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What will it take...really
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What will it take...really

  #1 (permalink)
 Vendor: protradered.blogspot.com 
NY + NY/USA
 
Futures Experience: Advanced
Platform: Ninja
Broker/Data: Optimus Futures- Rithmic
Favorite Futures: CL, 6E
 
Posts: 236 since Nov 2009
Thanks: 11 given, 1,267 received

What will it take...really

I wish I could sugar coat it for you and tell you everything you want to hear. The truth is that no one has the answer that will give you what you want from trading right now. Truthfully what you want right now is probably very unrealistic. What you can possibly achieve, if you are just starting out, right now is to not lose too much money. This would be the best most practical outcome your first year.
I wish I could tell you something else. The truth is that many will sell you the dream and tell you that you can do it. Yes, you can do it in an ideal world and under the most ideal conditions.
The reality for 9 out of 10 new traders is that you will most likely lose money steadily UNLESS you are willing to be extremely patient and willing to quantify continuing this venture by accomplishing and meeting clear milestone mearsurements.
So, the best I can offer is the holy grail. Here it is.... open your charts and stare at them for 6 months. Throw no more than 2 moving averages on them. Make one average fast, make one slow. Watch them for 6 months. Keep a notebook next to you. Write down the events you see when those two averages converge. Write down what price does. Keep a tally of events by description. When you start to see a recurring pattern, record the amount of time price fulfills the pattern for about 4 or 5 ticks. Call this event something.
Keep doing this for 6 months. Then, once you have some kind of statistical repeating patterns, start to trade them in sim. See if you can recognize them clearly enough to trade those events. Keep doing this. Build up a basket of events that you can clearly recognize and start to test trade them. The money management you devise has to be one that allows you to make consistent profits trading those recurring price patterns. The moving averages will help you recognize those patterns. But keep it simple as you can. There is no need for complication.
Well, that is it. After 6 months of observation defining what you see, spend 6 months test trading what you see as the most common outcomes. Once you have consistent positive results start to trade what you have learned with real cash and be willing to not make any money. Your first and primary goal is to not lose money.
After 15000 hours in front of the charts I can tell you that the simplest view is best, and that the money you make depends on your willingness to find a reliable high probability pattern to a defined target using what you learn. Then leverage is all you need.
A few words of caution.... beware of those that sell you using a method that trades 50 contracts. Ask yourself are you willing to accept that much risk right at the start? Beware of being turned into a cash cow. Do you really want to pay and pay and pay and be dependent and dependent and dependent on someone else? Beware of someone selling you a secret. There are none at this level of trading. Beware of reading too much, The market needs inventory and there is a lot of mis-information that helps provide losers for the market.
Well,,, I could go on and on, but I hope you get the idea.
Find someone whose trading you admire, and see if there is something you can learn. Most of what you can learn you can do on your own....it just will take longer.
One last thing.... treat this as a capital venture. Put a plan together and give it at least 3 years if you can and x amount of dollars. Make those dollars last. The best way to do that is to not trade until you know what you are doing and have put together a strategy that you have statistical facts for.

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  #3 (permalink)
 Vendor: protradered.blogspot.com 
NY + NY/USA
 
Futures Experience: Advanced
Platform: Ninja
Broker/Data: Optimus Futures- Rithmic
Favorite Futures: CL, 6E
 
Posts: 236 since Nov 2009
Thanks: 11 given, 1,267 received

What do you study first when preparing for the real market?


Set yourself a statistical performance level based on whatever methodology you use. For me, I am primarily a scalper in search of the bigger trade. This means I need a high win rate to first (scalp) target and can pick the point where I risk either earned income or unearned income on staying with a runner. Also, as a scalper, the method calls for an inverse 1:2 risk reward which can only be done with a high win rate to first target. In practical terms, I risk 10 ticks to make 4 ticks, but I make 4 ticks 10 times in a row on average. This also allows me to use leverage in creative ways not only to make money, but also as a way to recover quickly.
I am also very risk adverse...scared little rabbit, my wife says. Well, she exaggerates of course, or maybe she is talking about something else...? Anyways, I try to maintain a 1:1 RR as soon as possible and base my decision to remain or bail on the movement of price after my entry. Most of my trades are done using price location, price structure, price movement, and visual recognition clues supplied by a moving average pair and the nature of range bars. I am not a purist nor subscribe to any canned theoretical trading concepts, nor disagree with any. I trade what works for me as a result of eliminating what did not work for me. I keep it as simple as I need it it. Anything that does not directly influence my decision to initiate a trade, I have eliminated. After I enter into a trade - take a signal - I use the most immediate right edge of the screen to give me clues as to what I need to do next. The developing picture at the right edge in relation to any established static or dynamic event that happened to the left of the right edge determines the evolving probability. I give as much time and opportunity for price to fulfill the probable outcome of my trading strategies (the reasons why I took the signal) as is necessary until I recognize an exit pattern. The exit pattern can be with profit, or break even or loss. I prefer the profit, but welcome the break-even. I try to not take the loss unless necessary to control the size of the loss.
There is more to this.... but this will give you an idea of one way to study. Note I never mentioned specific signals...they are less than 10% of what you need. Almost any simple signal generating strategy will do. Just pick something and stare at it until it becomes familiar enough to define almost every event. I did mention something about money management or trade management. I also mentioned probability. You need this also. The resulting statistic is the application of these basic things plus the thing I most talked about...me.
You need to know as much about yourself while trading as possible.

So, first study yourself. You do this by keeping a detailed comprehensive trading journal. You study yourself via the inputs and outputs of the reporting and analyzing features of your journal.

Here is a way to get started:
Define why each trade was taken. Be specific. Name each similar trade event by the same descriptive name. You can call it trade A, but try to use something more informative. So below you may have 3 trade A, one trade b, and one trade C. Also define each exit. See if you can come up with the reason in technical terms as to why the exit was taken. Be careful to not use any future information, only the past. It may turn out that there was a lot more emotional consideration in your trading than you realize. You need to know this. Your journal will help you with this. There is nothing wrong with it. Just know it so you can use it positively in your trading.

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Last edited by Jaguar52; October 15th, 2011 at 11:47 AM. Reason: syntax
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