NexusFi: Find Your Edge


Home Menu

 





Trading When to call it quits? Oil Trader


Discussion in Psychology and Money Management

Updated
      Top Posters
    1. looks_one xylem with 13 posts (1 thanks)
    2. looks_two RielA with 7 posts (6 thanks)
    3. looks_3 grausch with 3 posts (0 thanks)
    4. looks_4 DrewDown with 3 posts (0 thanks)
      Best Posters
    1. looks_one Hulk with 6 thanks per post
    2. looks_two Pariah Carey with 4 thanks per post
    3. looks_3 Big Mike with 2 thanks per post
    4. looks_4 RielA with 0.9 thanks per post
    1. trending_up 8,961 views
    2. thumb_up 37 thanks given
    3. group 13 followers
    1. forum 42 posts
    2. attach_file 0 attachments




 
Search this Thread

Trading When to call it quits? Oil Trader

  #21 (permalink)
 
Tymbeline's Avatar
 Tymbeline 
Leeds UK
Market Wizard
 
Experience: Intermediate
Platform: Tradovate
Broker: Tradovate
Trading: MES, MNQ
Frequency: Several times daily
Duration: Minutes
Posts: 644 since Apr 2015
Thanks Given: 2,342
Thanks Received: 1,054


xylem View Post
With regards to my setups/EDGE. Trading order flow is quite subjective.

But trading outcomes are not: they're entirely objective and quantifiable.

Do you have - at least - the results (somewhere, for yourself - I'm not suggesting you should post them here) of 200 consecutive trades made on a sim, which show a clear net overall profit? (That's not too much to expect, after 6 years, is it?). If you don't, then clearly you're nowhere near ready to trade with real money.


xylem View Post
What is an easy trade?
A trade that I feel I have to take and has a lot of volume and excitement with it. A trade that is a good opportunity. Low hanging fruit.

Do you have actual, statistically significant evidence that "a lot of volume" is an outcome-determining factor, overall, or is that a guess/feeling/instinct?

If you do, then you'd presumably want to incorporate a volume requirement as a filter in your method/system?

If you don't, then it sounds like you need to research and test that, objectively, before deciding whether or not to continue?

Reply With Quote

Can you help answer these questions
from other members on NexusFi?
The space time continuum and the dynamics of a financial …
Emini and Emicro Index
Are there any eval firms that allow you to sink to your …
Traders Hideout
Better Renko Gaps
The Elite Circle
NexusFi Journal Challenge - April 2024
Feedback and Announcements
ZombieSqueeze
Platforms and Indicators
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
61 thanks
Funded Trader platforms
38 thanks
NexusFi site changelog and issues/problem reporting
26 thanks
GFIs1 1 DAX trade per day journal
19 thanks
The Program
18 thanks
  #22 (permalink)
xylem
LONDON UK
 
Posts: 60 since Nov 2014
Thanks Given: 20
Thanks Received: 13


RielA View Post
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.

Interesting ideas.
I believe in market auction and volume profile principles.
I like the trades best when the market is imo at an now or never area.

EG price has just broke down from that high value consolidation. Now it will either flush down for the forseeable future or this is a shakeout. SO a long position is gonna work now or never.

I like the way you talk about context but im not sure I fully understand it.
A setup has a million context factors to it.
I like opening drives, closing drives as I can predict there will be some momentum in them periods and when a setup occurs around these times I am more likely to take it.

Reply With Quote
  #23 (permalink)
 RielA 
Winnipeg, Canada
 
Experience: Intermediate
Platform: Sierra Chart
Trading: ES/ZB
Posts: 106 since Apr 2015
Thanks Given: 94
Thanks Received: 167



xylem View Post
A setup has a million context factors to it.

Exactly why we need a strategy to determine what's relevant to our trades or not.

A setup should fit within the context that your analysis has defined for you. The more flexible and transparent the analysis the better we can adapt our setups to a changing market environment.

It sounds to me like you are doing to much at once. Refine your analysis, develop context and keep things simple. From there you can focus more on managing your money and your mindset.

Reply With Quote
  #24 (permalink)
xylem
LONDON UK
 
Posts: 60 since Nov 2014
Thanks Given: 20
Thanks Received: 13

So in your example, presuming you are a profitable trader can I ask what one of your setups is and how specific you have it?

My journalling process should start to smooth out my setup list as I describe each trade and break them down into categories that I can more clearly quantify

Reply With Quote
  #25 (permalink)
 RielA 
Winnipeg, Canada
 
Experience: Intermediate
Platform: Sierra Chart
Trading: ES/ZB
Posts: 106 since Apr 2015
Thanks Given: 94
Thanks Received: 167

I have three general setups: a breakout trade, a pullback trade, and a fading trade. I determine a long/short bias using the VWAP and trade location using the current sessions' Developing Value Area + Volume Profile.

i have trades occurring when prices are above the DVA, prices inside the DVA and when prices are below the DVA. Depending on where there trade is in accordance with the VWAP determines the trade as trend or counter trend.

So when I record a trade..

a) Type of trade (Breakout, Pullback, Fade)
b) Location (DVA/Profile)
c) Directional Bias (VWAP)

This is how my setups are recorded and categorized. I also record and track the types of the exit strategies I use with each setup. This allows me to note any patterns of specific setups and exit combinations that can be particularly profitable.

This is not a trading system, only a portion of one. How I trade the setups, manage my positions and the context of the market at the time of trading is a big part of making it all work. I keep a handwritten journal that I can jot down notes about those concepts, there are too many variables to categorize that side of my trading as it is more subjective.

Some contextual concepts i use are: level 2 price action, cumulative delta, correlation with other markets, price as its trading to daily/weekly highs and lows, previous days' value area, price compared to the opening range as well as the first hours' high and low. These are all things that i've found important to follow that help me trade.

Reply With Quote
Thanked by:
  #26 (permalink)
 
lasecondababele's Avatar
 lasecondababele 
London, UK
 
Experience: Beginner
Platform: NinjaTrader
Broker: TSTcombine
Trading: CL, ES, FESX
Posts: 214 since Oct 2014
Thanks Given: 182
Thanks Received: 375

Hi, I've been using Pete's tools for three months, so I'm relatively new at this, but after having reviewed his materials a couple of times, here's my take on your setups.


xylem View Post
Setup 1. Exhaustion.

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.

These are fast, hard to catch counter-trend moves, even seeing strong absorption & capitulation you're trying to catch a reversal. You'd be better off to wait for a LH/HL and take a continuation trade. Doesn't come from me, these tips are in the Jigsaw course.


xylem View Post
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.

Another counter-trend setup.


xylem View Post
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.

These are my favourites. Look at cumulative delta to spot lack of urgency (market orders) in the pullback. More often than not you won't have icebergs, but tests of previous levels with sudden silence from the side pushing the pullback should be enough.
Also I don't see mentions of context, but I'm sure it's embedded in how you set your bias.


xylem View Post
Setup 4. OrderFlow Scalping

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.

These are the set-ups where I personally have the worst W/L ratio. Because they happen in no man's land, where the market spends so much time, it's too easy to mistake HFT algos farting 500 lots on a 2 tick range for something meaningful. But hey, your mileage may vary.

Visit my NexusFi Trade Journal Reply With Quote
  #27 (permalink)
 KelvinKing 
Johor Bahru, Malaysia
 
Experience: Advanced
Platform: NinjaTrader
Broker: NinjaTrader Brokerage, Continuum
Trading: FESX, FGBL
Posts: 87 since Apr 2013
Thanks Given: 21
Thanks Received: 148


RielA View Post
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.

That is a very good point that you mentioned. Context is a very important part of the setup.

I also use order flow to trade, and I don't really use charts any more, but I still pay attention to context. Just to give you a different perspective of how I use context within order flow itself.

I'll use one of your setups as an example. You mentioned that your first setup is exhaustion. So, you look for a few things, 1. low volume test or 2. Iceberg order. OK, that's perfectly fine. But, you have to also be aware that, seeing an iceberg alone, means nothing. It could simply be some guy that was long from the low and he's just liquidating. So now, you have to bring in some context. What was happening as the market was trading up into the iceberg order? Was it very strong, were buyers aggressively hitting into the offer, was they any selling as each price went from offer to bid? Are the bids stacking up? (showing a sign that buyers are still willing to support the market), when you see the iceberg order, are the bids pulling off? Is there any back ticking (sellers actively hitting back into the offer). These all fall under "context". Every time I trade, all of these are constantly being processed in my mind. I'm not just looking at what's happening at the individual price, I'm looking at how it's getting there.

I hope this makes a little bit of sense... if not, I'll be happy to clarify..

I also see that some of your favorite trading instruments are CL, YM and NQ... They certainly move very fast, but I find the order flow very difficult to read. I would stick to the Bund until you are profitable trading that. Reading order slow is also something that you need to acquire a very intimate relationship with that market you trade, so I would advice to just stick to thick markets like the Bund, or Treasury Notes.

Good luck with your journey

Reply With Quote
Thanked by:
  #28 (permalink)
xylem
LONDON UK
 
Posts: 60 since Nov 2014
Thanks Given: 20
Thanks Received: 13

I started my DOM trading with the BUND and was fairly successful, IE I could trade it better than I can trade other instruments (ES, Forex etc)

Maybe I should revisit it.
I have however found CL to have a lot of oppurtunities in it.

Glad to hear some of your orderflow ideas.

Reply With Quote
  #29 (permalink)
 KelvinKing 
Johor Bahru, Malaysia
 
Experience: Advanced
Platform: NinjaTrader
Broker: NinjaTrader Brokerage, Continuum
Trading: FESX, FGBL
Posts: 87 since Apr 2013
Thanks Given: 21
Thanks Received: 148


xylem View Post
I started my DOM trading with the BUND and was fairly successful, IE I could trade it better than I can trade other instruments (ES, Forex etc)

Maybe I should revisit it.
I have however found CL to have a lot of oppurtunities in it.

Glad to hear some of your orderflow ideas.

Well, seems like there's your answer right there.

You knew you could make money trading the Bund, but then it was too slow and wasn't sexy enough. So you moved over to trade CL, which gave you tons of opportunities (i.e. reasons to fire off trades). But honestly, having traded CL for over a year myself, I have found that most 'opportunities' were nothing much than just 50/50. After that, I switched over to trading the 10yr notes, and have not looked back. Sure they are hell of a lot slower as well, but I could actually read the order flow and react to the price action.

Slow and steady is the name of this game. If you're profitable on the bund, trade that, and don't get distracted by all the glitz and glamour.

Gd luck!

Reply With Quote
  #30 (permalink)
AlexTA
Estonia
 
Posts: 3 since Jul 2015
Thanks Given: 9
Thanks Received: 0


On which markets do you trade?
If you are a flow trader, can you see the full book? I mean, do you have access to level2 that displays the full book. Eg. in the US markets, you are only shown a part of the book, there will be trades coming thru that you can recognize from the t&s, but you would not have seen the orders in level2. This is a huge disadvantage. On more illiquid markets, flow trading should be more profitable due to your ability to see the full level2 and lack of algos. Algos are also a big part of trading that are designed to make money from you. Eg. you try to put best bid, then they overbid you, you raise your bid until someone sells to you, only to find out that all the other bids were canceled and oops, your -500.

Reply With Quote




Last Updated on August 13, 2015


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts