Something is wrong, is it the market or the method? I think the method is ok so to test this I try another market. if I thought the method was wrong I'd adjust it. By method I mean the stop. There is also another thing wrong and that's trade location (see below). Doesn't matter what the stop is if one is trading on the wrong side.
Have you read Way of the Turtle? The turtles were given the same strategy and the same markets. the author said he was surprised when he was often the only one who took a trade, or he was the only one who took it with full size. This is a great example of what you said. A few succeeded a lot didn't.
But if they're trying indicator combinations then psychology is not the problem, they don't have an edge. Psychology is important, but I think it can be a cop out for not having an edge.
That's called "cognitive dissonance". We see what we want to see. It's a real problem in trading. That's one reason I post charts with my volume indicators. I was hoping someone would challenge them. So far Westbeach has challenged the theory behind it but no one has challenged whether they have any predictive value. I may be suffering from cognitive dissonance.
Here's one example of the kind of anysis I do on my trades. This is from Monday's morning CL session.
Tell me if you disagree, but I believe my main problem is:
- preference for the short side which is particularly dangerous in the bull market
- bad trade location - I am often on the wrong side and get a loss and/or miss a great trade
Hopefully someone can comment. I believe that trade location is one of the most important factors in making money. This is what I'm currently working on, which is actually why I got interested in market profile.
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If you want a six pack you don't suddenly start doing 1000 sit ups a day. You start buy doing 50 for a week then up it to 70 the next week and so on untill 6 months down the line your doing 1000 a day and have something that looks like its straight out the film 300...
Its funny how a few weeks in doing those situps becomes easier as you start to see the benefit of your efforts and hitting your targets. Then before you know it your looking forward to doing them the next day.
Funny how an 'edge' is easier to execute the more you do.
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Hi cp, I thought I had said before that I didn't get these indis and the last thing I want to do is offend but since you asked...
I know you have used these for a while and see certain things in them but as I have said before and you said above, trade location is what separates good traders from average ones.I see absolubtly how any of those indis can help with trade location, you are trying to box something up that is organic and has to do with resting inventory and areas of supply and demand in the market. Ain't gonna happen imo, focus on the big picture forget the cycles and initate trades from these areas scaling out to bigger targets. I think the cycles thing is getting you caught up in small moves. Just my2c hope I haven't hurt you with this post
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I follow your post and think they are very helpful and interesting. I donít comment because we trade differently so I donít have much to add to your setups. Also I believe in mastering one market at a time so I just trade the ES. So I have zero feel for CL. Lately iīve been trading the Euro but I donít feel comfortable there since I donít know it that well.
I started to do really well last summer and continued until the last few months when I started to experiment to much with orderflow. I got caught up in the short term fluctuations and missed the bigger picture. So now iīm back to what iīm good at. I think its important to analyze ones strengths. Mine are iīm good at guessing levels and overall direction. My weakness is confidence and taking loss. It used to be trade execution but all that orderflow stuff at least helped me with that. I think my problem was/is that iīm looking for that perfect method. I want to understand the market and I look at the bid/ask trying to follow smart money or at least not follow dumb money. From my orderflow experience I learned that there is more noise in the market than we think. There are many motives for being in the market but we always seem to assume that all the participants motive are the same as ours, making money trading. So for me orderflow is second to finding my levels. I look at it just when I enter trying to se the market tip its hand. But after that I donít have my DOM up and I donít look at any footprintcharts. It only gives me a headace. For me itís easier trying to find a spot away from value and then trying to get a feel for what the market is going.
I had a brief disorientation this last couple of months thinking I could find a good setup, code it and almost autotrade it. I remember James Dalton saying in a market profile education that you if you apply the principles he was teaching you could probably get to the level competent. But in order to make money you had to utilize your inner sens to get to that expert level. Concerning to the short bias, was it the same during 2008 or did you try to go long there? Looking at my own trades I tend to be contrarian to price. Somehow the hard trade is going long after a big move up. Its ďeasierĒ to short. But the hard trade is usually the best ones. So when I get that breakout I myself wich feels better? shorting, knowing I just went up 10p and it HAS TO pullback a bit or buy and risk being the sucker that is left holding the bag at the topÖ the one that gives me the most agony is usually the right choiseÖ
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My ES trading went well. It has been a long time since I daytraded ES. +$109 I won 3/4 the loser was 1 tick loser. Would have been a winner but I had to stop trading.
This is just one day so it's too early to say if ES is a better market for me than CL. One thing is for sure: I have plenty of time to study the situation and enter. Today was kind of weird though, really slow & flat so I think I can make more on more volatile days.
I haven't read it, but am glad he reached the same conclusion as me I think it's a very important conclusion and people need to understand it. It's all psychology...
I disagree. They are losing money. They haven't figured out that the reason why is them, they still think the reason why is poor indicators. "If only I can find something that turns a bit faster", "If only this indicator would keep me out of chop", "If only I didn't get faked out so much".
Indicators, indicators, indicators. They look to indicators to solve everything. They look to indicators as the reason they lost money in the first place. Some people have so many indicators on their chart it is ridiculous. I've seen screen shots on the forum and said "I can't even see the damn price!!" to myself, because the screen is so overloaded with indicators.
Then people start to have thoughts like "The indicator was right, but I screwed up", and "If only I had noticed this indicator was heading lower I would not have got stopped", and all this crap. They think the majority of time the indicator(s) work, but they've somehow failed to interpret them. It isn't true. The majority of time they don't work, but people fail to realize that (cognitive dissonance, as you mention, as as the author of that book I'm reading goes into detail about).
Everyone suffers from it. Just like everyone has a built-in instinct to avoid pain. The human brain is conditioned to be a poor trader. Again, psychology. In order to be a successful trader you have to slowly condition yourself to do something that doesn't come naturally. While you are a working on that, consistency is helped by proper risk management and proper money management. Both of which are very easily affected by psychology, ie doubling up position size to "get even", and trying to make more on winning trades to "get even". These two things are risk and money management, but they come from the core of psychology.
The instinctive thing to do is minimize pain. We are very slow to take stops, even moving them, to make sure we don't have pain. There is no pain until the stop is actually hit and then bam at that moment we are in a world of hurt. When we have a profitable trade working, we are quick to take that trade off because of the fear of pain, again, we want to have a good feeling, we want to make it a winner. Of course these winners are half the size of our losers, for the same reasons. We are conditioned all wrong.
Next you are determined to get it right, so you'll say "for the love of pete, I will hit my profit target or else" on the next trade. It turns into a stop, because you ignore factors in the trade which were valid in causing for a quicker exit, but you are determined to not let the market get the best of you.
You can't win! Not until you step back and realize that you are responsible for all these missteps. Once you take responsibility for everything that is happening, and stop blaming the market, stop saying they ran stops, stop saying they faked you out, stop thinking the market is out to get you, then and only then can you slowly start to move forward and start taking the baby steps needed to recondition yourself for trading.
Trading is simple, not easy. There are a lot of variables you have to master. I don't think any of them have to do with any indicator, order flow, or volume.
I'm going to copy this reply into my advice thread too
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I'm glad you started your journal. There aren't many dax traders in the forums (not many dax traders period I think) so I'm very interested to see what you're doing.
I'm still thinking about some kind of dax trading room or just chat. So far you're the only one interested so maybe we could try something via skype. My skype id is the same as my user id here if you want to add me.
I have thought about this, particularly the platforms part and I think I have a valid idea here so I'd like to respond. I actually didn't respond to this earlier because I didn't want to be defensive without really thinking about it but the more I think about it the more I think I should be defensive if I'm defending a valid idea.
For my charting I've used Tradestation as my main charting platform for over 1 year now. I am so much more productive with TS than I am with Ninja. I love taking an idea and having a finished indicator or strategy within a few minutes. That's really powerful. I have tried some things on Ninja, particularly where TS is lacking such as annotations and renko charts. But overall TS is my main charting platform.
I've used Ninja as my order entry platform for daytrading over a year. So far I haven't seen a DOM better than Ninja's.
So I could use TS's DOM along with charting or Ninja's charting along with their DOM, but to me each tool is particularly adapted for a specific purpose. If I want the best DOM I get Ninja. The fact that it comes with charting that I don't need doesn't bother me.
In the past few months I wanted to use a volume ladder & Market Profile charting. These are available for Ninja but if I want the best why not use it? So I am using Market Delta. It's pretty intuitive to use so there wasn't a learning curve. I don't program it, just charting. I'd love to have all charting in Market Delta but there is no programming language built-in so I prefer to have Easylanguage available to me (via Tradestation) for prototyping ideas.
So for me I use the best tool for the job. It doesn't bother me that I have 3 "platforms". I just consider them 3 windows on my desktop. Doesn't matter if they're from the same company or 3 different companies. Each has their use, their strengths, and their limitations. As long as they're easy to use then it's a good thing in my opinion.
I have an example of the professional community that might give some encouragement. About 6 months ago there was a huge buzz on Bloomberg Chat about Tom Demark's indicators. I don't know too much about his work but the indicators I briefly looked at were either wave counting, breakout or moving average based. With all due respect to Mr Demark, this didn't seem too dramatic. Now Bloomberg is mainly a professionals' tool and you can look up where every user works. When I last checked there were over 6000 professionals joined in the discussion. I can't tell you how many heads of various trading desks from the top tier investment banks and funds participated in the discussion. I didn't spend much time looking at it and I don't know if anyone found any value or used the methods so I am not encouraging anyone to go on a wild chase down that road. The point is this was a forum discussion amongst the largely professional community and it was not very different from the concepts thrown around on this forum. Just something to think about...
Last edited by WestBeach; April 4th, 2010 at 06:40 PM.
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