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Learning price action - how long, how many hours per day, how many pips
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Learning price action - how long, how many hours per day, how many pips

  #31 (permalink)
Elite Member
Dartmouth NS
 
Futures Experience: Intermediate
Platform: MC, MC.Net, NT, TWS
Broker/Data: IB / IQFeed / Kids
Favorite Futures: Forex, stocks
 
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Posts: 638 since Feb 2010
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Adamus View Post
I'm going to break your message up, hope you don't mind.


I'm going to start another thread relating to the bid / ask spread and what goes on there including not just the jitter that you see but whether there's anything that we chart traders might be able to import from the book ladder, especially if we're talking forex.

To me while I was watching some big pushes yesterday, the bid and the ask looked as though they were in fact one item, moving up or down without changing their spread. That surprised me. I'm not sure I fully understand what is going on there regarding brokers, liquidity providers, bulls, bears, etc.

Roger the new thread--will look it up.

As you may already be aware there are a number of ways to incorporate volume into NT's price panel.

Gomi published an impressive suite of tools (e.g., Gom Volume Ladder - Big Mike's Trading Forum) for instruments providing trade-by-trade volume (i.e., AFAIK not all features--especially cumulative delta--are available for Forex) and works best with (requires? ) true tick-by-tick data (e.g., IQFeed) as opposed to say IB's sampled data.

The VolumeProfile indicator built into NT builds a cumulative bid/ask volume histogram on the side of the chart (must rebuild every time the chart is refreshed).

jtRealStats prints an instantaneous bid/ask bar chart on the side of the price panel, although given occasional complaints in NT's output window there may be programming issues with the indicator.

As you say, yesterday was interesting for pairs involving the USD and EUR/USD bid/ask did look like they were glued together a lot of the time. I don't know for sure how either IB or IQ construct their feeds so don't know if zero spread means their sources are exposing "choice price" in the interest of moving as much of a currency as possible as quickly as possible, or whether it's an artifact of arbitrage among their sources, say. In the latter case if Bank X is offering EUR/USD bid/ask at 1.4142/1.4143 and Bank Y is offering the same at 1.4143/1.4144 then the feed might represent the situation as a "best spread" of 1.4143/1.4143.

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  #32 (permalink)
Elite Member
Dartmouth NS
 
Futures Experience: Intermediate
Platform: MC, MC.Net, NT, TWS
Broker/Data: IB / IQFeed / Kids
Favorite Futures: Forex, stocks
 
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Posts: 638 since Feb 2010
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Adamus View Post
Very interesting stuff, it gives me a lot of leads that I must follow up when I get on top of the things I'm dealing with now. I love your description of price as a probablility density. It seems every trader is marked by his background in some way and yours seems to give you possibly a unique style - I've not heard anything similar IIRC. I assume though that a lot of quants in banks are also using your approach, but I bet they don't trade it before they write their bots, therefore losing out on a possibly major advantage.

It's great that you've moved across to the EUR/USD.. Let me just verify the syntax here: when you say 'pip' do you mean the 4th digit after the decimal? I realised yesterday that I was probably confusing everyone I talked to by talking about forex 'points', so I changed my syntax to pips, following NinjaTrader, who refer to it like that and also to the 5th after the decimal point as the 'half pip' if it's there (e.g. 1.4375'5).

IMO instantaneous probability density serves as a decent mathematical analogue of the "landscape" inside a discretionary trader's head at any moment, and hence may lend itself to short time frame trading by bot.

I'll say more about this in my trading journal, hopefully later today.

I tend to use Points & Pips interchangeably (and so does NT AFAIK). For EUR/USD and other pairs I interpret 1 pip to mean 0.01% of the quote price (i.e., the 4th decimal place; e.g., the "6" in 1.4206'5). I understand for pairs involving JPY 1 pip is 1% of the quote (i.e., the 2nd decimal place; e.g., for USD/JPY the "2" in 81.12'5) although I've read this may vary for JPY between brokers.

As an aside for anyone who might not be aware, we need to keep in mind NT ATM (advanced trade management) strategies work in ticks (minimum price resolution) as opposed to pips. This becomes an issue if we set "Tools > Options > Data > Quote currencies (FX) in " to anything other than "Pip" (i.e., "HalfPip" or "TenthPip") since this setting determines how NT defines a tick and will affect ATM initial stop loss, profit target & stop strategy parameters.

In other words, if we want a 10 pip initial stop in our ATM strategy and "Tools > Options > Data > Quote currencies (FX) in " is set to "Pip" then the stop value is set to 10 (ticks). If say "Tools > Options > Data > Quote currencies (FX) in " is set to "HalfPip" then we need to set the stop value to 20 ticks (20 ticks = 20 half-pips = 10 pips).

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  #33 (permalink)
Trading Apprentice
NYC
 
Futures Experience: Beginner
Platform: T4
Favorite Futures: Oil, Euro FX future, Stocks
 
Posts: 7 since May 2011
Thanks: 1 given, 6 received

I am on a similar path.



Adamus View Post
I want to learn to trade myself (as opposed to automated trading). I figure I have the personality traits you need. I have equity enough in my account. And I control my day and I have a lot of related experience - I am a self-employed automated trader. Plus it would compliment my automated trading fantastically.

...

Quite an inspiring story especially for me, someone who is also on the same road. Reading your story, I felt like I was reading my own(which was the first article in my blog).

Social norm puts tremendous pressure on keeping us "normal", yet very often than not, the need of being normal "kills" who we really are, what we really want. Only when we go down the path of our own passion, we find meaning,energy,imagination and inspiration.

Especially, if the "kind" advice comes from our loved ones, it carries more weight due to its "good intention". Make no mistake, I would never doubt the love of my parents when they say :"you need to get a decent degree and get a safe corporate job and....". Yet, never forget "the road to hell is paved with good intentions." simply because my parents are not me. They tell me what THEY could see as the best option for me. However, they don't know the future either. They will never see exactly what I see in myself or how I truly feel. Therefore, I would only say "thanks" and continue with my journey. But I know at the end of the day they only want me to be happy. By pursuing my dream, I AM happy regardless the final result. It will be a bumpy road. That's what makes the journey interesting. So don't give up.

From a practical standpoint, there are many things that you might have done wrong. I guess many of these have been mentioned by others as well. By reading some of the threads, I found them very useful and encouraging. Here is a "training manual" I found extremely useful that categorized most of the flaws in your approach and more. A must read for a serious trader in my opinion. Enhancing Trader Performance by Dr. Brett Steenbarger

Good luck on your journey. I will be on the same road.

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  #34 (permalink)
Elite Member
London, UK
 
Futures Experience: Beginner
Platform: NinjaTrader, home-grown Java
Broker/Data: IB/IQFeed
Favorite Futures: EUR/USD
 
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teaze View Post
A must read for a serious trader in my opinion. Enhancing Trader Performance by Dr. Brett Steenbarger

Good luck on your journey. I will be on the same road.

I see Steenbarger's name a lot on the web, and I've used articles from his blog too. I'll get that book, thanks for the recommendations. Of course it won't be until I've finished Al Brooks Price Action Bar by Bar so it might be a while.

Funny but due to time pressure I just unsubscribed from the "Introduce yourself here" thread and so I missed your post. But I read it just now.

I wish you good luck too, until we meet on opposite sides of a trade!

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #35 (permalink)
Trading Apprentice
NYC
 
Futures Experience: Beginner
Platform: T4
Favorite Futures: Oil, Euro FX future, Stocks
 
Posts: 7 since May 2011
Thanks: 1 given, 6 received


Adamus View Post
I see Steenbarger's name a lot on the web, and I've used articles from his blog too. I'll get that book, thanks for the recommendations. Of course it won't be until I've finished Al Brooks Price Action Bar by Bar so it might be a while.

Just for your reference, price action is one component of our craft, an important one for sure. Enhancing Trader's Performance gives traders a road map of the entire journey.

If you finish that book first and get to specifics of any components such as market selection, strategy building, tool selection, entry, execution, price reading etc, you will understand the Al's material much better since you know how the pieces fit together.

Well, don't take my words for it. If you could, read one or two chapters first see if that makes sense to you. IMO, it will improve your efficiency.

My next item is in fact Al's book

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