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Achieving Consistency - the turning point?
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Achieving Consistency - the turning point?

  #11 (permalink)
Market Wizard
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Thxo View Post
That's just my personal experience, it will differ from person to person.

I realize for my own good its better to not complicating my entry routines, since the stats (win/loss) can change in merely days (due to randomness factor), better to focusing on direction which is what my trade is all about (i trade expectations).
If i get the direction right, even with simple MA cross entry the trade will work just fine, no need for me to complicated things.

Thanks. My question really is about the "if I get the direction right": I think it's safe to assume that when people get the direction right everything else falls into place. The problem is knowing that the direction is right, isn't it?

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  #12 (permalink)
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Blash View Post
I feel you need to focus all your energies at the beginning on finding a tradable edge for your business. Something that has a high probability of happening. It all depends on what timeframe you use. But the shorter the timeframe the less reliable the events are or occurrence is.

We are so lucky in trading as opposed to brick and mortar business that need a location edge like a restaurant or dry cleaners etc that might be a great business with a poor location and just beat by a "ok" business with Rock'n location. In trading we can pick "Trade Location" however we want, test for it and change easily if it's not working.

I'll assume you are day trading and your info says ES. Try running the numbers on the likelihood of ES tagging the Over Night High (ONH) and ONL over at least five years. There are many other stats to use and mined for like yesterday's high or low etc. I'm not familiar with Sierra Chart but I understand it is spreadsheet based. Should be a way to crank out probabilities with it. IMHO this is the real work of a trader. Then trading it is just the routine part.

Ron

Blash, your words here are encouraging. I am actally in the process of setting up my own stats for opening types,resulting day types, following day types, as well as ON highs. FT71s videos have really opened my mind but I need to do the stats and see it unfold for myself. I am really glad you pointed this out.

Given my small account size (and the time it takes to build it up) I am using this time purely for education. I do swing equities on a very small scale to get accustomed with the emotions, execution and more or less practice, however my mindset is more geared towards day trades.

This is an intersting business, I am certainly driven to join the ranks of those who have worked hard enough to make this a succesful one. You can't put a price on your freedom. If I could even achieve the same salary I have now (nothing spectacular) I'd be the happiest person alive


Last edited by DK86; May 21st, 2016 at 02:39 PM. Reason: Grammar
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  #13 (permalink)
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DK86 View Post
Hello everyone,

I am writing this as a trader very much in the beginning stages of the journey to the more experienced traders who have developed themselves to a point where they can pay the bills and live off trading.
Like probably all of you, I have read books, watched copious amounts of material and spending hours in front of charts everyday, however through the multitude of information I get pulled in so many directions that it is sometimes difficult to tell if I am on the right path.

I would like to know from those of you that are able to make a living from trading, what was the turning point for you? Was it grinding away at a program/system till you made one that worked, was it practicing a discretionary method until you got it? was it researching and trying until you found something that worked? was it a particular course or booked that changed things instantly? or simply hours upon hours of screen time?

I guess basically I just want to know what you did most of that helped you become successful, or more or less that my efforts are not in vein

You will need 2 things to be consistent

1) a method with a positive expectancy
2) develop discipline and mindset to follow that method

You will encounter a lot of your own fears in the process, mastering some level of emotional control is crucial for you to stick with and execute your method. Only truth will set you free, learning to think in probabilities is a good place to start with trading.


THINKING IN PROBABILITIES ( compilation from internet blog)

To be a great trader you have to have what we call Ďa lot of heartí, which is the ability to not only understand what the right entry or exit is, but to be able to follow through with it. Which seems like a very trivial point, but itís probably the biggest point. A lot of times, what happens to people, sort of what separates the good from the great is that the good know the right answer, but they donít follow through with it because itís too scary and they think the risk is too big. They donít have that confidence that itís okay because while there might be some variance to the results and you might lose on this particular trade, mathematically it was the right choice. Over the long run it will work out. Most traders spend far too much time worrying about whether theyíre right on this particular trade. What great traders worry about is whether their action will give them a profit enough of the time, which is a totally different way to think. What really makes a great trader is understanding, itís not about winning right now, itís about making the right decisions so that you win in the long run.

Although beginning traders hang their entire psychology, confidence and performance on the next trade Ė you have to look at the next one as just one free throw in the thousands you will make over time.

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  #14 (permalink)
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Risk management, risk management, risk management. Be so good at risk management that you can take a 50% outcome and make it profitable.

Understand where the large funds are trying to exit their position. While the small fish retail traders can exit their 1-2 contracts at any time they want, there are very flew places where a fund holding say 10,000 contracts will be able to exit. And as long as you know where you exit and therefore direction is, you'll always be able to make money.

Imagine you are driving on a highway for example. Your job is to simply not miss the exit. It doesn't matter if you're one stop away from the exit or 10 stops away from the exit. As long as you aren't on the wrong side of the high way, you'll make money. There's only two ways the high way is going. It's not that hard to figure out what that direction is if you know where the exit is relative to where you are right now. And of course if you miss the exit, then you'll have to make a U-Turn (and reverse) at your decremented.

Finally, do the hard work. Do the easy work to, which includes using the search function to find all previous people who have asked the same question. =)

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By getting away from everything having to do with scalping. It's a hard pill to swallow, but it's the antidote.

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  #16 (permalink)
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As pointed out by some fellows in this thread - high probability is the key to survive.
For this some good system is needed and traded seriously.
To take out personal emotions to pull the trigger I recommend to automate as much
as possible. In my trading I am using patterns that occur (sometimes rarely) and let
me come in to manually trade this upcoming pattern. Calculating the max. risk for
setting the stops is just calculating a statistic with the optimum to stay out of noise.
If the pattern found is positive over a time - it can be fully automated and you do not
sit in front of the screen nor pull the trigger yourself.

With such "tools" you are able to trade without emotions and you can become a consistent
profitable trader.

GFIs1

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  #17 (permalink)
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When you are referring to "a method with a positive expectancy" does that apply to discretionary traders also? I've read this so many times and it's obviously true but if you don't trade mechanically or have algorithms for your method, how do you know that you have a method with a positive expectancy?

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  #18 (permalink)
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Macan View Post
When you are referring to "a method with a positive expectancy" does that apply to discretionary traders also? I've read this so many times and it's obviously true but if you don't trade mechanically or have algorithms for your method, how do you know that you have a method with a positive expectancy?

Eventhou I follow rule based strategies, I consider myself a discretionary trader because there are discretionary elements to my trading that could affect taking or discarding a rule based strategy setup. probability of a particular rule based setup can be affected by discretionary elements in the form of market internals, overall context etc. That being said, I have clear statistics for each set up, including the trades I discarded.

From my experience, even for discretionary trading, there are certain underlying broad rules the trader follows. It is fairly easy to classify these trades into buckets and collect statistics on them to figure out the expectancy. Any successful discretionary trader will agree that they have a broad set of rules that they follow and they are not taking random trades as they please.

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  #19 (permalink)
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Much appreciation for all your replies,

This has really given me a direction to focus my energy... Educate/develop my skills into collecting/analysing data to find those positive probabilities. Once found, combine this with a sound risk management strategy.
Makes sense really... No substitute for hard work, anything else is just a distraction

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  #20 (permalink)
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Macan View Post
When you are referring to "a method with a positive expectancy" does that apply to discretionary traders also? I've read this so many times and it's obviously true but if you don't trade mechanically or have algorithms for your method, how do you know that you have a method with a positive expectancy?

"Expectancy" is a statistic that is calculated from past results. It tells you what you have been doing, and if you are consistent, what you can expect in the future. It's worthwhile to know, no matter what your method is.

Formula:

Expectancy = (Percentage of wins multiplied by Average win) - (Percentage of losses multiplied by Average loss)

This is more important than just your winning percentage by itself, since it accounts for the size as well as the percentage of wins vs. losses. It tells you, objectively, how you are doing. Keeping track of it keeps you realistic.

Bob.

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