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1. While working at a day job, I traded end of the day and doubled my account in three months. That led me to think "If only I could watch the market realtime, think of the money I could make."
2. I quit my day job and began looking for the holy grail. I bought and read about every trading book there was. I signed up for about every trading seminar there was. I tried about every indicator there was. In TradeStation, I programmed and tested about every custom indicator I could imagine. While I didn't lose significant money, I didn't gain significant money while trading. I stayed more or less even over time.
3. After doing that for twenty, yes, twenty, years, I quit and got another day job.
4. Ten years later, I quit my day job and went back to trading. This time, I abandoned all the books, seminars, gurus, indicators, etc. and just began looking at multi-time frame, ES price charts, together with volume, during the day session. After a while, a long while, I began to see repeatable patterns that led to profitable trades and minimal losses.
5. That's all that's worked for me and all I that can recommend.
Hey Barabas, I tried to reply to your PM but I was prevented from doing so due to the fact that I have not posted 5 posts yet. So I am not ignoring you and will try to post 3 more quality posts before I can respond. Alternatively, you could reach me at mzaslanian @ g m a i l to directly message me that way as I am happy to respond to your pm.
As youve probably guessed, and Ive seen others post, market indicators are just that.. and most of them are lagging indicators.
Remember the market is nothing more than a giant, infinite auction that is constantly in search of further information to establish value. Price action is the result of the market facilitating trade so that the market may find value.. and it is a constantly moving target.
Price action and value are the only 2 things I trade on. Indicators are nice and they make pretty pictures and such, but the core definition of the market is an auction, with value established by price.
Good luck.. and the others here are right.. you cant trade in the zone if youre worried about paying bills and eating.
I have to agree with Seattle7. Your answer does not lie in indicators.
You need to simplify everything. Stop looking at multiple markets. Become an expert at trading one market. Become Consistently Profitable Trading one market.
Then, if you want, start looking at a second. But only look and study. Do NOT trade it yet. Look and study it for several months until you can get a grasp on it's personality and it's nuances.
Order Flow seems to be most trader's preference. It is for me. What Volume is coming in to the market. Is it effecting price? Who is in control of price?
I trade the ES with a 500 Volume chart. (If you are, STOP changing charts, time frames and indicators). I trade a Volume chart because, to me, in my mind, I want to compare apples to apples. So if I want to look at Volume and order flow then a Volume chart makes sense.
I still trade with NT7. Sorry, I am used to trading it and I'm not ready to graduate to NT8. I trade with what I am used to and what I am comfortable with. All that said, I return to my hero gomi. Maybe his work can be duplicated on NT8. I don't need to research that. Perhaps one day I will have to.
Here's my 500 Volume chart.
The first panel has gomi's Bid/Ask Ratio. It breaks down Buyers and Sellers per bar. It tells me who is in control.
The second panel has gomi's COT. It breaks down how many Buyers and Sellers from the High and Low of each bar. It tells me how hard Buyers or Sellers are working to move price for directional continuation.
I like these because they are not "setting" dependent. They simply show the number of Buyers and Sellers per bar.
The lines on the main panel are from MyDynamicPivots and draws Fibs from the HOD and LOD. I like lines on my charts because it gives me a frame of reference to reference price action.
I don't want to violate any forum posting rules - could not find the rules to check if I can mention the specific program
which of course is a commercial product (I have no financial interest in it, though). If you send a private message to meI'll be glad to provide it. Alternatively, you could do a Google search for :
michael bryant, trading systems,genetic algorithms
For learning about algorithmic trading, you should read the manual that comes with the program and describes its features, and read Michael Bryant's newsletters.
Kevin Davey is also a good source of information and ideas:
Kevin Davey is the Founder and CEO of KJ Trading Systems and will be monitoring this thread so that he may answer any questions that you post here relating to his products or services, primarily focused on algorithmic trading systems.
Please keep in …
Although Kevin Davey is not necessarily a big supporter of using this type of genetic programming to build strategies,
he is definitely in the algorithmic trading camp. I believe he prefers to find a tendency in the market that he can logically understand and explain and write his own computer code to take advantage of it. With Bryant's program you may not really understand the "why", the computer just finds the strategy from indicators the program has or that you provide to the program. So with the program you do have to be careful that the result is statistically significant and robust with respect to any inputs and parameters determined by the program or used in the indicators - after all, you need it to continue to be profitable for some amount of time into the future.
I am also influenced by John Ehlers - most of my custom indicators are either copies of or borrow ideas from his writings/books/publications/articles
Has anyone backtested john ehlers' indicators/strategies on intraday emini's or equities? how about ulf jensens'? if you know, i'd appreciate a reference.
I think the way to go is to develop a small portfolio of systems on different trading instruments and different time frames. Trade very small size initially (I only trade one contract generally). Use a quantitative measure of system quality (e.g. SQN of Van Tharp).
Just wondering if anyone may have a copy of this book ( Van Tharp's Definitive Guide To Position Sizing ) that they would like to sell for a discounted price , or better yet Lend out ? :)
Thanks so much
Continually rate and re-rate your individual systems as to their quality. Determine your average system quality, and the standard deviation of system quality for all your traded systems. Any system that falls more than one standard deviation below average needs to be retired and replaced with something better.
You need to continually increase your average system quality as you weed out the poorer systems or those that fail as time goes on, and as you become more proficient in system development.
I am a firm believer that the market has a very repeatable and understandable structure. The tricky bit is that structure is played out over multiple timeframes. So what looks chaotic on a 2 minute will be an aha moment if you look at a 15 minute or a 60 minute chart. And in general all time frames are reponded to, ie price will always bounce at a resistance point but will bounce to a different degree depending on the energy of the market in that direction. Add to that the fact that bars form in a relatively repeatable manner (a green bar will start, go down, go up and then retrace a little as an example) and that is happening on all time scales too, and a larger timeframe has multiple smaller bars making it up and you get a lot of repeatability that looks chaotic. I think in physics this would be a fourier analysis and I am sure some quant somewhere does just that to price action.
Understanding this has helped my trading a lot.
What I would recommend is print out every days trading on multiple time frames and study the print out marking it up so you understand why everything that happened happened. It will eventually make total sense. Once you spend your time saying "Of course the market did this here" and you can predict pivots based on this type of analysis it makes trading a lot easier. Then pick indicators that enhance your predictive abilities, rather than picking an indicator and having it tell you what is happening in the market. Personally I use a 20 period SMA and a modified stochastic. I made the early mistake of doing this the wrong way around and was constantly surprised when the indicator got it wrong.
Then you can develop a system of your choice on top of that understanding. I suspect your system will then be pretty robust.
Hope this helps. BTW I am still learning but even writing this out has helped me understand it further. Also I got a bit peeved by all the people who think the markets are unpredictable and chaotic. Just a pin ball machine with lots of people at the controls.
1. Risk management is CRUCIAL - I would limit my risk to more than 2-3% of the account per trade.
2. Can trade the new Micros to achieve #1 above. Again - risk management...
3. You could either trade one instrument and multiple setups, or a few instruments and a single setup. Singe setup with a single instrument is hard to do, as setups could be rare. I am actually gravitating towards the latter.
4. Single timeframe.
5. Find a setup that give you advanced warnings a few bars early, e.g. Cup & Handle (my favorites). That way you have time to decide.
6. Trade no faster than 5 minute chart and see #5 above.
So, there's a lot of people giving categorical advice here and a common theme seems to be that indicators are useless.
I'm curious - how many of you people are consistently profitable and making good money in the markets?
I know a guy who's very profitable in the markets, but he keeps his methodology secret. What I do know is that he uses a lot of indicators. What I also know is that most of his indicators, if not all, are custom coded and with proprietary code. And while at it - I also know he spent 10 + years before he started making consistent and really good money.
Personally, I have a lot of indicators which are custom coded and very useful for what I want to do. But they're not MACD or stochastics or stuff like that. I don't get signal from them per se. But they help me track the market. And yes - they're custom coded.
So, saying that indicators are not useful seems to me a very ignorant statement.
barabas,
This might not be what you want to hear, but I get the feeling you're gambling and don't sufficiently know what you're doing. You're still trying to find your way and that's OKAY, but it should precede live trading and it should precede quitting your job.
Let me ask you bluntly:
What's the most rational use of your time, money and resources right now?
Trying to trade and hoping to make some money? Win some, lose some? Or maybe lose all your savings?
Or stop trading and focus on studying the markets full time?
In my opinion - if you want to focus full time on the markets and have the opportunity to do so, great! But make sure you spend your time wisely.
From the questions you're asking and your statement of being in deep sh't - it's clear to me that you're not ready for live trading at all.
There's people in this thread who told you they used 20 years to become profitable. I just mentioned one guy who spent 10 years.
Personally, I've been full-time trading several times and have been following the markets for 15 + years now. I actually got an education (engineering) after my last attempt. Meanwhile, I've been working on my trading part-time.
When I started working full-time, I expected to be back to part-time trading after 6 months. 2 years later I was still crafting my methodology with huge amounts of time invested in studying and custom coding.
I have now quit my job and hope to finally crack it as a full-time trader. I feel prepared. And have tied down most loose ends. But it's taken far more time than I initially expected it to.
Just because you quit your job and spent a lot of time already doesn't mean you're ready.
I think you should get a job which allows you to trade and helps you to find your market and edge in the market. I do this now for over 22 years and 16 years for myself, I taught traders and from all my experience in this field. I know that almost everyone can be taught to make money, that being said. The BIG BUT - not as a daytrader and living solely from trading. Itīs just a fact at least from my experience, that not everyone can handle the mental and physical stress which comes with that profession. I know very profitable traders they canīt trade futures if their life would depend on it. But they make a lot of money with very great risk control with small drawdowns with stockīs (with a systematic and statistic approach). Or seasonal trading, FX or options, etc. You have to find the product that fits your mentality.
And the most important thing of all, I donīt understand why everyone thinks after 2-3 month of reading 5 books watching 10 Youtube vids and adding some indicators to a chart, they could make a living trading. And the worst thing of all is paper trading because you donīt feel the pain from losing. Use real money micro-lots CFDīs etc. Only real money will show you the real deal. And saves you a lot of false promises and dreams. Would you board a plane if you knew the pilot read a few books watched a few vids and is a great simulation pilot. I think we all know the answer to that question.
Trading is a highly demanding task and demands constant studying and training. It takes time, it took me 18 months to be profitable with my own money. And I was already 5 years in the business as a broker, market maker and trader.
