I just want to say that this is such a helpful thread. When I was researching a system and how to trade futures when I first started about 6 months ago, I wish I had found this thread. The system I was designing with soft code was sort of along the same lines as this. I traded for about 4 and a half months and ended up blowing up an account due to not following rules or restrictions that I had set for myself. I'm currently recovering psychologically from my loss, the account was not worth much but I focus on percentage PnL rather than actual amounts. I'm just now revisiting the system and am using your trading style to give the improvements I'm making to my system some direction. Please keep this thread going, and from a true fan, good luck!
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Thank you. I highly appreciate your comments. While I realize that duplicating someone's system without having all the same components and experience is virtually impossible, I think there are some basic principals that one can use and adapt. Here they are:
1. I have the belief that there are conditions of the market that can be observed that often result in repeatable events. I have found these moments from seven years of observing price movement on a variety of time frames simultaneously. In other words, I am watching 2 range, 1 minute, 5 minute charts at the same time and observing the correlation between order flow, momentum and price action patterns. There are times when I can very accurately assume that price will move at least 10 to 40 ticks while maintaining a very small risk. Those are the moments I wait for and act when I see them arise.
2. Support and resistance can occur on all time frames and can affect price movement even on small timeframes. For example there are areas visible on a 2 range chart, that you can't see on say a 5 minute chart. I map out all areas and color code them according to how significant I feel they will be. For example, if I think an area may cause a bounce ..but not a dramatic reversal, I code it yellow. Stronger areas are red. I make sure before I trade, these areas are mapped out. I even pay attention to those that are occurring in real time. The less areas of resistance and support in front of a target, the easier price will move towards that target.
3. It is not enough to have some price action setups..You must understand the conditions they work best in. You need to know the prevailing conditions of the day and be aware what's happening in real time. Pullback trades work well in certain conditions..Range reversals work in certain conditions....Know your setups, know the type of volatility they work best in and only trade those setups during those moments. This eliminates excessive speculation and guessing.
4. Avoid trading in "BattleZone Areas." There are areas that could be extreme levels of support and resistance or highs or lows of the day..etc..where the sellers and the buyers are waging war. I used to try to play a lot of breakouts or reversals in these areas and get stopped out a great deal of the time. Now I like to see what appears to be proof that one side has won the battle..and find a way to time in an entry.. Getting into these trades too soon makes one assume more risk than my system calls for.
5. One must be aware of their emotional weaknesses and formulate measures to correct them. I found that taking two to three losses in a row would cause me to shift and start trading erratically. I found ways to finally get this under control. One thing that helps is to verbalize a commentary of price movement throughout the session..including how I am feeling at that moment. I will verbalize that I am "tempted to jump back in" or that I am angry..etc. This way, those feelings aren't silently in my head influencing me. I might talk about how the market is choppy and that it's "Ok not to trade right now..and that there is no hurry to go back in and win my ticks back..and that I will win in the long run." The idea is be in total control at all times. One moment of erratic behavior can have devastating consequences. Been there, done that!
Failure is not an option
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I agree with you a 100%. which is why I wrote this in my last post : It is not enough to have some price action setups..You must understand the conditions they work best in. You need to know the prevailing conditions of the day and be aware what's happening in real time. Pullback trades work well in certain conditions..Range reversals work in certain conditions....Know your setups, know the type of volatility they work best in and only trade those setups during those moments. This eliminates excessive speculation and guessing.
Failure is not an option
The following 6 users say Thank You to lancelottrader for this post:
Lance, I just would like to say, that I always read your posts with constant nodding with my head. Sometimes I feel that you write down my thoughts. Thank you for the great thread!
To a beginner trader, I’d also recommend these:
a) Don’t try to look for a magic system, forget holy grails entirely. Not even Lance’s system. As Lance wrote, it is impossible to duplicate a system, one can boil down his very own method, tailored to his experience, personality, and risk taking ability. What works for Lance, won’t work for you, but of course you can learn a lot from his method. Use his thoughts as bricks to your system. (Once I had a mentor in option trading, I copied his system entirely. I had a terrible loss on a trade, and I asked him if he took a trade around that time. It turned out, that on the very same day, at the very same price he took exactly the trade I took. Surprise! He won on the very same trade, simply he had more balls to sit…)
b) Be patient. Very patient. It will take years to become succesful, nothing beats screentime.
I’m happy that you made it, and you definitely in the 5th stage of „5 steps to becoming a successful day trader”. Unfortunately, it seems it’s happening as it’s written in the 5th step: „you grow out of the chat rooms and find a few choice people who you converse with about the markets without being influenced at all”, I’m sorry to see you post less.
May the probability be with you
The following user says Thank You to daddy for this post:
I would like to thank you again, your thread have a lot of value for me. I'm so glad that you succeed like that and I'm very happy for you
Since couple week I start to work on my self, my mind and my way to think in trading. I decide to stay away from forum and some chat to focus on me to know me better. I like the way you trade and it was a system like yours I always want to trade. So I was able to find my way base of what you have show us since you have start your system. Now it work, my system work, but I know I still have work to do in my mind. I start to figure out that all this time the problem wasn't the system ,the market but ME. The way I think are the source of my problem, my attachment for my result are the reason of my failure. I have read so many times, to just trade your system leave your emotion on the side etc... But I didn't understand the reason behind that.
Now I'm able to close my computer when I reach my daily stop loss, witch is for me a really good start. I work hard to be able to accept my losing day and move on. When I close my computer I don't feel angry anymore but more peaceful. I said to my self:"Tomorrow it a other day..."
BUT, I still have problem when I'm winning, I got difficulty to continue trading when the market is on my way, I start to be afraid (I really feel it on my body, it really uncomfortable) to lose what I have done but on the same time when I saw what I had leave on the market I'm angry about me because I should trade my system don't think about my result just trade my system
I know that you have work on this issue and you're able to take a lot of trade when the market are on your side. If I can ask you a question, what are the trick, the work or the mind set you use to overcome the fear of continuing trading on yours really good days?
Thanks for your help, you have share a lot of value insight in your thread, the way you think make me remember some of great people who fallow there path when other discourage them...
Thomas Edison, the light...(try 3000 times before the first good one)
Graham Bell... invent the phone
Roger Bannister... first man to run a mile under 4 min,
Albert Einstein... E=mc2
and many more...
All people said to them it was IMPOSSIBLE, but they fallow there Idea and they because great person
Thanks you to fallow your idea...
When you want to succeed as bad as you want to breathe, then you will be successful
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