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This sounds sort of like when I was younger and trying to have sex without losing my virginity. The "tighter" the stop, the less sex I was having. On the other hand, the more I held out (a bit) for more -- the more virginity I found myself losing.
Poop or get off the pot. Find a strategy that has a reasonable chance of making money and follow it religiously so you can work through your emotions of having real risk at stake. Over time it gets easier.
With regards to why I stopped trading live.
I felt I was losing money and so should go onto Sim to refine my orderflow techniques. The emotions I felt live were similar to how I feel on the sim.
With regards to my setups/EDGE. Trading order flow is quite subjective.
I have many scenarios that I like and I feel provide opportunity but I feel like they all blend into a mix of eachother.
I for instance could take a momentum trade based on iceberg price action, or I could take a momentum trade based on lack of resistance (where there should be resistance) price action.
Its a discretionary way of trading which is what ive developed. Ive seen many techniques in the market but never one that has worked/ worked for me. (maybe because the winning systems arent taught)
^ I see that there is some work to do there in that I should have Trade A Setup Trade B setup etc etc but discretionary order flow trading is a mess of different factors combined into one opportunistic environment.
With regards to the sex analogy I dont think just loosening my stops is going to help.
Today there has been some good opportunity in oil and I did ok. If i just wait for days like today Im sure I could make money. But being so inactive is difficult. I think I have to work on certain thoughts like:
"your not doing anything what kind of job is this"
"how are you going to earn money by just sitting there"
"1 trade a week - that wont make you enough"
Maybe if I really only take say 10 trades a week I can just take the low hanging fruit trades and up my size.
Confidence is something I lack at the moment though.
On another note, can I ask how many of the people that responded profitable active traders?
I feel like many traders are losers and some over many years.
In a way im glad that my post wasnt met with "hey me too buddy" etc but I was expecting more people like me to say the same.
Thanks for your responses, this feels like a good counselling session, but it is the psychology forum!
Discretionary order flow trading is extremely difficult to quantify after the fact WHY you entered a market. Although traditional simple indicators such as MA's have their limitations at least you can come back after the fact and know WHY you entered the market.
I tried discretionary trading simply based off the order flow and what I found is that at the end of the day / week I could not go back and explain why I took a trade other then to say "I saw something". If after 6 years
I have still incorporated order flow into my trading strategies but once I realized that most of the price movements in a day are random I now only look at the order flow in specific predetermined areas otherwise I would just get muddled up in my head.
For what its worth I got into trading 2 years ago and have mostly lost money. A few months ago I stopped trying to scalp. Learned a type A / B setup and have been profitable (went from sim back to live). Not the greatest track record by any means but it certainly feels like I am on my way.
Even if you trade order flow it is still necessary to be able to track your performance. The types of setups you listed are potentially objective enough to track if you include the right amount of context for your trades.
Objectify your trades to a degree where you can classify each setup and track its performance.
for example.. Determine a small set of criteria that you want to see when your iceberg order momentum trade is going off. Is there a required amount of size you want to see trade? When is that trade occuring in the session? Where is it occuring, near the open, high, low of the day, etc? Is this trade a long or short signal, determine your directional bias (objectively) at the moment and whether this trade is trend or countertrend?
Even with order flow there are ways to classify and quantify your trades so you can track your performance. If not then change your strategy so that you can because its imperative to know whats working or not and why. If you can never know that information you are just taking shots in the dark and thats no way to run a business.
These are my Setups from my trading plan detailed with some effort put into it. Defining ALL the variables still is difficult for me but maybe this gives some idea as to what I do or what Im missing.
Price has overextended by a very large amount 50+ ticks. At the highs/lows I am looking for either 1. A low volume test of new top. 2. Heavy Iceberg absorbtion. 3. Strong capitulation move uncharacteristic from the previous momentum.
Entry should be at the moment of 1 2 or 3 but if they happen too quickly find a low risk momentum area to get into the move.
Stop should have less than a $200 risk.
R.R should be at least 3.1
Trailing: After an impulse of 15+ticks in my direction I am looking for a pivot to use as my protective stop. Generally on these trades as they are big targets I am happy to take a first target and let the rest run at breakeven to give it room to get the 50+tick target.
Setup 2. Level Bounce
Price has preferably extended into a strong level. At this point I am looking for 1. A low volume test of new hi/low. 2. Heavy Iceberg absorbtion. 3. Strong capitulation move uncharacteristic from the previous momentum. Furthermore given this is not always so volatile a shakeout entry is always preferable.
Stop should have less than a $200 risk.
R.R should be at least 3.1
Trailing: After a first impulse target I am looking to use a pivot after a 6+tick impulse. Level Bounces are a lot more choppy and less potent than exhaustion moves so protecting profits is more important.
Setup 3. Momentum Continuation
Price has began moving with high volume or fast speed with higher timeframe alignment (not at resistance- with space above- With some reasoning behind the move).
Find an entry with low risk and take a fast 5+ ticks and let the rest ride to the next resistance area or until the momentum stays strong.
Entries will usually be a breakout with defined low risk <8 ticks. Or a pullback that has had either 1. A low volume test of new top. 2. Heavy Iceberg absorbtion.
Stop Should have less than $200 Risk
R.R should be at least 3.1
Trailing: After taking a first target I want to get breakeven as soon as possible. These trades are all about fast momentum so I dont want to be sitting in it leaving profits on the table. Tight trails as it goes in my direction. The potential target must be considered when trailing but a 10tick move off momentum is fine.
This setup requires VOLUME. Using either 1. A low volume test of new prices. 2. Heavy Iceberg absorbtion. 3. Strong capitulation move uncharacteristic from the previous momentum and 4. DOM sup/res IF!! The market is volatile and volumous we can trade using TIGHT stops and FAST targets. This is similar to momentum trading but usually happens on a news release or unexpected volatile moment where the direction is undecided. The key to this is using TIGHT stops and being Extremely Flexible in directional bias.
R.R should be 1.5/1
Stop should have less than $200 Risk
In regards to your setups I have a couple thoughts.
1) Trading Stops should not be measured in dollars. A $200 limit on a trade is a function of risk management and position sizing, both of which have no bearing on what prices are going to do. Our stops should be in accordance with our trades, so when an idea is not working we get out.
Determine how much points/time you have to risk to make that decision then size your positions to a $200 limit.
2) You have setups. Great. But what i am not seeing is a governing concept or principle that guides your strategy. By that I mean a way to read and analyze the markets where trading setups then fit into. As an example I subscribe to Market Auction Theory and that's how I see the market, I use Market Profile analysis and techniques to find opportunities. From there I use the Order Flow, like you, to work with setups that are all derived from those concepts.
Without a governing strategy we're just trading setups and we'll have no real idea of why something works or not. At that point we're just trading the probabilities of our setups with no real understanding of what/why those probabilities are.
IMO we all trade some form of momentum, fade, pullback, breakout setup. Its the specifics and the context that makes them all different. There is no edge in a setup without context. You get context by having a governing concept/strategy/principle (whatever you want to call it) that guides your trading.
