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Yeah, that Mike guy is correct; you need to give your trades more room, and ATR is a s good as any metric out there, to gauge that space.
Then you need some very basic points of reference i.e., previous days high/low/close, ETH range, current day's opening etc
You also need to identify the kind of trading day i.e., range day or trend day. If it's a range day, then you should adopt a mean reversion mindset ( buying breaks, and selling rallies) and if it's a trend day, you should trade in the direction of the trend. If the market is trending higher, then you should be buying breaks, not selling rallies.
I would hold off on indicators, trend lines, and chart patterns. You want to be able to read price action w/o them.
You could put a 21MA, 50MA, and 200MA on your chart. A lot of low latency algos incorporate these averages (especially 50MA) and you would be surprised by how often they signal moves. They also help, to put the market in a directional and timeframe perspective.
There's a plethora of more advice out there, but this is a start.
@tigertrader , when I see masterminds like yourself who are at the top of the foodchain give a fairly detailed coaching to poor newbies (I am kinda one of them now that I see real pros), who are getting broken down by 50$ loss, I start to believe altruism still exists (hard to justify your time time otherwise, you can’t sell anything to them worth of you time).
Aside from the above long-winded note of appreciation - any basic pointers to focus on about how to assess if it is a range day or a trend day? At the end of the day - it is clear, we are talking about status quo - as it happens... a leading indicator...
Even tossing a link to the relevant thread (I am sure it has been discussed before) - would work.
Unfortunately just the title of this post makes me question whether you really do want success out of the market or are hoping someone confirms what you might be feeling about getting out. There are far too many things that could possibly be wrong with how you are trying to trade but you don't give any details. Remember the markets are extremely tough and in order to be successful you need to be tenacious, determined, have humility, be ready to put in long hours training the different modalities that are needed to be successful as a trader, and then train, train and train some more.
Using /ES as point of reference, it should first be noted that trend days are the exception rather than the rule. They probably occur about once very 6-7 days or 3-4 times a month. Most of the gains and the linear moves in /ES occur overnight in the ETH session. However, if you capitalize on trend days when presented during the RTH session, you can make your month.
That being said, a trend day typically opens higher/lower above/below the VWAP accompanied by a strong/weak $TICK and good/bad breadth, and remains above/below the VWAP all day, along with the 21EMA of $TICK staying positive/negative, and breadth remaining strong/weak. The market will usually close on its highs/lows.
On the other hand, a range day will see the market trade above and below the VWAP, often times with perfect symmetry to the VWAP i.e., rally +2SD and break -2SD, always returning to the VWAP, and often settling on it. Of course, the distinction gets easier to make as the day progresses.
Just pull up some 15min VWAP charts and you will be able to see some examples.
@yoyotrader1, I posted this yesterday on another thread; however, it seems especially appropriate for this thread...
There really isn't that many different ways of approaching trading correctly, but there are an infinite number of ways to trade incorrectly. Unfortunately, higher visibility is a user level factor, and the acquisition of information and adoption of that information transfers almost instantaneously when it is readily available, versus when one has to seek it out and perception of adoption is non-existent.
Obviously, there are many more failed traders than successful traders, so there is a very high probability, that there is a commensurate amount of bad advice and faulty knowledge available to aspiring newbie traders. In other words, what-they-see-is what-they-get. The stuff that really works takes time and is hard work to uncover. That is, the methodological wrapper for inductively organizing the information gathered is accomplished through quasi-experimentation.
The other problem is, people believe what they want to believe, see what they want to see, and hear what they want to hear. They tend to avoid information that contradicts what they already think or believe, and tend to seek out other like-minded people. It’s the guiding force behind organized religion, the political system, cults, and yes...forums.
Researchers found that people are about twice as likely to select information that supports their own point of view (67 percent) as to consider an opposing idea (33 percent) and 3 times as reluctant to consider differing perspective when it pertains to politics and religion. One could only imagine what the percentage is when it comes to money and trading -probably 95-99%, huh? I've seen this phenomenon repeat itself ad infinitum on this forum. Big Mike and other experienced traders will dole out advice, and it is summarily ignored or even refuted, by aspiring traders with little experience.
It is not only easy to get sidetracked, spun around, and derailed by the markets, but one can also be misled if the information they are receiving is apocryphal. Everyone wants to make money, but with respect to what? Everyone one wants to wrestle the gorilla, until the door opens. So, instead of making rational decisions based on objective observation, they make emotional decisions that make them feel safe and comfortable. They develop a compulsive addiction to this stimulus-response loop which reduces them to instant-gratification junkies. They may have a seemingly effective methodology that generates profitable trades, but in the end, they never get ahead because they end giving it all back in the rake and grind. They either choose the markets-they-trade and the strategies-they-use randomly, or once again, make the decision based on comfort.
The result is that 80% of the ideas that are freely exchanged on this site are invalid. They are misguided, anachronistic, simplistic, irrelevant and often just plain wrong. The dilemma is, how does one separate the wheat from the chaff. Logic would dictate, and it is confirmed from my personal experience, that the best place to seek knowledge is from someone who is extremely knowledgeable and experienced. So for starters, i would question the quality of the sources of the advice you are seeking, and look to those individuals who are proven and have successfully accomplished what you seek to achieve.
Rational traders incorporate risk into the determination of their expectation, because their approach is reason-based, rather than driven by emotion. They are able to build positions, add to their positions, and follow the move-to-the-end. They focus on getting bigger, and size their trades to get the maximum compounded growth of their capital relative to the amount of risk they are willing to incur, and they trade the markets and use the strategies that allows them to accomplish these goals. They realize and accept that markets vary from day-to-day and even intra-day, and that it is unwise to trade the market the same way, on days that aren't alike.
Forums can be beneficial and I would certainly argue that more education is preferable to less, provided the education doesn't impede someone's ability to reason things through for themselves. And provided the knowledge that is imparted is accurate and doesn’t mislead it’s readers.. In order to effectively convey ideas to others, you must amend their perspective and their point of reference, so that they may see it anew, and from an entry point that they will understand. To spare them the inevitable beatings of otherwise learning it the hard way is not often appreciated until its too late.
I realize this is very theoretical sounding and not very practical in nature, but it is not without its reason. Learn to think critically (& on your own) and don't be a follower. The way you choose to learn and acquire expertise in trading is as important as the actual process. So, give it careful thought and approach it logically - develop a plan to learn and then execute the plan. Forget about popular opinion and don't take anything at face value. Organize and filter your ideas and determine what is relevant, but allow conflicting ideas to generate new conclusions. Keep in mind, that in theory, there is no difference between theory and practice, but in practice there is.
@tigertrader
What you just wrote is appropriate not just this thread, but should be a mandatory part of intro course for all the newbies who suffer through the bitter personal experience, rather than learning from the priceless wisdom accumulated over years (almost half a century in your case). Being a brain specialist in my main/original profession, I could not concur more about the bias in people believing what they want to believe - something I "preach" to many in my "other life" all the time.
I am just ecstatic to finally find a place (this forum), when someone experienced (like you) is not beating their own drum for an hour lecture on youtube, and at the end of it trying to sell you their "magic indicator" packaged with bunch of .pdfs and videos at a deeply discounted rate. Don't get me wrong, I actually found some of these quite useful. But you are spot on one thing - most trader's "bottleneck" in being successful is not knowing whether 21 EMA is better than 20 EMA, but their own psychology of wanting to be right overruling the primary goal they are in the game - being profitable.
I have an inborn allergy to "experts", and often challenge many before I accept them as such, albeit after seeing a few posts from you mentioning just a few pearls - (using ADR for SL rather than Ticks and almost opposite mindset for Trend days vs range days, etc.) -I was sold, those were exactly the same things I came up with myself, but took weeks to months of trial and errors as a beginner.
Probably the single most important advice you gave - and I have already been doing - is seeing inordinate amount of data ourselves, to develop it as a skill, rather than blindly follow any single one or any single thing. It's just for beginners - looking at the price action is like Chinese characters, and unless given the meaning of each character - one can stare at it all their life and won't get far. People like you provide the "cleanest" and most straightforward definition of those characters - that's what I am talking about. Our brain (yet) is the best "deep machine learning" computer we have. One just needs to push through enough data with the right mindset (let the reality shape the logic, not the wishful thinking).
Thank you once again, and very much looking forward to future posts. I hope there are a few more people like yourself on this forum (though even just you are sufficient). I am very new here and just starting to dig on all the existing good stuff (Spoonalysis, etc.).
if you have a journal of all your trades, analyze it. wouldnt it be wonderful if you can just take the opposite side of the losing trades that you have been making ?
from the journal analysis, what kind of losses were you having ?
- time of the day (getting smack at the 9.30am open ?)
- trading news event
- timeframe risk/reward, scalping 1 min but expecting 10 points ?
good posts in this thread from others, I would suggest MTF approach 1min/5min/15min for example.
You need to start looking more long term. Scalping intraday is a tough world. I did this for awhile with good success and then a lot of not so much success. Back and forth…Made me sick! I suggest you swing trade the MES. You are going to need more Capital than $1000. I think I could start over with about $2640. That’s double the initial margin. You might need more, depending on the strategy you develop.
Find a strategy looking for mean reversion. The ES or MES are mathematically more profitable buying lows and selling highs. You can make money with trend trading, but the more trades you take, you will have a much lower win loss ratio and worse average win to average loss than with mean reversion. The one down fall to mean reversion is it works better with no Stops. This will make your MAE higher, but with consistent trading you will reap the benefits. You can always place an extreme emergency stop but keep it out of the way.
Over time you will build your capital and then can start adding contracts, Avg. Down, etc.
So for now….. stop trading and save some capital. While you are waiting, find a strategy that can mathematically make money. Get to know it well. Practice it in sim. Learn to trust it.
