34 EMA and pointing down, or only take longs when the 5 EMA is above the 34 EMA and pointing up, and see how that works. If you put those two moving averages on a chart, you'll instantly see where the entries are. Also try different non-time-based charts. A delta volume, volume, or tick chart can also work well. Try it in sim and see what you think. You can also use this for entries and VAH/VAL as targets if you prefer.

See how different times of the day work on your charts. Some times of the day you'll get chopped up - others, you'll catch a nice trend. Be careful trading after big trend days - they are often chop or ranging days. Not good to trade in until you get more experience. (But these can be great for trading moves between VAH and VAL, because non-trending markets tend to bounce between VAH and VAL.) Volume profile is a really, really good thing!

Another piece of advice. STAY AWAY from time-based charts until you have experience trading them! Price can move a long way in a minute, and moving averages on a time-based chart are horribly laggy.

As for sim trading, my personal rule in my trading plan is, if I lose 2 trades in a row, I stop live trading for the day, and go back to sim for 2 days until I've figured out what my problem was and fixed it.

One more thing: Be careful of order flow trading. As more and more people start using order flow in their trading, it becomes less useful, because the large institutions see what people are using, and adapt to it. If you want to investigate this sort of analysis, I would highly recommend Anna Coulling's book, "A Complete Guide to Volume Price Analysis". If you read no other book, this will help your trading immensely. It's cheap on Amazon. If you have a Kindle, it's even cheaper. You can also find the PDF online for free.

The only thought I can add to the above, as I am unfamiliar with the latest indicator provided, is that both Gann; and Wyckoff (when the latter produced his stock market course in 1930's) each suggested the chart reader needs to understand the changing forces of supply & demand within dull periods, as breakouts frpm dull periods are where the big money is made. This all depends on the trader's idealized interpretation of market price structure over longer periods. It is possible to work out likely break out directions within dull ranging periods using the right force of supply & demand measurement tools, but especially the measurements near the right edge of a dull period. Measurements or assessments of accumulation or distribution along the whole range of a dull period may not be useful for determining a likely breakout direction
I would also suggest that if you are a bar by bar chart reader that Anna Coulling's book, mentioned above, which is generally a very good read, mixes up the definitions of Buying Climaxes and Selling Climaxes compared to Richard D. Wyckoff's interpretations of the same.

Last edited by cmacdon; August 24th, 2019 at 03:55 AM. Reason: editing and clarification
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