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Catching Big Waves - a trader's journal of surfing the the markets
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Catching Big Waves - a trader's journal of surfing the the markets

  #4041 (permalink)
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I have no clue what I am doing here, but I have read a few of the threads, took a small class once on market profile, watched a couple webinars, etc. I know there are some statistics regarding the value area for ES, but not sure about CL. The POC seems to have caused a response more than a few times in the data set I have, but I am only getting bars back a few days, not sure why yet.

But, at initial glance, despite what I might supposed to be doing with it, it looks like a lot of buying occured in the lower range of today's bar.


Last edited by GaryD; September 4th, 2012 at 07:56 PM.
 
  #4042 (permalink)
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  #4043 (permalink)
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I was just discussing today's trading with my wife. "What happened?". It went down. "So you sold?". No, I bought.

I am geared towards higher time SR levels. Why, I have not determined. I do not take advantage of them like I want to. But I will watch the market fall and fall, and wait for it to turn, then trade. I see it so many times. I feel the trend is up, or, my SR levels are drawn that way, and I wait. And often miss the major move. But I prefer to feel price is now against a wall.

And typically, 24 to 48 hours later, my 20 ticks would be worth 100.

Scalping.


Last edited by GaryD; September 5th, 2012 at 07:56 PM.
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  #4044 (permalink)
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Scalping vs holding for a big run.....they both accomplish the same thing. They make money. You can make $500 with one lot and a 50 tick win or you can make $500 from a ten tick win with 5 lots. Its the same money. Yes the risk is smaller with the one lot. But if your expectancy is good, (yours is) then in the long run, you could theoretically make the same money in half the time.

For me, the big runs are a source of pride....."look at me, I held a trade for X ticks". No lie, its an ego booster for me for some reason. But I trade to make a living. My need to earn a living supersedes the need for my ego to be stroked. My need to earn a living even supersedes my need to have my peers think highly of me. Believe it or not, I've let what people on the forum might think prejudice my thinking about things. How stupid is that?

In the end, its the $500 you earned, not how it was earned. My wife doesn't care one bit if its 50 ticks or ten. Just that it happened. I suspect most of our spouses feel the same.

What is a scalp? I read a professional recently that said it was something less than 6 ticks. This guy was a prop shop trader where that's all they did. In and out. 2-3 ticks at a time all day long. For us CL traders, what is a scalp? Is it 6 ticks, 20, 30 or is it anything less than the 240 ticks price moved today. How much of the move is enough to make us feel better about ourselves.

Here's my two cents....keep in mind my journey is different than yours, but I think a well thought out plan based on what you think price is gonna do with entry and exit zones executed as well as possible given the circumstances of the trade is what matters. If you plan a trade thinking it will run 76 ticks to an exit zone and you exit there only to see it blast through for another 100 ticks, does that make you a bad trader or did you execute your plan poorly? Of course not. You executed perfectly, and the trade exceeded your initial projections. Just like a losing trade, you don't control where price ends up, all you can do is have a reasonable plan, execute it as best you can and take what the market gives.

I don't want to sound arrogant or disrespectful here nor do I want to minimize the struggle you're having with this issue because I've struggled with it as well, but it does seem like a vicious circle. Damned if you do, damned if you don't. To me the result is whats important, not the means. So if you are a good scalper, become an expert and add size. There is something real nice about being out of a trade at 18 ticks with 5 lots instead of having to hold a single lot for 90 ticks which might never come or worse, be in profit for some nice number of ticks only to have it come back on you for no gain. All that hard work out the window. Yes, I know that's the price you pay for larger moves, but is it a price that's even needed? Only you can answer that but for me, a conservative exit with size is better for my psyche than a shoot for the moon with one lot. It also takes a hell of lot less time. Another thing I like about it is this, its a heck of lot easier to duplicate the 18 tick winner than it is to duplicate the big winner. And repeat-ability is important. Outliers are important to the bottom line to be sure but do you want to depend on them for your living?

My one exception here is this: If I have had a nice successful trade in the "normal" manner, meaning I've executed a trade and have some "house" money to play with and I get another trade signal that meets all my requirements, I will put the trade on with less size than before so that if I get stopped out, I am still up more than what I want to earn daily. At that point, I am willing to give the trade plenty of room to run. I had a couple of nice trades last week this way. But my daily nut had already been made and the trade was a no risk proposition from an income standpoint. This is gravy money for me. Nice when it happens but not counted on for income purposes. And in my world, income is the holy grail. The gravy simply buys me more breathing room for the next trade.

In the end, this is your journey, however, every once in a while, everyone needs an outside opinion to think about, even if it eventually is disregarded completely.

You're a good trader. I think you think to much. You know your plan and how your set ups develop. Execute your plan. If you scalp, be a great scalper, if you swing trade, be an expert at it, but somewhere along the way, a bridge needs to be burned. Of course, you could just scalp out your risk and let the remainder ride....no harm in that.

I remember you once did a study on the probabilities of a swing going 20,30,40,50,60,70,80,90 and 100 ticks. You had done an extensive study based on your set ups off the 6 range chart. I appreciated that study because it led me to do a similar one based on my entry style and to determine for me what the optimum exit is. If I remember correctly, you determined that something like 40 ticks was the optimum number to look for in terms of probabilities over the longer term off the 6 range chart. To me, trading inside that window seems like a terribly smart thing to do.

Ok I'm rambling now.....I've written a quarter's worth but its still probably only worth 2 cents...

Good luck.....

Simplicity is the ultimate sophistication, Leonardo da Vinci


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  #4045 (permalink)
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GaryD View Post
I am only getting bars back a few days, not sure why yet.

Probably because you do not have tick data back that far. You can also set GomMP to use MinuteData instead of TickData and you can get data back as far as you have minute data. Probably okay for long-term profiles, but for dailies, I much prefer tick data (especially for an instrument like CL which is much more thin than something like ES).

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  #4046 (permalink)
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There is a fine line, like with most things in trading. Nothing black/white.

Scalping has high overhead. 1 tick slippage on market orders plus commission cost can easily be 20-25% of your entire profit. If you are a scalper, you should be trading thousands of turns a month and should be leasing a seat, or own one, so your transaction costs will be reduced in half, or less.

Longer term trades, which can still be considered day trades, will minimize the transactional overhead.

You do not need to risk more $$ to trade longer time frames. Just trade a more appropriate instrument or decrease position size. Trade the ETF if you need to.

With scalping, you cannot have a big stop, because you also have a small target. This means noise is a major concern. With longer term day trades, your stop and target is wider, so noise is less of a concern, but there is increased probability your trade will move 50% in your favor then reverse. While this happens with scalpers too, it is less noticeable because it is only 2-3 ticks.

Personally, I swing traded and day traded for years before ever trading futures. With futures I was always scalping, I guess because of the leverage and thus the risk / reward. It took me a long time to realize I could be trading smarter instead of bigger. Over the last few years on futures.io (formerly BMT) you can see me slowly transitioning away from scalping and back to day trading or swing trading. For me, it works.

There are plenty of people who prefer scalping. I am not sure how many of them are truly any good at it however.

Mike

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  #4047 (permalink)
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And perhaps the most important factor, which is what suits the trader. Jack Schwager, who has met a more diverse group of good traders than probably any of us have, mentioned how traders often try to be something they are not. They could do fine with something, but they try and be like someone else, or try to adopt a method which works for someone else. His consistent theme is: there is no one path to success in the markets.

For example, some traders feel the flow and understand the market in the day timeframe. They see no logic to the swings the market makes over many months, but one day at a time... they can handle. However, other traders would go nuts day trading, and see it all as just noise, and can see the bigger picture of several days or weeks on end. Putting either of these traders in the others' shoes would likely result in disaster, but each in his own element can be very effective.

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  #4048 (permalink)
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Big Mike View Post
There is a fine line, like with most things in trading. Nothing black/white.

Scalping has high overhead. 1 tick slippage on market orders plus commission cost can easily be 20-25% of your entire profit. If you are a scalper, you should be trading thousands of turns a month and should be leasing a seat, or own one, so your transaction costs will be reduced in half, or less.

Longer term trades, which can still be considered day trades, will minimize the transactional overhead.

You do not need to risk more $$ to trade longer time frames. Just trade a more appropriate instrument or decrease position size. Trade the ETF if you need to.

With scalping, you cannot have a big stop, because you also have a small target. This means noise is a major concern. With longer term day trades, your stop and target is wider, so noise is less of a concern, but there is increased probability your trade will move 50% in your favor then reverse. While this happens with scalpers too, it is less noticeable because it is only 2-3 ticks.

Personally, I swing traded and day traded for years before ever trading futures. With futures I was always scalping, I guess because of the leverage and thus the risk / reward. It took me a long time to realize I could be trading smarter instead of bigger. Over the last few years on futures.io (formerly BMT) you can see me slowly transitioning away from scalping and back to day trading or swing trading. For me, it works.

There are plenty of people who prefer scalping. I am not sure how many of them are truly any good at it however.

Mike

I was gonna mention the pro I referenced paid pennies a round turn. It makes a difference. Another thing I intended to mention was this, I do not consider a 15-25 tick trade a scalp. It might be but for me, seeing 15-25 ticks per swing seems like a reasonable day trade. I know others hold trades for hours. Thats cool, I don't want to do that, so a 15-25 tick trade with 3-5 lots on it is a decent trade. I'm good with one or two of those a day.

Simplicity is the ultimate sophistication, Leonardo da Vinci


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  #4049 (permalink)
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A lot of great comments. I plan to sort through them this afternoon.

 
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