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My experience - advice requested on methodology
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My experience - advice requested on methodology

  #1 (permalink)
Elite Member
Cardiff, South Wales
 
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My experience - advice requested on methodology

It would be great if I could get some advice on methodology on the ES.

I've been learning the PATS system this year, and while I understand it, I have had limited success with it. I SIM traded profitably for months, and then went live a couple of months ago with a $6k account, trading 2 cars with a runner. Account size not big enough I know, although it did give me a good learning experience.

My first few days were great. It was easy. I was pulling in 5-8 points a day with very limited losses. I was patient, I waited for my setups, took them, and they worked. I didn't like a trade, I closed it.

Soon afterwards though it changed, and I went on a downward spiral of losing day after day. The thing that changed it for me I think was having an expectation. As soon as I expected that I would make x per day I felt obliged to do so, and it became very difficult. I felt rushed into making x. I'd take trades because they were 'close' to a setup. They'd lose. I'd lose 8 points before the open, then make it back by following the rules later on.

As time went on I found it increasingly difficult to follow the rules. I did think for a few weeks that I should bail and go back to SIM, but didn't. Why should I go back to SIM when all I need to do is follow the rules to make it all back and get back on track? But day in and out I couldn't follow the rules, and I continued to lose money.

Now with a blown account, it's time to have a cold look at what happened and re-evaluate my trading. I am committed to making my trading work, however long and however many accounts it takes. The reason the account was blown (I think) really comes down to the fact that I didn't run it as a business, how a business should be run, and I was not able to follow the rules. I was interrupted, didn't give it my full attention, didn't keep a journal. These are things which I know I need to work on and change before I'm live again.

But what I am wondering is, is a price action trading system for me, or will I be better off by spending more time studying auction market theory and volume profile and building a system around that? PATS has a 2 point stop and 1 point TP, sometimes with a runner, a 0.5/1 ratio, whereas an AMT/VP system may have a 3 point stop for a trade which could include the range for the day or longer, with better risk/reward ratios.

My guess is that I should work on the reasons why this isn't working for me now, master the PATs system until I am profitable, and then move on to amt/vp once I've cracked it, but it would be great to get some advice on it.

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  #3 (permalink)
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rossco View Post
It would be great if I could get some advice on methodology on the ES.

I've been learning the PATS system this year, and while I understand it, I have had limited success with it. I SIM traded profitably for months, and then went live a couple of months ago with a $6k account, trading 2 cars with a runner. Account size not big enough I know, although it did give me a good learning experience.

My first few days were great. It was easy. I was pulling in 5-8 points a day with very limited losses. I was patient, I waited for my setups, took them, and they worked. I didn't like a trade, I closed it.

Soon afterwards though it changed, and I went on a downward spiral of losing day after day. The thing that changed it for me I think was having an expectation. As soon as I expected that I would make x per day I felt obliged to do so, and it became very difficult. I felt rushed into making x. I'd take trades because they were 'close' to a setup. They'd lose. I'd lose 8 points before the open, then make it back by following the rules later on.

As time went on I found it increasingly difficult to follow the rules. I did think for a few weeks that I should bail and go back to SIM, but didn't. Why should I go back to SIM when all I need to do is follow the rules to make it all back and get back on track? But day in and out I couldn't follow the rules, and I continued to lose money.

Now with a blown account, it's time to have a cold look at what happened and re-evaluate my trading. I am committed to making my trading work, however long and however many accounts it takes. The reason the account was blown (I think) really comes down to the fact that I didn't run it as a business, how a business should be run, and I was not able to follow the rules. I was interrupted, didn't give it my full attention, didn't keep a journal. These are things which I know I need to work on and change before I'm live again.

But what I am wondering is, is a price action trading system for me, or will I be better off by spending more time studying auction market theory and volume profile and building a system around that? PATS has a 2 point stop and 1 point TP, sometimes with a runner, a 0.5/1 ratio, whereas an AMT/VP system may have a 3 point stop for a trade which could include the range for the day or longer, with better risk/reward ratios.

My guess is that I should work on the reasons why this isn't working for me now, master the PATs system until I am profitable, and then move on to amt/vp once I've cracked it, but it would be great to get some advice on it.

Trading 2 contracts with a $6000 account is really too much risk when starting out (as you suspect). Using 2 contracts with a runner and 8 tick stop, 4 tick profit is also too much risk when starting out. Even Mack recommends completely exiting the trade at 4 ticks for beginners. You need to be a very good trader to make PATS standard rules work. A better strategy would be 6 tick stop and 6 tick profit if the market is swinging large enough to go for 6 ticks. Also if conditions are right go for swings.

The market is always changing character, sometimes trading PATS style is very successful and easy other times its tough going. As a trader you need to recognize these changes and modify your trading or stay out when things are not working.

Only you can decide if price action trading is right for you as opposed to other methods. You need to explore different methods to find what feels right for you. I myself tried just about everything but was drawn to the simplicity of PA trading, it just feels very right for me. When using other methods I was always afflicted by the paralysis by analysis syndrome. Just avoid jumping from one method to another continually, that is a losing traders habit.

Seems you have some psychological issues to overcome, good luck.

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  #4 (permalink)
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I recently commented on another similar thread. This member had only been trading SIM but I suspect they will end up down the same path of a blown account at some point. New traders don't want to think they will fail but 95% of them do.

https://futures.io/traders-hideout/34099-es-s-p-500-futures-contract-mini-altern...et-opens.html#post457954

Seahn made some great points. Using PATs style of trading is great, but the market is an ongoing adlib performance and when you think you understand the script, it changes in an instant.

I harvested a lot of information from PATs and only you can tell if it is for you or not. Just because in the end it was not a success for you, doesn't mean it won't be in the future.

I put my own spin on it and ended up creating my own indicators that try to mimic price action entries. But, in the cold light of day, trading is hard.

There are some great trading methods on here. For example, this from PerryG from what I understand is successful providing you are prepared to put the work in.

https://futures.io/elite-circle/18081-perry-s-method-continuation-advancement.html

Good luck,

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Last edited by JonnyBoy; December 8th, 2014 at 03:49 PM. Reason: Spelling
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  #5 (permalink)
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PAT's system is ok but there is a better way

Pat uses tick charts. I started out with tick charts exclusively and now I trade the five minute and 1 minute time frames. There is a lot of information that you get in time based charts that is not visible in tick charts. You should check out Lance Begg's and Al Brooks methods. I use both.

I believe price action alone is does not provide enough information as to market direction. Market indicators such as Tick Charts, Advance/Decline, and Volume Spread charts are indispensable.

Al Brook's E-Learning course was an revelation to me especially his discussion and book on trend reversals.

You will need to develop your own system that you have complete confidence in. What works for me or Pat, or Al Brooks, or Lance Begg may not work for you.

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