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Newbie NQ trading question
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Newbie NQ trading question

  #1 (permalink)
Trading Apprentice
Salt Lake City, UT
 
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Newbie NQ trading question

Hi all,

I am new and I am trying to get into day trading with NQ, and have been practicing with market replay data. I am hoping to find some help and would be delighted if someone could take the time to help me out.

First, here are my goals:
1. Make $100 per contract per day. So, 5 points, but probably another 2 for commissions.
2. I can only trade until 9:30 to 10 AM Central time (can start early in the morning).

My questions are:
1. Is the NQ a good place to start as a newbie? I looked into ES, but some folks have said the ES can be difficult due to high automated traders.
2. I see a LOT of movement at 7:30 AM Central time. What do people think about attempting to be in a position at that time, with an appropriate stop loss?
3. I use 5,8 and 13 SMA, 13 Bar SD BB, 5-3-3 stochastics and a volume indicator. I essentially look at the 5 & 8 to cross the 13, and at the stochastics to be below the 20% and above the 80%. I also look for reversal patterns from watching PAT videos. Some days this does better than others. Am I using these indicators correctly? Or is it just a matter of practice?
4. Going back to the market times above, I see a lot of movement between 7:30 to 10:00 AM, but it is pretty flat after that, until 12 PM. Is trading only until 10AM realistic? Or should I stick it out past 12PM?
5. I look mostly at the 2 minute bar. Could this be hurting my trades? I see most people use the 5 minute bar. Also, during market replays, I speed it up to 10x (10 seconds per real time second). Could this also affect trading when I have to do it in real time?

Thank you so much!

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  #3 (permalink)
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On what basis do you think this method will give you an edge ?

Have you back tested it ?
What is the success rate ?

I would strongly suggest, you paper trade it first
Have an idea of the statistical success rate would even be better...

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  #4 (permalink)
Trading Apprentice
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I am not sure if I necessarily have an advantage. I am borrowing this strategy from an article on investopedia and from watching a numerous youtube videos. I have been trying this strategy in market replay data, with a little bit of success, but I have been getting caught in scenarios with high volatility, where many times I spot what I think is a reversal bar, which immediately fails. This is why I am reaching out for some help.

Thanks!

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  #5 (permalink)
Market Wizard
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rleplae View Post
On what basis do you think this method will give you an edge ?

Quick on the draw and always right on the money. I think you should put the guitar down and change your avatar.

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  #6 (permalink)
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I won't say anything about your trading system except that IMO a simple indicator system off a website is unlikely to work consistently for day trading. Make sure you paper trade it in real time for a while to see whether you actually have a chance of making it work before going live.

You will see that from a calendar Econoday Calendar : Economic Events and Analysis there is quite often news at 7:30am Central before the market opens. Sometimes it has a big effect, sometimes not. I wouldn't get in a trade just before an important announcement.

The markets tend to be busiest when both the US and Europe are trading. After the European markets close and the US lunch starts things tend to quieten down, but not always. Quite often the afternoons are less volatile and more ranging in nature. Markets are always changeable, it is just a case of being aware of what sort of market conditions are likely or happening in which ever period you are looking at.

You’re right about the difference of speeded up replay. Much easier to hold a sim trade for two or three minutes if it goes negative straight away, than to watch it in real time for twenty or thirty minutes. It also seems easier to understand the flow of a market when it is speeded up. But you do get the advantage of being able to watch lots of days of data.

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  #7 (permalink)
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matthew28 View Post
I won't say anything about your trading system except that IMO a simple indicator system off a website is unlikely to work consistently for day trading. Make sure you paper trade it in real time for a while to see whether you actually have a chance of making it work before going live.

Well, the article where I found that setup was specific for day trading. But after having done a couple of months of research, I have seen many people recommend EMA's and bollinger bands, with varying parameters. In fact, I have seen just as many people suggest that no indicator is needed at all. What do you recommend?


matthew28 View Post
You will see that from a calendar, there is quite often news at 7:30am Central before the market opens. Sometimes it has a big effect, sometimes not. I wouldn't get in a trade just before an important announcement.

The markets tend to be busiest when both the US and Europe are trading. After the European markets close and the US lunch starts things tend to quieten down, but not always. Quite often the afternoons are less volatile and more ranging in nature. Markets are always changeable, it is just a case of being aware of what sort of market conditions are likely or happening in which ever period you are looking at.

You’re right about the difference of speeded up replay. Much easier to hold a sim trade for two or three minutes if it goes negative straight away, than to watch it in real time for twenty or thirty minutes. It also seems easier to understand the flow of a market when it is speeded up. But you do get the advantage of being able to watch lots of days of data.

Thanks! This is kind of what I was looking for. What do you think about the NQ vs ES for beginners?

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  #8 (permalink)
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Stay away from the ES your best bet is to focus on NQ or YM.
You need to add some context to your setups. Start with a daily chart and hourly chart and plot areas where price consolidated or broke out from the prior few trading days. Now once you have those levels identified you can proceed to drill down with a 5 or 2min chart it really doesn't matter one for 3 weeks and then switch to the other for 3 weeks see which provides you better results. I would also recommend you trade with the idea that you are allocating at least 5k for each contract traded. All the indicators you listed are nothing more than visual cues so use them as such. Look for patterns near your levels and use those areas as a basis to place a stop loss order when you enter a trade. Use an ATR in the first couple hours in the AM to come up with a reasonable size stop loss to place a bracket order on your DOM. If you follow everything I have just shared with you you will get better results than what you are probably currently getting. Over time as you prove you can change or tweak this to suit your own strengths or weaknesses. One can be profitable with a strategy that is roughly 50% accurate over time using proper risk management and sufficient capital per contract to weather losing trades without losing an entire account that's all you need. Avoid systems and strategies for sale that claim 70%+ success rates most likely they cannot achieve those results

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Hi planetmoto why you recommend stay away ES. What about using price action? I'm new to trading as well. Jason

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zaruski View Post
Well, the article where I found that setup was specific for day trading. But after having done a couple of months of research, I have seen many people recommend EMA's and Bollinger bands, with varying parameters. In fact, I have seen just as many people suggest that no indicator is needed at all. What do you recommend?

Thanks! This is kind of what I was looking for. What do you think about the NQ vs ES for beginners?

At the moment I am not trading live, not making consistent real money, so I am happy making general suggestions but avoid giving actual trading advice.

I think trading is a very difficult and also a very personal thing. If you could take a poll, of everybody who was actually profitable, and see how they traded I imagine they would all be different. I remember not too long ago being in a chat room/squawk radio chat for an interview with a former floor trader who was one of the largest in the ES pit during its heyday and had successfully transitioned to screen trading. He showed a picture of his charts and some guest login person who obviously hadn't realised his trading history started offering advice about how much clutter he had on his charts with all the indicators he used. One quite often hears that new people start off adding lots of indicators then as they get more experienced they start to take them off. Then you have others who talk about 'trading naked' like the pros as if you get a prize for having the best looking chart with no indicators on it, and they think that that is the secret to being profitable. So I do think it is horses for courses. People use what is comfortable to them but I imagine in general most people who are profitable probably reduce the number of things they look at as their competence increases, where as people who aren't doing well are always looking for something new to help them filter out losses.
Regarding Bollinger bands, moving averages etc, and all that sort of technical analysis has been around for decades so I think it might be useful to some to help with deciding on context or directional bias, but trying to use them for a green light/red light system that tells one when to buy or sell is unlikely to work. That was the sort of thing that the first computerised back tests were data mining and optimising years ago for the best indicator combinations and settings.

As to whether the ES or the NQ, some people like slower thicker markets and some like faster thinner markets (thick and thin as in how much volume transacts at each level on average before price changes, and how many orders are sat in the book at each level). The equity indexes have a reputation as a faders market. Other markets have reputations for trending but those market characteristics also change over time.

Sorry I know I am answering your questions with more questions, or avenues for exploration, but I refer you back to my first sentence.
My only advice is that trading is incredibly difficult. It can sound simple, buy or sell, set targets at three times your risk, win 50%, lose 50%. Kerching. Unfortunately it is very unlikely to be that simply. Be prepared for a lot of time and effort. And bear in mind the statistic that the vast majority of retail traders aren't profitable which means that most people on the forums aren't making consistent money either, self proclaimed experience isn't necessarily a guide. Forums are great for ideas but it is very easy to be bombarded with lots of ideas and suggestions and constantly be changing your markets and methods and in effect taking your learning back to zero and restarting again and again. Better in my opinion to spend some good time at the beginning doing some reading and investigating and finding a methodology and market type that you understand and actually makes logical sense to you and then sticking with that and persevering and working to improve yourself and learn that method. Then if necessary only changing one thing at a time after a lot of logical consideration. Also remember you want to be consistent so practice on sim with the lowest number of contracts you can trade then go live with the lowest number of contracts you can trade so if it goes badly you lose as little as possible. You are not trying to make loads of money really quickly, just make a little consistently. Once you prove you have an edge/positive expectancy ( https://futures.io/traders-hideout/42670-question-edge.html ), and have developed a confidence in your method and yourself, then you increase size and actually try to make money.

Just my thoughts on a quiet Saturday. Hope it helps in some way.


Last edited by matthew28; July 15th, 2017 at 01:09 PM. Reason: clarity
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