133usd 

I don't recall where I heard the statistic about the 40%-60% of the high/low is within the first 1.5 hours, but I continued to see it often in my observations. ...... ..... The best rule I've ever created is to stop trading once you hit a daily profit goal, that way you don't give back your profit. A lot of times I can be done in 1-3 hours each day.

-- Hello, I would like to know if there is any study on the benefits vs risks of stopping to trade after hitting a daily profit goal ($). I can see some reasons of stopping, for example after trading a few hours one may get tired and difficult to focus therefore would have higher risk of making mistakes. But that's based on time and energy, not based on a $ limit of profit. What if the profit of the day has been lacking (has not reached the daily profit goal yet), then the trader should also not continue to trade after the time he can concentrate to trade has passed ...

In addition, if I am on a winning streak because I am in the zone and the market is providing me the opportunities I am good at taking, and I am still feeling confident (not getting tired) about it, why should I stop pressing the winning clicks just because after a certain preset time has passed?

Should our "best rule" be changed to not base on $ goal but on attention span? But then I don't know how to measure attention span. Maybe someone here can help. Thank you.

Bill

Rustic 

I understand and appreciate your example, but I don't see how this is using the statistics you mentioned. If the chances of the price breaking out to either side is X% or Y% was not really a factor in your decision making..

One way I like to think of this is... if today opens in the middle of yesterdays range for instance then drops but makes a higher high double bottom above yesterdays low then fires back above the open... theres a good chance that the market just printed the low of the day. And if its not you'll know quickly enough because if it breaches below todays low the markets are probably heading lower or in a trading range. All which are signs pulled from those statistics.

Good trading!

Sent using the NexusFi mobile app

Rustic 

I recently came across some very interesting articles that discuss statistical evidence of certain price behaviors during the trading day that could be taken advantage of when trading. Al Brooks is one example of a discretionary trader that uses statistics such as - in 90% of the days the high or low of the day happen during the first 1.5 hours of the day - as a trading edge. Are there experienced traders here who successfully use such statistical edges in their trading? which ones?

Well, it's definitely good knowledge to have but still need to pay attention to price action and implied opening ranges.

Billiwon 

-- Hello, I would like to know if there is any study on the benefits vs risks of stopping to trade after hitting a daily profit goal ($). I can see some reasons of stopping, for example after trading a few hours one may get tired and difficult to focus therefore would have higher risk of making mistakes. But that's based on time and energy, not based on a $ limit of profit. What if the profit of the day has been lacking (has not reached the daily profit goal yet), then the trader should also not continue to trade after the time he can concentrate to trade has passed ... In addition, if I am on a winning streak because I am in the zone and the market is providing me the opportunities I am good at taking, and I am still feeling confident (not getting tired) about it, why should I stop pressing the winning clicks just because after a certain preset time has passed? Should our "best rule" be changed to not base on $ goal but on attention span? But then I don't know how to measure attention span. Maybe someone here can help. Thank you. Bill

Hey I'll take a swing at your question Billiwon! And let me say first, there is no correct single answer, it will be highly dependent on the trader and his strategy, as well as psychology of that trader. But also thank you for quoting my post and bringing this up, because I am now re-thinking this!

I would say, if the trader is a novice, struggling, or hit a recent losing streak, trade 1 time window and that's it. Don't take trades outside of that time window. Once you are profitable and steady, go ahead and add a 2nd small time window in which you will scan for opportunities.

At this point, I do great in the morning, and part of that is due to attention span for sure. The rest of my day is very choppy and busy in my personal life, but so long as I can sit down and focus and clear everything out of my way, there's a chance I could take 1-2 shots in the afternoon closing hours. The only way I will earn more is to not impose a strict limit on daily target profit, because I have seen great setups in the afternoon and simply not taken them...then again, I'm usually pretty distracted, but I can find ways to clear the distractions and "zero in"

Then again, I have to monitor myself to ensure I am not forcing trades, which could happen anytime. If I can push things to the side and focus, I would like to see if I can continue to make money beyond my target daily profit.
As a mini-case study I'm going to give it a shot this week and I'll let you know how it went for me personally.
Because it did get my gears turning. My style of trading would work great in the volume surge of closing hours of the US day session.

Here's another example using $ADD (advance/decline):
If $ADD>0 there is a 65% probability that SPX will close higher than its open and $ADD<0 indicates a 60% probability that SPX will close lower than its open.
These numbers get better for higher values, for example, $ADD>500 indicates a 69% probability that SPX will close higher than its open. $ADD<-500 indicates a 63% probability that SPX will close lower than its open.
These numbers are based on historical data running from 5/13/2011 to 5/21/2020 - just over 9 years of data.

133usd 

Hey I'll take a swing at your question Billiwon! And let me say first, there is no correct single answer, it will be highly dependent on the trader and his strategy, as well as psychology of that trader. But also thank you for quoting my post and bringing this up, because I am now re-thinking this! I would say, if the trader is a novice, struggling, or hit a recent losing streak, trade 1 time window and that's it. Don't take trades outside of that time window. Once you are profitable and steady, go ahead and add a 2nd small time window in which you will scan for opportunities. At this point, I do great in the morning, and part of that is due to attention span for sure. The rest of my day is very choppy and busy in my personal life, but so long as I can sit down and focus and clear everything out of my way, there's a chance I could take 1-2 shots in the afternoon closing hours. The only way I will earn more is to not impose a strict limit on daily target profit, because I have seen great setups in the afternoon and simply not taken them...then again, I'm usually pretty distracted, but I can find ways to clear the distractions and "zero in" Then again, I have to monitor myself to ensure I am not forcing trades, which could happen anytime. If I can push things to the side and focus, I would like to see if I can continue to make money beyond my target daily profit. As a mini-case study I'm going to give it a shot this week and I'll let you know how it went for me personally. Because it did get my gears turning. My style of trading would work great in the volume surge of closing hours of the US day session.

Hello 133USD. Thanks for your feedback. I am not a novice but I do get tired or distracted like most traders. Your thinking and mine are very similar. After trading in the morning, I take a break, and come back to hone in to try to catch the market closing trend (if there is one). I'd be very interested to hear about the result and new ideas of your mini-case study last week. Thanks. Bill

Billiwon 

Hello 133USD. Thanks for your feedback. I am not a novice but I do get tired or distracted like most traders. Your thinking and mine are very similar. After trading in the morning, I take a break, and come back to hone in to try to catch the market closing trend (if there is one). I'd be very interested to hear about the result and new ideas of your mini-case study last week. Thanks. Bill

Quick response: Sometimes it's worth it to continue after daily profit target hit, results for me were mixed. Only worth it if I keep my size small and strictly filter my setups.

It was somewhat beneficial to continue trading after I hit my daily target profit. It wasn't a whole lot better in terms of profit, but there was plenty of days where I would pad my pockets with an extra $50 or $80.

There were also plenty of losing trades where I would end up chasing my tail or giving back my "extra" profit. When the tape slows down in the evening, I've decided that IF I take extra trades, I would take them with smaller sizes, and try to let the market come to me instead of entering at market. When the tape is scrolling slow and the price action is slow, might as well wait and let it come to me. I definitely try to trade differently as compared to the US open.

Yes my limiting factors are: Being tired or distracted with family life (kids). I think that is why I have loosely formed my "rules" around my lifestyle, which is why I stop while I am up in profit at a daily targeted amount. Some of the days I was simply forced away from my desk due to those factors obviously.

Basically I have to be more strict if I operate outside of the first 3 hours of the US open. I try to keep size smaller, stops wider, and let the market come to me more & setup limit orders. The big thing I am doing is to ask myself if there's really a setup or am I forcing it? There were a few times I was forcing it yes, which still wasn't that bad, it just wasn't ideal.

This past Sunday going into Monday (euro hours) was excellent for me, but I ended up chasing my tail a little bit too much. The conditions were perfect and I definitely could feel/see it, whereas today mostly all day was fairly slow and so I sensed that I would stick to my "daily target profit & quit" Mostly due to the rangey feel of the PA and no huge breakout moves.

So it went well and as I expected. Some days I was totally better off walking away at daily profit target and ignoring additional setups, as valid as they seemed. Trading is just like so many things in life that has a lot of gray areas where it's not really black or white 100%. That is the struggle. That is when art and science mingle together.

133usd 

Quick response: Sometimes it's worth it to continue after daily profit target hit, results for me were mixed. Only worth it if I keep my size small and strictly filter my setups. It was somewhat beneficial to continue trading after I hit my daily target profit. It wasn't a whole lot better in terms of profit, but there was plenty of days where I would pad my pockets with an extra $50 or $80. There were also plenty of losing trades where I would end up chasing my tail or giving back my "extra" profit. When the tape slows down in the evening, I've decided that IF I take extra trades, I would take them with smaller sizes, and try to let the market come to me instead of entering at market. When the tape is scrolling slow and the price action is slow, might as well wait and let it come to me. I definitely try to trade differently as compared to the US open. Yes my limiting factors are: Being tired or distracted with family life (kids). I think that is why I have loosely formed my "rules" around my lifestyle, which is why I stop while I am up in profit at a daily targeted amount. Some of the days I was simply forced away from my desk due to those factors obviously. Basically I have to be more strict if I operate outside of the first 3 hours of the US open. I try to keep size smaller, stops wider, and let the market come to me more & setup limit orders. The big thing I am doing is to ask myself if there's really a setup or am I forcing it? There were a few times I was forcing it yes, which still wasn't that bad, it just wasn't ideal. This past Sunday going into Monday (euro hours) was excellent for me, but I ended up chasing my tail a little bit too much. The conditions were perfect and I definitely could feel/see it, whereas today mostly all day was fairly slow and so I sensed that I would stick to my "daily target profit & quit" Mostly due to the rangey feel of the PA and no huge breakout moves. So it went well and as I expected. Some days I was totally better off walking away at daily profit target and ignoring additional setups, as valid as they seemed. Trading is just like so many things in life that has a lot of gray areas where it's not really black or white 100%. That is the struggle. That is when art and science mingle together.

Hi 133USD, I also trade PA, with a few other indicators to help me get a feel of the market edge, probably similar to your approaches. Through our discussion, it appears that it is the lack of market activity that causes problems with our trades and reduces our profitability, usually several hours after the US day session open. So thinking this way, maybe instead of stop trading after a daily profit goal is reached, we use something to measure the lack of market action to stop trading. We both feel that we could still trade and be profitable (smaller sizes) as long as the market stays active and sets up to give us an edge for the trade (in your case using limit orders for example). I wonder what kind of indicator could give us that kind of measurement. Something like an expanding ATR, or a rising ADX? Not sure. What do you think?
Thanks. Bill

Any of you guys use volume profile? can you elaborate?

Billiwon 

Hi 133USD, I also trade PA, with a few other indicators to help me get a feel of the market edge, probably similar to your approaches. Through our discussion, it appears that it is the lack of market activity that causes problems with our trades and reduces our profitability, usually several hours after the US day session open. So thinking this way, maybe instead of stop trading after a daily profit goal is reached, we use something to measure the lack of market action to stop trading. We both feel that we could still trade and be profitable (smaller sizes) as long as the market stays active and sets up to give us an edge for the trade (in your case using limit orders for example). I wonder what kind of indicator could give us that kind of measurement. Something like an expanding ATR, or a rising ADX? Not sure. What do you think? Thanks. Bill

I don't know anything about the ADX indicator but expanding ATR could help gauge activity yeah. I usually just look at the speed of the actual tape (time and sales) as it reacts to levels. Right now it's crawling really slow, obviously. The less lagging the better, imo. So yes the lack of activity causes problems for us. Knowing when to trade is huge I think. And then knowing what strategy will work given the conditions and if the conditions are actually slowly changing before your eyes, and to be able to sense that in real time in order to say "hey I usually stop when I've made $200, but this can be an exception due to XYZ"

Last night I traded euro session and was able to make $200 and then got some sleep. Came back at US open in order to see if I could at least add to that a little more (pushing myself a little bit to test myself and my rule). I expected price to stay range bound, made $75 extra and quit, but the conditions were not easy for me today.

Stopping while ahead for the day is probably due to an emotional need of feeling some amount of certainty, which I admit isn't the best practice! Many times it works out in my favor, but I've also missed countless setups too. Several times a day I am "feeling out" my emotional state. Am I forcing a trade? Am I chasing? Am I frustrated?

Volume profile is interesting, but I don't yet use it or fully understand how I could use it (would like to use it though or have it as a reference), other than high volume areas are congested popular entry points and the low volume points can be traded through very quickly, due to a lack of volume there. The higher volume spots can support or reject price at times. So based on what I know about volume profile, that would at least help filter trades, if one decides to continue after hitting a "target daily profit".