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Hey everyone, first off happy new year! Hope everyone’s 2019 is a blast and profitable
I’ve been in the markets teaching myself for the last 3 years, I’m a big fan and use it daily of orderflow and auction theory.
I’d love to know and also think a lot of newbies would love to know what the vets or multi year profitable traders opinions on what actually works in trading.
I’d like to ask the pros/ trading vets to share what they think is BS and what they think actually works in the market ie/ pure tech analysis (s/r, trend lines, PA patterns etc), fundamentals, order flow (tape reading, delta, vol profile, footprints etc), spreads, options (vol trading, hedging etc).
There is so many websites, people on twitter, furus etc all sharing what they use to make $ in trading and they all have different methods from literally basic s/r, to impressive mathematical edges. But as we know there are way more people selling BS to the ignorant and new people on the block and these things get spread around making it even difficult to know what actually works in the markets and what is just pot luck.
I’ve seen on twitter and even here on FIO several people who are legit traders who know their shi* give advice to newbies like ‘give up now and get a regular job because trading is for pros and the info you need to be truly successful isn’t in books, websites etc but taught in trading firms’ ....’TA is bullshit, orderflow is bullshit’. And basically ‘the industry is a scam and you’ll only learn in firms’ (obviously paraphrasing but that’s what I’ve seen said from legitimate traders who have been in the game for years and work in firms so obviously I’d think their words are true).
Thanks again, I hope we get some replies, I think it’s an extremely important topic to talk about and to save a lot of people learning the wrong stuff.
the thing with people selling items online is that a lot of them are actually right what happens is they promise people to make 10k a day and once people get that in there head, the second it doesn't work they scream fraud/scam etc.... but yes there are a lot of shit bags selling stuff.
Now what works for me might not work for you, there a million ways of telling if things are going up or down and everybody thinks that if they copy what joe millionaire is doing they will become joe millionaire jr. Hell you could trade cross overs on a daily chart and still make money if you find your edge. Some guys/gals on here trade order flow and ice bergs and all this off the DOM , if i try to trade a DOM only its like a bull in a china shop so I don't trade it. It's taken me a very long time to figure out what works for me and what doesn't. The reason why some "pros" say that is because they get tired of saying the same stuff to everybody who comes here thinking next year they will own the CME.
Want to be a great trader:
Obsession with trading
Patience
block out anything that is negative in your trading life ( friends.family etc )
figure out what works for YOU maybe you spend 20k on classes but if that one class works for you then the earning potential is unlimited
if you're lucky enough to get a "pro" mentor, pick up everything he/she does
you are trying to do one of the hardest thing in the world, 95% of people don't make it of that 5% about 1% actually make it BIG.
people are going to be harsh as many of us have worked years and years and gave up many things to get where we are so if someone tells you to quit before you start don't take it personally.
-P
"Truth is not what you want it to be; it is what it is, and you must bend to its power or live a lie"-Miyamoto Musashi
You're trying to describe an elephant....every trader is blind to some part of it, but has found the part that works for them, so it's not possible to give you the simple answer you are looking for without knowing your personal situation and personality, however MiniP has given the common requirements all traders need. On the plus side the beauty of trading is that it can fit so many life-style choices and personalities.
I'd like to add a couple of things though...in your question you ask for (as most newbies do IMO) the best technical indicators, but that isn't most important factor. Finding a style and market that works for you, your capital level and time constraints is more important. For example, there is no point in discussing intra-day trading if you could be called away from the screen during the day, nor does it matter if you have a proven technical system tested on a years of consistent trading if you are away for vacation/travel thus negating it's statistical validity. And finally no one really considers the importance of money management until they blow up their proven successful system a couple of times.
But here is my bit of advice...start with a very small amount of money, on a small (low margin), low-risk (quiet volatility) contract and risk a very tiny amount of capital on each trade until you find something that works consistently for you, then keep going at the same scale, for a year or two, before scaling conservatively. In my experience good trading that is consistently profitable can be a boring war of attrition, which means it's hard disciplined work catching small moves and giving up big ones. So called "exciting" trading in which you catch a big move with huge size comes later from consistently applying a low-risk approach, building capital, and being lucky on the timing with excess capital that you have conserved through rough periods. Money management is important, because it converts a Wild-West fantasy into a business (which is a risk management practice not enough so called "professional" hedge funds focus on either IMO).
These are what I consider to be the most salient issues I have learned the hard way over many years of trial and error.
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
Posts: 2,311 since Nov 2011
Thanks Given: 7,341
Thanks Received: 4,518
You want to hear what works with zero BS.... here goes.....
A boat load of cash.
Guys with tiny accounts use tiny stops and get stopped on wiggles rarely able to stay in for the trade to develop.
How many stop outs before you are out of business? Cleverest edge still has random sequence of trades that work and don’t.
Question is: can you execute said plan perfectly. Most worry solely about how/when to enter and what should signal it. They are working way to much on the wrong piece.
Why is it there are trading systems available for purchase? Because the seller knows they’re selling a dream and the vast majority don’t have the resources to execute it. Financially or otherwise, meaning psychologically.
How many short guys in the NBA? Every endeavor has its built in advantage. In trading it’s account size. In gymnastics it’s balance etc.
100%, thanks! i've always believed the quantitative route is the best way to trade like you said you can identify areas that arent working anymore and statistically validate parts of the strat compared to discretionary trading where in my opinion it is very difficult to pin point what has changed thats making you lose more.
So we have two basketball teams playing. One team in white Jerseys and one in Blue Jerseys. This is about all the information we have. Make your bet... This is an example of what "doesn't work". Now if we do some further digging we find that one team is ranked #5 and the other is ranked #15. The team ranked number 5 has a record of 10-1 and the number 15 ranked team has a record of 7-4. Now with this new information make your bet. This would be the better path obviously.
This is really the best analogy I can give you of what works vs. what doesn't work. There are thousands of ways to peel the proverbial onion and define entry points and exit points that have historical odds of x,y,z. But most traders don't take the time to ever quantify any of it.
The single biggest problem most traders have is not having this type of information (betting odds) going into a trade. And in order to get this type of information one must undertake trading research from a different angle. The challenge involved is not one concerning difficult math, data processing, statistics or any other obvious skill.... But the challenge is in coming up with a decent classification system so you can even start to quantify things. So the relevant skill set needed is a strong taxonomy skill set, paired with a solid data skill set to source the data and then at least a basic math skill set to quantify every thing.
The worse the data set is (Unstructured, unclassified, raw, rough, limited data elements, etc.), the more the user would need to rely on more fanciful things like ML, AI, complex statistics. But the better the data structure is: (Good taxonomies, segmented into quantifiable buckets, multiple data elements to build a complex structure) the easier this becomes to measure with fairly simple statistics / math.
There are tons of ways to find real edges if you just look at the data. But this is where most people fail, they only look at charts, and never can differentiate anything because visualizing linear price movement isn't robust enough by itself.
I'll give you one example to kick this off.... Take any famous candle stick pattern. (A hangman for example) or any famous chart pattern (Head and shoulders for example). Now this alpha alone is likely not enough to give you a real betting edge, but if you layer in transacted volume or resting volume or some additional information to give this pattern context, you might be able to find a legit edge. Like this:
Every time you see alpha signal X with the presence of volume Y and additional information Z, then once you define these hard characteristics, you go back and source the data for 2 months, 2 years whatever.... and figure out when all of these things were present at the same time what happened? Did the move go your way 60% of the time, 70% of the time, etc. You will likely never get any thing over 60% or 70% but this should be about what you are aiming for. Then you have the discipline to place the same bet the same way every time with no deviation from it. And if you have done your homework, and found your edge, then you will enjoy a 60% to 70% win rate.
But don't try to use 5 - 10 different entry setups that you have never kicked the tires on! This is the biggest mistake you can make. Start with one real edge that you have really kicked the tires on and stick with it until you have found another, then another, etc. But unless you have really done the work and validated the edge don't use it. Have discipline and stick with this process.
Best of luck.
Ian
In the analytical world there is no such thing as art, there is only the science you know and the science you don't know. Characterizing the science you don't know as "art" is a fools game.
I try to find as many entry setups as possible to create diversification to avoid long draw down periods. I do not create them my self my computers does this. I do not care much about the code since i can see the result on the EQ curve nor do i look at charts anymore just the median (SPP) results overtime. It is not hard to find strategies this way that works. Same entry can usually be used with different exits to create a totally different performance which will work in periods were other exits do not. For example.
1. High Win% 75-90% works very well in sideways markets because they have large stops and small targets.
2. Medium Win% 45-60% work well in trending markets , breakouts and mean reversion usually end up here.
3. Low win% 15-30% works also if You can diversify enough. Very small stops but with huge targets.
