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6 questions regarding psychology and techniques
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6 questions regarding psychology and techniques

  #1 (permalink)
Elite Member
Hubei, China
 
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6 questions regarding psychology and techniques

Hello everyone,

I'm Aaron from China, a beginner with 6 moths experience on US stock. I'm focusing on day trading because I have only about 3 hours to trade everyday, otherwise it will be too deep night in China, and I have a job in daytime.

I have been looking around in futures.io (formerly BMT) for a while, and found a lot of useful information and people are really helpful here.

After my 6 months trading, now I have a loss of $700 in my 28k account. In my opinion, I'm luky that I learned a lot about trading techniques and mental ability from the relative small loss. I trade at 100 shares to minimize the potential loss, and I was just trading FB, as it's volitaile. Now I can usually profit $20-$50 in my 2-3 hours trading time, but small loss occurs from time to time.

I summerized 6 questions that I encountered, hope anyone could share his/her idea to help me and others with the same feeling.

1. Choice of Day Trading Stocks: I was just trading FB, because it is the only one that I find easier, as the price is waving almost everyday. But I was wondering how to find the others. QQQ seems to have a much narrower oscillation zone in terms of ticks. Is that better because safer? Any idea about how to choose the stocks to trade?

2. I'm using the price action to trade, waiting the price movement to break through resistance or support. I find it's doing well. But the chance of break is not easy to find. I feel it's like fishing, you see an opportunity to get fish, and all you shoud do is to wait for the good time to pull the rod. Am I right? For one stock, the opportunity occurs 2-3 times during a day, but if we have several stocks on the watchlist, it would be much more profitable, yes?

3. False break, sometime I can feel that after the price has moved through the reisitance or support, it's losing momentum. Anyone feel the same way? Should I get out with little profit or even, Or I should wait and see if the price touches my stop loss?

4. I think impatience is popular around newbies. I always enter or exit a trade too early, get threw out with stop loss or lose big part of the movement. But sometimes I force myself to stay calm, but lose the opportunity to catch a breakout or give back my profit as the price do really comes back. How can I keep a balance here?

5. I suppose that indicators are supportive, to make a trade safer. Some people say that too many indicators would be confusing and useless. But some trainning video shows that experienced traders have a lot of windows monitoring many kinds of indicators. Are these indicators necessary to make profitable trade?

6. After watching the price moving for several months, sometimes as the price approaching resistance or support, I have a feeling about wether it will break or not. Do experienced trader develop some kinds of feeling about the market? Like driving, at first, you just get nervous and panic, longer you drive, easier to predict other vehicules possible direction. Am I right?

Thank you in advance for sharing your ideas!


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  #2 (permalink)
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  #3 (permalink)
MATrader
Prague Czech Republic
 
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Hello Aaron,
I am not really a proficient and profitable trader (am flat overall) and I do not trade stocks (well not in the literal sense) but I will try to give you my opinion:


tshunhu View Post
1. ...Choice of Day Trading Stocks:

I do not trade stocks and have no clue how to choose them. However, intraday I trade only one index and it takes hell a lot of my focus.


tshunhu View Post
2. ...the chance of break is not easy to find. I feel it's like fishing, you see an opportunity to get fish, and all you shoud do is to wait for the good time to pull the rod. Am I right?

If you are not a scalper or HFT, you are absolutely right. Trading is about patience and waiting for the best. I have heard several times that it is even boring when you finally break through...


tshunhu View Post
For one stock, the opportunity occurs 2-3 times during a day, but if we have several stocks on the watchlist, it would be much more profitable, yes?

It depends on how much focus you have to pay to find your "setup". Sometimes it can be disasterous if you watch more than one instrument. What about multiple positions for larger profits?


tshunhu View Post
3. False break, sometime I can feel that after the price has moved through the reisitance or support, it's losing momentum. Anyone feel the same way? Should I get out with little profit or even, Or I should wait and see if the price touches my stop loss?

I definitely feel the same way. However, the next questions are related to your market, your posistion sizing and money management. If you trade multiple position you can close some of it as soon as the market loses momentum and see what happens only with your reduced position.


tshunhu View Post
4. I think impatience is popular around newbies. I always enter or exit a trade too early, get threw out with stop loss or lose big part of the movement. But sometimes I force myself to stay calm, but lose the opportunity to catch a breakout or give back my profit as the price do really comes back. How can I keep a balance here?

Thanks for this one. This is the only (no offence meant) question of a progressing trader.
It is not caused by impatience, it is caused by various emotions that you have during trading and every symptom you describe is widespread and vastly experienced. It is caused by fear, hope and greed.

No one can answer this question, you have to answer it for yourself. You have to find out what is keeping you out of balance in such situations. You have to find out what emotions are "moving your hand" to click the mouse button.
You can read and get many advice but if it is not directed to the root of your emotions, it will not help.

If you were to ask me if I recommend you to pursue trading as a career, I would say Absolutely not. During the years I have been trying, talking with others and reading I have concluded (and it is only my opinion) that if you do not have a mentor from the begining who is willing to go through all of your ups and downs untill you reach whatever your trading objective, you are going to spend literally years by searching for the way how to crack all of it. In the final stage it gets to searching for a way how to crack your brain. And it either stops here, or breaks through.

This is the first question that brings you to the topic of human psychology. It depends on you if it is the last one or if you are going to ask more and more of such questions (yourself and others) and maybe finally find the answers.

I wish you that you find it fast because honestly, any time I read similar question, I can feel my own suffering and believe me or not, the feeling is not an easy one. That is also the reason I decided to try answering your questions.


tshunhu View Post
5. I suppose that indicators are supportive, to make a trade safer. Some people say that too many indicators would be confusing and useless. But some trainning video shows that experienced traders have a lot of windows monitoring many kinds of indicators. Are these indicators necessary to make profitable trade?

From my experience, they usually do not monitor indicators. They usually monitor several correlated or inversely correlated markets, maybe NYSE TICK and then maybe one or two custom indicators. But those are secondary. Experienced traders usually focus on a pure chart and DOM.


tshunhu View Post
6. ...Do experienced trader develop some kinds of feeling about the market? Like driving, at first, you just get nervous and panic, longer you drive, easier to predict other vehicules possible direction. Am I right?

You answered your question yourself

Have a good one.
Hana


Last edited by hadamkov; July 20th, 2014 at 07:34 AM.
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  #4 (permalink)
Trading for Profit
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Futures Experience: Intermediate
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I'd disagree with this ...


If you are not a scalper or HFT, you are absolutely right. Trading is about patience and waiting for the best. I have heard several times that it is even boring when you finally break through...



You'll never see that there the best till afterwards, you've got to dip your toe in the water then decide when to pull it out.

You get a pull back, it'll either continue that way or rebound back, if you do nothing you miss the rebound back potential, if you go long then you risk it continuing, so get it and if no rebound / further weakness then get out and if it rebound you should make a good profit.

If you keep sitting it out, you'll eventually get annoyed of all the trades you've missed, get bored and make bad trades to try to compensate for the missed trades.

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  #5 (permalink)
MATrader
Prague Czech Republic
 
Futures Experience: Beginner
Platform: S5 Trader, Jigsaw, SeasonAlgo, Sierra Chart
Broker/Data: IB/OEC
Favorite Futures: Eurex Futures
 
hadamkov's Avatar
 
Posts: 489 since Nov 2011
Thanks: 859 given, 391 received

@Turveyd,

Thanks.
By the best I mean something that is according to your trading rules compared to ignoring some of your rules or frontrunning your thinking out of boredom/fear/greed/whatever.
I mentioned HFT and scalpers purely because of the speed of their operations.

Successful trading.
H.


Last edited by hadamkov; July 20th, 2014 at 11:52 AM.
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  #6 (permalink)
Elite Member
Hubei, China
 
Futures Experience: Beginner
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Posts: 271 since Jun 2014
Thanks: 304 given, 165 received


hadamkov View Post
Hello Aaron,
I am not really a proficient and profitable trader (am flat overall) and I do not trade stocks (well not in the literal sense) but I will try to give you my opinion:



I do not trade stocks and have no clue how to choose them. However, intraday I trade only one index and it takes hell a lot of my focus.



If you are not a scalper or HFT, you are absolutely right. Trading is about patience and waiting for the best. I have heard several times that it is even boring when you finally break through...



It depends on how much focus you have to pay to find your "setup". Sometimes it can be disasterous if you watch more than one instrument. What about multiple positions for larger profits?



I definitely feel the same way. However, the next questions are related to your market, your posistion sizing and money management. If you trade multiple position you can close some of it as soon as the market loses momentum and see what happens only with your reduced position.



Thanks for this one. This is the only (no offence meant) question of a progressing trader.
It is not caused by impatience, it is caused by various emotions that you have during trading and every symptom you describe is widespread and vastly experienced. It is caused by fear, hope and greed.

No one can answer this question, you have to answer it for yourself. You have to find out what is keeping you out of balance in such situations. You have to find out what emotions are "moving your hand" to click the mouse button.
You can read and get many advice but if it is not directed to the root of your emotions, it will not help.

If you were to ask me if I recommend you to pursue trading as a career, I would say Absolutely not. During the years I have been trying, talking with others and reading I have concluded (and it is only my opinion) that if you do not have a mentor from the begining who is willing to go through all of your ups and downs untill you reach whatever your trading objective, you are going to spend literally years by searching for the way how to crack all of it. In the final stage it gets to searching for a way how to crack your brain. And it either stops here, or breaks through.

This is the first question that brings you to the topic of human psychology. It depends on you if it is the last one or if you are going to ask more and more of such questions (yourself and others) and maybe finally find the answers.

I wish you that you find it fast because honestly, any time I read similar question, I can feel my own suffering and believe me or not, the feeling is not an easy one. That is also the reason I decided to try answering your questions.



From my experience, they usually do not monitor indicators. They usually monitor several correlated or inversely correlated markets, maybe NYSE TICK and then maybe one or two custom indicators. But those are secondary. Experienced traders usually focus on a pure chart and DOM.



You answered your question yourself

Have a good one.
Hana

hadamkov, Thank you very much for your answer!

As I keep trading everyday and reading books and articles abour trading, I find all the 6 questions I asked before are actually the same one. I think the key to be profitable trading is all about dealing with the uncertainty of market, by using both trading and psycho/mental skills, like AL BROOKS wrote "sailing in the gray fog".

I'm still learning that. I just got break even of my account last friday, counting from a little more than 6 months ago when I began to trade. Last night I got too confident and greedy, had a $520 lost, I managed to calm down and ananlyse the market and get back all the lost with 45$ profit.


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