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Starting All Over - Finding My Trading Niche


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View Poll Results: What is the next step?
Stick with purely scalping Bund for another month 5 35.71%
Start position day trading learning market profiling as I go along 6 42.86%
Learn market profile by day - scalp by night 3 21.43%
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Starting All Over - Finding My Trading Niche

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  #61 (permalink)
Sunnyvale, CA
 
 
Posts: 171 since Dec 2012
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grahamg View Post

Correct me if I am wrong - but trading is just a skill like anything else.

Actually, not really. In fact it's a skill quite in "contrary" to normal "job type skills". The skills you need for trading are things that don't work real well in other types of jobs. For example in most jobs there is a expected and consistent outcome for the task you do: if you are a bookkeeper and you calculate the payroll, the result is the paychecks for the employees. You get the same results week after week.

In trading, though, you are dealing with probabilities and calculated risks. One week is not the same as the next. Things are unpredictable.


Quoting 
Why should scalping be any different.

Because of the high degree of unpredictability in prices of an asset.


Quoting 
The No BS and Jigsaw material's give the components for profitable trades. Why can't anyone dedicated enough master these components, and then put them together to make a living out of trading? Is it purely a matter of effort / dedication?

It is not so much that, as the proper attitude and understanding of what you're doing. I have my own very strong opinion about what these ought to be, but I won't get into it here, other than to say that's strictly a probability-based business and at the core of it is price behavior.


Quoting 
I think it should be, but I haven't made it yet. The hardest part as of late is getting on the right wave (trading) as Bund is not giving clear clues as to direction to my eyes.

I can only state my own approach. I look only at price behavior, and as far as that goes, only a small handful of general, simple patterns, and combine that with risk management and knowing that you are doing nothing more than playing the odds. The results of any single trade mean little in the overall outcome.


Quoting 
If you have made it to a point you are confident to scalp for profits consistently - do you agree with me?

I have a consistent 27% net ROI and have been doing it for a long time. If it were me, I wouldn't try to scalp somebody else's system. Again, I can only tell you my own approach. I keep things as simple as possible. I play probabilities. I don't ever have any expectation about any particular trade working out. I don't try to predict prices. I look at the general picture. I don't get hung up on little details like defining fixed-distance stop losses because those type of things dont' matter. What matters is price behavior which does not adhere to any "fixed" sort of "anything," other than a few very general patterns.

Learn these few general patterns. Then observe the price of your commodity on the ticker (tape) so you know how to recognize them. The patterns are very simple and they occur over and over again:
  • breakouts
  • retracements
  • congestion

I personally never use any volume. I've never seen it to matter in oil futures, except in rare cases when a very large breakout is brewing. (the biggest example I've seen of this was back in 2008 when oil went above $85 for the first time. Buying volume in the minutes leading up to the breakout was immense. There were a steady stream of 2000 lot orders as the price was preparing for the breakout)


Quoting 
My Plan is - look for places where bigger traders are tipping their hand and jump on board.

This is evident in the price behavior. Learn to read the tape. You don't need anything else.

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  #62 (permalink)
Sunnyvale, CA
 
 
Posts: 171 since Dec 2012
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by the way, i should add that sometimes it is in your best interest to not be on the side of the big players. funds often go short index futures to hedge their holdings in the stock market. it is not necessarily a good idea to be on the side of what they are doing, because they are not placing bets on future prices in the commodity and their actions may only have a temporary effect on the market.

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  #63 (permalink)
Legendary Market Wizard
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"they" may be opening transactions that you regret missing.

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  #64 (permalink)
Sunnyvale, CA
 
 
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wldman View Post
"they" may be opening transactions that you regret missing.

Yeah but how are you going to know? Are you comfortable placing a blind bet? The fund managers may be bullish on stocks, but if you only look at their actions in the futures market you would mistakenly believe they are bearish.

The way I look at it is that the price action tells all. It doesn't matter who's doign what, or why. If I start trying to figure out what the different players are doing, it's going to get confusing very quickly and I don't need to anyway, because what they do is reflected in the price.

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  #65 (permalink)
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going to know with a reasonable certainty that can be justifiably relied on. Agreed.

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  #66 (permalink)
Armidale, Australia
 
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Hi @mwtzz, thanks for your answers to the big questions.

In this style of trading - the process of following size is not so much about looking for one order, which more than likely is someone hedging a position or spreading - its a flow of capital coming into the market. In my limited experience and from what has been pointed out by DionysusToast in his Topstep videos, the increase in volume occurs, if the Bunds are going down for instance, as a combination of the drying up of sellers, an increase in absorption of sellers, and then buyers actively hitting the offers. You can sense it happening but the hard part is acting on that sense. The degree of the transition of buyers coming into the market in this example determines the size of the predictable bounce afterwards. Observing the process and measuring the degree of it occurring I am having a bit of faith is an intuitive skill that comes with experience.

It is quite obvious seeing a block order come in to hedge or spread another market. Maybe only a few hundred are trading, then a 4000 block trade occurs against the trend and barely moves it a tick.

In regards to the skill - I get what you are saying in that we are supposed to be treating it as a game of probabilities. Just like the Mark Douglas approach he talks about in Trading In The Zone. With scalping however I get the feeling that the game is played with higher expectancy than a more mechanical / setup approach. ie You scalp to be right way more than you are wrong, and though you should try to ride a move for a higher Risk Reward, you must get out at first sign of change in market participants. If you need to be right say on 80% of your trades, then it tends to be more like a skill don't you think? You have an expected outcome of being profitable from most of your actions. Just a thought.

Price action is something I want to look into, but am caught in the conflict of moving on from a technique already and pursue something else.. or seeing if I can stick it out long enough to trade by osmosis of the one market. You mention the tape (ticker).. are you talking about just time and sales or the DOM? Since you have it broken down so simply into those three setups reckon you could capture some video of examples of what you're seeing in the tape each when you take a trade? Would be very educational!

The leap into freedom is the exchanging of risk for reward. This can be done only by shifting from tension to ease, and that can be done only when one perceives the reward and not the risk. That you won't win all the time has nothing to do with it - that's life, that's the [stock] market. The trying itself is freeing. And being free has its own reward - Justin Mamis, The Nature of Risk
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  #67 (permalink)
Armidale, Australia
 
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Last week I couldn't make even a tick in paper profits. Replaying my trades showed I was getting excited in the right areas -just getting shaken out - March 5 - Bund Trade - Graham83's library

I am having the realisation that this takes some time. Getting to know the market, learning from trading mistakes, learning my own capabilities etc. As long as I keep my losses small and don't destroy myself hopefully I will bounce back one of these days. It feels like I can shout out what the Bund is going to do next short term, and be right more than wrong - however the bids and offers aren't doing anything exciting enough for me to draw that line in the sand where I can calculate quickly a risk reward play. ie I just know its gone down about enough with enough breaks of the low by a few ticks, the selling pressure definitely decreased, no numbers coming out, and that it will go back up to test the higher volume areas - BUT have no step in the profile to lean on or big bid to get in front of. Probably just need to add a play for this scenario and see how it goes.

So since it takes time I should probably just relax a little - going to watch some of the FT71 material for future reference in case I do follow my original plan on trying different tactics. I think day trading is definitely for me, and I like DOM element, but who knows if in the end scalping just isn't for me. Probably too early to tell. I have a full day before the Bund even opens, and I want to be doing something that is progressive for my trading. Market Replay on SIM to fill the time and practice just seems like a joke compared to trading the one lots so is not how I want to spend my days.

I also seem to have gotten over my jitters to some extent, accepting more the risk involved in trading Bunds. One wise dog told me on Skype that you have to feel the pain before you can trade like this.. maybe I reached that threshold? Though only the relevant threshold to my small-time one lot trading. You probably have to feel the pain when you switch to 2 lots, then 4 lots. What I mean is there is a bit more detachment from placing a trade - akin to that 'every moment is unique' trading philosophy, so why stress over the action of one trade. Anyway maybe a good hurdle to cross - though the markets have been quiet so I could be delusional.

Happy trading.

The leap into freedom is the exchanging of risk for reward. This can be done only by shifting from tension to ease, and that can be done only when one perceives the reward and not the risk. That you won't win all the time has nothing to do with it - that's life, that's the [stock] market. The trying itself is freeing. And being free has its own reward - Justin Mamis, The Nature of Risk
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  #68 (permalink)
Armidale, Australia
 
Experience: Intermediate
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Felt a bit more cool calm and collected today. An odd feeling trading where I was more accepting of the risk. Detached from it in a sense after such a string of non-profitable trades. Today Bund was very slow in the first two hours, with a tonne of numbers coming out later in the day including the big one - Rates. I managed to pick two successful scalps iin the slow action, which has me feeling a bit more confident. I understand that to the observer it would look like pure luck but there is a lot of personal control that goes into making these trades.. and yes.. even still luck is probably the main contributor

Scalpers Anon Video Posts: March 7 - Scalps In Slow Bund GG

The leap into freedom is the exchanging of risk for reward. This can be done only by shifting from tension to ease, and that can be done only when one perceives the reward and not the risk. That you won't win all the time has nothing to do with it - that's life, that's the [stock] market. The trying itself is freeing. And being free has its own reward - Justin Mamis, The Nature of Risk
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  #69 (permalink)
Armidale, Australia
 
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grahamg's Avatar
 
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Friday and Monday I did not get filled on any trades. Unemployment rocked the Bund for a while but I watched on only, late into the night. Monday was dead as. Tuesday was starting out that way but a few bursts gave some opportunities. I was pretty good at entering for some of these opportunities and not so good at exiting.

I was aware of entering without thinking and exiting because of thinking. With this combination I was really quick getting into intuitive feeling trades, then psyched myself out of staying with them. The last trade this is especially the case where I got a good fill for a 'free' look at the highs. Then as soon as the market filled me and went straight up to test the highs I calmly exited happy with my 3 ticks.. instead of the 10 ticks that would have been available to me 30 seconds later. RIght idea, bad execution. I am going to try and continue to get in using less thinking like this - my rational logical mind really does a bad job at justifying taking trades, or at least does a very slow job at it.

Heres a recap of the trading day:

March 12 - Graham83's library

The leap into freedom is the exchanging of risk for reward. This can be done only by shifting from tension to ease, and that can be done only when one perceives the reward and not the risk. That you won't win all the time has nothing to do with it - that's life, that's the [stock] market. The trying itself is freeing. And being free has its own reward - Justin Mamis, The Nature of Risk
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  #70 (permalink)
Armidale, Australia
 
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Posts: 108 since Dec 2012
Thanks: 58 given, 103 received




Its a deceptive picture as I didn't trade for half the days as just couldn't get a read on the order flow. Add to that the very small profits I did lock in. BUT its the most momentum I have had towards consistent profits yet given that is 2 weeks in a row I have ended up positive.



This picture shows relative volume, which compares the accumulated volume of each day to the average of the previous 60 days (in this chart) upto the time of the relevant bar. Something I am finding immensely helpful as a freebie from Jigsaw Trading. What this picture shows is that volume has continually been falling out of the Bund this past few weeks, highlighted by the red arrows. The blue rectangle shows what the relative volume should look like on a good day trading day. With volume continually dropping out of the market, there are less decisive players willing to defend prices at their preferred level, which means less obvious waves in the order flow essentially.. to me anyway. When the relative volume slope increases is where the opportunities lie if I'm quick enough. Even if its in the negative and starts to slope upwards that means above average volume entering in the market. Days when the relative volume is in the positive means that big players are 'playing', and their footprint can be found in the DOM in theory. I am hypothesizing that these big players haven't been gaming the past 2 weeks to the same extent. Not that I'm and expert on such matters yet.

So the question is what to do when it slows down like this. My opinion is that the Bunds, and bonds in general, are at a critical juncture in history being at or near their all time highs. Either the range of the last year or two will continue, or a breakout to new highs will occur, or the commonly predicted bond bear market will ensue soon enough. At such a juncture I guess it is pretty normal for everyone to be less active, or less convicted in their trading until a direction is established. The fact that there is an obvious drop out in the relative volume to me says that this IS a juncture, and it will resolve one way or another soon enough. I think trying a new technique, or switching products is a bad idea in my development stage as I will probably then miss the action in the Bund when it returns, or not be as prepared for it. SO just going to be patient, bunds like everything have their ON time, and OFF time. Hopefully this week they get cracking and my eye improves for spotting opportunities either way.

The leap into freedom is the exchanging of risk for reward. This can be done only by shifting from tension to ease, and that can be done only when one perceives the reward and not the risk. That you won't win all the time has nothing to do with it - that's life, that's the [stock] market. The trying itself is freeing. And being free has its own reward - Justin Mamis, The Nature of Risk
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