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

September 2nd, 2012, 12:46 PM

GaryD

Mike,

I am at a phase where I am very interested in connecting with other traders to see what they do. I do not mean I am looking for someone else's method. It has something to do with validation as a group? Not sure, but you may have read enough of my jumbled inner thoughts to get where I am. My biggest setback in trading is my own confidence, something that I am seeing make a comeback though.

I'm pretty sure you stopped trading crude oil and went to 6E and ES, but I was on my Control Panel, preparing to add some contact info for myself, and saw the name of a thread you started

Big Mike's day trading method and advice

First, for those following me for the last year or more, you know I've changed my style a few times. At first I felt bad about this, I felt perhaps I was doing something wrong before and that anyone that followed me was possibly now doing something …

(where I got the quote above) in some "recent posts" list. I also saw it was from 2009, so who knows why it showed up there.

Despite your suggestion that I stay away from a computer for a few days...

I agree with the 16-24 tick stop minimum, and even set an "emergency" wider than that at times, it all depends on price action. On targets, similar, if I am truly only looking to "scalp", 7-15 ticks is about it. Next range of targets 20-30, then up into the 40-60 area.

So, on the premise that we agreed at some point in time of the mannerisms and probabilities of crude...

At the wide extremes of the RR you mentioned above (and I understand that trading is an evolution) the low end target was 8 and the high end stop was 24. While that mix was probably fluid and cannot be truly defined as a 3:1 RR, I am interested in hearing your thoughts, and the thoughts of others who might read this, on whether scalping for initial targets lower than initial stop loss is something you do, how often you do it, or what place it holds in your trading, today or in the past.

I started trading crude and holding for my 2x or more targets a few years ago, and it did produce a profitable trail over time, but the execution has to be nearly flawless. Tiring mentally. I have found that sometimes I just "go with the flow" for a brief moment, for RR less than 1:1. Mine is more like 12-15 vs 6-10 on scalping. Price action determines it, no hard rules.

I find that when I trade like that, which is not every day or every trade, only on certain days, or mixed in with longer trades to soften a loss, or capture a moment, or build a risk base for later, kind of a "feel something" trade approach, I can hit win % that makes it work. Not with my eyes closed, or anything I am capable of programming to be traded automatically... but when I am focused, that initial risk vs reward seems acceptable to me. I know I will be right more than wrong. Could not say why I know...

Of all the training I have had, all the books I have read, all the advice I have seen in this website, reward is supposed to be larger than risk, transaction costs are supposed to not make sense, and so forth. So, whether it works or not, in my subconscious it feels like I have committed some great trading "sin" when I do it, and I often tell myself to stop it, wait for something better.

That is something that is at conflict in my head lately.

Forgetting hard math for a minute, if scalping is mixed with longer targets, and is not seen as just another trade, but as a way of keeping my finger on the pulse, and if at the end of the day, week, and month I am ahead... is it wrong?

I would argue that for someone starting new, yes, it is absolutely wrong. The odds are so far against you at first that you will die a death of a thousand tiny cuts. The question may be, with experience, and once you understand the when and where, can it become right?

I am sure that accurately represented how I was trading 3 years ago. But since that point, I've grown a lot as a trader. Majority of people on nexusfi.com (formerly BMT) are scalpers. I am not any longer, and very happy that is the case.

These changes happened gradually over the last 3 years, slowly going to bigger and bigger time frames, and then last year finally learning profile and using that to replace any other lines on my chart.

I have no small charts on my screens any longer, and I do not scalp. My smallest chart is 100k vol on ES which is roughly equal to 45m chart. I have nothing in my price panel except for swing high/low markers or trend lines which I draw. There are no moving averages, no bands, no other s/r lines.

I use three charts: 100k vol, 500k vol, daily. These are my primary charts. I will look at the weekly and monthly chart as well, but only every couple weeks or so. On these three charts, two of them are identical: panel 1 = zigzag + trend lines, panel 2 = rsi. On the third chart, the daily, it is TPO and Volume Profile. This creates three levels per day, a VAH, VAL and POC. Those lines are extended forward as naked lines until price trades through them.

I use RSI for divergence. I use profile for levels. I trade with an average of 2x reward to risk, and I am to be right half the time.

Mike

September 2nd, 2012, 02:09 PM

Big Mike

I trade with an average of 2x reward to risk, and I am to be right half the time.

Mike

Thanks Mike. A little deeper in if you find time;

1) "an average of 2x" leaves room for some trades to be taken off at less than that. Do you have a minimum, or is it a loose rule and dependent on structure? Today, do you ever go in for less than 1:1 on any targets?

2) Do you still go in with 3 or more and peel off at various levels?

3) Do your charts now offer more than a trade per day?

I am exporting my trades for the past month (tonight) and separating into ranges of profits and losses, to see win % in various tick distance areas, percentage trades taken in those ranges, etc. Just thinking.

Thanks man, thought you were getting away from this for the weekend?

September 2nd, 2012, 02:18 PM

GaryD

Thanks Mike. A little deeper in if you find time;

1) "an average of 2x" leaves room for some trades to be taken off at less than that. Do you have a minimum, or is it a loose rule and dependent on structure? Today, do you ever go in for less than 1:1 on any targets?

2) Do you still go in with 3 or more and peel off at various levels?

3) Do your charts now offer more than a trade per day?

I am exporting my trades for the past month (tonight) and separating into ranges of profits and losses, to see win % in various tick distance areas, percentage trades taken in those ranges, etc. Just thinking.

Thanks man, thought you were getting away from this for the weekend?

Should have said "aim to be right half the time", not "am to be right half the time".

1) Some are less than 2x, some are more than 2x. I usually have three targets, first one is 1x, second 2x, third 3x. I usually give market a wide berth but will take a trade off early if I think I am going the wrong direction.

2) Yes, firmly believe in scaling out. And scaling in. I don't think I can predict a perfect entry, so I do not even try. Toe in water, then add more after I see the temp.

3) Usually 1-2 trades a day is it for me. Past several weeks it was far less than that.

I am making final arrangements to rescue my third lab this weekend. It has been a busy weekend with meet-n-greets and home visits. I have the final meeting in a few hours, and with luck, will be chosen to be his family by the foster today or tomorrow. The organization is very thorough, and that is one reason I like them and support them so much: Dallas / Fort Worth Labrador Retriever Rescue Club

Mike

September 2nd, 2012, 04:24 PM

Big Mike

Should have said "aim to be right half the time", not "am to be right half the time".

1) Some are less than 2x, some are more than 2x. I usually have three targets, first one is 1x, second 2x, third 3x. I usually give market a wide berth but will take a trade off early if I think I am going the wrong direction.

2) Yes, firmly believe in scaling out. And scaling in. I don't think I can predict a perfect entry, so I do not even try. Toe in water, then add more after I see the temp.

3) Usually 1-2 trades a day is it for me. Past several weeks it was far less than that.

I am making final arrangements to rescue my third lab this weekend. It has been a busy weekend with meet-n-greets and home visits. I have the final meeting in a few hours, and with luck, will be chosen to be his family by the foster today or tomorrow. The organization is very thorough, and that is one reason I like them and support them so much: Dallas / Fort Worth Labrador Retriever Rescue Club

Mike

"Am" is more affirmative. "I am to be right". You go on and tell the universe and it will listen.

But I figured it was a typo.

Thanks Mike. The perspective helps me. We are not the same, but not that different either.

My wife is talking about another dog. Meanwhile, my dog thinks she has it pretty good with just us.

September 2nd, 2012, 05:15 PM

Good speaking with you earlier Mr Gary

I am leaving Naples on the 8th to go Orlando

Here is where i am staying for the week

Orlando Hotels | Sheraton Vistana Resort, Lake Buena Vista

You and your wife are more then welcome to come and chill at the resort for the day, we can just chill by the pool and crack some beers open

Deffo interested in poping over yours one day in the week to see you beautiful looking house

Keep in touch and let me know your schedual from the 8th to the 15th

@researcher247....why did you have to bugger off to Hong Kong, we could of had a party! booooo

regards

September 2nd, 2012, 07:54 PM

greenr

Good speaking with you earlier Mr Gary

I am leaving Naples on the 8th to go Orlando

Here is where i am staying for the week

Orlando Hotels | Sheraton Vistana Resort, Lake Buena Vista

You and your wife are more then welcome to come and chill at the resort for the day, we can just chill by the pool and crack some beers open

Deffo interested in poping over yours one day in the week to see you beautiful looking house

Keep in touch and let me know your schedual from the 8th to the 15th

@researcher247....why did you have to bugger off to Hong Kong, we could of had a party! booooo

regards

The house was once beautiful... but you will see when you come, it is now just a place I am waiting to move out of. A memory of days when money meant something different to me. I just came in from mowing the sand volleyball court...

I was thinking after we spoke, it would be great to have you as a guest trader for a day. As the host, I think it should be proper etiquette that I allow you to take a trade from my desk, possibly even in my account? We can sort out any difference at dinner or by the pool.

You will be the first futures.io (formerly BMT) member I meet in person, and I am excited about it. Hopefully Hedvig will be next.

September 3rd, 2012, 11:56 AM

September 3rd, 2012, 04:51 PM

GaryD

I am exporting my trades for the past month (tonight) and separating into ranges of profits and losses, to see win % in various tick distance areas, percentage trades taken in those ranges, etc. Just thinking.

Hours later...

I exported all trades from August 1 through August 31, then sorted them into columns by winners versus losers, then divided them into groups by tick value.

At the bottom, I discovered that in August, scalps were a valid contribution.

Not a very good commission factor this month, and I already knew that. Not really the purpose. I continued to experiment with varying contract size, up and down, trying to "feel the weight" is the best description I have come up with. When I feel ok, I sit there, when I feel uncomfortable, I scale out or just drop it and start over. So what if my broker enjoys my madness. It is my account, and this is something I am trying to work my way through.

The goal for September, is to concentrate on feeling comfortable, and see if the columns change on their own.

What I "THINK" I would prefer, is to see the columns to the right fill up more, and the ones on the left to be reduced by number. But I believe I need to "FEEL" that way for it to work for me.

The exercise of analyzing it, spending a few hours on spreadsheets, comes from a different part of my brain, and I believe I need that part. In fact, that is a dominant tendency in how my mind works, that I have that I have learned needs to be tempered. By spending the time satisfying that part of myself, it is then free to sink in and eventually provides direction for what I am feeling. I think that is what happens, anyway.

But for some reason, if I do not balance logic and analysis with feelings and emotions, I do not come out ahead.

I can't force myself to feel comfortable, I have tried. And without feeling comfortable, I am either too emotional, or too robotic. Somewhere in the middle is this zone where I know I will come out ahead.

September 3rd, 2012, 05:10 PM

So Gary, when you say "tick range" of 10 to 100, you mean a dollar profit of 10 to 100, whether that's trading 1 contract or several? Just making sure I understand your chart.

September 3rd, 2012, 05:18 PM

josh

So Gary, when you say "tick range" of 10 to 100, you mean a dollar profit of 10 to 100, whether that's trading 1 contract or several? Just making sure I understand your chart.

If I was in 4 contracts, it lists as 4 separate line items in the spreadsheet. Pure contracts traded.

10-100 is dollars, or 1-10 ticks.

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

Discussion in Trading Journals

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