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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?

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  #401 (permalink)
 wldman 
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jstnbrg View Post
You need to read farther in the thread. 200,000 was a typo, he corrected it to 20,000.

but as soon as the BS horns start to sound, I tend to move on to something that might be productive. So at the corrected numba that is 2,3 years...multiply that by 3 to adjust for an 8 hour day...then the answer is so what.

I do stand corrected on this point however, and will again move on to something productive

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  #402 (permalink)
 jstnbrg 
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wldman View Post
but as soon as the BS horns start to sound, I tend to move on to something that might be productive. So at the corrected numba that is 2,3 years...multiply that by 3 to adjust for an 8 hour day...then the answer is so what.

I do stand corrected on this point however, and will again move on to something productive

I grant you, 20,000 still sounds like a hell of a lot of hours. 10 years at a normal job. What did he do for money in the meantime, and even if he were ultimately successful it means he sacrificed 10 years of income doing something else to gain all this screen time.

"You don't need a weatherman to know which way the wind blows..."
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  #403 (permalink)
 drago1 
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forrestang View Post
I wonder what the attrition rate would be for those that stick with it for some given period of time?

For example, for those that may spend a year trying to figure it out, probably easily less than 5% of those people will make it. Maybe for two years that number would be more like 8%. Maybe for three years, might be a bit more......

Obviously it will be variable, and dependent on one's prior experience, environment etc....

But I'm just wondering what the GENERAL % vs. time spent would look like.

The unknown and unquantifable variable to this question is what level of consciousness that the would be or want to be trader brings to the art and practice of being a student. Many people have no idea how to effectively use their time. Looking inward for example versus perpetually seeking new weapons like finding a new set of impressive looking squiggly lines. I wonder how many "traders" know what the word stochastic even means? If you don't or worse do not understand the math logic behind it why in the world then risk money trusting it? Problem is charts always look so good at nighttime - so the tendency or reinforcing unconscious loop is to continue chasing one's tail. A good exercise for indicator lovers would be to hand calculate every indicator ontheir chart - hourly for example , and then see if they are still a believer in these lines. If that is too much work then perhaps reconsider your conviction in these indicators or just go find something safer to do with your money than trade.

For some others , I think it is the intellectual challenge to perpetually build the better mouse trap is their unconscious obstacle. The ego and intellect are seeking self congratulation because simple profit taking is pedestrian. Your skilled well- healed opponent does not feel that way - he just wants your money. When you enter the trading arena you walked into the proverbial lion's den. You are competing with some of the smartest people in the world with deep pockets and huge resources seeking to take your money. This never occurs to most people. Would anyone in their right mind expect to survive one round in the ufc against a top fighter with that same naivete?Of course not. The markets are much crueller teacher. I posted a book a few weeks back called Zen and Art of Archery - which is about being a student. This is the real journey of our life.

N.B. Forestang , when I used the word you, I was speaking in general terms and do not mean in any way to imply that it isyou personally I am directing my comments towards.

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  #404 (permalink)
 forrestang 
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Oh yeah, like I said above, like most things it is probably HIGHLY variable.

But there is likely a 'general' distribution of some sort with regards to success with respect to time. I wonder what it would look like if that % was plotted in graphical form.

Just as an example, see the pic, where the x-axis represents time, and the y-axis would represent % of traders that do become successful.

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  #405 (permalink)
 Anagami 
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Thanks Drago, one of my favorite books.

"...we should not practice anything except self-detaching immersion..." page 49.

"The way to the goal is not to be measured..." page 51.

"...to have it as though he did not have it..." page 53.

These are of course only fragments and out of context, and one needs to read the book itself.

"The mind is its own place, and in itself can make a heaven of hell, a hell of heaven." - Milton
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  #406 (permalink)
 forrestang 
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drago1 View Post
I wonder how many "traders" know what the word stochastic even means? If you don't or worse do not understand the math logic behind it why in the world then risk money trusting it?

There was a really good podcast done by radioLab a few years back talking about 'stochasticity.' It didn't have anything to do with trading, but it was an entertaining listen. Since you mentioned it, just made me think about it.

STOCHASTICITY

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  #407 (permalink)
 gg80108 
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The best traders I have seen over the last twenty years,, will admit that they don't really need any stinkin indicators,, just the tape and a feeling.. There are those people that can beat u in golf with just a five iron, or at tennis using a broom,,, a blind guy in poker.
In the New York times Oct 9,, an article "A Masters touch or just Luck?",
John C. Bogle :"IF u ask a bunch of people to flip coins,, maybe one out of thousand will flip heads 20 times in a row.. In our business we'll declare him a genius"
Guess this supports the number theory mentioned above..
May ur lucky streak last u a lifetime...

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  #408 (permalink)
 jstnbrg 
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gg80108 View Post
John C. Bogle :"IF u ask a bunch of people to flip coins,, maybe one out of thousand will flip heads 20 times in a row.. In our business we'll declare him a genius"
Guess this supports the number theory mentioned above..
May ur lucky streak last u a lifetime...

"Fooled by Randomness" is a good book to read in this regard. The thesis of this book is that in any discipline where randomness plays a large role, and where there is a large population of practitioners, it can be difficult to distinguish the roles that skill and luck play in separating the winners from the losers, and we tend to ascribe to our own skill what may very well just be a lucky string of winners.

"You don't need a weatherman to know which way the wind blows..."
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  #409 (permalink)
 drmartell 
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When it comes to analogies like obtaining a black belt or learning to play an instrument I think that to be an apples to apples comparison, we need to take these analogies to their extreme.

For example

a successful trader is not simply like a black belt, they are one of a very few high ranking black belts who are widely regarded as a master.

a successful trader is not simply like someone who has learned to play an instrument, they have achieved a level of performance that has them being courted by major metropolitan orchestras.


Another important point - there isn't really partial success in trading.

someone who knows just a little martial arts might be able to defend themselves in a petty argument that turns physical.

someone who knows how to play an instrument just a little might be able to entertain themselves and their friends.

someone who knows how to trade just a little is sure to get their _ _ _ handed to them by the markets at every turn.


I think most people don't realize (I certainly didn't) that when they set out to beat the market - especially in the extraordinary manner that discretionary short term traders can - they are taking on something as difficult as being drafted to the major leagues.

So yes, in that context most people do fail, lazy or not.

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  #410 (permalink)
 wldman 
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mathematically speaking or in general terms, I do not know what stochasitc means. I do understand, pretty well, what a stochastic indicator is and does but I do not use stochastics in my trading. Trading is, though a stochastic process...I think.

Right on the martial arts or black belt analogy. To add...I remember so many times guys would come in and tell me they want to fight in a cage fight. I ask them to tell me about their martial arts and "ring" experience...the answer...

I've seen it on TV!

So I would agree that the vast majority of martial artists and the vast majority of traders do have a great deal in common, metaphorically speaking. For me the parallels are amazing, but my journey is just that...mine.

Roughly, through my own emperical review, I would say that one out of every hundred adults that "starts" a martial arts program attains the rank of black belt...probably much less in some disciplines like jiu jitsu. Past that the rank or level of "master" maybe 1 in 20 blackbelts progress to a second or third degree. So what is that 1 in 2000 who begin become master?

Considering futures.io (formerly BMT) as a reasonable gauge of the "mostly retail" trading community we see that futures.io (formerly BMT) has about 20,000 members. Is it a fair assumption that there are 10 people that are members of futures.io (formerly BMT) that are "master" traders...however that is defined? I'd say probally yes. Now consider that the "professional" trading community is probably not in mass on futures.io (formerly BMT) and that the rank of master is probably more common there.

Here is why trading lags in my opinion. Traders do not take instruction. Traders celebrate (usually false) victories. In trading, especially in an online community, you can create any false persona you wish...that only works in the very short term in combat sports. On the mat you have to submit to your ability and your attributes. Being undisciplined is often associated with physical pain. There is a huge difference between simulated trading and sparring...lol.

I have been reluctant to say it before but I will now...if you have a good plan and sound instruction in trading and you execute with discipline and you are not making money on a consistent basis after six or nine months has passed you should check your plan, your instruction and your discipline and if it is a year on and you are still struggling it is probably not going to happen "one day".

That is not to say "give up", it IS though saying be honest with yourself and how you do and evaluate things. If you have the capital to fake it till you make it in trading, then good for you.

On the sports analogy.poick your favorite sport and then research how many players have recorded ONE professional contest in that sport then divide that number by the number of participants in that sports hall of fame. Staggering.

But so are the odds here in this game. Do well, trade well, be well. DB

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  #411 (permalink)
 Surly 
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jstnbrg View Post
"Fooled by Randomness" is a good book to read in this regard. The thesis of this book is that in any discipline where randomness plays a large role, and where there is a large population of practitioners, it can be difficult to distinguish the roles that skill and luck play in separating the winners from the losers, and we tend to ascribe to our own skill what may very well just be a lucky string of winners.

Honestly I think Nassim's arguments here don't convince me of his thesis with regard to successful traders. A successful money manager who's attempting to achieve relative returns is not "beating" the market. Discretionary traders who achieve much higher rates of return are, in a sense, "beating" the market. No one can convince me that skill does not play a role in trading and so Nassim's argument is logically similar to (if not equivalent) to saying that the best tennis players in the world are simply lucky and that the ones that never make it out of their hometown are just as good but unlucky. I don't buy it.

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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  #412 (permalink)
 wldman 
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get that from Taleb...from any of his books. Is that his argument or is someone stating it that way for him. I do have a like to numerous excellent academic papers including many by NNT. Ill try to post it here

https://hq.ssrn.com/rankings/Ranking_display.cfm?TRN_gID=10&requesttimeout=900

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  #413 (permalink)
 wldman 
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link in some sense a scholarly repository for all kinds of articles financal and economic. Here is the thing. I've consistently reccomended to guys a basic reading list of mostly non trading books that will help them with their understanding and trading. Almost every time the advice is ignored. I cant tell why and I've stopped trying. But of course if I had code or settings to share those would be greatly appreciated..lol.

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  #414 (permalink)
 redratsal 
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An interesting survey over 700 traders is giving some unexpected results about beeing successful, I like to study it from time to time.

Post #14


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  #415 (permalink)
 wldman 
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red. You have any further conclusions?

Bro, no offense but that is not what I would call a primary source academic resource. There is not even a publishing authority listed. None of that can be considered as anything but anecdotal...although I do think some of it is correct...maybe due to NNT's idea about randomness...lol

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  #416 (permalink)
 redratsal 
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wldman View Post
red. You have any further conclusions?

I like very much the pages 5 and 7, I beleive many of the discussions on this thread are subjective. Altough Beeing a successful trader is a complex of causes/effects, there are many different ways of beeing succesful based on the traders' personality. Being a succesful trader is a relative term, as we cannot predict our future, succesful and broke are very close concepts.

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  #417 (permalink)
 wldman 
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agreed 100%. I review every trade every day based on a metric. When I see "issues" develop there is grounds to change the system...but most of the time it is an idiort thing on my part ...not a series and not a pattern of weakness in method or execution.

Page 7... not so much...mostly because I do not know the source or the purpose for the research...but by defenition it is specific and clear what someone is that engages in the same behavior and expects a different result..so if you could accuratly identify all those things as issues that go wrong you would eliminate them all, right. Besides most of those are "idiot things"

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  #418 (permalink)
 sinisa 
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wldman View Post

I have been reluctant to say it before but I will now...if you have a good plan and sound instruction in trading and you execute with discipline and you are not making money on a consistent basis after six or nine months has passed you should check your plan, your instruction and your discipline and if it is a year on and you are still struggling it is probably not going to happen "one day".
DB

Great post, and i believe straight to the point.
I tend to disagree with a strike of luck points and arguments around those things. I would like to add some bits, maybe repeating someone else words but here it goes:

1) Accept that you do need method or system to trade. Comes to the fact that only way in statistical chaos such as markets to achieve positive results is consistency.

2) Develop the method with understanding of adaptivity. Extremely important, as markets do change every day and participants in statistical pool change every day, if your predictions are to be more correct than false, they need to have adaptive component in them. Use forward testing approach for intraday timeframes, very imporatant. The approach i am taking in developing a method/system is this:

  • See the potential set-up that might be useful and good
  • Note down all conditions that i can recognize
  • Develop simple strategy and perform back testing. If back testing results are well below my expectations drop the strategy. My guide on the back testing results for a valid strategy that in last 12 months had better than 40% accuracy and profit factor of 1.2 and more.
  • Trade the method for 2-3 months and fine tune the criteria, get at least accuracy of 55%, profit factor of 2 at least.
  • Start trading it for real.
3) Accept that no matter what losses are part of your day job. There is no one, even those masters mentioned in quoted post that always have positive trades. Sooner you learn how to effectively handle the loss you will become better trader. Understand that only way you can handle the loss if that loss is acceptable to you and monies you loose don't mean much in overall schema things. (Have a strong risk management plan and do not step away from it, by the way this is core component of you trading method called position sizing and risk management) Simple thing if you ask your self a question while in the trade which is red, can you be more wrong, answer is always YES YOU CAN.

4) Learn patience to identify the market for your method, trading in the conditions that do not suit your method is suicide. And i know from personal experience that on the begging we have tendencies of trading all the time no matter of the market.

5) Learn that you and market must be as 'one'. Market conditions must align with your method, but YOU must align with the market and be ready to trade. That means forget everything around you, wife, husband, kids, girlfriend, cars everything and focus on trading, make sure that market is at front of your thoughts. Cus if you are tired, sick or stressed you will not be able to execute required decisions at the right time, this WILL cause losses. All basic mistakes come into play afterwords such as chasing, revenge and so on.

6) Accept that only way to make money in the markets is to preserve it. The way one of the trainers from Optionetics explained to me on the first course i ever did was, every trade you enter must be the best trade of your life, if it is not, you will not be able to manage that trade adequately. So if you ask me how you preserve capital when you risking it every time you enter into the trade is exactly this way. Make sure that each trade is trade of your life, all aligns all signals are perfect including the gut one too.

7) DO NOT EVER FOCUS on what you COULD HAVE MADE, after the fact everyone is a wizard, those hills and bottoms look perfect. You will never achieve that. Focus on what you do make and make sure you are happy with the net outcome of that. YOU MUST BE HAPPY TRADING, if your not, you will find that you are constantly exhausted and can not trade properly.

8) Accept that day trading is a JOB. Nothing less nothing more, you must be good at it, you must be disciplined and focused, you are in business of making money, no one will come back and tell you, 'Ohhh sorry i took your money, her you go, i'll give it to you back cus you are such a sweet thing.'. You are SELF-EMPLOYED, you are RUNNING THE BUSINESS, you are in the business of money, behave that way and understand the seriousness of the job. Just cus might look easy to you it aint.

9) There is no silver bullet, any shortcut in developing above skills and methods will only cost you more time and more money. No one can predict the markets all the time. If anyone could do that, markets would seas to exist. There is no magic software or indicator with arrows that will make you money unconditionally and do your job for you.

I just get upset when people ask same question time after time, such as this one, is it possible, it is, understand that this is job, and a hard one, probably the hardest thing any of you will ever do in your life, there is not many jobs out there that require you to process large amount of data very 5 or 15 minutes that directly impact your pocket, and there is no UNDO button either.
It can be done, some people make 100K + in a day, some people make 2k + in a day and they all happy. Create you business, do it simple, listen and learn from experienced guys, and understand that commitment is required and this is not a joke and you will make it too

Markets are logical and
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  #419 (permalink)
 redratsal 
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wldman View Post
agreed 100%. I review every trade every day based on a metric. When I see "issues" develop there is grounds to change the system...but most of the time it is an idiort thing on my part ...not a series and not a pattern of weakness in method or execution.

Page 7... not so much...mostly because I do not know the source or the purpose for the research...but by defenition it is specific and clear what someone is that engages in the same behavior and expects a different result..so if you could accuratly identify all those things as issues that go wrong you would eliminate them all, right. Besides most of those are "idiot things"

The source of the survey https://www.traderinterviews.com/free/2011-02-01_Trader-Survey-Results.php

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  #420 (permalink)
 wldman 
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thanks for posting source. I did not mean to come across in a personal way if that is what you felt. Just stating that there was no source.

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  #421 (permalink)
 wldman 
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I agree almost catagorically.

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  #422 (permalink)
 marker 
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Remember when most of us said, "If I could make JUST $100/day, I would be SO HAPPY and Grateful..."

Most actually do experience $100/day, But here is where we are separated into the Failed and Successful ones.

GREED.

We want more than $100/day, because we convince ourselves that we are smarter than the market.

Here is the key, how many of us are able to STOP at the $100/day goal and Shut it down, and come back the next day?

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 bluemele 
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marker View Post
Remember when most of us said, "If I could make JUST $100/day, I would be SO HAPPY and Grateful..."

Most actually do experience $100/day, But here is where we are separated into the Failed and Successful ones.

GREED.

We want more than $100/day, because we convince ourselves that we are smarter than the market.

Here is the key, how many of us are able to STOP at the $100/day goal and Shut it down, and come back the next day?

For me, it isn't the making 100.00 per day, but the losing then 500.00 at the end of the week. haha... Hence breakeven-ville.

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  #424 (permalink)
 sinisa 
Melbourne, Australia
 
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marker View Post
Remember when most of us said, "If I could make JUST $100/day, I would be SO HAPPY and Grateful..."

Most actually do experience $100/day, But here is where we are separated into the Failed and Successful ones.

GREED.

We want more than $100/day, because we convince ourselves that we are smarter than the market.

Here is the key, how many of us are able to STOP at the $100/day goal and Shut it down, and come back the next day?

I agree that that is one of the factors that differentiates the successful traders from the failed ones. If trader has those issues, in my opinion, his method is not complete. There are number of well presented plans and topics in this forum that discuss trading plans and issues of over trading.

I guess maybe some people ignore that fact that there must be 2 plans. One at planning you working day, and second one is how to manage each individual trade. The last is mechanical and happens as preparation for each individual trade, the first one has to occur before you start trading every day. Eventually both of those things do become mechanical.

Trading is emotionally charged, and i am personally adrenaline junky, and to be honest there is nothing in this world that will get my adrenaline going as markets can. But severity of not planning and not controlling greed it is very high. Just to describe i will put personal story in here:

Two years ago i had a winning strike and made close to 3000 pips in a week trading only EUR/USD and GBP/USD spot. Anyone trading spot markets knows that that number is extreme. After that week i was so hype would not believe it. Beautiful house came on the market across the road and auction was week later. So i got this fixation in my head that i want to buy that house for cash to surprise my wife. I did surprise her alright, but not in positive way.

I ignored all of the rules, first one was i calculated that i need 600 pips per day as per previous week, no logic what so ever, but i've done this week so should not be a problem, and if i increase the leverage on my account i'd be able to risk $$$ per pip so at the end of the week house will be mine.

Well market turned around and gone into corrective cycle, no big moves, choppy, etc.... got hit ones, twice, started chasing, ignored the exhaustion, i was trading that week for 18 hours a day..... The end result was that i have managed to loose all of the profits from previous week and quite a bit more.... It felt as i was under a spell o something, fx-anonymous......

Lesson learnt never again i did the same thing....


Out of all this, learn to have boundaries around the length of trading (number of hours on front of the screen), maximum points per day when your optimizam and feeling of untouchable kicks in you get out, loosing boundary, as you will start revenge trading and loose more.....

Keep in mind, i'd rather not do even single trade and make no pips on any given day then loose 100 or more pips. Sit back and honestly ask your self and analyze your behavior to establish those daily boundaries. Put them in place and adhere to those. Unfortunatelly, rules are simple, there is no quantum physics involved here, it is all in your head to learn your weaknesses, note down the boundaries and adhere to those. If you do not do that, market will punish you by taking your hard earned dollars, simple as that. If you get butterflies in the stomach when you neter the trade, stop, you are to anxious and you will not be able to manage the trade. If you are frustrated, get out go for a walk, punch a bag, do something but get away from a chart, as each candle will push your emotions to the next level, till you dont eventually break and make mistake = loose money. I mentioned it before, after the fact everyone is a wizard, do not pay attention to what you could have made, ignore that and be happy with what you got.... Everyday that i do not loose money in the markets is a winner, remember that.....

And then with time you WILL become success and all this will make sense and you will laugh and say how simple it was.... Understand that markets are faster than anything else in our life, you must make decisions very quickly (especially if you day trade) If you trade without the plan for most of the situations, you will trade on emotional basis and you will be inconsistent and you will loose money. Planning for known situations ahead and having decisions made before the hand, enables you to react correctly when situation eventuates, practising this will enable you to control:
  • Fear
  • Greed
  • and impatience of not being in a trade
Please, plan and then execute your day, and plan and then execute each trade, only way to consistence and profitability....

Happy trading

Markets are logical and
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  #425 (permalink)
 redratsal 
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wldman View Post
thanks for posting source. I did not mean to come across in a personal way if that is what you felt. Just stating that there was no source.

It's ok, you're right the source should always be mentioned, I never felt it in a personal way , I just wanted to add the point of views of a statiscal population of traders. Thanks for mentioning it.

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  #426 (permalink)
 Lornz 
Oslo, Norway
 
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marker View Post
Remember when most of us said, "If I could make JUST $100/day, I would be SO HAPPY and Grateful..."

Most actually do experience $100/day, But here is where we are separated into the Failed and Successful ones.

GREED.

We want more than $100/day, because we convince ourselves that we are smarter than the market.

Here is the key, how many of us are able to STOP at the $100/day goal and Shut it down, and come back the next day?

Is that why you decided to become a vendor?

It's not about $, it's about how many ticks one can capture and the risk required to do so. The more liquid the market, the more one will stand to make (assuming one is a trading direction outright).

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  #427 (permalink)
 gg80108 
Castle Pines N, CO.
 
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The theory of ,,, Setting daily goal never made much logical sense to me, or is this one of those number theory deals. Seems to me u either got a winning methodology or u dont.. Yes every day isn't going to be a winner but if I only go for $xxxx,, am I not fooling myself since we all know the market can take it back 5x faster then u can win and mr market does not care about my daily goal.. For every guru who only trades a few hours a day,, there is one that is in there all the time....

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  #428 (permalink)
 wldman 
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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?

In suggesting to someone to have a daily goal, my thought would be to create a daily routine that builds confidence based on initially small but consistent success. When guys bank ten days in a row they will figure to expand their idea of success and hopefully keep the consistency due to increased confidence. Is that a bad approach, or built on faulty premiss? DB

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  #429 (permalink)
 eudamonia 
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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?

In suggesting to someone to have a daily goal, my thought would be to create a daily routine that builds confidence based on initially small but consistent success. When guys bank ten days in a row they will figure to expand their idea of success and hopefully keep the consistency due to increased confidence. Is that a bad approach, or built on faulty premiss? DB

In a perfect world discretionary traders could execute their edge consistently without any fear or greed. The reality is that for most of us these are major factors in our overall edge. Few people argue against having a daily stop but having an upside stop is also useful for the same reason. The greater the variance the greater the chance that our inner ape comes out to play.

There probably isn't any one size fits all metric. A good indicator for a daily stop is an amount big enough that you feel you've traded well and small enough not to trigger your yacht fantasies

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  #430 (permalink)
 jstnbrg 
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eudamonia View Post
In a perfect world discretionary traders could execute their edge consistently without any fear or greed. The reality is that for most of us these are major factors in our overall edge. Few people argue against having a daily stop but having an upside stop is also useful for the same reason. The greater the variance the greater the chance that our inner ape comes out to play.

There probably isn't any one size fits all metric. A good indicator for a daily stop is an amount big enough that you feel you've traded well and small enough not to trigger your yacht fantasies

Setting daily goals is a personal thing. For me it was necessary but I knew other hugely successful traders who did not set daily goals. If you're trading totally algorithmically with no discretion probably a daily goal is not necessary.

The daily goal I set for myself in the pit was to try to earn an amount that could easily be obtained without taking high risk trades. If I accomplished that goal by 7:45 am, great! If it took until 2:00 pm, so be it. Having an easily attained daily goal allowed me to focus on only taking low risk set ups. I went from being an inconsistent and marginally profitable trader to going 6 1/2 years without a losing month, while gradually increasing my size from 5 lots to 500 lots (five year US treasury note futures).

"You don't need a weatherman to know which way the wind blows..."
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 jstnbrg 
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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..."
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  #432 (permalink)
 wldman 
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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)
 Jedi 
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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)
 Init 
Raleigh North Carolina
 
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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)
 Jedi 
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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)
 Init 
Raleigh North Carolina
 
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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)
 Jedi 
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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)
 sinisa 
Melbourne, Australia
 
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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)
 jstnbrg 
Chicago, Illinois
 
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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: https://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html?_r=2&pagewanted=all%3Fsrc%3Dtp&smid=fb-share

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 Init 
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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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 sinisa 
Melbourne, Australia
 
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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.

Ohhhh that sounds so familiar in one day of my trading when i have turned around . Not sure if this is the right place to discuss the specific of one's methods, if you wish i am happy to start the thread and we can compare the notes, i do as well trade Dow, FTSE 100, ASX 200, and DAX, as currencies. Would be very keen to discuss the approaches. I'll get my plan and setups up and start the thread if you wish to discuss further.

Markets are logical and
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 Jedi 
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JSTNBRG,

I agree with you on both.

I agree weekly goals can have the same effect as daily goals but the disadvantage is less likely on a longer time frame, that's all.. Its possible that you can meet your monthly goals with 1 good week or your annual goals with one good month, but would you stop trading the rest of the month or year? I wouldn't, but I may become choosier on the days I trade.. On the other hand, I may take a lot less trades or trade smaller when the R/R don't look as attractive.. Those are days to trade smaller and less often.. Other days, you may want to increase your size and even frequency.. Approaching it this way will only increase your edge..

Everyone achieves their edge in a slightly different way.. For the trader whose performance will be reduced after the morning, its part of his edge to reduce his trading during those times.. Its much like the tennis player that has a great forhand and a weak backhand.. Its to his advantage to run around his backhand whenver possible to hit his forhand... He should do it every opportunity he gets..

Every little edge in every aspect of trading all adds up to your total performance.. For those that play blackjack and count cards, how much of an edge do they really have?

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 jstnbrg 
Chicago, Illinois
 
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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

Actually, I have not made significant money trading on the screen (and I haven't traded at all the past 6 months because I'm too busy being a general contractor renovating my summer home, too many distractions to trade). I made enough in 16 years in the pit to set me up comfortably for life, and really I'm most interested in making sure I don't do something dumb and blow it. Though there is something to be said for being hungry...

One thing to consider with the large trades you're making: the flash crash. The flash crash showed us that the new technology we are all using to trade is not well understood or reliable. It taught me that using stop market orders is out of the question on ANY trade. If I were you, trading in size for large directional moves, I'd look at using options instead of futures or stocks, in particular deep in the money options. I see two benefits and one or two costs to trading this way. The first benefit is obvious: your risk is limited to the premium you pay, and on a deep in the money option the time value of that premium should be small. The second benefit is that the directional risk reward on an option is not symmetric; the more in the money an option becomes, the closer the delta of that option is to 1 (that is, the more closely the option moves tick for tick with the underlying instrument). The advantage here is that if the position moves against you, and the option becomes less in-the-money, the option will move less against you than the underlying instrument.. (I'm assuming you are long calls or long puts). The largest disadvantage to buying options is that the time value of the option decays the longer you hold the option. A potential disadvantage to trading deep in the money options is that they may be less liquid than at the money options; it seems like most of the action and liquidity takes place at strike prices near the current market price.

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 Init 
Raleigh North Carolina
 
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That is exactly what i'm talking about. That Is probably the biggest edge any trader can have. but hardly no one uses it. "Position sizing"
When all your things line up and you you thought that price had left you behind from that double bottom that you missed, then it comes back down and hugs the low a third time on trickle vol, you say, come on, break the low. Then it breaks and your looking for that fake break. the tape speeds on the bounce with big blocks, You put all you can handle on.
Thats the edge, not an indicator(too laggy for me)

And yes, I would like you to start that thread. But try to name it something catchy like, My trading secrets or whatever.
Dont worry about people taking your ideas, because thats why 90% lose money. They all know what they should do, They just cant.
Every time I give something away for free, it always comes back
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 Jedi 
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Position sizing is a definite edge given that you already have an edge in the other aspects of trading.. In trading, no matter how strong each individual link is, the chain will always break at its weakest link..

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 sinisa 
Melbourne, Australia
 
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And yes, I would like you to start that thread. But try to name it something catchy like, My trading secrets or whatever.
Dont worry about people taking your ideas, because thats why 90% lose money. They all know what they should do, They just cant.
Every time I give something away for free, it always comes back
Thanks

I am not worried about giving away stuff for free, that is why we are all here, i've got a lot of help from those forums and am happy to give back. I dont care if people like it or not, if discussion is constructive i will listen to it, otherwise i can quite easily ignore it

Will get something started tonight and let you know the name of the trade, i might actually start trading journal... that might be more effective...

Markets are logical and
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 Init 
Raleigh North Carolina
 
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Actually, I have not made significant money trading on the screen (and I haven't traded at all the past 6 months because I'm too busy being a general contractor renovating my summer home, too many distractions to trade). I made enough in 16 years in the pit to set me up comfortably for life, and really I'm most interested in making sure I don't do something dumb and blow it. Though there is something to be said for being hungry...

One thing to consider with the large trades you're making: the flash crash. The flash crash showed us that the new technology we are all using to trade is not well understood or reliable. I taught me that using stop market orders is out of the question on ANY trade. If I were you, trading in size for large directional moves, I'd look at using options instead of futures or stocks, in particular deep in the money options. I see two benefits and one or two costs to trading this way. The first benefit is obvious: your risk is limited to the premium you pay, and on a deep in the money option the time value of that premium should be small. The second benefit is that the directional risk reward on an option is not symmetric; the more in the money an option becomes, the closer the delta of that option is to 1 (that is, the more closely the option moves tick for tick with the underlying instrument). The advantage here is that if the position moves against you, and the option becomes less in-the-money, the option will move less against you than the underlying instrument.. (I'm assuming you are long calls or long puts). The largest disadvantage to buying options is that the time value of the option decays the longer you hold the option. A potential disadvantage to trading deep in the money options is that they may be less liquid than at the money options; it seems like most of the action and liquidity takes place at strike prices near the current market price.

Thats the one of many crazy things about me. Things like the flash crash is what My main reason is for keeping a large short position on in the core account. Thats all i've done for years is go "short only". During the flash crash I was short but out in town. When I heard it on XM, I raced back to cover and it had bounced 300 points. Im short right now and down 30k and hoping we get a final blowoff top so i can load up. I'm not doing it blind, I have very reliable reasons. Plus i'm hedged good with gold
It sounds like your set, I would just have fun with it then. As long as you know that hobbies cost you money, and this is an expensive hobby.

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 Init 
Raleigh North Carolina
 
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sinisa View Post
I am not worried about giving away stuff for free, that is why we are all here, i've got a lot of help from those forums and am happy to give back. I dont care if people like it or not, if discussion is constructive i will listen to it, otherwise i can quite easily ignore it

Will get something started tonight and let you know the name of the trade, i might actually start trading journal... that might be more effective...

That sounds good, but tell me where its located. I know nothing about chat rooms, forums or hardly anything program related. These are the first times I've ever talked to anyone about trading. Always been by myself. I'm going to try to figure out how to put a picture up sometime.

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 Init 
Raleigh North Carolina
 
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jstnbrg View Post
Actually, I have not made significant money trading on the screen (and I haven't traded at all the past 6 months because I'm too busy being a general contractor renovating my summer home, too many distractions to trade). I made enough in 16 years in the pit to set me up comfortably for life, and really I'm most interested in making sure I don't do something dumb and blow it. Though there is something to be said for being hungry...

One thing to consider with the large trades you're making: the flash crash. The flash crash showed us that the new technology we are all using to trade is not well understood or reliable. I taught me that using stop market orders is out of the question on ANY trade. If I were you, trading in size for large directional moves, I'd look at using options instead of futures or stocks, in particular deep in the money options. I see two benefits and one or two costs to trading this way. The first benefit is obvious: your risk is limited to the premium you pay, and on a deep in the money option the time value of that premium should be small. The second benefit is that the directional risk reward on an option is not symmetric; the more in the money an option becomes, the closer the delta of that option is to 1 (that is, the more closely the option moves tick for tick with the underlying instrument). The advantage here is that if the position moves against you, and the option becomes less in-the-money, the option will move less against you than the underlying instrument.. (I'm assuming you are long calls or long puts). The largest disadvantage to buying options is that the time value of the option decays the longer you hold the option. A potential disadvantage to trading deep in the money options is that they may be less liquid than at the money options; it seems like most of the action and liquidity takes place at strike prices near the current market price.

Sorry about the last post, I realized just now you meant the trading pit. they say thats its a hard transition because you dont have the energy to gauge the flow. Thats why I listen to the squawk box and use it to feel the demand at the open, last hour and at swing highs and lows. I love it, It took a while to know when to go with paper or the locals. I lean with the locals on light volume.
You could get used to screen trading, but would prob be boring for you.

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  #450 (permalink)
 jstnbrg 
Chicago, Illinois
 
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You could get used to screen trading, but would prob be boring for you.

It is boring for me. That's my biggest problem.

"You don't need a weatherman to know which way the wind blows..."
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 Jedi 
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I think its a myth that great traders are very secretive about their method unless you're trading size and don't want others to ride your tail.. My experience has often been to the contrary and it makes sense.. There is only so much edge that is available to every trader and it doesn't come from a systematic method or a level that only they know about.. the market has much more variables than that... It comes from the way a trader puts the information together that gives the edge.. Often very good traders have very simple methodologies but they are very clear how they trade.. That means I can tell you exactly how I trade and you may not perform the same, just as you can tell me exactly how you trade and I may not perform the same.. because we all have different strengths and preferences.. Case in point - Market Wizards don't all trade the same way but they all achieve a level of success.. 2 athletes can tell each other how they move, but in the game they will still move differently...

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 gg80108 
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Jedi View Post
I think its a myth that great traders are very secretive about their method unless you're trading size and don't want others to ride your tail.. My experience has often been to the contrary and it makes sense.. There is only so much edge that is available to every trader and it doesn't come from a systematic method or a level that only they know about.. the market has much more variables than that... It comes from the way a trader puts the information together that gives the edge.. Often very good traders have very simple methodologies but they are very clear how they trade.. That means I can tell you exactly how I trade and you may not perform the same, just as you can tell me exactly how you trade and I may not perform the same.. because we all have different strengths and preferences.. Case in point - Market Wizards don't all trade the same way but they all achieve a level of success.. 2 athletes can tell each other how they move, but in the game they will still move differently...

This seems to mean that when one buys trading instruction, that the chances are slim that u can trade like the guru who sold it too u (despite their claims). U mostly hope that there is something u can make ur own in the information u purchased, to make u profitable...

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  #453 (permalink)
 Init 
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Jedi View Post
I think its a myth that great traders are very secretive about their method unless you're trading size and don't want others to ride your tail.. My experience has often been to the contrary and it makes sense.. There is only so much edge that is available to every trader and it doesn't come from a systematic method or a level that only they know about.. the market has much more variables than that... It comes from the way a trader puts the information together that gives the edge.. Often very good traders have very simple methodologies but they are very clear how they trade.. That means I can tell you exactly how I trade and you may not perform the same, just as you can tell me exactly how you trade and I may not perform the same.. because we all have different strengths and preferences.. Case in point - Market Wizards don't all trade the same way but they all achieve a level of success.. 2 athletes can tell each other how they move, but in the game they will still move differently...

I agree. There are countless things to trade off of. and each day, A persons list of metrics holds different weights for that day. for example, say we gap down 15s&ps on news, I have to figure the odds between a gap fill and the length of the impact of the news.
Sometime soon I would like to start a thread on just this, which is for people to list down the main factors they look at each day and their general weighting of importance.
For example: When I get up, I look at the dax and its action and whether the es has found a decent vol bottom and how much the es is able to close the gap before the open. That tells me alot about how many fakeouts to expect at the open.
I'm sure there are tons little things that people look at. its up to us to place the correct importance and on which days to use them.

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 Jedi 
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99.9% of the methods that are for sale will not produce a consistently profitable trader.. 99.9% of the gurus selling them are themselves not consistently profitable traders.. Its because they only give set ups.. Its the market bias that is the most important edge.. There are countless set ups on both sides of the market daily...

Before you find a guru, he needs to first show you that he can do it himself..

As far as sharing, most of us have had to pay blood sweat and tears to get to where we are so we are very selective who we share it with.. A strategy will become void if everyone uses it though this is not likely..

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 Massive l 
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Jedi View Post
99.9% of the methods that are for sale will not produce a consistently profitable trader.. 99.9% of the gurus selling them are themselves not consistently profitable traders.. Its because they only give set ups.. Its the market bias that is the most important edge.. There are countless set ups on both sides of the market daily...

Before you find a guru, he needs to first show you that he can do it himself..

As far as sharing, most of us have had to pay blood sweat and tears to get to where we are so we are very selective who we share it with.. A strategy will become void if everyone uses it though this is not likely..

Exactly. I have no problem sharing a few little tips that work sometimes and a few rules here and there but
sharing the complete system, the brains of the whole operation is out of the question.
The business plan evolves over time as I find new, more efficient ways to do things.

It comes down to managing your risk anyways but some things took a long time to figure out.
Every great trader goes through these hurdles and continues to do so.

Trading is an individual sport (for a retail trader like myself)

I'm not a 'great' trader yet but I'm feeling pretty good about things with 6000 hours of dedicated screen time.
A complete love and passion for the markets keeps driving me forward.

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 Init 
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The main reason I suggested the thread is that I thought it would help alot of people to describe their daily thought process. I am very consistant, but I wont be happy until my weekly win rate is at least 90%.
I am new to all this forum stuff, so I dont know all of the do's and dont's.
I figured that if I laid out all of my intuitive clues that I have learned, I would spark others and help alot of people.
For example: I go thru spurts of reading (professional traders) books, so while I read them, I want to be able to take agree with everything I read and maybe find one nugget that I missed.
Last night I started reading "sniper trading" and he was a predominate short seller (like me) in the pit and he said he noticed over time that thursdays, he tended to make more because of the day of the week effect.
Now today being thurs, as normal I try to catch the opening range break (if down). If it goes up, I trade light and wait to see some greed and hope to short a swing high. well, I was stopped out 3 times and figured it would be a range to up day. then the ES fell back down without me and carved out a bowl, which then I just knew it was going to breakout upward. After I had given up for the day, I happened to go back and take a look and saw 2 small fast breaks with almost no retracement. I was hard but shorted into weakness and picked up 13 points. I want to think that the "thurs" note allowed me to act.
Remember; unless your the smartest person on the planet, You will gain by sharing

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 Jedi 
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I've shared generously many times, but have only been reciprocated by a few times by a few very good traders.. At this point, odds are slim that someone will tell me something that will alter the way I approach the market but every trader needs to continue to grow.. I can share this much..

Generally, all things equal, the long side usually have a slight edge over the short side.. The short is usually much harder to play than to the long side unless you have an edge in your market bias.. Your timing has to be better as a short trader than a long trader..
  • There are usually more opportunities to go long in both bull/bear markets with an edge
  • Short opportunities are almost always only in bear markets to have an equivalent edge
  • During bear markets, markets will bounce sharply from short covering and picking a bottom
  • During bull markets, markets will have shallow retracements and tend to extend
  • Markets go down faster than they go up BUT they spend a lot more time going up than down, hence the timing is more difficult..
  • Its generally easier to get caught by a short bounce because they are swift and violent than a sell off as they roll over
  • If you focus all your attention on finding an edge in your market bias, you will be successful with almost any method of your preference..

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 Private Banker 
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Jedi View Post
I've shared generously many times, but have only been reciprocated by a few times by a few very good traders.. At this point, odds are slim that someone will tell me something that will alter the way I approach the market but every trader needs to continue to grow.. I can share this much..

Generally, all things equal, the long side usually have a slight edge over the short side.. The short is usually much harder to play than to the long side unless you have an edge in your market bias.. Your timing has to be better as a short trader than a long trader..
  • There are usually more opportunities to go long in both bull/bear markets with an edge
  • Short opportunities are almost always only in bear markets to have an equivalent edge
  • During bear markets, markets will bounce sharply from short covering and picking a bottom
  • During bull markets, markets will have shallow retracements and tend to extend
  • Markets go down faster than they go up BUT they spend a lot more time going up than down, hence the timing is more difficult..
  • Its generally easier to get caught by a short bounce because they are swift and violent than a sell off as they roll over
  • If you focus all your attention on finding an edge in your market bias, you will be successful with almost any method of your preference..

For the longer term swing trader, I can see these making sense to a degree but it truly depends on how you trade the market. For example, if you're a target based trader and just looking to pick up a few points/pips per trade using a shorter periodicity chart, many of these items you mentioned don't really matter. Each market has it's own characteristics and flow. Equities are far different from Crude Oil or Soybeans move far different from say the Euro. A trading method should be based on common occurrences that are present in the market you're trading obviously but the occurrences in which you are looking for can vary in magnitude based on your trading objective. A trading method is just a small part of the puzzle of course as psychological hurdles and money management misconceptions are typically the account killers for traders looking to establish some consistency. Many new(er) traders also make the mistake of being over confident or laissez-faire with what they're doing because they feel they have good technical analysis skills or they "feel" they are on the right side of the order flow which always ends up being a big humiliating mistake.

In all honesty, this is one of the hardest professions to become successful in because of the wide array of hurdles a trader has to overcome. Time in the market trading real money is the best way to learn/perfect one's trading. All the other items go hand-in-hand of course such as psychological confidence, a reasonable edge and sound money management to name a few. But developing theories and biases based on seasonality or cliché's can be very detrimental so I'd caution against that.

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  #459 (permalink)
 Init 
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Jedi View Post
I've shared generously many times, but have only been reciprocated by a few times by a few very good traders.. At this point, odds are slim that someone will tell me something that will alter the way I approach the market but every trader needs to continue to grow.. I can share this much..

Generally, all things equal, the long side usually have a slight edge over the short side.. The short is usually much harder to play than to the long side unless you have an edge in your market bias.. Your timing has to be better as a short trader than a long trader..
  • There are usually more opportunities to go long in both bull/bear markets with an edge
  • Short opportunities are almost always only in bear markets to have an equivalent edge
  • During bear markets, markets will bounce sharply from short covering and picking a bottom
  • During bull markets, markets will have shallow retracements and tend to extend
  • Markets go down faster than they go up BUT they spend a lot more time going up than down, hence the timing is more difficult..
  • Its generally easier to get caught by a short bounce because they are swift and violent than a sell off as they roll over
  • If you focus all your attention on finding an edge in your market bias, you will be successful with almost any method of your preference..

I respect your bias to the long side. And its hard to change the comfortable feeling from a bias.
I used to trade from both sides until I realized that the it seems the risks are greater to short, but it is actually the safest way on a risk basis.
I was a short only swing trader during the internet boom (about breakeven) and shorting the housing stocks in 2005-6.
The basic premise is that fear is stronger than greed. Excluding daytraders, If you go home short after a big run up that you properly qualified, and the dow gaps up up 200 points. I know that the worst case scenario is I may have 2 hold it a couple weeks for the gap fill. But the odds are that it was news driven and we would likely see at least a half fill.
But the MAIN reason that I only short is that I have weighed everything out (Never been wrong on a macro call) and we are on the way to a pronounced sideways to down market for a while.
I have been waiting for this type of market since the internet boom. Thats why I am gearing up now with various software (which I dont know how to use yet) So I can combine my core trading with the swing and be able to daytrade while I wait. I have been waiting for these markets for years, and i'm not going to miss it.
My main methodology to base trades from (except the opening bell) is looking a the price and volume from the mindset of the people in it.
For example: Yesterday, I really wanted the ES to go up and fill that morning gap so I could pick a spot to short. Well, it just barely filled with alot of vol resistance, (I shorted anyway) but had to cover with a small profit on the way back up. Again, I knew for sure it wanted to breakout and test the recent highs, Then it came off and when I looked closer, It looked like a real exhaustion. Which told me that most of these shorts that have been being squeezed from the lows, are finally wiped out. (at least for now) So I caught that nice short to the close.
Todays lack of any short covering off of todays lows tells me that we dont have much more scared shorts. So now I can be ready with a different entry approach of picking my tops at a lower bounce on the day. Until we hit a good panic bottom.
I am saying this to show my way of trading and thoughts. But yes, I am trying to get set up with some bid/ask indicators and vol at price charts.

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  #460 (permalink)
 tigertrader 
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PB,

Indeed, I agree with what you said.

However, you're way too polite. Everybody is entitled to their opinion, but personally, it really bothers me to see dilettantes (jedi) dispense advice so unequivocally, making bold statements with absolutely no empirical evidence to back up their claims. One of the biggest drawbacks of this forum is the dissemination of misinformation and the promulgation of myths about trading.The vast majority of the members of this forum have neither the past experience nor the current practice to "qualify" them to give advice to other traders. Most of them are still trying to "figure-it-out" themselves, yet end up dispensing advice anyway.

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 Init 
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The foundation
If you master the underlying psychology of market moves. They are all the same
For example: at almost any important low, if there is high volume and a fierce battle, the buyers win and price goes up
that left some sellers on the sideline, But how many. Its like two big gangs fighting. Until one side has been wiped out, you havnt finished testing that bottom.
The main thing I look at in price is the speed and size of the countertrend action.
A true high or low (even if its a higher low) will NOT jump fast off that level, It will laugh and tease you until someone with some balls jumps on it.
I know because every day when I miss the top, Im watching it laugh at me.

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  #462 (permalink)
 Jedi 
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PB,
I agree with everything you're saying, my statements are meant to be general and different markets certainly exude different characteristics.. This is certainly a hard business and most traders have all the odds against them no question about that.. There is also no question that each link of the chain needs to be strong or the chain will always break at its weakest link and it doesn't take much..

Tiger,
I'm not trying to give advise, nor do I consider my statements to be bold.. The truth is nobody has it all figured out, all we can ask for is an edge and that's all I'm saying.. Do you have it all figured out? The set up is not the edge or everyone with a good set up will become consistently profitable.. If you have an edge to trade at the right side of the market where the larger move is likely to occur, not that's a real pragmatic edge that will have an impact.. That's all I'm saying... I know I don't have it all figured out, but I also know I don't need to.. all I can ask for is an edge... that's all. I'm not trying to have it all figured out because that's the wild goose chase.. I'm always open to learn, but I'm aware every methodology has its limitations..

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 Init 
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I know i'm new here, but one thing I would like to do down the road if I meet the right people, is to form a very small group of traders that REALLY excel in a specific market, and know it inside and out.
Then just have the forum or wherever, open so you could make general notes if you feel something important is brewing.
When I was in the trade room at OFA watching him nail the entries within a tick or two. It hit when I realized the power of daytrading and swing trading. I really adopted tight entries and stops, but then when the trade goes in my favor, I am completely comfortable riding for a while.
There were only 2 days in 2 months that he "net" lost money. But on those 2 days he was losing by going long each time. I was sitting there wanting to tell him no no thats crazy right now. But me knowing the short side like the back of my hand, I saw it clear.
Now from that perspective, imagine if you had a "short sider" a "long" a "currency" guy and maybe a few others that are good calculating long and short term sentiment moves. During a typical day maybe you would say "If the dollar breaks this level look out", or "There is an upside unfilled gap 3 days ago we might try for"
The reason I'm saying this is because whatever you are using to pick trades, A certain % of them are not going to work. You could probably eliminate half of those.
So far it seems that people think there are secrets to trading. The power is in combining viewpoints which would increase confidence which would unlock the the real power of "bigger size". that's what I want to do.

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  #464 (permalink)
 Cloudy 
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Init, sounds like what you're talking about is like a prop firm. A team of hired traders evaluated daily and overseen and held accountable for their performance. And then some strategies get shared, experimented with or dictated around depending on the policy of the prop firm. Or for another example, I've noticed also having been in a trading room the host usually has control over what is presented and decides what suggestions gets listened to or not. It would take a trading group where one or more members has the power to step in and change the trading style of another through some type of prior agreement to do so. Which is hard to consider since a successful trader usually sticks to the "rules" of his particular type of trading and weathering the system's particular drawdowns and stoplosses. I do get the idea of being able to trade multiple systems at once or a combination even though it can get to be too much for some traders.

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  #465 (permalink)
 Private Banker 
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Init View Post
I know i'm new here, but one thing I would like to do down the road if I meet the right people, is to form a very small group of traders that REALLY excel in a specific market, and know it inside and out.
Then just have the forum or wherever, open so you could make general notes if you feel something important is brewing.
When I was in the trade room at OFA watching him nail the entries within a tick or two. It hit when I realized the power of daytrading and swing trading. I really adopted tight entries and stops, but then when the trade goes in my favor, I am completely comfortable riding for a while.
There were only 2 days in 2 months that he "net" lost money. But on those 2 days he was losing by going long each time. I was sitting there wanting to tell him no no thats crazy right now. But me knowing the short side like the back of my hand, I saw it clear.
Now from that perspective, imagine if you had a "short sider" a "long" a "currency" guy and maybe a few others that are good calculating long and short term sentiment moves. During a typical day maybe you would say "If the dollar breaks this level look out", or "There is an upside unfilled gap 3 days ago we might try for"
The reason I'm saying this is because whatever you are using to pick trades, A certain % of them are not going to work. You could probably eliminate half of those.
So far it seems that people think there are secrets to trading. The power is in combining viewpoints which would increase confidence which would unlock the the real power of "bigger size". that's what I want to do.

There are some brokers that offer offices to trade from with other traders/clients. You can rent an office, a bull pen or a desk space. It just depends on what you're looking for and where you live. You're trading your own money not like a prop firm. The obvious advantages are a professional work environment, contact with other traders who are trading their own money, and access to high level computers and internet speed. I'm not sure of all the locations but I know there are several in Chicago near the exchange. Maybe ask you broker if they offer that service.

Cheers,
PB

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  #466 (permalink)
 Init 
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Cloudy View Post
Init, sounds like what you're talking about is like a prop firm. A team of hired traders evaluated daily and overseen and held accountable for their performance. And then some strategies get shared, experimented with or dictated around depending on the policy of the prop firm. Or for another example, I've noticed also having been in a trading room the host usually has control over what is presented and decides what suggestions gets listened to or not. It would take a trading group where one or more members has the power to step in and change the trading style of another through some type of prior agreement to do so. Which is hard to consider since a successful trader usually sticks to the "rules" of his particular type of trading and weathering the system's particular drawdowns and stoplosses. I do get the idea of being able to trade multiple systems at once or a combination even though it can get to be too much for some traders.

Thanks for the reply. I may not have explained it right.
The people in this group (theoretically) has a clear edge in one particular market. The edge comes from knowing that particular market inside and out. (from political, fundamental, news effects and technical)
Like me for example: I feel that I know the "short side" only, of the ES better than 90% of anybody.
It has Its limitations because it is nearly impossible to evaluate bar by bar psychology and then flip your mind over to the long side to view it at a different angle.
In todays market and why its tough, is because in order to really tilt the odds, You need to be able to recognize as soon as possible what the market is keying off of that day. On a typical day I need to see what is leading us. Is it the DAX, Italian bond yields, rising forclosures, Is 2 year bond $ flows the cause or effect, Is the dollar moving on its own fundamentals or being driven by another currency. This is a huge edge if you can identify it early. And a specialist in their particular market will know sooner than anyone.
There are NO buy/sell calls, Just a few people that may type in something special that they see.(A heads up)
like an ECB anouncement at say 2:00 I may have not factored that in and be carrying a big position. No 1 person can keep up with it all.
There would not have to be a moderator in that chatroom (im hoping one could be set up here at futures.io (formerly BMT))
the hidden benefit in this would (for me at least) is to keep my mind on the right track (my ADHD)
Sometimes while swing trading, I get excited about my longterm shorts and start adding, because im too impatient to wait for the setup in swing. I dont mind a huge loss in the core accounts(part of the strategy), but in swing and daytrayding, I want to punch the computer on a $200 stop loss.
I am just trying get my mind to be able to trade large enough to make over $2000/day
Right now, I am averaging between $200 and $1200/day. But everytime I get in the 1500-2000 range, I go to scale out and within 4 min I am flat. My sell rules go right out the window. When I was in the trade room and talking commenting a little, That mental block was gone.
If I have this mental block (where size changes your rules) then prob everybody does.
This i'snt a hobby for me, but it is extremely fun.

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  #467 (permalink)
 Jedi 
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Init,
This is not the easiest pursuit to make money and its not for everyone but it is fun and it is very possible. Perhaps a paltalk or skype room where traders can post their thoughts, levels and trades can accomplish the same goal. Its often fun to communicate with other traders during the day. If you can get a strong group together, it should be very worthwhile. I average between $700-$1500/day with occassional $500-$1k losses. I'd be glad to post my trades and share some concepts with the right group and there is some level of trust, respect and friendship.

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 Cloudy 
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Good points Init. I guess I didn't get what you meant at first. I agree having a heads up on news events can keep one out of trouble. I've been caught myself one too many times on large event driven news. Maybe a simple icq or aol im text chat group would suffice. I know what you mean about larger contract size. Do you scale in winning or losing trades or both? I was averaging down, scaling in losers and eventually I got hit big even though I was getting above $2k a day for a good run. Then I had the same trouble with sell and stop rules as you mentioned. Now I'm back to not scaling at all, but I don't know, it's tough to trade right now or make anything.

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 jstnbrg 
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Cloudy View Post
I agree having a heads up on news events can keep one out of trouble. I've been caught myself one too many times on large event driven news. Maybe a simple icq or aol im text chat group would suffice.

It's useful to be working among a large group of people with different types of market knowledge. In the pit there was always someone to give you a heads up about an upcoming number (along with market expectations or anything else you wanted to know about it), to mention support/resistance levels, floor pivots, etc. You could hardly avoid it if you wanted to. One of the things I miss about the floor is the community of informed traders. I went in basically clueless every morning except if there was a really big number, and within a couple of minutes I knew pretty much all I needed to know for the day.

"You don't need a weatherman to know which way the wind blows..."
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 Init 
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Cloudy View Post
Good points Init. I guess I didn't get what you meant at first. I agree having a heads up on news events can keep one out of trouble. I've been caught myself one too many times on large event driven news. Maybe a simple icq or aol im text chat group would suffice. I know what you mean about larger contract size. Do you scale in winning or losing trades or both? I was averaging down, scaling in losers and eventually I got hit big even though I was getting above $2k a day for a good run. Then I had the same trouble with sell and stop rules as you mentioned. Now I'm back to not scaling at all, but I don't know, it's tough to trade right now or make anything.

I think it would be a good idea as long as the points being made were not trivial. But it would prob morph into something not close to what it was meant to be. Like today for example; Since I only short, I have to identify strong bid bays and chop days to determine the size to trade. This morning I noticed that the ES was a little weak but Gold was strong, which told me that It shouldnt be another big down day because people were not in "capital raising" mode. The S&p locals couldnt even get a solid read on the day, The tape didnt make any sense so I didnt place any trades today. Plus I stayed up late and couldnt get my feelings into the price action. Half the battle is avoiding low probability situations.
When I go to short a level, I go all in and try to risk less than $100 if i'm wrong. Then I will add a little more at the next level up. Until I find the high, The worst days take three try's, but the risk reward is about 5:1 or better. I try to only look at my account every 3 months or so and keep my daily P&L behind me. Emotions help me in the market but kill me every time I think about the money. But then again, I dont do anything like normal people.
Thanks,

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 Jedi 
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jstnbrg View Post
I went in basically clueless every morning except if there was a really big number, and within a couple of minutes I knew pretty much all I needed to know for the day.

I agree, I do the same. I go into the day only with an awareness of my levels and the week's key reports. After the market opens for 5-10 min, I pretty much know all I need to know to begin my first trade. Within the 1st 20min, I usually have a very good idea how I plan to trade the day and the plan then develops throughout the day.

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 Init 
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I wish I could approach the market like some of you and go long then go short or whatever your strategy. I have tried just about every type of strategy to find what makes me feel comfortable.
Even now, We could hit super capitulating bottom at a century number and test it 3 time on lighter vol and I know its going up, but when I go long, every point, up or down feels like i just committed a crime. It's a mental block that I have to deal with later. Night before last I sent my personal account trades breakdown to ofa, because I know they didnt believe me when i was there. (I had not looked at my % like that before). And when I saw a 53% return in 3 months with a 95% daily win rate, I started thinking about everything I shouldnt, and monday I couldnt pull the trigger on the open because I didnt want to mess up. Took one higher risk trade in the afternoon and got stopped out. I couldnt attempt it any more like normal because I was scared of losing. Now I have figure out how to deal with it. It seems like its a constant battle between me and myself. Thats prob the real reason I didnt trade today. This never happens

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  #473 (permalink)
 Jedi 
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The opening trade is usually my smallest position and I don't always take it for the same reason though it often positions you in a great location. I believe the psychology of trading is something that will always be a work in progress. Somethings that help me are not oversizing my positions and having faith in my expectancy to keep trading the way I'm supposed to even if the trade was not profitable. The daily goal is never the profit but to trade correctly; profits should result if the methodology is solid. Even for a trader with a lot of natural talent for this, the method always needs to be clearly defined. It doesn't have to be mechanical but it should be well defined enough so that at the end of the day when you go back over your trades, you can identify your mistakes clearly. That's the only thing I know of that can help my psychology, to be very clear about the approach, and then to do my best to be as objective as possible when I'm getting stopped out 3-4 times in a row and I see the next compelling trade.



Init View Post
I wish I could approach the market like some of you and go long then go short or whatever your strategy. I have tried just about every type of strategy to find what makes me feel comfortable.
Even now, We could hit super capitulating bottom at a century number and test it 3 time on lighter vol and I know its going up, but when I go long, every point, up or down feels like i just committed a crime. It's a mental block that I have to deal with later. Night before last I sent my personal account trades breakdown to ofa, because I know they didnt believe me when i was there. (I had not looked at my % like that before). And when I saw a 53% return in 3 months with a 95% daily win rate, I started thinking about everything I shouldnt, and monday I couldnt pull the trigger on the open because I didnt want to mess up. Took one higher risk trade in the afternoon and got stopped out. I couldnt attempt it any more like normal because I was scared of losing. Now I have figure out how to deal with it. It seems like its a constant battle between me and myself. Thats prob the real reason I didnt trade today. This never happens


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  #474 (permalink)
 Init 
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Jedi View Post
Init,
This is not the easiest pursuit to make money and its not for everyone but it is fun and it is very possible. Perhaps a paltalk or skype room where traders can post their thoughts, levels and trades can accomplish the same goal. Its often fun to communicate with other traders during the day. If you can get a strong group together, it should be very worthwhile. I average between $700-$1500/day with occassional $500-$1k losses. I'd be glad to post my trades and share some concepts with the right group and there is some level of trust, respect and friendship.

that would be good, but I dont know anyone here. Maybe start out with something like a "chat" box (or something to type in. You know, start out simple.
Thanks

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 bluemele 
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Init View Post
I wish I could approach the market like some of you and go long then go short or whatever your strategy. I have tried just about every type of strategy to find what makes me feel comfortable.
Even now, We could hit super capitulating bottom at a century number and test it 3 time on lighter vol and I know its going up, but when I go long, every point, up or down feels like i just committed a crime. It's a mental block that I have to deal with later. Night before last I sent my personal account trades breakdown to ofa, because I know they didnt believe me when i was there. (I had not looked at my % like that before). And when I saw a 53% return in 3 months with a 95% daily win rate, I started thinking about everything I shouldnt, and monday I couldnt pull the trigger on the open because I didnt want to mess up. Took one higher risk trade in the afternoon and got stopped out. I couldnt attempt it any more like normal because I was scared of losing. Now I have figure out how to deal with it. It seems like its a constant battle between me and myself. Thats prob the real reason I didnt trade today. This never happens

What is "OFA"?

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  #476 (permalink)
 Init 
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What is "OFA"?

It's just a training course I took, when I decided to concentrate on timing my entries to where I could limit my risk, because my biggest weakness at that point was getting shook out.
There is a thread here under "OFA" or "order flow analytics" I think I described my experience with it.
For me (I had never approached daytraing at such such a micro level before) It just happened to fill the gap in my trading. it's one of those things, I use it as one part of my methodology.
If anyone is going to daytrade for a living, I think that someone must know orderflow for the simple fact of entering positions in very specific spots that you cant do with an indicator because of lag. But that's just me.
Thanks

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Sergio
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Init View Post
It's just a training course I took, when I decided to concentrate on timing my entries to where I could limit my risk, because my biggest weakness at that point was getting shook out.
There is a thread here under "OFA" or "order flow analytics" I think I described my experience with it.
For me (I had never approached daytraing at such such a micro level before) It just happened to fill the gap in my trading. it's one of those things, I use it as one part of my methodology.
If anyone is going to daytrade for a living, I think that someone must know orderflow for the simple fact of entering positions in very specific spots that you cant do with an indicator because of lag. But that's just me.
Thanks



The easiest way to calculate the lot of the work I do so take the size of the deposit\divide it by 1500=the value multiply it by 10 and that's all and calmly work

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 nakachalet 
siam, west coast andaman sea
 
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Big Mike View Post
I would venture futures.io (formerly BMT)'s crowd does in fact beat the odds (ie: perform better than the 95/5 rule). But, I think could be true of any specialized group within a larger group.

Remember, to fail at trading it could be as simple as starting with a woefully under-capitalized account, trading it for a month, blowing out, and then quitting. You've now failed at trading.

I earn my living from trading and I will never do anything else again. I've worked for myself for a long time before trading, and while its liberating to be your own boss, it is even more liberating to be a successful trader.

Mike

i'll say AMEN to that--a mark of a true trader!

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 nakachalet 
siam, west coast andaman sea
 
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Init View Post
It's just a training course I took, when I decided to concentrate on timing my entries to where I could limit my risk, because my biggest weakness at that point was getting shook out.
There is a thread here under "OFA" or "order flow analytics" I think I described my experience with it.
For me (I had never approached daytraing at such such a micro level before) It just happened to fill the gap in my trading. it's one of those things, I use it as one part of my methodology.
If anyone is going to daytrade for a living, I think that someone must know orderflow for the simple fact of entering positions in very specific spots that you cant do with an indicator because of lag. But that's just me.
Thanks

init

would you be able to describe in your own words just exactly how you applied the ofa in your trading charts to make it PRECISE and PROFITABLE, pls?

i went to the site of the video, but i think perhaps you could do a better job for those of us who are interested to hear how you, a customer and/or an invested person, apply ofa to trade. thx init.

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 Init 
Raleigh North Carolina
 
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init

would you be able to describe in your own words just exactly how you applied the ofa in your trading charts to make it PRECISE and PROFITABLE, pls?

i went to the site of the video, but i think perhaps you could do a better job for those of us who are interested to hear how you, a customer and/or an invested person, apply ofa to trade. thx init.

Knowing Orderflow trading without having a super reliable consistent foundation means nothing.
I am going to get personal and bold with this post because some of the things (not all) a person needs to make money consistently is to qualify EVERY trade (first) based on things in the market that are VERY, VERY reliable.

If you use these few things and absolutely never let a loser run, You will beat 90% of all traders. I have a ton of things that I use to raise the odds higher but I will list the foundation for which direction I go.
There are 2 things that cycle back and forth every day with such reliability that it's ridicules. And why anyone would not base their entire system of of this for reliability is beyond me. This is what i used for years in swing trading until I started a mission to time my entries in order to have NO visible drawdowns on my longterm P&L.
I will will answer your question when we get to the orderflow part.

The main things I monitor are total volume cycles and fear and greed cycles.
when you know these levels in extreme times all the way down to a normal chop session.(chop sessions are hard)
Your confidence will be so high that it almost makes you cocky.

I can short into any level I want to at extremes, The big money question is where in that level do I go, because IF there is another push higher, I have to cut my loss quick enough so I can short again at the next higher level. The reason I almost never have a down day is because at some point during that day, price will retrace some. But alot of times, I ride from the highest levels till I feel we have panicked to the downside. The main thing that will make you tons of money is quantifying in your head the vol levels in between swing highs and lows.

Me personally, while daytrading, can't stand to lose even a hundred dollars on one attempt. Because I know that if it is a day where longer time frame players are coming in, my normal panic volume levels may be off and sometimes I have to try 3 or 4 times higher, even after my first extreme pick. Every now and then I will get jerked around 5 or six times and throw in the towel for the day.
In order to do this type trading, I have to read orderflow, because if I get stopped out and its a false break, I have to switch to a momentum entry and feel confident. If we are somewhere in the middle of swing highs and lows, I have to trade alot smaller and take profits quick.

Looking at the broad picture and studying tons of people who trade for their living. Most have records ranging from 60% to 70% daily win rates. And looking at all the tools that they all use. You can't find an orderflow expert that swing trades. They normally go for 2-5 points, where the 70% win statistics are.

One of the most useful parts of ofa is the volume clusters that print as little boxes on the momentum chart. (I would classify the cluster chart like an easy to read P&F chart) The vol cluster is the highest area of vol within that particular directional momentum run. It lists what %vol it is in relation to the whole bar. Greater than 50% is notable. The main thing to understand about a vol cluster is that is doesnt matter so much that a large cluster printed. It matters which side is going to gain control from that point. It gives you a defined line in the sand, because you know that when price leads 6-8 ticks (ES) off. The wrong side's stops should start to kick in. Using that little bit of info and combining it with, near s/r levels and so on, You can build strategies on fading stop runs or getting in and letting the stops slingshot you into a safety net. You can use this theory also on larger timeframes to identify stopruns out of wedges, flags, etc. You have to know why price shot out of the gate before you can trade it. I try to fade upside stopruns for my tightest stops.

The safest way to use the the cluster charts is to wait for the breakout and a pullback into the latest set of clusters that are jumbled together, so you know there is a solid war line.
Hope this helps a little.

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Nasdin94
Singapore, Jurong West
 
 
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Success favours the patient and courageous trader.

It's all in the psychology, how much pain can you see and take, how long can you wait?
Can you control your emotions? Trade to win, not trade just to open a trade and be in the market.

When you open a trade, you need to be sure that the trade you just made is a profitable one, you want to be a sniper, not a machine gunner.
A sniper, waits for the correct set ups, and everytime he "shoots" he gets the kill.
A machine gunner, just shoots in hopes that he'll somehow hit the target.

A novice trader would look for reasons to trade, while an experienced trader look for reasons not to trade.


It's all in the psychology on whether you become successful or not.

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 nakachalet 
siam, west coast andaman sea
 
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Init View Post
Knowing Orderflow trading without having a super reliable consistent foundation means nothing.
I am going to get personal and bold with this post because some of the things (not all) a person needs to make money consistently is to qualify EVERY trade (first) based on things in the market that are VERY, VERY reliable.

If you use these few things and absolutely never let a loser run, You will beat 90% of all traders. I have a ton of things that I use to raise the odds higher but I will list the foundation for which direction I go.
There are 2 things that cycle back and forth every day with such reliability that it's ridicules. And why anyone would not base their entire system of of this for reliability is beyond me. This is what i used for years in swing trading until I started a mission to time my entries in order to have NO visible drawdowns on my longterm P&L.
I will will answer your question when we get to the orderflow part.

The main things I monitor are total volume cycles and fear and greed cycles.
when you know these levels in extreme times all the way down to a normal chop session.(chop sessions are hard)
Your confidence will be so high that it almost makes you cocky.

I can short into any level I want to at extremes, The big money question is where in that level do I go, because IF there is another push higher, I have to cut my loss quick enough so I can short again at the next higher level. The reason I almost never have a down day is because at some point during that day, price will retrace some. But alot of times, I ride from the highest levels till I feel we have panicked to the downside. The main thing that will make you tons of money is quantifying in your head the vol levels in between swing highs and lows.

Me personally, while daytrading, can't stand to lose even a hundred dollars on one attempt. Because I know that if it is a day where longer time frame players are coming in, my normal panic volume levels may be off and sometimes I have to try 3 or 4 times higher, even after my first extreme pick. Every now and then I will get jerked around 5 or six times and throw in the towel for the day.
In order to do this type trading, I have to read orderflow, because if I get stopped out and its a false break, I have to switch to a momentum entry and feel confident. If we are somewhere in the middle of swing highs and lows, I have to trade alot smaller and take profits quick.

Looking at the broad picture and studying tons of people who trade for their living. Most have records ranging from 60% to 70% daily win rates. And looking at all the tools that they all use. You can't find an orderflow expert that swing trades. They normally go for 2-5 points, where the 70% win statistics are.

One of the most useful parts of ofa is the volume clusters that print as little boxes on the momentum chart. (I would classify the cluster chart like an easy to read P&F chart) The vol cluster is the highest area of vol within that particular directional momentum run. It lists what %vol it is in relation to the whole bar. Greater than 50% is notable. The main thing to understand about a vol cluster is that is doesnt matter so much that a large cluster printed. It matters which side is going to gain control from that point. It gives you a defined line in the sand, because you know that when price leads 6-8 ticks (ES) off. The wrong side's stops should start to kick in. Using that little bit of info and combining it with, near s/r levels and so on, You can build strategies on fading stop runs or getting in and letting the stops slingshot you into a safety net. You can use this theory also on larger timeframes to identify stopruns out of wedges, flags, etc. You have to know why price shot out of the gate before you can trade it. I try to fade upside stopruns for my tightest stops.

The safest way to use the the cluster charts is to wait for the breakout and a pullback into the latest set of clusters that are jumbled together, so you know there is a solid war line.
Hope this helps a little.

init dear

i did not mean for you to reveal half of your trading strategies....

but then, again, PROBABLY only those who trade for a living or on their way to consistent profitability, would be able to recognize gems hidden in your exposition.

many many thx.

so are you the gentleman/lady, or are you not; and have no interest whatever in this? where did i ever come across such prose before?

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 Init 
Raleigh North Carolina
 
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nakachalet View Post
init dear

i did not mean for you to reveal half of your trading strategies....

but then, again, PROBABLY only those who trade for a living or on their way to consistent profitability, would be able to recognize gems hidden in your exposition.

many many thx.

so are you the gentleman/lady, or are you not; and have no interest whatever in this? where did i ever come across such prose before?

Thats the wonderful thing about trading, We all know what the rules are, but the rules go against our basic human nature of the comfort in numbers. If I dont feel sick to my stomach when taking a trade, it wont be the best entry.
Do you know how hard it was today to short the 3rd greed push (on the retest 2or3 ALWAYS) while close to weekly highs (lots of buy stops) on news that the The IMF was going to double the rescue fund.

The reason was that the volume in each push was lighter and the second test of the first wick had lower depth and the buyers ran out of gas.
Here is a little tidbit to watch and test. If you come to a bottom or top and the DOM resistance is very thick and the market orders give up and price retreats. I will take profits early because More than likely, price will return to finish the fight.
Do you notice that the people who do read tape will only look at either T&S or the DOM.
I note down the volume and the depth on each test. It may be 2 hrs later when it tests again but it helps.

Thats why I am here at BM, to find some tools that will graphically display and the DOM & T&S together.
I will gladly pay whatever for it. My eyes are going, slowly

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 Surly 
denver, colorado
 
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Init View Post
One of the most useful parts of ofa is the volume clusters that print as little boxes on the momentum chart. (I would classify the cluster chart like an easy to read P&F chart) The vol cluster is the highest area of vol within that particular directional momentum run. It lists what %vol it is in relation to the whole bar. Greater than 50% is notable. The main thing to understand about a vol cluster is that is doesnt matter so much that a large cluster printed. It matters which side is going to gain control from that point. It gives you a defined line in the sand, because you know that when price leads 6-8 ticks (ES) off. The wrong side's stops should start to kick in.

@Init - have you seen this: Steidlmayer Volume Strips: J. Peter Steidlmayer

Its Peter Steidlmayer talking about his new market visualization tool called "volume strips" - the idea is exactly like what you're calling "clusters" - same idea of how to trade it too. I think the yearly license on the product is $300 but it is platform specific.

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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 nakachalet 
siam, west coast andaman sea
 
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Init View Post
Thats the wonderful thing about trading, We all know what the rules are, but the rules go against our basic human nature of the comfort in numbers. If I dont feel sick to my stomach when taking a trade, it wont be the best entry.
Do you know how hard it was today to short the 3rd greed push (on the retest 2or3 ALWAYS) while close to weekly highs (lots of buy stops) on news that the The IMF was going to double the rescue fund.

The reason was that the volume in each push was lighter and the second test of the first wick had lower depth and the buyers ran out of gas.
Here is a little tidbit to watch and test. If you come to a bottom or top and the DOM resistance is very thick and the market orders give up and price retreats. I will take profits early because More than likely, price will return to finish the fight.
Do you notice that the people who do read tape will only look at either T&S or the DOM.
I note down the volume and the depth on each test. It may be 2 hrs later when it tests again but it helps.

Thats why I am here at BM, to find some tools that will graphically display and the DOM & T&S together.
I will gladly pay whatever for it. My eyes are going, slowly

init

thx again for going into details

just spell out exactly in OPERATIONAL TERMS and SPECS what you need and how you like them to function and measure et cetera; in as much details as you possibly can....

i am sure many coders here would rise up to the challenge.... and show you what you have in mind is really not beyond their realm of creative imagination and all....

yes, i could almost see the setups you described above and they repeated themselves practically everyday across the board in practically almost all products.

as you know human natures always look for the greener grass across some neighbors' yardage....

if only they would settle on two or three directional setups, they would be so happy after six months.... imo, yes a one man opinion again....

happy and profitable trading, traders of all sizes, shapes and forms....

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  #486 (permalink)
 monpere 
Bala, PA, USA
 
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Init View Post
Thats the wonderful thing about trading, We all know what the rules are, but the rules go against our basic human nature of the comfort in numbers. If I dont feel sick to my stomach when taking a trade, it wont be the best entry.

I can't comment on what works for specific individuals, but overall, for the majority of traders, feeling sick to your stomach when you take a trade is not the sign of a good entry or a bad entry. For most traders, it is sign into their trading psychology. It says they either do not fully trust their method, or they are under capitalized (trading scared money).

For experienced traders, a trade is a trade is a trade, your account value should not be majorly affected by one trade, your courage should not be tested by any trade, your performance as a trader should not be judged by one trade, your self worth should not be affected by one trade, one trade should not make you anxious, happy or sad. Most traders who cannot overcome the majority of the above, will probably not be in this business for long.

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 Init 
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monpere View Post
I can't comment on what works for specific individuals, but overall, for the majority of traders, feeling sick to your stomach when you take a trade is not the sign of a good entry or a bad entry. For most traders, it is sign into their trading psychology. It says they either do not fully trust their method, or they are under capitalized (trading scared money).

For experienced traders, a trade is a trade is a trade, your account value should not be majorly affected by one trade, your courage should not be tested by any trade, your performance as a trader should not be judged by one trade, your self worth should not be affected by one trade, one trade should not make you anxious, happy or sad. Most traders who cannot overcome the majority of the above, will probably not be in this business for long.

feeling sick when I go to trade is just putting the mental tug of war into perspective. Meaning that the best R/R trades are the ones that are the hardest to do.
Before I place a trade, I do all my mental stressing and self doubting as the the range is setting up that I want to get in. (not jump in and then stress). Then when orderfow agrees, I jump in. Within 3 min, I am either out, or have a cushin.
I have trained my high emotions to work with me, not against.
I love to hear people say that I am not like most traders. It tells me I,m still on the right track.

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 nakachalet 
siam, west coast andaman sea
 
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@ Init

@mompepe

long time ago, i thoght really smart individuals they do have some SIMILAR characteristics, individualities and what not.

then, when my great-great-grandson went to take a qualifying exam into a first class govt prep school and passed and was accepted.

my knowledge and understanding of human behaviors changed completely.

those attending freshmen class, there were only 600+ that year out of about 10,000 applicants nationwide.

his classmate came in all sizes, truly amazing. many physically looked like they still belonged to upper elementary schools--so small and tiny in physical appearance. then there were those 6 footers, both male and female, so very tall and slender like bamboo sticks.

and many weighted no more than 40 kg. yet some looked like wrestlers, sumo type....

@ Init @mompepe, don't we agree that HOW we trade and WHAT we feel individually really does not matter at all.... just so each and everyone of us would consistently hear each and every time.... target filled.... target filled and more targets filled....

@ Init @mompepe.... cheers and happy new year, everyone.

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  #489 (permalink)
 Rad4633 
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In the real world I walked a different path thru the forest from the norm which has been very beneficial to me. But when I started trading a year and half ago I learned the same trading path as most other traders, I do not have to say anymore. So I am now sorting out my trading path.

Thanks again for sharing.....Your info was very informative
Richard

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  #490 (permalink)
Paige
Gainesville, Florida, United S
 
 
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Init -- Thank you for your contribution to this forum. It's refreshing to have someone who actually shares reasonable info with the group. Most here come across (to me) as quite paranoid about such things -- as if they really want to believe that revealing a personal startegy or set-up is going to change the course of market history! Are you kidding me --- most traders come across as so self-absorbed that they wouldn't believe the "Holy Grail" assuming *someone else* posted it!

Jstnberg (sorry-sp) I have always enjoyed your posts and contributions and have followed them since I became a 'simple' member. (Sorry I am not an ELITE or some other 'credentialed something or another member') Thank you for sharing what you share and I have tremendous admiration for your ability to acknowlege your weakness (in screen trading) after such a successful career on the floor. You're a really cool dude!

Privatebanker (if you are still on this thread ) -- Thank you as well. Like Jstnberg -- your posts are very important in my learning process.

Lastly, Tigertrader -- You have no idea how much I respect your opinions and posts -- yet at the same time -- the manner in which you often choose to address people while sharing your opinions are, in my opinion, just not a nice way to treat people or get your points across. If I wanted to come to you for advice or guidance, I wouldn't feel comfortable about doing so. Why? Because I don't care to be addressed arrogantly or be belittled when all I am doing is asking for help? And if you are not here to help me --then why are you here? If you have any intention of replying to me on this --please refer back to the first line of this paragraph before pressing "send"

Peace,
Paige

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 nakachalet 
siam, west coast andaman sea
 
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Init View Post
feeling sick when I go to trade is just putting the mental tug of war into perspective. Meaning that the best R/R trades are the ones that are the hardest to do.
Before I place a trade, I do all my mental stressing and self doubting as the the range is setting up that I want to get in. (not jump in and then stress). Then when orderfow agrees, I jump in. Within 3 min, I am either out, or have a cushin.
I have trained my high emotions to work with me, not against.
I love to hear people say that I am not like most traders. It tells me I,m still on the right track.


Paige View Post
Init -- Thank you for your contribution to this forum. It's refreshing to have someone who actually shares reasonable info with the group. Most here come across (to me) as quite paranoid about such things -- as if they really want to believe that revealing a personal startegy or set-up is going to change the course of market history! Are you kidding me --- most traders come across as so self-absorbed that they wouldn't believe the "Holy Grail" assuming *someone else* posted it!

Jstnberg (sorry-sp) I have always enjoyed your posts and contributions and have followed them since I became a 'simple' member. (Sorry I am not an ELITE or some other 'credentialed something or another member') Thank you for sharing what you share and I have tremendous admiration for your ability to acknowlege your weakness (in screen trading) after such a successful career on the floor. You're a really cool dude!

Privatebanker (if you are still on this thread ) -- Thank you as well. Like Jstnberg -- your posts are very important in my learning process.

Lastly, Tigertrader -- You have no idea how much I respect your opinions and posts -- yet at the same time -- the manner in which you often choose to address people while sharing your opinions are, in my opinion, just not a nice way to treat people or get your points across. If I wanted to come to you for advice or guidance, I wouldn't feel comfortable about doing so. Why? Because I don't care to be addressed arrogantly or be belittled when all I am doing is asking for help? And if you are not here to help me --then why are you here? If you have any intention of replying to me on this --please refer back to the first line of this paragraph before pressing "send"

Peace,
Paige

hear ye, hear ye

those who have gone on to the head of the line....

why indeed as paige said.... why on earth are we here traveling back in time....

if not only to help others stumbling along the road to consistently profitable trading, to have a smoother journey, also to the head of the line....?

thx much paige for reminding so many many arrogant souls among us to behave and just help without dispensing barbed wire or syanide to slow even further our fellow traders' learning curve....

thx again paige. have a very merry christmas and happy new year.

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 sharky 
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yes but everyone is different with a different personality,if we where all the same it would be a dreadful place to live.i also come across hard sometimes but i love to help people it is the one thing i enjoy more than anything else,good trading and merry Christmas everyone...sharky

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 jstnbrg 
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sharky View Post
yes but everyone is different with a different personality,if we where all the same it would be a dreadful place to live.i also come across hard sometimes but i love to help people it is the one thing i enjoy more than anything else,good trading and merry Christmas everyone...sharky

Actions speak louder than words. How many dozens of hours have you put into teaching others, strangers, with no financial reward?

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

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 nakachalet 
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sharky View Post
to many to count...sharky

yes, sharky, you're a doll and an exception.

i can almost vouch for you, can't i? LOL

merry christmas and happy new year to you and yours.

keep up your charitable character and may your charitable heart grow and multiply in coming yr.

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  #496 (permalink)
Paige
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Init,

A comment that you made a while back seemed to suggest that you opined that 'Scaling Out" of trades was beneficial. Is this your opinion and how you trade?

I've done some searching on this subject recently and it seems to be a rather controversial subject.

Any strong opinions on this subject here on this thread? (sorry, I couldn't easilly find a debate on this subject within the search engine here)

I tend to NOT believe that the correct answer is simply that it is a matter of 'personal choice' or "psychologicaly benefecial" to many traders. I'm guessing that it is either a correct play or an incorrect one.

Peace,
Paige

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 Jedi 
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Paige View Post
Init,

A comment that you made a while back seemed to suggest that you opined that 'Scaling Out" of trades was beneficial. Is this your opinion and how you trade?

I've done some searching on this subject recently and it seems to be a rather controversial subject.

Any strong opinions on this subject here on this thread? (sorry, I couldn't easilly find a debate on this subject within the search engine here)

I tend to NOT believe that the correct answer is simply that it is a matter of 'personal choice' or "psychologicaly benefecial" to many traders. I'm guessing that it is either a correct play or an incorrect one.

Peace,
Paige

I happen to believe in both scaling in and scaling out if you're trading size. If you're trading small, I still like scaling in but scaling out seems less optimal due to R/R. Everytime you enter a trade, you're risking your stop so your reward needs to be attractive. I believe scaling in and scaling out is an edge enhancer but scaling out works best with some size to both lock in some profits but have enough to run to target. Scaling in because S/R is often a zone and not so precise. Scaling out to lock some in for assuming the risk. I'm still not where I want to be with my trade size for optimal scaling in and out. Once I get to 10-20 contracts, I believe my edge, R/R and ratios will be further enhanced.. I'm speaking for myself with ES as the instrument.

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  #498 (permalink)
 Init 
Raleigh North Carolina
 
Experience: Advanced
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Paige View Post
Init,

A comment that you made a while back seemed to suggest that you opined that 'Scaling Out" of trades was beneficial. Is this your opinion and how you trade?

I've done some searching on this subject recently and it seems to be a rather controversial subject.

Any strong opinions on this subject here on this thread? (sorry, I couldn't easilly find a debate on this subject within the search engine here)

I tend to NOT believe that the correct answer is simply that it is a matter of 'personal choice' or "psychologicaly benefecial" to many traders. I'm guessing that it is either a correct play or an incorrect one.

Peace,
Paige

What alot of traders like and feel comfortable doing is the strict rule based methodology of setups, trade size, entries and type of exits.
In the beginning, You almost have to define your rules very firmly in order to be able to measure consistency. And with consistency comes confidence which brings bigger size.
The problem is that the same rules you start out with can only go so far before you need to start slowly applying those rules in a more discretionary manner to eliminate the qualified setups that you now know, have a low probability of working. I like to explain things with examples (People relate to real world examples)

About your question of "should you scale out or all out at once"
Lets say the ES is up 10, an hour after the open. I see a flurry of panic buying and then it went a little higher and was met by by huge depth and it had a fast triple top and could not bust through. Lets say I got short 5 lots and now price has moved down some.
For me, the way I read it. If price was rejected by heavy depth, I know that the odds are very favorable for at least one retest. So I would be on the lookout for a smaller bout of panic selling to exit all at once.
The same setup above except this time the buyers ran out of gas and the depth was chasing lower. I usually wait for larger scale panic selling and sell half there and see how high the bounce and how it acts on the test.

I try not to give any advice that I dont use everyday.
Every time you look at the market, you have to put your mind on the guy on the other side of your trade.
I boils down to one thing, ARE YOU SELLING BECAUSE YOU HAVE TO, OR BECAUSE YOU WANT TO...

Here is a little nugget: What do most people look for, large size traders, volume spikes, volatility etc.
That is what I look for just in the alert phase. The real decision making time comes when you see just the opposite after the first. Every range has that one little tiny make or break balance point. That one point where the micro volatility is super low and vol is holding back for that one large order to run through and tip the scale.
I can never find that one point until I am in a trade, then I narrow it down to a few seconds, but its too late at that point, so thats why I bail out if I am not right. I am trying to be more patient and put on a pilot position so I can wait for the break to add, but I cant handle the stress of a larger stop.
( I am referring to more prominent highs and lows instead of midrange chop)

For me, every trade requires different position size and the way exits occur, change after each bar passes.
I like to look at the symmetry of moves to get a general feel of maybe what to expect.
Which ever side takes longer to retrace is usually the real direction. Think about the psychology behind a sharp fast move down and a slow rise back up. Which side would you say was more scared. The scared money never wins over the long term.
Thanks

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 Linds 
Victoria, Australia
 
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Init said

"Which ever side takes longer to retrace is usually the real direction. Think about the psychology behind a sharp fast move down and a slow rise back up. Which side would you say was more scared. The scared money never wins over the long term."

Could you say a bit more about that Init? I would think that the slow choppy retrace is the one with less conviction and may have more scared money participants?

thx

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  #500 (permalink)
 Init 
Raleigh North Carolina
 
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Linds View Post
Init said

"Which ever side takes longer to retrace is usually the real direction. Think about the psychology behind a sharp fast move down and a slow rise back up. Which side would you say was more scared. The scared money never wins over the long term."

Could you say a bit more about that Init? I would think that the slow choppy retrace is the one with less conviction and may have more scared money participants?

thx

That is exactly what the market makes you think.
I am going to paste a story in here that I read that explains the market psychology beautifully.
Read it twice if you have to. It will explain a lot about price action and how to view it.

Trading on the BANDWAGON

Imagine a bandwagon that is rolling forward at a quickened pace. Music
that is very pleasing to the ear is being played from speakers on each side
of this bandwagon, and a few people currently on the back of the wagon
are partying, having the time of their lives. The music, loud and clear,
starts to attract many other onlookers that happen to be idly standing on
the sidelines. These onlookers, unable to resist the sweet sounds being
played, run to join the party that seems to be going on. Progressively,
more and more onlookers jump on the back of this bandwagon, and
those few who were initially enjoying the first phase of the party begin to
leave. As the crowd of new party animals on this bandwagon grows
larger, the bandwagon finds it harder and harder to move forward at the
same pace. It slows, enabling more and more late onlookers, witnessing
the great fun, the chance to jump on. The crowd grows even larger.
Larger and larger this crowd grows, until the bandwagon, heavily laden
with the bodies of drunken party animals, can no longer move forward.
It finally comes to a complete stop. Now that the bandwagon is at a com-
plete standstill, more people jump on. And why not? At this point, joining
the fun is easy. Absolutely no work is required, for individuals wanting
to join the crowd no longer have to run to jump on board. But the nature
of the bandwagon is to move forward. Its motionless state is unnatural,
and therefore cannot last. It tries to move forward again, but can’t. The
crowd, piled on back, is much too large. It must free itself of the heavy
burden. And it does. It quickly shifts into reverse, and jolts backward,
knocking a few of the party animals off the back. The music stops. Puz-
zled faces from the crowd begin to emerge. Before anyone figures out
what’s going on, another backward jerk takes place, only this one is more
violent. Another large group of people gets thrown off the back. Now, re-
ality sets in. The fun has turned into a nightmare of epic proportions, and
panic begins to run rampant. Some decide to jump to their deaths. An-
other thrust backwards sends an even larger group of drunken, off-
balance people, hurling to the muddy ground. It doesn’t stop. The jolts
backward continue, each successive one more violent than the last. At
this point, only a few die-hard wagon dwellers are holding on, their very
lives hanging in the balance by a very thin thread. Failing to be com-
pletely free, the bandwagon angrily puts the pedal to the metal, and this
final thrust backward is so vicious that its front wheels lift high off the
ground, momentarily suspending the wagon in a perpendicular posi-
tion. The last of the hangers-on crash to the ground, broken and maimed
to no end. At this point, a new group of onlookers emerge from the
nearby woods. They are clean and serene. Each movement they make is
deliberate and powerfully energetic, for they did not take part in the
tragedy that just transpired. Or did they? A few of the dejected souls ly-
ing on the ground take a closer look, a look that reveals something very
interesting. This seemingly new group is not new at all. It is the same
group that was seen quietly exiting the party before it came to its violent
end. An even closer examination by a few more beaten-down onlookers
reveals something even more stunning. This group not only exited the
party early, they were the originators of it! “My God,” someone exclaims.
Paralyzed, and unable to move freely, all these dejected souls can do is
watch, as the masters of the game go to work, again. No sooner does the
bandwagon’s wheels hit the ground than this professional platoon bolts
for the wagon. In a flash they are on board. Easy. The bandwagon, now
free of the larger crowd, can move forward freely and gracefully, com-
fortably carrying the more astute group with it. Its pace quickens, and
before long a smooth elegant stride is in place. After a few miles of unin-
terrupted movement, someone from this masterful group flips on a
switch, and suddenly the loud sounds of entertaining music start again.
Someone yells, “OK everyone. Here they come. Let’s do it again.” Within
moments, those who were the former victims of the backward crash be-
come interested again. The music almost calling them from the grave.
And once more, the never-ending cycle repeats.

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