I will start by saying that I am not trading live with what I am learning about tape reading yet... I am not incorporating that for a long time (2-3+ months)..
basically, I am looking for number of orders being executed at b/a to determine the aggressiveness of the execution and if a SR level will hold or not.... CVD helps, but not always clear to me as I am looking at it on the chart.. for scalping, which is what I do.. all indi's are lagging but I find value on VB and MP for SR levels and overall direction..
I always felt as if something was missing from my understanding and I have been reading more books lately on sucessfull traders and the one thing they all seem to have in common was that for the most part they were also tape readers, besides having nerves of steel and trading price action or trend.... so this past week I started to read more about tape reading and searching online about it... I came across this two sites..
I found a few of the videos from PAR over at screencast and then I gave it a try on replay mode after watching them for 2 days over and over, and also by just plainly started watching the tape and it was interesting to see how when it gets to a support level one can see the volume and tape velocity increases depending on who is getting control, etc... but I see it instantly on the T&S.. it is just a matter of being able to see it and interpret the data correctly...
I wish the T&S windows could be customized beyond what it can do today(just filtering) to see if some of my ideas are correct, but I am not a coder so hard to write my own T&S..
I plan to buy PAR course beginning of the year once since I dont have $2K left on my training budget, but next year is a new budget
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I have been thinking about your dilemma with stop's lately. I have not yet read it, but take a look at van tharp's money management book.. people speak highly of it... other than that, have you considered not having a fixed by rather variable stop size depending on the type of day you think we might be having? in other words, adjust depending on the volatility... or how about taking a Percentage of the ADR for the stop and target and always shoot for 2:1 (risk 1 to make 2) ...just a few thoughts...
Up until lately I've used wide stops and I just got out when I knew I was wrong. This works 90% of the time and maybe 5% of the time the loss will be bigger (like 4 pts). This isn't that bad, because the 90% cover for it. But 5% of the time (or maybe less) I've missed the opportunity to exit with a (3-4 pt) loss and it doesn't come back. And that can wipe out gains from the 90%. So one idea is to just use a hard stop at 4 pts no matter what and try to get out ASAP when I'm wrong which could be from a few ticks up to 4 pts.
The idea of a 4-6 tick stop is that I could trade 3-4 times the size as 16 tick stop. This 3-4x increase in size could make up for the extra losses from the additional stop outs. This is what I'm experimenting with now. My stats from last week showed I took a few losses last week but they were small and I was still profitable. If I can continue this for a week or two then I'll increase size to 3 contracts and then 4.. etc.
The final idea is to use the DOM. I've gotten good at "entering with the edge" and if it doesn't move a few ticks in my favor just bail -2. If it moves a few ticks in my favor bail if it comes back to entry. If it moves 4 ticks bail with 1 or 2. This is the approach used in the no bs daytrading book. The problem with this, at least for ES & Bund, is that they move around a lot so moving 3 ticks forward and 2 back is very common and could result in getting stopped out a lot. But the potential gain is huge. One could have a stop of just a couple ticks. And now we're talking trading 8x more size than with 16 ticks!!!
For me I am pretty good at context and targets. The "final frontier" for me is to get good with the risk part of trade management. It's the last step before increasing size.
For so long I thought if I was just profitable with 2 contracts I could do 100 and have it made. I've learned that it's a lot harder than that. Especially with retail commissions. When trading 50+ retail commissions are reduced so it's easier. And when trading >50 buying or leasing an exchange seat makes commissions almost go away completely. The deck is stacked against the small retail trader. It's clear why only a few survive. We compete with others paying 35-50 cents commissions. They can scalp against us for 2 ticks it cost them $0.50 and we stop out it cost us $4.50.
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Hey guys it's almost the end of the year. 2010 was a great year for me as I made lots of changes to my trading. First I learned about market profile, then order flow, the volume ladder, and then volume profiling. These tools eventually replaced the sine waves & multiple timeframes and my trading improved. Then I recognized that after 6 months of profitable day trading, I still had an issue holding me back from increasing my size. And that was lowering my risk and managing my risk better. Lowering means tighter stops and managing means avoiding situations where my stop is likely to get it. This has turned out to be much harder than I expected. I thought when I was profitable with 2 contracts I'd just keep adding. But here I am 7 months later still trading 2 contracts! But I know where I am going and what I need to do to get there so it's just a question of time to undue bad habits and to practice good ones.
I'd like to close this thread by the end of the year. First of all more than half of this thread is about trading methods & tools that I no longer use (cycles, better momentum, volume indicators, volume ladder, etc.). Second, I've been very active with collaboration on Twitter, Skype, & GTalk. I find realtime interaction with like-minded traders to be very helpful. So posting things in hindsight is less interesting now. Before each trading session (European morning for bund and US morning for ES) I tweet my trade ideas for the day with a brief summary of how I intend to trade. I've found that this has helped my trading immensely. I plan my trades & trade my plan. It also allows me to get feedback on my plan and my trades. Third I've been very busy studying my trades, trades of some other traders, study different markets (I'm starting to trade Stoxx & Euro) and reading blogs of other profitable traders. I quit posting in forums several months ago with the exception of this thread.
Overall I don't have much time to keep this journal going. This has been a huge learning experience for me and I've found a trading method that works for me. I don't anticipate changing anything for a long time. Other than possibly adding markets.
So if there are questions I'll do my best to answer them. If not then I'd like to close this thread by the end of the year. Thanks to everyone who has participated, who has challenged me (especially Big Mike who challenged me often and I very much enjoyed it). Thanks to those who have taught me things about the markets. I learned a lot from Jeff Castille and I still use what he taught me about scaling out and locking in profits. Deltason has been very supportive and have helped me learn a lot. Fiki taught me about market profile & volume ladder and for that I'm forever grateful. And Gab, a true innovator, has been very helpful. I can't mention everyone else by name because I'm sure I'd forget a lot of people.
I met a successful trader who said he wished he could delete all of his old forum posts and I kind of feel the same way. But I guess it's a rite of passage that we all have to go through, trying everything & experimenting before finally finding our own way. So while it may not be interesting for people to read about it now, it was very helpful to me as I was writing it.
Now that trading is providing a consistent (albeit small) income, I can start to enjoy the things I planned on enjoying when profitable.
Thanks to everyone for helping me along on my journey. I wish you all best of luck on your journey and if our paths cross let me know if I can be of assistance.
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Even tho this thread is not your current trading style. I appreciate the evolution as in a nutshell you currently use pa, volume profile /market profile. This has actually keep me on my learning path pa/mp. I thought about adding (ie eminwatch) but not learning whats in front of me. I'm continuing to improve with mp/pa and less on deviating. With your thread I have dodged and learned many things. It's funny how one begins with a naked chart and begins to add, subtract indicators, different strategies and at the end (once successful) ends up back to a near/ naked chart. I guess it the evolution of a trader. Just add you to my tweet.
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I just wrote a simplified trading plan that I'm trading going forward. I plan to share this and then tweet about setups in real time. Anyone interested can follow me on Twitter. The more I use twitter the more I find it really useful for realtime collaboration while trading.
If there are no other comments we'll close the thread.
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