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Starting to Trade and Getting Education


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Starting to Trade and Getting Education

  #11 (permalink)
 
johny1971's Avatar
 johny1971 
Omaha, NE/USA
 
Experience: Beginner
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@matthew28

Till now, I have only thought about screen recorders and hearing about BB Flashback Express seems to be a great step in the right direction. Even if I were to upgrade it would still be very affordable.

One question, what is the benefit of viewing recordings when one can just look at chart print outs? Particularly, if one is trading a system only using price bars and an EMA.

Thank you much!

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  #12 (permalink)
 
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 matthew28 
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@johny1971

I just prefer recordings. Especially if you look at a few markets together. If watching the ES for instance one might also have charts of the YM and NQ up to see how they are all moving to influence your decision. Or the Treasuries, the ZB, ZN and ZF. Also if looking at order flow you won't see that on a chart afterwards (large bids or offers pausing the market, icebergs etc).
So it depends. I use the recording because it feels like watching and reacting to a live trading day. I just have the free version as I am not interested in editing videos, putting them on YouTube or anything like that, just replaying them myself.

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  #13 (permalink)
 grausch 
Luxembourg, Luxembourg
 
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Cool thread and I can appreciate where you are coming from and how you wish to accomplish these goals.

If I may add in another book that should be essential to your studying, it is Nassim Taleb's Fooled by Randomness. It will give you some good insight into things that a lot of educators do not mention. For one, it should raise your scepticism of any trading method and it will also give you some insight into the risk of ruin in a way that I found quite unique and eye-opening.

Regarding trading itself - I know no successful traders who are jack of all trades. Most of the successful guys have a single approach that works for them and that they have "mastered" completely. Keep this in mind for your journey.

Final note regarding education - going into trading without a plan is a sure way to get killed. However, trading quite often revolves around patience, waiting for the right opportunity, making the most of that opportunity and not getting scared out too early. There is a balance between aggression and risk management which is unique to each trader and it can take a while to get the balance right.

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  #14 (permalink)
 
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 johny1971 
Omaha, NE/USA
 
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@grausch

Thanks for the book recommendation. Grimes talks some about the randomness of the market and the near impossibility of locating and edge, which it seems he defines as the exploitation of a repeatable pattern that can produce consistent results (or something like that). Reading the Taleb book could help with appreciating the psychology of the market and/or the psychology of myself vis a vis the market. Anyhow, after Link I think I will get that book - just ordered from Amazon. I always have a book I am reading since my job allows me down time occasionally.

I get what you are saying about honing an approach. I see the price action, order flow, and volume profile as fundamentals that can reinforce each other. I may be off, but so far that is how I see it. Currently, when trading price action I see activity through the 'volume profile lens' that informs my bias, not necessarily my trading as my bias is from me and my trading is from the plan, though my bias informs my initiation of the plan or my psychology while in the trade. It is all circular, I guess. Also, knowing all three and learning them over months each, allows me to have some sharp tools in my bag. For instance, a volume profile may not be great for this slow grind ES market, but my PA plan can handle it ok. This idea is most nascent, but I do think it has potential. Also, I have a feeling nothing like learning order flow can teach auction.

I like the aggression/risk-management spectrum.

Thanks again!

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  #15 (permalink)
 grausch 
Luxembourg, Luxembourg
 
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You're welcome.

To me, Fooled by Randomness is more about how we fool ourselves. Being aware of this makes me question things in ways that I would not have before and I good example unfortunately relates to trading education - a healthy dose of scepticism is very much advised and until you have done your own research and drawn your own conclusions, you may not fully appreciate what I am trying to convey. Unfortunately when it comes to trading education, it is very easy to manipulate past results or even offer training for trading methods that will never make money without being held accountable.

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  #16 (permalink)
Trader V
Chicago, IL
 
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I second that, Al Brooks's books are in my opinion the most comprehensive material on price action that exists. If you read and memorize as much of the material and then apply it correctly, you will be surprised at the results. Mastery of price action, risk management, psychology, patience, and self-discipline are the keys to success in this business!

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  #17 (permalink)
 
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 johny1971 
Omaha, NE/USA
 
Experience: Beginner
Platform: S5 Trader; Jigsaw; TOS
Broker: Stage 5
Trading: ZN
Posts: 110 since Sep 2016
Thanks Given: 221
Thanks Received: 105

What I have done the past month for my education:

finished Link
got some ATR % ideas regarding targets
got some ideas of seeking high probability trades, really got this important idea in my head, trying to have it always inform my entries
also, ask myself about confidence when taking the trade. aka am I entering in a way I could explain to someone
still
more to learn from this book as I review and make notes about it

started Fooled by Randomness
this is a highly intelligent book that is fun to read with plenty of good anecdotes, so it is a nice break

strong return to emphasis on Al Brooks

continuing development of a trade log that fits me

involvement with S5 community

still updating my FIO posts which is becoming increasingly difficult, but satisfying and much respect to those that continually post in a journal

low emphasis on Grimes, though I did listen to a 3 of his podcasts this weekend, but I plan on saving his book for months from now and occasionally visit his free online course

switched practice from M6E to ES, this makes it more easily to follow Brooks’ ideas, specifically the bar bar analysis offered on his price action website


Some Lessons

when I hit a plateau in dedication, I plowed through with reassertion of my self coupled with, ironically, a little rest

some things need to wait - I have decided to put order flow and Grimes, for the most part, out of my mind as I focus on Brooks

stay open to advice - hence the Brooks focus and Fooled by Randomness and practicing the M6E was good as it allowed me to start with a slower paced market and gives me something to compare other markets with

trade with a plan regardless - even if it seems really bad, it is a starting point from which can aid in the press of improvements, now I need to focus on trading 1 contract with money management and trade management (eg when to get out), an entry criteria articulated in a trading plan is proving hard to do with the discretionary system similar to Brooks, but I am thinking about that a little, what is key now is just reading the bars and entering and getting ticks and maybe getting points

don’t be a chicken (whatever that means) when it comes to asking questions

What is Ahead

the goal is consistency in all I do - sleep, eat, trade, learn, at work

establish a daily trade routine - getting close to this - wake up at 7:30am, eat, Trader Bites, set up screens, can enter first trade 9:20am after 11:00am cease entering trades, and at 11:30am disengage, review trades, then it is either walk, work, eat, visit with wife, return to education at nite with Brooks at around 8pm, take breaks from desk, and go to bed at 12:00am

also find time for FIO webinars and forum participation

when the time comes plan to trade the YM or NQ since easier on capital

Attached Files
Elite Membership required to download: Recent Trade Log Version.xlsx
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  #18 (permalink)
 
johny1971's Avatar
 johny1971 
Omaha, NE/USA
 
Experience: Beginner
Platform: S5 Trader; Jigsaw; TOS
Broker: Stage 5
Trading: ZN
Posts: 110 since Sep 2016
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Trader V View Post
I second that, Al Brooks's books are in my opinion the most comprehensive material on price action that exists. If you read and memorize as much of the material and then apply it correctly, you will be surprised at the results. Mastery of price action, risk management, psychology, patience, and self-discipline are the keys to success in this business!





I see that you got the price action education from Brooks. What about risk management? I tried Tharp, but that seems way ahead of me, given I only trade one contract, so, for instance, position size is settled. Also, I have found, with Brooks, my trade develops the momentum or not. That is, if it doesn't go my way then my stop is hit and if I have 2-3 pt stops I am having bigger losses than winners. Then there is the question of exiting a bad trade or raising stops on a good one. I like the idea of targeted profit, because that gets me out with a profit and then I stay in with a really tight stop to protect that profit.



I am growing ok with initial tight stops (7 ticks max) because 1) I can take a small loss better than a large one and 2) once I am out I can always get back in if a set up is produced. Also, I really like Link's idea that cutting losses, cutting losses, and cutting losses is as key to trading as location, location, location risky to real estate. He says over and over again that preserving precious capital is key and that that focus is what keeps you able to trade another day.



Maybe as my win loss percentage stabilizes I can use bigger initial stops. It seems Brooks teaches principally two methods, stop at the recent low if long and stop at the recent high if short. The other is the stop below the bar prior to entry. I guess I do a combination of these: stop a few ticks below the entry bar or I want to enter when the recent high or low is not more than a few ticks from entry.



Overall, I am seeing how Brooks can work as for my first 31 ES sim trades I am up 44 ticks. I mainly trade and consider where in market structure and legs and identify a signal bar and count bars with pressure in mind. I strictly enter buy the close and keep risk to 5-7 ticks, with those above parameters in mind. I also like to use measured moves for targets and entries and avoiding entries.



But, anyone with ideas for Brooks and stops would be helpful.



Thanks!

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  #19 (permalink)
 marpol 
San Francisco, CA
 
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I will give another plug for Al. His videos are also good....makes his books a little more understandable.

That being said you will only get truly educated when you start putting your money on the line. No matter how much you sim trade it is not the same. You can make 20 ticks a day on sim and lose 20 ticks a day for real with the same system. It is sort of like playing poker against a computer compared to sitting at a table in vegas with 4-6 other real players. Playing against the computer is good to learn the rules, but that's about it. I am not putting down sim trading because it has its use ...but when you do start trading play small (1-2 contracts) and expect to lose all your money at the beginning...it will be the cheapest and most valuable education you will have gotten.

Also because you are sim trading don't limit yourself to one contract....try NQ, try ZB, try CL, try 6J, etc.....

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  #20 (permalink)
Trader V
Chicago, IL
 
Posts: 10 since Dec 2016
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marpol View Post
I will give another plug for Al. His videos are also good....makes his books a little more understandable.

That being said you will only get truly educated when you start putting your money on the line. No matter how much you sim trade it is not the same. You can make 20 ticks a day on sim and lose 20 ticks a day for real with the same system. It is sort of like playing poker against a computer compared to sitting at a table in vegas with 4-6 other real players. Playing against the computer is good to learn the rules, but that's about it. I am not putting down sim trading because it has its use ...but when you do start trading play small (1-2 contracts) and expect to lose all your money at the beginning...it will be the cheapest and most valuable education you will have gotten.

Also because you are sim trading don't limit yourself to one contract....try NQ, try ZB, try CL, try 6J, etc.....

You are absolutely correct in your statement. The first year and a half I spent learning and sim trading. I had the luxury to learn and sim trade full time as I did not need to hold a traditional job i.e. 9-5. I spent literally 12-15 hours a day doing trading stuff. I would sim trade in the morning and study and read in the afternoon and night. Then I would wake up the next day and do it all over again. It took about a year and a half of this cycle where I got to a level in which I felt comfortable enough and saw (what I thought was) consistency in my sim trading. Enter real money live trading: I lost my ass each and every day until I inevitably blew out my account. I did not understand what was going on. I did not even fathom that the reason I was constantly loosing when trading live was because of what was in my own head and how I perceived money. I compared my sim trading to my live trading and saw that I was entering and managing in a completely different way which lead me to ask my self why I was doing so. By profession and schooling I am a psychologist (but I no longer work in this field) and I began to develop a sort of mindfulness and increased my self awareness while I was trading live. This (slowly and painfully) lead to the realization that fear was the culprit, specifically fear of loosing money and fear of being wrong. One of the main causes was also how I perceived money and how I attached that perception to the markets. The actual mechanism at work from a cognitive sense is that fear, in certain situations, activates the fight or flight response in the brain. More specifically, it triggers the release of cortisol which is the chemical in the brain that triggers the fear and in turn the fight or flight response in the human body. When traders have fear, that fear is irrational because they are not in any actual danger to body and well being/death. It is simply the way most people's brains are wired with regards to trading. It takes a long, long time to unlearn this while in front of the markets and takes steady training and positive reinforcement. It took an additional year and a half to train my own brain not to trigger this response or the fear that accompanies it. So when you sit in front of a live account and trade, this is whats actually going on that is causing you to think irrationally and in turn to lose money. Quite simple actually. Hope this helps you guys out.

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