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Trailer Park Capitol

  #51 (permalink)
 
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 michaelroth 
Gillette Wyoming
 
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I wasn't able to trade today- needed to sleep, but wanted this screen grab for analysis.


Day trading, so easy a caveman could do it.
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  #52 (permalink)
 
michaelroth's Avatar
 michaelroth 
Gillette Wyoming
 
Experience: Beginner
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How it started


This is how I see it going down this morning- ES moving from 4350 higher to 4366. 1 hour chart suggest that we are bouncing off the 200 SMA. Whatever happens, I plan to be in position to capture the move and retire the session with 8-40 ticks profit.


Day trading, so easy a caveman could do it.
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  #53 (permalink)
 
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 michaelroth 
Gillette Wyoming
 
Experience: Beginner
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Here's how it ended.

I started off with some technical difficulties. Basic strategies are, well, basic. The original strategy I made in the builder wouldn't let me adjust my TP and SL too well so I ended up giving money back. I pulled out another more robust strategy out, seeing how the entry's were similar and gave that one a go. Having fixed that. I was able to test my strategy idea, and make some profits.



As we can see here I did end up green for the day, and achieved my daily goal of 2-10 points, the errors I made today where of a purely technical nature so I think that once I get the strategy fully formed, and get in a little more practice I'll be ready to go live. Practice will be against market replay this weekend, and if I feel that I am ready and have the time I'll consider a run at it next week.

Good on me for coming up with and actually implementing a completely rules based strategy. I'll be a MF'er, the concept actually works.


Day trading, so easy a caveman could do it.
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  #54 (permalink)
 
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 michaelroth 
Gillette Wyoming
 
Experience: Beginner
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Friday Night Fights

Replace fighting with trading and you'll find that what Connor McGregor has to say poignant in the pursuit of profits. Sometimes we find exactly what we need in places we don't expect to find them. The best trading tools, tips and tricks just might come from outside the tradosphere, and the greatest weapon against the market- is you.


Day trading, so easy a caveman could do it.
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  #55 (permalink)
 
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 michaelroth 
Gillette Wyoming
 
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Staying out of Contraction

My goal is to become financially independent. My priority is to become a good and profitable trader. I accomplish this by making small, measurable improvements every day.

The aim of trading is to have a well enough understanding of the information provided about price in order to make an educated guess about it that turns out to be profitable. If we don't truly understand that information well enough, we will be uncertain and therefore fearful. Instead of making an educated guess, we make wagers. This is what truly separates traders from gamblers- a well enough understanding of the information provided about price.

Call it what you will, a phase, a cycle or a wave, price moves in patterns. The pattern I see is that of expansion and contraction. When expanding, price moves farther, forms structure, or starts to trend, and when contracting, price moves less and becomes less predictable. Therefore, my first consideration when trading is to ask whether price is expanding or contracting, and my choice is to trade only when price expands.



Identifying Expansion and Contraction

On this chart we can see thee distinct times and areas where price was clearly behaving in a specific manor. In areas 1 and 3 price is trending, whereas in 2 its stuck in a tight range. This characterized in the indicator. in 1 and 3 ADX is high (+25), DM crosses are larger, longer, and less frequent, whereas in 2 ADX is consistently below 25 and DM crosses are small and frequent. Therefore I consider areas 1 and 3 as expansion, and 2 as contraction.

Trading Expansion, not Contraction

One will lead to another. When in contraction, look for DM crosses that are larger than the last and an ADX that angles above 25. When this happens, start taking trades on DM crosses. When the ADX value starts to falter, making its way back under the 25, when the DM crosses once again become small and frequent, then stop taking trades, and wait for the cycle to begin anew.

Day trading, so easy a caveman could do it.
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  #56 (permalink)
 
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 michaelroth 
Gillette Wyoming
 
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The fallacy of the Myth of Bulls and Bears

The challenge that face as modern traders is not that we lack information, but that we have so much information that it becomes difficult to filter it and find what's useful. We can never truly know all the information that factors into the movement of price. At the most basic level price moves because all those participating in the market are seeking to profit from buying low and selling high. All those who do, do so by their own designs and in their own time. Seeking profit is the only motivation that drives price.

Don't waste your time trying to second guess what other market participants are doing. Spend your time wisely and identify what information will lead to being profitable.

Day trading, so easy a caveman could do it.
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  #57 (permalink)
 
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 michaelroth 
Gillette Wyoming
 
Experience: Beginner
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Where Contraction and Expansion Can be Found, and why

Perhaps the most useful information we are provided with is where price was, how it was behaving at that time, and where it is now. To forecast where it will be in future and how it will behave then is perhaps the art of trading.

We are given many tools to accomplish this task. We know that prices tends to react at certain levels- we call this static and dynamic support and resistance. we know that price tends to move in certain patterns, at times making higher highs and lower lows, at other times ranging or consolidating. This is structure. The only way you will ever know if this is true and therefore useful is by observing and identifying these in real time and seeing them work.

Where price reacts we tend to see contraction, and its the areas in between where price Expands. Key landmarks I like to think as "Areas of interest". I am only interested in these areas because price TENDS to react to them, there's no guarantee that price will. After all- Price gonna do what price gonna do. These areas include support and resistance, moving averages, the VWAP and the point of control. There is reason that this happens. Price moves in one direction when more participants are either buying or selling, and move in no direction when this is not true.



1. Price retests the high of the day, a previously known level and is rejected. We might not know what will happen, but we can anticipate something will.
2. Price reacts to VWAP. Again, you could have seen that coming.
3. Was a previous area of strong support. It worked again.
4. This contraction takes place at the point of control where the big dogs are fighting it out. Trust me, your not a big dog. Wait it out.
5. We see that things are picking up, but what really happens? It looks like things are starting to move higher, but price reacts to VWAP and then sells off. You might have thought we were going higher, but in thinking so would have got burned. Don't buy and sell what you think, Buy and Sell what's really happening.
6. Some people probably thought this was the bottom. Some people probably took profit here. Some people probably thought we were going to go back higher. Some people made money, others lost it.
7. Another previous S/R level, another reaction.

We all tell ourselves a story as the trading day unfolds right before our very eyes. If the story that your telling yourself matches with what you are seeing happen, if you know when and where things might change, and they do, then there is a chance you might profit from it.

Day trading, so easy a caveman could do it.
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  #58 (permalink)
 Deetee 
Amsterdam, The Netherlands
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matthew28 View Post
You have the enthusiasm, my only advice would be to take it slowly and start trading sim in a realistic fashion, ie mimicking the number of contracts and risk you will take with a funded account.

If you can make some profit there consistently for a while, not just a few lucky days, then start trading real money as small as you can.



Not meant as a dampener on your spirit, but the Gamestop blowup was only a few months back so you haven't had much time for practical experience yet or to have settled on a trading methodology, style, timeframe, product that suits you.

There is loads of time to make money once/if you gain consistency, most people never make it that far because they are too impatient and start too quickly so losing what small amount of capital they had to start with.



Either way, I hope it goes well.

Totally agree with Matthew. First sim till consistent profitable. Then start small. Making accumulated profits? Then increase your risk

Be smart, take it slowly.
Good trades

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  #59 (permalink)
 
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 josh 
Georgia, US
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michaelroth View Post
At the most basic level price moves because all those participating in the market are seeking to profit from buying low and selling high. All those who do, do so by their own designs and in their own time. Seeking profit is the only motivation that drives price.

This isn't quite accurate. I suppose we can say that the vast majority of people have the ultimate goal of profit -- that is, the underlying, root, most core motivation for participation in markets as a whole is indeed profit. But it's not possible to reach that conclusion for any given transaction (or a series of related trades) looked at in isolation.

Many newer traders (and many older ones too) make the mistake of oversimplifying the interwoven webs of world markets and thinking that everyone has the same simplistic motivation they do: that if they buy something, they hope it goes higher. This just isn't true. Sophisticated market participants are rarely outright in nature, and are rarely fully exposed to directional risk.

A few examples of trades:
* Billions of dollars worth of USD is bought in the EUR/USD spot/forward FX market.
* A monster trade goes off in SPX options, at the 1000 and 2000 strikes.
* Huge trade occurs in crude oil at $72/bbl in the December contract, after which crude sells off
* 10K Dec 3500 SPX puts are bought, and 10K Dec 4500 SPX calls are sold
* Tens of thousands of ES futures are sold at the open and the market falls

Possible explanations:
* A European company needs to pay a US-based company in USD for $billions worth of equipment. Perhaps the Euro buyer is an American company who needs to buy goods and services from a European company.
* This is a box spread, which is effectively a delta neutral, OCC-backed loan between a lender and a borrower
* Oil producers are selling, locking in their cost to deliver. On the other side of the trade is Delta airlines, buying to hedge their fuel costs for a predictable 2021.
* A big investor who just invested in a balanced SPX-based portfolio of stocks wants to hedge downside risk, while financing that insurance by selling calls.
* After a market maker sold to open a big put options position, he sells ES futures to reduce/eliminate his delta.

The uninformed investor or trader looks at those transactions and naturally thinks that everyone else wants to do just like he does. While markets have speculators, they are also used to simply conduct business.

* The european company in the first example doesn't cares about the rate once the transaction is complete.
* Neither buyer nor seller in the box spread in #2 is taking any directional risk. The buyer makes profit from the effective rate of return, but he doesn't care what happens in the market, period, after this is done, because he's delta neutral and has offsetting positions, and a guaranteed return. The seller is borrowing money, and presumably hopes to use those proceeds to generate alpha elsewhere.
* Oil producers are hedging, and have zero interest in whether crude goes up or down up until the delivery date. Same for Delta airlines. They know their cost, and they don't much care for quite some time.
* The investor certainly doesn't want the market to fall, which results in him making money on his puts. He's rather that insurance never be used.
* Market makers generally strive to be delta neutral, and will buy/sell ES to hedge SPX exposure.
* I didn't mention an interest rate example, but obviously, being the largest market on the planet (besides FX), transactions here amounting to trillions of notional are executed all the time. You don't think that someone buying a few tens of billions worth of bonds is simply looking for an increase, and then going to get flat, do you?

You could make the argument that the root motivation for any of the parties above is to make money, and I think that's a pretty safe bet. But any one of those transactions, viewed in isolation, doesn't really say anything about the motivation for the trade.

The theme here is that markets exist for more than outright directional speculation. Outrights are the "trading 101" of markets, but when dealing with large sums of money, no one takes purely directional risk, not very often anyway. It's easy for the average Joe to get involved in the game when it's "buy low, sell high." But there is a lot of machinery surrounding this. So, when you see markets going up or down, don't make the mistake that you think you know why.

The good news is that for trading outrights like most of us do, it really doesn't matter why. If it's going down and you're short, you make money, and vice versa for longs. So, my point is not that you should understand all of the above, even though I think it's worthwhile to do so. The point is that it really doesn't matter, so to assume a motivation that the participant wants the market they're buying to go higher is not as likely as you may think.

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  #60 (permalink)
 
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 michaelroth 
Gillette Wyoming
 
Experience: Beginner
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Trading: futures
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kevinkdog View Post
My thoughts/advice:

Finally, a 1 month test, even with 1000 trades, is IMO insufficient. This goes back to the flavor of the day comment I made earlier. What worked a month ago might not work today.

You would know.

I just realized who you are. I've been watching your webinars on YouTube for like a week straight. I'm just getting started here, trying to figure it all out.

Day trading, so easy a caveman could do it.
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