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Primary source of income: how many have made it?
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Primary source of income: how many have made it?

  #431 (permalink)
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wldman View Post
a daily goal but that alone is seldom the reason to cut off trading activity. I agree with the idea that you have a winning method or you don't...that you can trade or you can't. I usually have other things that I'd like to move on to, things that trading well allows me to do. I do think that new traders or that guys struggling with consistency could benefit from hitting a daily number and then reviewing each trade and set-up. I think that helps with confidence. I also think that many of the daily goals are anemic... based on a products trading range and the leverage that is typically applied.

I wonder, what is the metric that guys who have daily goals use to determine those goals?

See my post above (#430) about the metric I used. Regarding why one would use that goal as the reason to cut off trading activity, the reason is discipline. My experience is that when one's discipline starts to break down in one area, it breaks down in all areas, with disaster the ultimate result. The important thing is to have a set of rules carefully thought out in advance and stick to them. No new rules set during the trading session! You could have a rule that if you hit your goal by, say, 8 am, a second incremental goal is put in place with its own profit and loss parameters, but that rule has to be part of a game plan thought out long in advance.

"You don't need a weatherman to know which way the wind blows..."

Last edited by jstnbrg; November 9th, 2011 at 01:26 PM.
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  #432 (permalink)
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The reason I set...

daily goals now is that I just don't care to or need to sit here all day. Sometimes when the tape is active I do, other times I want to go fishing or play baseball with the kids. If I traded like I used too I'd trade the european session and the US session till 11 am central or so. (a 12 hr day, or so) I would just rather do other things. So I guess daily goal is not the best term to use. Once I hit my number I am free to leave is probably a better way to describe what I do.

So that is consistent with your mention of the construct being a personal thing...because it works for the trader. However I do not agree with a target profit number that percipitates a quitting point out of fear of the give back...that is IMO an idea for losers...but if it works to help build confidence, who am I to judge?

Daily goal as a focus point...maybe that is better?

I mean if you are making money and you quit because of banking a small number isnt that the wrong psychology? Shouldnt that dynamic be quit when you have crossed a losing threshold? It used to suck when I would take profit because it was there while watching losers grow to behemoths because I was right and the market was wrong. Kill the losers little when YOU can still defeat THEM. Let the winners run, right? I typically trade with three units, the first of which is off at a primary target, the second of which is triggered out by any one of a couple conditions or changes to the price action and the third unit remains in place a la welles wilder SAR until the contr signal happens or the original stop loss is triggered.

Interested in other opinions, thanks all for commenting. DB

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  #433 (permalink)
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JetTrader View Post
I agree with almost everything you said, until you typed that line above.


We spend so much time searching for that 100% perfect system, that we often times forget about the natural tendencies and dynamics of the market in relationship to the trades we make and our reason for being in the business in the first place - which is to walk away from every trade with profit that is inline with what the market will yield.

Jane, is on her way to becoming a full-time trader, while her counterpart who was every bit her equal, will probably blow his remaining $5k, less than a month later.

Very good point.. I believe you're right on..

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  #434 (permalink)
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Balance of time and money

In regards to profits and time spent. This is what works great for me
If vol and price action are confirming my trading plan and everything is lining up, I max my size
I trade full size after the open and sometimes the last hour. Because the monentum will allow me tight stops.

I try to mentally chart my actions and scale my size to the probability and potential profit of that trade.
For example: If at the open we traded up off 3 consolidation levels higher and didnt print over 20k vol on 2min chart. Then I would only short half position. If it broke out upward again (cover quickly) and at the next level I will put on full size.(if my qualifications are met).
This and cutting losses asap has made me profitable at least 4 out of 5 days a week.
To tell you how simple and powerfull this is. Since the latest 1500 point rally started from the low. I have only "shorted" almost every day (thats all I do) and made a profit everyday except for 3 days.(those losses were small)
On the day that the dow was up 400 at the high. I had stayed up all night, shorting key levels, stopped out at six different levels, until finally the last hour I made all those small losses back plus $500. That was the most stupid thing I've ever done. But if I hadn't have started small, I would have had to give up.
Thats what works for me
Thanks

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  #435 (permalink)
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Trade full time - Y
Primary source of income - Y
Over $100k/yr - On my way to my first year over $100k and I believe I will continue to do so.. (knock on wood)

This is the first post I read since joining this site and captured my attention so I'll add my 2 cents..

Trading is ultimately about having an edge and having the discipline to let your edge kick in.. If you truly do have an edge and you are disciplined enough to allow your edge to kick in, it will show up in your PNL.. I believe the myth to many new traders is that you can achieve a bigger edge than what is possible so many dig for a magic systematic method with a great edge and it sends them on a wild goose chase.. IMHO, there is only so much edge that is available to every trader but you don't need a very big edge to achieve your goals to be a full time trader, but you do need to have it..

You need an edge to
  1. trade on the right side of the market (THE most important edge) - most only use longer time frames with price which is actually another late indicator..
  2. know the significant levels in the market where other traders are likely to engage.. Decision zones..
  3. basic price reading or "footprints" to confirm an entry decision at your chosen level and direction..
  4. manage risk and allow a decent R/R ratio
  5. the mental discipline to allow your edge to kick in..
If you can honestly answer yes to all those questions, you are well on your way to becoming a profitable trader.. Your edge don't have to be huge, but it needs to be real.. after that, its the psychological discipline to allow your edge to kick in...

I believe having a $$ goal/day will reduce your edge and not enhance it though a weekly goal is ok.. The reason is because everyday, the market presents different opportunities.. some better than others.. IF you give up the great opportunities a great day presents and then have the same goal when the market is hard to trade, how does that help your edge? That's why I believe you always have to trade what the market gives you..

Small goals like $100/day is also difficult because it often requires you to trade 1 car.. who has the greater edge and R/R? the trader trading 1 car or the trader who trades 5 cars scaling in and scaling out? Who is more likely to get stopped out or give back gains from not taking profits or capturing a bigger move from the market?

Trading is all about an edge.. its basically gambling with an edge but even a small edge can make a big difference.. So the question is, do you have an edge in all the aspects trading requires?

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  #436 (permalink)
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Having an edge

To Jedi

You are exactly right in that post.
I am, by nature, A contrarian that also happens to be highly emotional, ADHD and impatient. So when I started trading, the first 10 years, I tried everything in the book to get and find an edge. The only edge that I found after trying everything was that I during a trade, I would take my profits quick and hold my losers. I could lose on a trade about 95% of the time. So I ditched all the standard metric and made all 3 of my massive negatives for with me.
I figured out that the only edge I needed was to use 2 main variables. Position size and to short somewhere near true short term upward exhaustion.
If You flipped a coin 10 times in a row, I would take the bet that there would not be 6,5,or even 4 in row of the same side. But what about the unlikely event that it does happen. Thats when I get out.
So if shorting a level, Im right only 50%. The odds are still in my favor because i'm near a temperary exhaustion high.
It has worked for 9 years very well except for 2 bigger drawdown periods. This last one pissed me off so bad
(-120k) that I decided to daytrade around my core short positions to offset retracements. And by using the same method on a shorter time frame. I make way more $ than my core shorts.
And this is with only reading time and sales and 3 standard charts with indicators.
Thats why i am here. So when I pick a range to short, I would like to have more confirmation as to the breakout direction. As of now, Its high energy and stress with sometimes 3 losses before I catch it.
But the strategy requires you to be able to believe in your heart without a doubt that its going up. And then hit the sell button. Plus my risk line in the sand is at about 1 point on ES, and firm...
I have a few things I monitor for breakout direction, But they dont happen every time.
I have to get my breakout direction above 70% so I can trade bigger.
Is there anything you that leans you one way with reliability?
Thanks

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  #437 (permalink)
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Edge


Init View Post
To Jedi

You are exactly right in that post.
I am, by nature, A contrarian that also happens to be highly emotional, ADHD and impatient. So when I started trading, the first 10 years, I tried everything in the book to get and find an edge. The only edge that I found after trying everything was that I during a trade, I would take my profits quick and hold my losers. I could lose on a trade about 95% of the time. So I ditched all the standard metric and made all 3 of my massive negatives for with me.
I figured out that the only edge I needed was to use 2 main variables. Position size and to short somewhere near true short term upward exhaustion.
If You flipped a coin 10 times in a row, I would take the bet that there would not be 6,5,or even 4 in row of the same side. But what about the unlikely event that it does happen. Thats when I get out.
So if shorting a level, Im right only 50%. The odds are still in my favor because i'm near a temperary exhaustion high.
It has worked for 9 years very well except for 2 bigger drawdown periods. This last one pissed me off so bad
(-120k) that I decided to daytrade around my core short positions to offset retracements. And by using the same method on a shorter time frame. I make way more $ than my core shorts.
And this is with only reading time and sales and 3 standard charts with indicators.
Thats why i am here. So when I pick a range to short, I would like to have more confirmation as to the breakout direction. As of now, Its high energy and stress with sometimes 3 losses before I catch it.
But the strategy requires you to be able to believe in your heart without a doubt that its going up. And then hit the sell button. Plus my risk line in the sand is at about 1 point on ES, and firm...
I have a few things I monitor for breakout direction, But they dont happen every time.
I have to get my breakout direction above 70% so I can trade bigger.
Is there anything you that leans you one way with reliability?
Thanks

Question - When you say you had a -$120k loss on a trade, I assume you're trading size.. because otherwise you're allowing a loser to ride way too long, which will eventually take down any trader, just a matter of time.. Your R/R has to have an edge too.. If you're willing to take a $120k loss, the profit potential of that trade should have been at least $240k..

I can see how your set up will give you many high probability trades but the key question is how far is the exhaustion likely to fade? Are you fading for 5-10 pts or 2-3 pts? Is your target bigger than your stop? Ofcourse if you're batting at 70%, the R/R can be 1/1 and the set up will still be very profitable., which sounds like the case with your set up.. There are many different ways to have an edge and it sounds like you do have one..

To answer your question, I don't have any one or 2 things that I lean on in particular but I can tell you that the biggest factor to me when I trade is to try to get a sense of what type of day might be unfolding before me before it unfolds and I will trade accordingly.. There are some days where I'm willing to be contrarian and some days that I'm only looking to trade with the trend and recognizing the difference is very important to me.. I don't expect my "guess" (and I do call it a guess) to be perfect but I believe my edge is real... My goal is to always trade on the side of the market where the bigger move is likely to occur, with 5-10pt potentials.. That's part of my edge to bring the R/R in my favor..

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  #438 (permalink)
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Huh spot on....


wldman View Post
daily goals now is that I just don't care to or need to sit here all day. Sometimes when the tape is active I do, other times I want to go fishing or play baseball with the kids. If I traded like I used too I'd trade the european session and the US session till 11 am central or so. (a 12 hr day, or so) I would just rather do other things. So I guess daily goal is not the best term to use. Once I hit my number I am free to leave is probably a better way to describe what I do.

So that is consistent with your mention of the construct being a personal thing...because it works for the trader. However I do not agree with a target profit number that percipitates a quitting point out of fear of the give back...that is IMO an idea for losers...but if it works to help build confidence, who am I to judge?

Daily goal as a focus point...maybe that is better?

I mean if you are making money and you quit because of banking a small number isnt that the wrong psychology? Shouldnt that dynamic be quit when you have crossed a losing threshold? It used to suck when I would take profit because it was there while watching losers grow to behemoths because I was right and the market was wrong. Kill the losers little when YOU can still defeat THEM. Let the winners run, right? I typically trade with three units, the first of which is off at a primary target, the second of which is triggered out by any one of a couple conditions or changes to the price action and the third unit remains in place a la welles wilder SAR until the contr signal happens or the original stop loss is triggered.

Interested in other opinions, thanks all for commenting. DB

I so agree, the time when i did become profitable was when i have removed targets. In my opinion the targets create the desire and panic effects as well. No matter how small or big target is, it is something that you put your mind too, and intraday time frame is way to short to be loaded with such. I remember one non-farm friday, GBP and EU went flat, range was less than 10 pips, there was no way to scalp anything out of it, my candle chart looked like line bar. News came, 100 pips up and then 100 pips down in two 5 minute candles and gone flat again.
The point of the story is that you have to trade technically during the day and use concentration, market conditions, and level of your exhaustion as limits wen to stop and when not rather than physical numbers. Markets are changing every day, fixed numbers are only how much of your account in percentage you can risk on each trade everything else changes. Fix targets will make you chase, or stop short of your potential.....

cheers and happy trading....

Markets are logical and
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  #439 (permalink)
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Decision Fatigue


Jedi View Post

I believe having a $$ goal/day will reduce your edge and not enhance it though a weekly goal is ok.. The reason is because everyday, the market presents different opportunities.. some better than others.. IF you give up the great opportunities a great day presents and then have the same goal when the market is hard to trade, how does that help your edge? That's why I believe you always have to trade what the market gives you..

Small goals like $100/day is also difficult because it often requires you to trade 1 car.. who has the greater edge and R/R? the trader trading 1 car or the trader who trades 5 cars scaling in and scaling out? Who is more likely to get stopped out or give back gains from not taking profits or capturing a bigger move from the market?

Trading is all about an edge.. its basically gambling with an edge but even a small edge can make a big difference.. So the question is, do you have an edge in all the aspects trading requires?

The post as a whole is excellent. One question I have is why having a daily goal will hurt you but having a weekly goal is OK. By the (correct) logic that you have to take what the market gives you, it seems that if the market is giving you edges you have to take them no matter how much you've already made this week, because it may not be giving them to you next week or the week after.

Concerning the first sentence that I quoted, you have to realize that traders differ in their psychological makeup. If you are the kind of trader who can trade as well in your 5th hour in front of a screen as you do in your 1st, then you should for sure stay and trade. But if you find that you tend to do well early in the day but get sloppy later, then set an easy goal and stop when you reach it, or limit your time in front of the screen in some other way (eg., being done after 3 hours or 6 trades, etc.). "Decision fatigue" is a real psychological phenomenon. Check out this article from the New York Times Magazine: http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.h...3Fsrc%3Dtp&smid=fb-share

"You don't need a weatherman to know which way the wind blows..."
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  #440 (permalink)
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Methodology


well, I can tell that both of you(last 2 posts) make money because it sounds like you stick to your R/R.
As for me, The last big loss was me being pigheaded about my view of the longterm trend. (I was playing 1000 to 1500 point dow moves) and in the past, I never needed to have a stop. But that was the best thing that ever happened to me. I wouldnt take the money back for nothing. Cause when I get slapped like that, It drives me on mission to make sure it never happens again.
I had never been a good daytrader because I am so emotional. Thats why that longer term system worked for me because I wanted to be wrong on my first three scale in's. Even if I was way off, I knew I could short in other accounts. But I was down 250 untill I added more and Got too exited when the dow fell off a cliff in march.
When I trade these type positions, My profit target is about 400-600. I call these my retirement trades.
But its a whole new ball game now. In the last 4 months, I got back 50 by daytrading, using the same strategy but this time I added my mental stops. I learned how to identify swing highs and lows with at least an 80% probability.
So I just short (it has to qualify) the retest of swing high on lower vol. (sometimes it takes 3 trys) (even on up days) and according to vol action is how I scale out. On these 20point es ranges, I usually get 3-12 points
I have also been listening to the S&P pit on squawk because it allows me to feel the action and tell when the breakouts are real (at tops and bottoms)
I would be glad to share specifics with you, because some of them make up the majority of my gains.
I would like to hear your general methodology also.
I would never criticize anyone, but I URGE people to pick mine apart, I believe strongly in opposing opinions because If I cant justify EVERYTHING I do to be the absolute best, I'm not going to do it.
Thanks

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