I am wondering how to look at "indicators" in a useful way. It seems that using the MACD, the Stocastics and the ATR has in NO way aided me in interpreting the ESmini at all. I assume i am using these tools incorrectly.....
Regardless of how many training vids or books i read it just seems as though I CANNOT get on the good side of a trade! I am fortunate in so far as i haven't lost "the farm" yet but at this rate its only a matter of time. I feel as though I am driving blind.
Also, I am wondering why the bar timer on the Ninja Trader7 platform lags so badly....
Any thoughts or points of view would be greatly appreciated.
I will take a shot at this. However, it will be somewhat like @Big Mike's standard advice; he may want to add it in here.
First, going into the futures game armed with indicators, and wanting to do better by understanding your indicators better, is probably not going to work out well for you. It generally does not. Everyone and their uncle knows about MACD and the rest. If they were the key, everyone would be rich. Instead, everyone pretty much makes the same mistakes, and generally end up blowing up their accounts.
The reasons people lose so often in futures has to do with (and this is not necessarily a complete list):
- Being undercapitalized, which screws with your mind because it makes you emotionally off-center when faced with losses
- Trading a highly leveraged instrument, with small margin. This means the losses will come quick and will be shockingly big.
- Trading too short a timeframe. The tendency with many traders is to try to take quick, small profits to keep their risk down. (That would be maybe a couple of points in the ES, for instance.) In fact, it increases your risk, because you have small profits and then sudden losses that overwhelm your profits.
All of this feeds into the psychological issues of trading, which are much more important than the methodology. It takes you down the path of desperation and near-gambling.
So, first, you are better off not trading futures right now at all. They have the allure of quick riches, but since it is not working out for you, your first move should be to stop. Go into trading something that doesn't have the serious leverage, such as a stock index ETF (like SPY), or even pick some stocks -- start with something that acts enough like the averages that there will be few surprises.
Then, trade whatever you select on a longer-term basis -- swing trades of many day's (or weeks) duration. You need to get out of the futures, short-term pressure cooker or you cannot learn how to trade.
Once you can trade under these circumstances, see if you want to look at futures again.
Well, I've just spent some time typing what I think is really good advice, and I didn't answer your question, which had to do with trading with indicators better. I'm not going to try to answer that one, though. Anything you do with your reading of indicators, or any other methodology, will be wasted, in my view, if you don't take the other advice first. Then, maybe you will be able to use whatever tools you like to help you understand the market.
I also am aware that I probably have just spent time when I shouldn't have, typing out some advice that will not be welcome and will not be followed.... Oh well.
https://futures.io/traders-hideout/7364-random-line-theory.html -- a not terribly popular (unfortunately) exploration of why the methods traders are in love with let them down. Hint: it's not about the methods, or lines, or indicators, nor even about whether they are random. It's about how your mind sees things in hindsight that don't really exist. You can find things that work well, for you, but testing them, and bringing them into your own understanding of markets, is how to do that. It really is individualized, and there are no magic methods or indicators.
OK, this is too much probably for anyone to read. (And is definitely not popular advice, as a rule.) I do wish you well, and hope that you find something in this that helps you.
Last edited by bobwest; September 28th, 2015 at 09:40 AM.
The following 10 users say Thank You to bobwest for this post:
/\ freakin' awesome post. Pretty much sums up what I had to learn in my first 6-12 months of this game.
Try looking at it differently. Take away charts, and take away indicators. Look at numbers only. go to Quandl.com, pull up some markets, and look at the table/spreadsheet data.
Take your very first rows of data, and put together a hypothesis. Say "I notice that when x happens, y tends to happen" and then run that hypothesis on the rest of the data, even if by hand. Don't use moving averages, RSI, stochs, blah blah blah. Find the probabilities of that hypothesis, and find the expectancy of it as a system.
Don't start applying risk/reward or any of those cliches to that yet. That only applies well over 10,000 trades, and as averages go, they don't represent reality. Just see if the system makes money, when it loses money, etc.
If that doesn't work, that hypothesis might not be bad, it just may be bad for that instrument. I have systems that work great on ES and YM, Bonds, etc, but then will lose money like crazy on NQ. Or will do well on silver, and do horrible on the other metals.
I have stacks of index cards that I write my ideas on, and set it aside for testing later.
Food for thought
The following 2 users say Thank You to FABRICATORX for this post:
It basically says that staying disciplined is a three step process: 1) have a rule based system that statistically works. 2) that builds confidence in your system. 3) that leads to discipline, because you trust your system.