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Advice from traders with 5+years experience
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Advice from traders with 5+years experience

  #11 (permalink)
Elite Member
Williamsburg, VA
 
Futures Experience: Intermediate
Platform: ThinkorSwim
Favorite Futures: Stocks
 
worldwary's Avatar
 
Posts: 523 since Mar 2010
Thanks: 259 given, 788 received

I have made many trading mistakes over the years but the worst of them have all stemmed from a single cause: trading too large a position.

My advice is to trade small, especially at the beginning. If you're tempted to trade 1000 shares, trade 100 instead. Large positions mess with your head and cause you to make emotional errors.

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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  #12 (permalink)
Trading Apprentice
Las Vegas
 
Futures Experience: Intermediate
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Favorite Futures: Drums...ZN, 6E, TF, CL
 
MoneyHor's Avatar
 
Posts: 23 since Nov 2011
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Revenge trading - don't do it. If you find yourself obsessing about a big loss/mistake then stop trading until you're over it even if it means stopping for the day.

After every loss or win now I take a 5 minute break before taking any new trades. It actually helps.

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  #13 (permalink)
Membership Revoked
toronto canada
 
Futures Experience: Intermediate
Platform: NinjaTrader Multicharts
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Favorite Futures: nq,tf,es,6e
 
Posts: 9 since Feb 2012
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They say, thre are 4 types of trades: 1. Big winner
2. Small winner
3. Small looser
4.Big looser
A trader need to avoid only one trade - Big Looser. sounds simple

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  #14 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
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Posts: 46,240 since Jun 2009
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Private Banker View Post
Educate yourself. The CME's website is an excellent source to start out with. What did you study in college? Finance hopefully. Your profile states that you're in Chicago, correct? You happen to be in the Mecca for futures trading. Maybe ask your broker if they know anyone you could sit down with and learn from. Sitting and watching with a professional trader will be the best way to get an initial view of how to do this correctly.

In addition to that, here are some general things to follow:

- Do not trade cash until you're consistently profitable on SIM.

- Make sure you're well capitalized.

- Trade SIM the same way you plan to trade live including appropriate market vs. your risk tolerance, appropriate position sizing and realistic risk:reward ratios, stop placements, etc.

- Start small even if you have a sizable account. Start with small positions to get a feel for trading with cash and overcome the psychological hurdles associated with it. Do not go max leverage.

- Do not scalp trade. Look to only take a few trades per day while learning that have reasonable targets. This will avoid over trading.

- Institute a daily loss maximum. You want to be able to come back the next day and try again.

- I mentioned educate yourself. This means learning multiple methods. Do not try to duplicate someone else's method. Take what you like from various methods you learn and create something on your own that suits your trading goals. Trying to duplicate/copy someone else teaches the wrong habits. You need to think for yourself which is one of the most crucial elements in trading.

- Keep it simple. Do not try to utilize a strategy that has a complex set up criteria with a bunch of bells and whistles. You need to have clear signals.

- Do not strike out on the quest for the indicator holy grail or trading method. You need to learn the fundamentals of the markets. One thing you'll see is people looking for the fast easy way to success. I think this has a huge impact for reasons many fail. They aren't willing to do the work and learn the basics. Do not go out and buy a bunch of fancy indicators or pay for a trading method.

- Do not only utilize small chart intervals. I've seen a lot of people trying to trade with a myopic perspective. You don't want to be navigating a map with a microscope. Look at multiple time frames to see all the important areas that will have an affect on price. An example would be, looking at a five minute chart with higher intervals to see where the OTF traders may step in. One of the reasons traders use smaller time frames is an attempt to justify using a small stop. That's a fools game there and you'll have a tough time with that.

- Make sure you have good equipment but don't over do it. Have a solid trading only computer while using a trading platform and data feed that is fast and dependable while keeping your overhead low.

- Study your screens as much as possible even if you're done trading for the day. It's important to learn how your market moves as each market has their own unique personalities. ES is far different than CL and 6E is far different than ZB for example.

- As far as trade/money management goes, do not exit your trade early because you're "afraid" the market will turn on you. Let the market take you out. As you become more familiar with trading, you learn when something isn't right about your entry and you'll know when to get out. But while learning, you should avoid this because you'll find yourself getting out of winning trades.

- Determine an appropriate market to trade based on your account size and the risk you can take on. Do not trade a particular market based on how much money you can make. It's all about how much you can potentially lose if you're wrong. Many traders get caught up in this and you know what happens next. Your risk/uncle point should be consistent with the market you're trading based on it's volatility. If you can only risk a small amount per trade, maybe trade a small tick size/low(er) volatility market.

- Do your homework before each trading day with a game plan based on what you'll do if the market ends up here or there. What will you be looking to do? This avoids impulse trades or simply chasing the market.

- Remain humble in good times and in bad. If you're doing well and you start to get cocky, guess what happens next? The market will find you. Treat trading with as little emotion as humanly possible (not easy). Behavioral finance is one of the biggest hurdles we face.

I'm sure there's a lot more to be said here. Feel free to ask anyone questions.

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Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
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  #15 (permalink)
Elite Member
desert CA
 
Futures Experience: Intermediate
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Interesting there are proponents for both fewer bigger trades vs. scalp trading. With the usual cons being bigger losses vs. over trading. I would like to think both have a respectable place in trading and neither is invalidated nor unrecommended for a student trader.

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  #16 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
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Cloudy View Post
Interesting there are proponents for both fewer bigger trades vs. scalp trading. With the usual cons being bigger losses vs. over trading. I would like to think both have a respectable place in trading and neither is invalidated nor unrecommended for a student trader.

I try to discourage scalping simply because most people over trade as it is, and scalping makes things 100x worse. In addition, you are at a severe disadvantage when scalping due to latency and entry costs (transaction costs). Let the machines do what the machines are better at, which is scalping.

Scalping also tends to lend itself to people making the worse trading decisions, like having much bigger stops than targets.

That said, as always, there is no right/wrong. Obviously there are a lot of traders that do exceptionally well scalping, even paying "level 1" commission prices (full retail), with no major discount level, no seat discount, and even doing it from far away countries with high latency. I think like most things in life, anything is possible

But I think that most people simply have a higher chance of success if they will not scalp. People tend to think scalping is the only way to minimize risk ($$$). Instead it is death by a thousand cuts, for most. If they would trade bigger chart time frames, bigger targets, and bigger stops --- while reducing their position size or trade a micro instrument --- they will achieve the same small risk $$ while increasing the chance of success.

Naturally, nothing is free. Trading micro's has a higher transaction cost than trading full sized futures. So you just need to find the sweet spot that works for you.

At the end of the day, I think that beginners probably have more luck swing trading than they do day trading, however. And scalping is at the far end extreme of day trading, meaning it is 100x more difficult to be profitable.

Just my opinion...

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #17 (permalink)
Elite Member
Houston,Tx
 
Futures Experience: Advanced
Platform: NinjaTrader
Broker/Data: Mirus Futures/Zen-Fire
Favorite Futures: TF
 
ThatManFromTexas's Avatar
 
Posts: 2,302 since Feb 2010
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Do what works for you ....

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #18 (permalink)
Elite Member
Near Vancouver BC CANADA
 
Futures Experience: Intermediate
Platform: NinjaTrader -- IB
Favorite Futures: Futures
 
cme4pif's Avatar
 
Posts: 32 since Mar 2011
Thanks: 28 given, 56 received

Preserve Precious Capital

Never bet the farm, your family and your current/future children are counting on you.

On the top of my monitor is a sticky it says:
Preserve Precious Capital

Oddly you will find that money management beats having an edge.
Forget about finding the perfect indicator or system.
Instead, buy with care, jump out at the first sign of trouble and trade small, very very small.
Don't try the ES until you can beat the IWM.
Don't try the IWN for real until you can sim trade it.

More about money management here:

Learn the idea that casinos don’t make there money based on the “edge” of the game but in fact do make there money based when the player runs out of money. Dr. Tharp and Ralph Vince talk about the risk of ruin even in a game 60% in your favour.
Here is a copy found all over the net:
http://www.otrader.com.au/dloads/difficultmakemoney.pdf

What this says is that a casino would still win even in a 50/50 game like coin toss.
Also in effect it says if you built an automated trading system that can win 60% of the time, if it bets a big part of your account, it will still blow up your account. We know this as getting through a drawdown.

Good luck . . .

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  #19 (permalink)
Elite Member
desert CA
 
Futures Experience: Intermediate
Platform: NT7, TOS
Broker/Data: AMP/wCQG, TDA
Favorite Futures: CL,YM
 
Posts: 2,027 since Jul 2011
Thanks: 2,211 given, 1,551 received

Good points about scalping side effects Big Mike. I've noticed I have a harder time going for and holding out for bigger targets and how to trade runners since I've been habituated on scalping the last 6 months. And this is a hurdle I need to work on as well as exposing weakness in entry and setup recognition since a scalper tends to trade off of a much smaller focus on the charts of the smallest time frames. I probably stand corrected in that maybe it's better for most new student traders to learn how to trade for at least 10, 15 ticks depending on instrument, and learning to adjust risk/reward ratio and getting confident that way before learning to scalp so as not to be limited as much by the habits formed from scalping alone. I'm not a 5+ year daytrader, more an almost 2 year, so just my personal experience.


Last edited by Cloudy; March 7th, 2012 at 05:27 AM.
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  #20 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,352 given, 83,223 received


I would call 10 ticks a scalp, but I understand your point.


Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote

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