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Tap In's Corner

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  #701 (permalink)
 Tap In 
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This is weird, something I haven't seen before. Thickness on both sides of the DOM around price. We'll see what is means...



big order shows up. We'll see if he is a spoofer or really wants to do business.



update: Not a spoofer. He wants to get filled

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  #702 (permalink)
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the market currently resides within a wide 60 tick congestion area after a deep overnight sell off. It has once again gapped to the downside. The long term trend is down, the mid term trend is neutral and the short term is sort of down. I haven't a clue what will likely happen next. Best under these conditions to wait for price to telegraph an obvious move or wait for a reaction off an S/R level as marked on the chart.


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  #703 (permalink)
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Short on pull back after impulse move through support. Looking of target of the naked RTH POC at 46.50.



Pull back was deeper than desired. Moved to BE after price came back through my entry. Was taken out at BE.



total reasonable movement: +8, -15 before the explosion in the other direction


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  #704 (permalink)
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the market has retraced most of yesterday's rally and currently sits on top of Y OR and where it broke out. The long term, mid term trends are down, the short term trend is up. A rally here would not be surprising. The action in the overnight has been choppy on the way down so bias is neutral at this point. Inventory report should shake things up later.



end of day. Price hit the resistance area at around 47.55 and reversed but it was just before inventory so no trade.


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  #705 (permalink)
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Catching up on journaling my trading this morning. Trade one taken on a entracement of a break out after price hit RTH HVN from yesterday




I didn't like the way price filled my order on a quick jump down through the break out top, so I exited at BE at the first opportunity. It was the right choice. Total Reasonable Movement: +7, -37


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  #706 (permalink)
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Trade 2 entered long on a retracement of the break out after price bounced off a major RTH swing from 8/17.




Took full stop out after price moved 2 ticks in my favor



In this case the stop was a little too tight


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  #707 (permalink)
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Trade 3 same concept as trade 2 but after a higher low off the swing. Entered on a retracement back to the POC of the impulse break out.



Exited at +1R when price had difficulty getting through the previous support turned resistance at 46.77. TRM -2t, +14t



Note: once again all trades taken against the prevailing trend today. It would have been much easier to have taken shorts today

Recap: price ended up at the end but I was gone by 9:00. TRM for the trade was -9t, +39t. It was a 3R trade but I don't think it would have been wise to hold through all of those pull backs.


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  #708 (permalink)
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The market sits inside the tight range of 36 ticks formed after the report yesterday. Yesterday's POC looms above while yesterday's swing low sits below. I'd like to see it get out of this area before considering a trade. Several scenarios are possible depending on how price reacts to the S/R in proximity.


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  #709 (permalink)
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Perfectly executed,



embarrassingly mismanaged. Exited because I thought it might have more retracement to the 83 area and I would re-enter.


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After the double bottom yesterday price is currently in a mid and short term up trend. There are a couple of areas below that look to be potential support on pull backs. Below yesterday's POC and we'll probably go down to test Wednesday's POC.


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  #711 (permalink)
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Bounce off support marked earlier in the blueprint, then BO above high volume trade area (pink). Large orders above on the offer.



After a deep pull back and lots of wait time, priced reached 1R and could go no further. Exit BE.



Good exit. TRM -9t, +12t


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  #712 (permalink)
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Tough read for me today. Price sits between two POC's from last week in the midst of some congestion. There doesn't seem to be a lot of directional conviction even after the opening. There are some large orders on the bid below 46.73 so they might eventually take it down to get filled.



uodate: end of day

Price bounced between the POC's with 11-12 ticks of overshoot. I was not around for the end of day push..


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  #713 (permalink)
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Entered on retracement to VWAP and ORH after an impulse move out of the OR and higher low. Target Thursday's POC at 47.10



Bids appeared below price and CD was at a major overnight swing so when price made a move in my direction I tightened and was taken out at BE. Not real crazy about the slow nature of the day so thought best to be prudent and wait for better ops.



Moving to BE was the correct decision. Price moved +8t in my favor before reversing past my initial stop.


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Clarity has been rather difficult to find these past few days. We are in the middle of a long term range with a mid term uptrend. I have four hypos this morning depending on how the market reacts to Friday's POC at 47.40 to the upside and the retest of Thursday's POC at 47.10 to the downside. As usual, wait for the market to reveal its intentions.



end of day it was the blue scenario


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Tried to enter on the way down but the pull backs were too shallow so I missed the whole move. These two trades were an attempt to scale in long after price bounced off the 8/15 POC and showed impulsive action. Looking for the 85 area.




The pull back did not bounce as anticipated so I moved to exit the two contracts at BE. Stops were missed by just a couple ticks thankfully.



The exit at BE was the correct decision:


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My bias is short until price can make its way through yesterday's POC at 46.41. Of course inventory can blow everything up pretty fast but until 7:30 I should be trading in the downward direction. There is not much to stop price until the 45.20 area.

As usual in these situations tactics become most important. Price can retrace upwards as much as 55 ticks and still be valid for shorts, so where to enter? This is what makes trading trend days hard with smaller accounts. The macro scenarios all involve some sort of retracement with varying degrees of pull back from 20 ticks up to 55 ticks:


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My bias is short until price can make its way through yesterday's POC at 46.41. Of course inventory can blow everything up pretty fast but until 7:30 I should be trading in the downward direction. There is not much to stop price until the 45.20 area.

As usual in these situations tactics become most important. Price can retrace upwards as much as 55 ticks and still be valid for shorts, so where to enter? This is what makes trading trend days hard with smaller accounts. The macro scenarios all involve some sort of retracement with varying degrees of pull back from 20 ticks up to 55 ticks:

I had the same conundrum this morning. Just "knew" it was going lower but didn't know the path it'd take to get there. I also wanted to have some size which further complicated the 11t open. I used eth VWAP as my first entry top and a tight stop above- it worked but my plan was if that didn't hold I'd fade y_poc as a second attempt to gain entry. First thing this morning I though about a countertrend scalp to y_poc but ditched the idea due to my bearish conviction.

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I had the same conundrum this morning. Just "knew" it was going lower but didn't know the path it'd take to get there. I also wanted to have some size which further complicated the 11t open. I used eth VWAP as my first entry top and a tight stop above- it worked but my plan was if that didn't hold I'd fade y_poc as a second attempt to gain entry. First thing this morning I though about a countertrend scalp to y_poc but ditched the idea due to my bearish conviction.

Yours was a fine trade. Holding all those contracts through the report took a fair amount of conviction!

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Yours was a fine trade. Holding all those contracts through the report took a fair amount of conviction!

Thanks- Conviction and a tight stop Figured if it got blown out Id reload higher- not a "quality" trade but it worked

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Price has encountered an area of support in the 44.10-44.20 area that could cause a bit of a bounce. Above is the closing range and POC from yesterday. The market could bounce around between these two S/R areas for a while. Look for signs of rebounds and play accordingly. If it breaks past these S/R levels trade in the direction of the break.


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Both trades using the same concept. After the news release there was an impulse move above a highly traded area around 44.05. Entered on retraces to areas I thought might stop price.

trade 1:



moved in my favor then stalled. Moved to BE because I suspected the news driven impulse might fail. Taken out at BE



trade 2 re-entered after price hit the top of the highly traded area and reacted quickly. Looking for the 44.50 area



moved to +10t and was taken out. Gave up a lot of ticks trying to get more.



tightening stop was the correct move. As suspected, the news driven impulse was a fake.


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  #722 (permalink)
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Price bounced off of a stacked RTH POC area at 43.77 ish in an impulsive way. Entered on the pull back to high traded area.



price cut deep into the support area, not a good sign. Move to BE at first opportunity. Taken out at BE



Move to BE was the correct decision. I was counter trend, no point in sticking around to be taken out at full stop


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Non farm payroll report has created a 70 tick range in a few minutes. In the long term the market is coming off a higher low but it also could just be an ABC correction of a continued down move. There is resistance at the after report high of 44.20 and support below starting at 43.75. Right now it feels like no man's land so I will wait for a reaction of some sort off these S/R areas or a break through them for a continuation play.



The blue scenario kind of played out. Price did stop and hold at Wednesdays RTH low. The bounce off of 44.20 surprised me considering the double top at Wednesday's low. I thought we were heading lower.


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Entered on pull back to previous low. Got run over. Tried to get out at BE but never came back.


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  #725 (permalink)
 GruttePier 
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What are the orange and pink zones you marked on the chart?

How do you like the changes you made recently? Does it feel good, do you see improvement in your expectancy?

I enjoy reading your journal and your progress. Keep it up!


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  #726 (permalink)
 Tap In 
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GruttePier View Post
What are the orange and pink zones you marked on the chart?

How do you like the changes you made recently? Does it feel good, do you see improvement in your expectancy?

I enjoy reading your journal and your progress. Keep it up!


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Those are areas that show up on footprint as highly traded prices, over 1000 contracts for the orange boxes and over 2000 contracts for the pink boxes. Like this:



They are automatically transferred to my other charts and sometimes this makes them come out looking a little funky.

I think the changes are a better fit for me. My pre-market analysis is decent and in general I like trading levels and pull backs since there is more potential in the trade and I can usually recognize when a trade is going bad. However, I am still struggling with confidence. This is especially true on trend days. I cant seem to get myself to jump on board good moves, always thinking it's too late or that a deep pull back is imminent. If I can get past this issue I think I will be ok. I just need to believe in myself a little more and take more chances on certain days.

Thanks for your interest.

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@Tap In

Hi TP,
I have made minor modifications to you chart to show how you can use you orange zones in a trend to trade the pull back.

From your chart, I can see that price has been above the VWAP during the RTH session, and also, Cum Delta was also going up. This tells me that we are in an 'up trend'. Therefore you should only be looking at taking longs on pull backs. Shorting is counter trend on this chart.

I use the VWAP as my main trend tool - i.e, if price is above, then look for buying pull backs. Opposite for shorts.

You can see how I extend the orange zones to the right and, that is where you could have gone long. The idea is that if price goes up once one of these orange zone has been identified, then, buying has occurred. And that when price returns the first time, you can go long.

If price goes down after one of these occur, then we may assume that selling has taken place. If seen at high of day, then this could set up a counter trend trade. But these may be more difficult to take. Stick to only taking pull backs in a trend.

Obviously, this does not always work, but you will need to do a lot of analysis.

Hope this helps. Modified chart attached.

Regards,

Dudley.

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  #728 (permalink)
 Tap In 
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@Tap In

Hi TP,
I have made minor modifications to you chart to show how you can use you orange zones in a trend to trade the pull back.

From your chart, I can see that price has been above the VWAP during the RTH session, and also, Cum Delta was also going up. This tells me that we are in an 'up trend'. Therefore you should only be looking at taking longs on pull backs. Shorting is counter trend on this chart.

I use the VWAP as my main trend tool - i.e, if price is above, then look for buying pull backs. Opposite for shorts.

You can see how I extend the orange zones to the right and, that is where you could have gone long. The idea is that if price goes up once one of these orange zone has been identified, then, buying has occurred. And that when price returns the first time, you can go long.

If price goes down after one of these occur, then we may assume that selling has taken place. If seen at high of day, then this could set up a counter trend trade. But these may be more difficult to take. Stick to only taking pull backs in a trend.

Obviously, this does not always work, but you will need to do a lot of analysis.

Hope this helps. Modified chart attached.

Regards,

Dudley.

Excellent observation! I was doing more of this a while ago, but was not including price's relationship to the VWAP in the analysis. I'll take another look. Many thanks!

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  #729 (permalink)
 Tap In 
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Monthly Recap August 2016
Live Trades: 0, live account still at $2840.17

August saw me blow out one combine and start another. I am currently up $666 (don't like that number!) in the new combine thanks to the good fortune of my first trade working with 3 contracts. Since then I have just chopped around going nowhere. I traded 59 times in August. Friday the 12th was a particularly bad day where I took 14 trades, mostly against trend to blow out the previous combine. My plan in this latest combine was to pass in the minimum number of days (10) by waiting for great ops and trading 3 contracts. I was either going to pass or blow out quick. There were ample opportunities to get this done but my confidence wavered and I couldn’t get myself to trade with 3 contracts or take the right trades at the right time.

Stats for the month:

Net loss: -$733.44

Trades: 58
Price reached 1R: 25 (43%, compared to 57% in July)
Price reached 2R: 13 (22%, compared to 35% in June)
Price reached 2R while moving stop to BE after 1R: 10 (17% compared to 25% in July)
Price reached 2R while leaving stop alone: 3 (5% compared to 9.5% in July)
Unsuccessful trades that were exited at or near BE: 11 of 31
Successful trades that were exited with almost no profit: 14 of 25
Ticks lost by tightening stop before price hit either 1R or -1R: 115
Ticks saved by tightening stop before price hit 1R or -1R: 103
Net ticks lost by tightening stop too early: 12

Stats were down in August compared to July. Much of this was the result of the three horrible days at the end of the previous combine. Since the new combine started on 8/16 the stats are a little better, with 9 of 18 trades making it to 1R. Still, 50% to 1R is not an edge. I am still struggling to take quality trades, even as I am ahead in the new combine.

As noted in a previous post, part of the problem is that I have tremendous difficultly jumping on board established trends thinking the trend has run its course and is ready for a deep pull back. This fear has caused me to miss out on a lot of opportunity. I can’t be certain because no one really knows how many trades they “should have” taken, but I believe my results would be better if, on those occasions that look obvious, I just held my nose, took the trade, and put the stop way back to see what happens. Of course, this will mean bigger loss if wrong. Don’t know, and won’t know till I try.

It feels like there is this mysterious chasm separating me from success, and the chasm is everything I fear in trading, and to get over this chasm will take an act of courage that I have, to this point, not been able to muster for any length of time, and this act of courage will be tremendously uncomfortable, and at times painful, but is a rite of passage that needs to be taken or nothing will change. Complicating things is the fact that up to this point, on those rare occasions when I have girded up to “go for it” I have gotten chewed up, so I am still unsure if there really is success on the other side or if it is all just an illusion. The bottom line is that I need to take a higher percentage of trades that work. Whether the answer to solving this problem is mental or mechanical is unclear, and probably lies somewhere in between.

Lately I have been attempting to show every trade. As for mechanics, if anyone sees something that should be noted about my trade location, direction, timing, read of the market or whatever I would most appreciative. I know I need to buck up psychologically, but I also know that nothing cures bad trading like picking better trades. Thanks again to @mrmuggins for what you pointed out earlier.

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 Inletcap 
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Do you go back and read your journal? It seams that every post talks about "BE". I ask you before if you are trying to be right or make money and you answered. Since then I see no change- every day you do the same thing- watch the market move all around on a very low timeframe chart which you end up ignoring your higher timeframe analysis ( which is good BTW) only to take some random trade thinking the trend has ended. You need to change this and believe in trading directionally until it doesn't work and ditch the fear- break even doesn't make money- Taking a loss to get a big win does!!

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 bobwest 
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Since the new combine started on 8/16 the stats are a little better, with 9 of 18 trades making it to 1R. Still, 50% to 1R is not an edge. I am still struggling to take quality trades, even as I am ahead in the new combine.

As noted in a previous post, part of the problem is that I have tremendous difficultly jumping on board established trends thinking the trend has run its course and is ready for a deep pull back.
...

It feels like there is this mysterious chasm separating me from success, and the chasm is everything I fear in trading, and to get over this chasm will take an act of courage that I have, to this point, not been able to muster for any length of time, and this act of courage will be tremendously uncomfortable, and at times painful, but is a rite of passage that needs to be taken or nothing will change.
...

Lately I have been attempting to show every trade. As for mechanics, if anyone sees something that should be noted about my trade location, direction, timing, read of the market or whatever I would most appreciative. I know I need to buck up psychologically, but I also know that nothing cures bad trading like picking better trades. Thanks again to @mrmuggins for what you pointed out earlier.

I don't know if I can give any suggestions that will help. I certainly would if I could, but everyone is different, and I don't know what will be the thing(s) that you need. Nor am I necessarily so smart that I can see it.

But I did see these things, so take them for what they are worth:

1. Your stats show a good, high win %, and show your average win as higher than your average loss. But the average win amount is probably reflecting that initial higher win of +658. Ignoring that, you're basically flat for the Combine so far, as you said. So even with your high win %, it isn't helping you because all the trades are very small. Many are -$3, which means BE and loss of commission.

2. One of the things that I have kept noticing as I have read your journal lately is some statement like "moved stop to BE." This is a strategy to keep losses down, but kills any chance of profit. I understand that it is much better to limit a loss than to let it grow, but also that BE is not helping you much, on balance. I have seen that very often the move to BE was a good call because price continued against you, so it isn't necessarily wrong. But either the move to BE is killing you, or your original trade entry is. Do you ever see a case where, after taking some heat (loss), the trade would have turned in your favor? If so, then not being willing to take any loss will keep you from realizing the gain. Basically, you're requiring every trade to be 100% perfect and giving it no leeway before killing it. I don't know how many of these would or might have worked out, but that is something to look at, as is the quick move to BE when it isn't working right away.

3. I also notice that you tend to stop for the day after one of these BE trades. Again, stopping when you're down can be smart, but not trading after a small loss removes the chance of any profit that entire day.

4. You note that you have trouble jumping on a trend. You are right that no one knows if it will continue, but if you never take it, or wait until you are sure, you are going to never be in it.

On balance, I think that you're extremely risk-averse, and it is not working out for you. I have found all your pre-market analyses to be very good, but when it comes time to execute, you are either waiting, or going to BE, or in some other way letting price go by without you.

You have talked about your courage, but your courage is fine. Otherwise you wouldn't continue to force yourself to face all this -- and good on you for doing so, by the way.

What you need is not courage, it's to click that mouse, when your read of the market says "Do it." If you don't let your trades have some room, and you won't risk any loss, then you won't have any returns either. Now, if your reading of the market were just no good, then I would say that you need to work on that.... but your grasp of the market's possibilities, the important levels, what price might do on its way to them, etc., is pretty good, certainly as good as you need it to be. Executing what you believe is the thing.

I am very, very familiar with this, by the way. I used to be a steady break-even, no-risk, no-profit trader, who blew up every time I tried to take a step and make some profit. Now I'm still a pretty terrible trader (), sliding back and climbing out again, but the net movement is up, and it takes clicking that damn mouse to get that started.

So, I know that you realize most or all of what I have said, but I hope that you can take something from it and build on it and start to move ahead.

Good luck, man.

Bob.

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 bobwest 
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Do you go back and read your journal? It seams that every post talks about "BE". I ask you before if you are trying to be right or make money and you answered. Since then I see no change- every day you do the same thing- watch the market move all around on a very low timeframe chart which you end up ignoring your higher timeframe analysis ( which is good BTW) only to take some random trade thinking the trend has ended. You need to change this and believe in trading directionally until it doesn't work and ditch the fear- break even doesn't make money- Taking a loss to get a big win does!!

I didn't see this until I had submitted my post.

Since you are not as long-winded as I am, you were making the points more simply while I was still typing mine.... But I think we saw pretty much the same things.

Totally agree.

Bob.

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I think you should consider a different market and maybe get out of futures altogether. Moving stop to break even belies fear. You can't trade that way. Plenty of trading opportunities outside of crude and leveraged futures. Places where you can experiment more, place wider stops. Just my observation.

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bobwest View Post
I don't know if I can give any suggestions that will help. I certainly would if I could, but everyone is different, and I don't know what will be the thing(s) that you need. Nor am I necessarily so smart that I can see it.

But I did see these things, so take them for what they are worth:

1. Your stats show a good, high win %, and show your average win as higher than your average loss. But the average win amount is probably reflecting that initial higher win of +658. Ignoring that, you're basically flat for the Combine so far, as you said. So even with your high win %, it isn't helping you because all the trades are very small. Many are -$3, which means BE and loss of commission. As you know, Top Step does not count BE in the win/loss stats so the 64% reported is better than what is really happening. I am very cognizant of the BE dilemma. That is why I keep stats on all my trades as to how far they travel from entry so I can gauge whether or not I would have made money by holding or save money by exiting at BE. Right now only 50% of my trades make it to a distance that is equal to my risk, 1R. The other 50% reverse and hit my stop before reaching 1R. 30% make it to 2R. Only 10% made 3R or more. Do these look like stats that one could make money on? Sure, there are occasionally trades that run 100 ticks, but they are way too rare to count on and I would have to manage them perfectly to make up for all the full stop outs that would incur trying to catch them. I am not try to be argumentative, just realistic

2. One of the things that I have kept noticing as I have read your journal lately is some statement like "moved stop to BE." This is a strategy to keep losses down, but kills any chance of profit. I understand that it is much better to limit a loss than to let it grow, but also that BE is not helping you much, on balance. I have seen that very often the move to BE was a good call because price continued against you, so it isn't necessarily wrong. But either the move to BE is killing you, or your original trade entry is. based on my stats I believe BE is saving me and my original entries, on the whole are killing me. (bad timing, wrong direction) Do you ever see a case where, after taking some heat (loss), the trade would have turned in your favor? yes but they don't happen often enough or to a large enough extent to make up for all the full stop outs I would have to take to realize one of those gains. At least, I don't see from my stats that they doIf so, then not being willing to take any loss will keep you from realizing the gain. Basically, you're requiring every trade to be 100% perfect and giving it no leeway before killing it. I don't know how many of these would or might have worked out, but that is something to look at, as is the quick move to BE when it isn't working right away. I do not want to move to BE as much as I do but I've gotten to where I can quite often see when a trade is going to fail. If I saw more trades move in my direction more often (60% to 1R consistently) I would not move to BE as quickly.

3. I also notice that you tend to stop for the day after one of these BE trades. Again, stopping when you're down can be smart, but not trading after a small loss removes the chance of any profit that entire day.
This is a problem. I need to continue acting on my reads

4. You note that you have trouble jumping on a trend. You are right that no one knows if it will continue, but if you never take it, or wait until you are sure, you are going to never be in it.This is one of the biggest problems I have. One of the reasons my trades don't go anywhere is that I am consistently on the sidelines while the trend plays out, then I try to catch the rebound at the first sign. It's really going to come down to pure will power to get on these trends.

On balance, I think that you're extremely risk-averse, and it is not working out for you. I have found all your pre-market analyses to be very good, but when it comes time to execute, you are either waiting, or going to BE, or in some other way letting price go by without you.Very risk averse. I didn't used to be but kind of morphed that way over the years due watching most of my trades fail.

You have talked about your courage, but your courage is fine. Otherwise you wouldn't continue to force yourself to face all this -- and good on you for doing so, by the way.

What you need is not courage, it's to click that mouse, when your read of the market says "Do it." If you don't let your trades have some room, and you won't risk any loss, then you won't have any returns either. Now, if your reading of the market were just no good, then I would say that you need to work on that.... but your grasp of the market's possibilities, the important levels, what price might do on its way to them, etc., is pretty good, certainly as good as you need it to be. Executing what you believe is the thing.I think my macro reads are pretty good but they require larger stops play them. I am not in the position of taking on 50 to 100 ticks of risk by scaling in with 30 tick stops. I am trying to use the macro read to help with directional changes in order to play the market on my size, which is risking from 10-15 ticks per contract. I know that a lot of folks don't think that is enough room but many have shown it to work. (scalpers thread)

I am very, very familiar with this, by the way. I used to be a steady break-even, no-risk, no-profit trader, who blew up every time I tried to take a step and make some profit. Now I'm still a pretty terrible trader (), sliding back and climbing out again, but the net movement is up, and it takes clicking that damn mouse to get that started.clicking the damn mouse. Damn right!

So, I know that you realize most or all of what I have said, but I hope that you can take something from it and build on it and start to move ahead.

Good luck, man. Thanks for the support, moral and otherwise. Please continue to offer feedback, even if it might hurt. I need a good kick in the pants!

Bob.

Bob, thank you for your thoughtful response. I knew that my plea for help would open up a big can and that's ok. There are probably a lot of things others can see that I can not and I am willing to listen and consider everything. I thought is easier to respond to your points above in red

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 Tap In 
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Pariah Carey View Post
I think you should consider a different market and maybe get out of futures altogether. Moving stop to break even belies fear. You can't trade that way. Plenty of trading opportunities outside of crude and leveraged futures. Places where you can experiment more, place wider stops. Just my observation.

I am definitely trading out of fear because I have seen no evidence in my trading to be confident. Trading something that didn't cost as much money would help for holding trades longer but I am not sure it would help me be profitable. At the end of the day a certain number of your trades have to work and not enough of mine do, or at least I don't think they do. I am not sure my read of the market would be any better on a larger time frame. I used to swing trade stocks and ran into the same problems, entering markets at the wrong time in the wrong direction. I know I am sounding pretty negative right now and I'm sorry.

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 Inletcap 
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bobwest View Post
I didn't see this until I had submitted my post.

Since you are not as long-winded as I am, you were making the points more simply while I was still typing mine.... But I think we saw pretty much the same things.

Totally agree.

Bob.

Damn- we said the EXACT same thing but you said it a lot better (clearer). I obviously 100% agree with everything you wrote and will be taking notes as to how to become a better writer! Very well said Bob!

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 Inletcap 
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Bob, thank you for your thoughtful response. I knew that my plea for help would open up a big can and that's ok. There are probably a lot of things others can see that I can not and I am willing to listen and consider everything. I thought is easier to respond to your points above in red

I've put some thought into what Bob and I said and your responses. This may sound crazy, but maybe you need to be more active as Bob said and take more shots at your ideas just to see if your trades "stats" are truly not favorable. If that is not an option, you unfortunately must stop trading your present system, go back to the drawing board and come up with something new ( but I don't think that's the answer).

Another idea- maybe you should focus on implementing a new trade- something you are not doing that is designed to be a "with trend" trade so that you can begin to find comfort there. It could be as simple as a VWAP retrace using the OR as a long short filter ( if above OR then long when price stalls near VWAP- vice versa for shorts). That's just an example but it's got a trend element and a value element so odds have got to be better than 50/50 you can make it ( or whatever you come up with) work and learn to get on board trends.

One last thing- Oil is a difficult market to trade because there are no internals and a lot of forces that generate big moves on minor news. Have you considered the boring old indices like ES? A lot more information can be taken into consideration than simply price and volume, the moves are generally slower and levels played upon more precisely than CL affording you more comfort and less fear.

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 bobwest 
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Bob, thank you for your thoughtful response. I knew that my plea for help would open up a big can and that's ok. There are probably a lot of things others can see that I can not and I am willing to listen and consider everything. I thought is easier to respond to your points above in red

You know what? You probably have had the experience in other things of failing and trying and failing again and then suddenly getting it. I sure have! Sometimes the failing part lasts a long time, but not forever. And then you succeed at it.

I think you are pushing in the right direction. It is hard stuff, and not for the faint of heart, which you definitely are not.

I agree with your comments in red, including your clarifications. You are the one who knows what he is doing.

It is, unfortunately, a totally individual journey/effort/adventure/pain-in-the-ass, whichever you want to call it. Your solution will be yours, and I am certain you will get there, if you persist at it. Which is your choice, of course.

Good luck, and if I can do anything to help, I will be glad to do so. Everyone who is reading your journal is rooting for your success.

Bob.

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 Tap In 
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Do you go back and read your journal? It seams that every post talks about "BE". I ask you before if you are trying to be right or make money and you answered. OK, I'm listening but I am not clear on what you are saying. I guess I don't understand what you mean by "trying to be right". As it pertains to trading, my definition of being right is that price moves in my favor far enough to take profits before it moves against me and forces me out. Am I misunderstanding what you mean? Since then I see no change- every day you do the same thing- watch the market move all around on a very low timeframe chart which you end up ignoring your higher timeframe analysis ( which is good BTW) only to take some random trade thinking the trend has ended. You are correct. I acknowledge this as a problem. You need to change this and believe in trading directionally until it doesn't work and ditch the fear- break even doesn't make money- Taking a loss to get a big win does!!

I cant trade the higher time frame analysis because it would require more risk and I am not in position to scale in and take on 50-100 ticks of risk to play these events like you do. I mainly use the macro analysis for directional clues to drop down to my risk level, which is 10-15 ticks per contract. I know you don't believe in this small of risk but it is all I can do right now and others have made it work. If you were forced at gun point to trade with my risk tolerance, could you make money? If so, what would be the one or two things you would suggest I focus on or do next week?

Thank you for your time. I appreciate it!

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 bobwest 
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Inletcap View Post
Another idea- maybe you should focus on implementing a new trade- something you are not doing that is designed to be a "with trend" trade so that you can begin to find comfort there....

One last thing- Oil is a difficult market to trade because there are no internals and a lot of forces that generate big moves on minor news. Have you considered the boring old indices like ES? A lot more information can be taken into consideration than simply price and volume, the moves are generally slower and levels played upon more precisely than CL affording you more comfort and less fear.

@Tap In: I know you're being bombarded by advice, but two quick thoughts raised by the above:

- Any sort of "with trend" trade has a better chance of success, particularly if you can get in fairly early. The time that trend-oriented trades will fail is during a non-trending range. If you can see when price comes out of a range, then the trend trade has a better chance of succeeding. Your pre-market work on likely support/resistance levels may help identify relevant levels here.

- Oil is a difficult market, period. I'm scared of it, although it is also very intriguing. It sort of sucks you in. @Big Mike, who is a very, very, very good trader, has called it the "widow maker." ES is slower, "boring" as @Inletcap says, and it won't take your head off so casually. People who crave action despise it. But there is money there to be made. Warning: it spends a lot of time in ranges and does not have the sharp reversals and big surges of CL. People used to CL complain about it. But it is also more survivable.

Generally, making a big change, such as a different market, is something to be cautious about. But you might think about this also.

Just a thought.

Bob.

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 Inletcap 
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I cant trade the higher time frame analysis because it would require more risk and I am not in position to scale in and take on 50-100 ticks of risk to play these events like you do. I mainly use the macro analysis for directional clues to drop down to my risk level, which is 10-15 ticks per contract. I know you don't believe in this small of risk but it is all I can do right now and others have made it work. If you were forced at gun point to trade with my risk tolerance, could you make money? If so, what would be the one or two things you would suggest I focus on or do next week?

Thank you for your time. I appreciate it!

I think I could survive if limited to 15t risk per trade but I would prefer to "thrive" without limits. I would certainly have to make style changes and I feel it would be more difficult to catch big moves. My trading on Friday was "tight risk" style as the market was in counter trend mode all day. I posted all trades in the scalpers journey and I don't think I saw 15t heat on more than 1 entry but that being said- I don't think I saw more than 50t on any of my trades either.

The one single thing I would do (as I did Friday) is to trade directionally until my trades start failing. Example- using your HTF analysis you identify where you think the market is heading for the day- then using your trading risk/timeframe you only focus on trading in that direction until your trades get harder to hit targets or start losing or the market clearly says it's not heading where you thought it was. Note I say directionally vs with trend. There are countertrend days and if trading inside the days timeframe you get forced to be countertrend- it's ok as long as you are aware of who really is in control of the market and why the day is being "allowed" to gain ground. One thing I like to say is that I think the market is going to xx but I have no clue the path it's going to take to get there- that "path" may provide a bunch of trades that will fit the low risk bill or it may only present 1 chance- I have to be open to every opportunity so long as I still feel we are going to xx ( my thesis) and my job is to make them work.

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 Inletcap 
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Parting words for the evening

I don't feel that the way I trade is the only way to make money. It fits my personality but it didn't always fit me. I used to feel that tight stops and getting out quickly was the name of the game- my style of trading morphed into what it is today as I learned to embrace different perspectives and it became a "learned behavior". Other guys, like @michaelleemoore, trade with little heat and get out at the first sign of trouble. I see nothing "wrong" with that style of trading at all. In fact, there are some days I wish I was doing the same when I'm getting hit and they are racking up singles one after another- The only time I feel tight trading is a problem is when it's done out of fear vs being ones strategy or when it's limiting ones true potential in exchange for a little comfort. If you can make it rain with tight stops and quick profits, by all means - go take thier money!

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 ratfink 
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Great advice in all of the above responses, I'm taking all of it to heart as well, as I too need to jump the 'fear gap'.

Only one I will add is a couple of pence response here:


Tap In View Post
I cant trade the higher time frame analysis because it would require more risk and I am not in position to scale in and take on 50-100 ticks of risk to play these events like you do. I mainly use the macro analysis for directional clues to drop down to my risk level, which is 10-15 ticks per contract.

Imho the goal is to use a lower time frame entry to get in on a higher time-frame move (if we get lucky our macro analysis correct, there is no more risk involved, that's the illusion (and the wonder) of good trading.

My only other plea is for @Inletcap not to adopt @bobwest's style of writing as I'm not sure the FIO servers have big enough disks..

Cheers

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 GruttePier 
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A lot of good advice has been given.
If I may add my 2cts....

Trade planning
As said, your analysis and bias are ok.

Trade execution
It's job as a trader to execute on your bias when the opportunity comes. I can understand that you are in doubt sometimes, but you must take the trade. Take our mutual friend @Inletcap for example. Many times he writes that he's done for the day, calling it a day, etc. But then all of a sudden you find him taking another trade Why? Because he feels he has to do it, it's his job as a trader (and I guess he doesn't mind the extra cash), he can't ignore the opportunity.
You can practice this very well on sim and reinforce this behaviour: just take all trades that fit your criteria and are in line with your directional bias for the day. Review the stats after 1 month

Trade management
Regarding breakeven and max risk. An excercise that will give you a lot of insight is to go over your trades and see what would have happened if you did not move the stop the BE, would have increased your risk, etcetera. I found this very helpful and convinced me to make changes.
Regarding profit targets. You are trading price levels, but why do you exit on 1R, 2R, etc? Market doesn't care about your R but respects price levels. My advice is to set profit targets on price levels (floor trader pivots, SR levels, etc) instead of R. This is also something that you simulate on past trades. Keep stats and see if these are better than profit targets based on R (I've done the excercise and know the answer in my case)

A long post, kinda Bob-style , but I hope it will help you.

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Only one I will add is a couple of pence response here:

Imho the goal is to use a lower time frame entry to get in on a higher time-frame move (if we get lucky our macro analysis correct, there is no more risk involved, that's the illusion (and the wonder) of good trading.

You said it better than I. This is exactly what I am trying to do. Example: I see a POC on my macro blueprint. I have a notion that this POC might stop and reverse price for a decent move. If I blindly fade the POC I might need to give it 40 ticks wiggle room. I don't have that size of an account (and I am not interested in ETFs right now! ). Instead I will watch price bounce off the POC with some conviction and then try to find a smaller risk opportunity within my risk tolerance.

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GruttePier View Post
A lot of good advice has been given.
If I may add my 2cts....

Trade planning
As said, your analysis and bias are ok.

Trade execution
It's job as a trader to execute on your bias when the opportunity comes. I can understand that you are in doubt sometimes, but you must take the trade. Take our mutual friend @Inletcap for example. Many times he writes that he's done for the day, calling it a day, etc. But then all of a sudden you find him taking another trade Why? Because he feels he has to do it, it's his job as a trader (and I guess he doesn't mind the extra cash), he can't ignore the opportunity.
You can practice this very well on sim and reinforce this behaviour: just take all trades that fit your criteria and are in line with your directional bias for the day. Review the stats after 1 month This is the "will power" aspect that I have referred to. I just have to will myself do it

Trade management
Regarding breakeven and max risk. An excercise that will give you a lot of insight is to go over your trades and see what would have happened if you did not move the stop the BE, would have increased your risk, etcetera. I found this very helpful and convinced me to make changes. Yes, I do this for every trade and keep a spreadsheet of how far my trades reasonably travel, with or without me. This helps me gauge the "potential" in my trading. How often does price travel a reasonable distance in my favor then reverse and hit my stop? Is it worth it to me to hold trades for greater profit, or should I be taking smaller profits more often? See the image below
Regarding profit targets. You are trading price levels, but why do you exit on 1R, 2R, etc? Market doesn't care about your R but respects price levels. My advice is to set profit targets on price levels (floor trader pivots, SR levels, etc) instead of R. This is also something that you simulate on past trades. Keep stats and see if these are better than profit targets based on R (I've done the excercise and know the answer in my case) Similar answer to above. My stats sheets help me determine how far my trades are traveling. My general belief, developed through keeping stats for a long time, is that a trader has to pick trades that reach 1R more often than not in order to be profitable in the long run. If you cant pick trades that get to 1R you will be taking too many stop outs and will have a hard time making up for them.
With multiple contracts, 1R might be where you would exit the first contract, leaving runners to get the rest. This is kind of what I was getting at when I gave you my observations about your stats. You were reaching 1R a whole bunch, and could make good money on 1 contract if you just took everything at 1R, but you were giving up a lot of those gains by trying to catch runners. With multiple contracts you could take partials at 1R, bank a lot of profits, and leave your second contract to run. Ultimately, I want to look for exits at predetermined levels, but in order to do that I have to be consistent at picking trades that travel a minimum distance, most of the time. I have determined that distance to be 1R. Can I correctly read the market such that price reaches 1R more than 50% of the time? If I cant I will have a hard time as a trader. If I can, than I will be profitable and I can concern myself with adding contracts and catching runners later. Does this make sense?


A long post, kinda Bob-style , but I hope it will help you.

All good points! My notes above. Thank you!

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  #747 (permalink)
 Inletcap 
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All good points! My notes above. Thank you!

One thing to point out- if your R is 10-15 ticks but your next POC is 150 ticks away, taking 1 R because it's available and comfortable just limited the ability to have "asymmetric" returns in this example. If you made a 100+ tick trade 1 or 2 times per week, where would you be compared to where you are today with your P&L? I hope you are seeing my point- your math and idea sounds logical, but my simple question just poked a major hole in its reality. Trading is not logical- markets are dynamic- When you have the ability to exploit the present condition you must do so vs taking a 1 R exit as this outsized return potential makes up for a bulk of the standard losing trades we encounter and when the market gives you a couple of these opportunities in a short amount of time, you get to see exponential account growth. You say that you can't afford to do it but I believe the real question is "Can you afford to NOT try it?"

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 grausch 
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I cant trade the higher time frame analysis because it would require more risk and I am not in position to scale in and take on 50-100 ticks of risk to play these events like you do. I mainly use the macro analysis for directional clues to drop down to my risk level, which is 10-15 ticks per contract. I know you don't believe in this small of risk but it is all I can do right now and others have made it work. If you were forced at gun point to trade with my risk tolerance, could you make money? If so, what would be the one or two things you would suggest I focus on or do next week?

Thank you for your time. I appreciate it!

That is not quite true. You can keep a mechanical 10 or 15 tick stop on any timeframe although if you do use them, I would advise keeping them at 20 or even 30 ticks to avoid unnecessary chop. Whether or not you use support or resistance (or any other method) to place your stops or just place them mechanically, the following almost always holds true - the closer the stop, the more likely the trade is to be stopped out.

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 grausch 
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ratfink View Post
Imho the goal is to use a lower time frame entry to get in on a higher time-frame move (if we get lucky our macro analysis correct, there is no more risk involved, that's the illusion (and the wonder) of good trading.

Just another thing to ponder - would lower time frame entries not also expose the account to more chop? Could this additional chop not negate the benefits of more "precise" entries?

I don't have the answer to that question, but whenever I trade on smaller timeframes my performance suffers. Of course the guys in the Scalper's thread seem to thrive on the smaller timeframes...

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 ratfink 
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grausch View Post
Just another thing to ponder - would lower time frame entries not also expose the account to more chop? Could this additional chop not negate the benefits of more "precise" entries?

I don't have the answer to that question, but whenever I trade on smaller timeframes my performance suffers. Of course the guys in the Scalper's thread seem to thrive on the smaller timeframes...

It is an issue, it just depends on what you see and feel best. I can nail lower structures and waves, but I sure as hell wish I could hold a longer trade or scale-in and out like the big sandpit boys can afford to. Mind you I used to do that in the previous decade, when scaling-in was just adding to losers.. At least I'm past that.

As the Cap says, you can lose half a dozen small-time entries, so long as you hold and press the good ones. Just like women then..

Cheers

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  #751 (permalink)
 grausch 
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It is an issue, it just depends on what you see and feel best. I can nail lower structures and waves, but I sure as hell wish I could hold a longer trade or scale-in out like the big sandpit boys can afford to. Mind you I used to do that in the previous decade, when scaling-in was just adding to losers.. At least I'm past that.

As the Cap says, you can lose half a dozen small frame entries, so long as you hold and press the good ones. Just like women then..

Cheers

One thing I have learnt over time, is that it is crucial to have more than one contract (or batches of shares) when trading. It changes a trade from a right/wrong type scenario into a multi-faceted scenario. By pyramiding (adding as it goes your way), you can actually keep a constant risk by just adjusting the stops upwards. Of course adjusting stops up means you are more likely to get stopped out, but when one of these trades works, they really work. Being able to scale out grants a huge level of flexibility, i.e. if I take profits on 1 contract, I can no longer lose on the trade, but I can really press to see if it becomes a huge winner.

Regarding using different timeframes, the best trades tend to be those where it is difficult to get a decent price. This morning, I needed to really scramble to get in and I probably paid 20 ticks more for the position than I wanted to, yet the breakeven point was never even threatened and it never even got close to my stop. Thus, even if I dropped down to a lower timeframe it wouldn't have mattered - momentum doesn't care about timeframes, you either hop on board or you missed it.

Wish I knew how to judge the quality of the women the way @Inletcap does... Seems I always need to treat each trade as if it will be a major winner. If I don't do that, I just end up giving up good positions for peanuts, get annoyed at missing the move, enter again at a bad time, get stopped out, and it just goes downhill from there.

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  #752 (permalink)
 bobwest 
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While much of this recent discussion makes sense, there is a danger of it just being a debate about what is better, long or short-term trading. And then there is the question of what is "short" term. @Inletcap's trading would appear to be amazingly frenzied and scalpy to someone trading with a four or five week horizon, which would in turn be very short-term to most investors.... and so on.

One thing is that true scalping is aggressive. You take many small bites out of the market instead of a big chunk. But you need to take many, and your tolerance for loss has to be very low -- kick that losing trade out quickly -- and you accuracy needs to be high.

Scalping can be done well, no question about it. It also is the most demanding, risk-embracing, high-volume trading around.

(Note: whether it is intrinsically higher-risk is not really the point. All trading is high-risk, unless you have a way to tame the riskiness of it. But scalping is not, temperamentally, a risk-averse thing. It is the opposite: grabbing those risky situations with high confidence.)

Sometimes I see it discussed (often by vendors) as easy and safe: you set your target and stop, you just take these high-probability trades, what could possibly go wrong? Well, human psychology and the limitations of methods, to start. But it still can be done well, if it's your thing.

I don't see any intrinsic reason to favor any timeframe, if it suits you personally and if you exploit its opportunities well. But there are pluses and minuses, as there are in every form of trading. The question is, what types of opportunities can you exploit?

Bob.

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  #753 (permalink)
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One thing to point out- if your R is 10-15 ticks but your next POC is 150 ticks away, taking 1 R because it's available and comfortable just limited the ability to have "asymmetric" returns in this example. If you made a 100+ tick trade 1 or 2 times per week, where would you be compared to where you are today with your P&L? I hope you are seeing my point- your math and idea sounds logical, but my simple question just poked a major hole in its reality. Trading is not logical- markets are dynamic- When you have the ability to exploit the present condition you must do so vs taking a 1 R exit as this outsized return potential makes up for a bulk of the standard losing trades we encounter and when the market gives you a couple of these opportunities in a short amount of time, you get to see exponential account growth. You say that you can't afford to do it but I believe the real question is "Can you afford to NOT try it?"

I totally get your point and want to trade as you say. The last time I took a trade where I could have made 100 ticks was on August 2. Since then I have taken 57 trades, 50% of them never making it past 10 ticks. I don't want to limit myself to 1R profits as a habit. I want to let trades run for asymmetric returns. I want those out sized returns. The point I have been trying to make is that, based on my analysis, I need to pick better trades, eliminating some of the bad ones and adding some better ones. I don't even care if I give up profits on any specific trade by moving to BE or taking profits too early. I just want to see my trades have more potential and the profits will follow. Your trading Friday was flawless on a day that I thought was choppy and hard to read. Perfectly timed entries, little heat, all worked.

You have given some good advise that I will try to follow. I will focus on trading directionally. You told me to ask if I need help. To the extent you could help me understand why my trades work or don't work, within my risk tolerance, I'd be most appreciative.

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One thing I have learnt over time, is that it is crucial to have more than one contract (or batches of shares) when trading.

This is a point that many have made, but I have not been able to understand why except for psychological reasons, and that may be enough. From a logical perspective, if one were to trade two contracts and scale them out at different targets, and look at the P&L of each contract on its own over the aggregate of a set of trades, shouldn't each contract yield a positive return on its own? Otherwise, what is the point? And if each contract yielded a positive return, couldn't someone trading one contract just treat that one contract as if it were the first contract exited in a two contract trade? Then, when they get good and profitable on this one contract, they could add the second contract to take advantage of the runners.

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Why do I make such big deal out of 1R? It's not because this is my target. The markets are fluid, targets vary based on S/R, etc, so targets should be determined based on conditions on the ground. The simple answer is that tracking this milestone gives me a way to measure the quality of my trading. Everything follows from how often my trades get to 1R.

When it comes to answering the question, "does my trading have the potential to make money?", tracking how often price gets to 1R is as good as anything else I have been able to come up with. If you were to pick any random moment in the market and flip a coin as to whether to go long or short, and do this over let's say 1000 trades, presumably you would see price reach 1R about 50% of the time and -1R about 50% of the time. Taking into account commissions, slippage and the nature of how a limit order is filled, in the end this would be a losing strategy. Someone might be tempted to argue that by taking all losses at -1R and catching a few big winners, you might be able to come out profitable in the end. But what I have found by keeping stats over a long period of time is that this will probably not work in the long run either.

What I have found is that how often price gets to 2R, 3R, 4R and more is in direct proportion, minus a little bit, to how often price gets to 1R. If I am 50% to 1R, I will be about 25% to 2R, 10% to 3R, and 3% to 4R, and on and on. These are not winning numbers either. Holding out for bigger gains when you are struggling just to get to 1R will be a losing strategy as well.

As an example, let's say I take 100 trades and I am 50% to 1R. This means I will take full stop outs on 50 of my trades, or -50R. On the other 50 trades price will reach 1R and I will have to make a decision, do I take profit at 1R or hold for more? I know I have to hold for more in order to be profitable, so I do. Because 90% of trades that come back to entry after reaching 1R end up hitting my stop anyway, I decide it would be prudent to move my stop to BE after price reaches 1R.

Now remember only 25% of all trades reach 2R. If I was holding out for 2R to take profit, half of the remaining 50 trades will come back and stop out at BE. The other half will reach 2R where I might take profit. 25 trades X 2R would give me +50R profit. 50R profit minus the 50R losses leaves me right where I started at zero, minus slippage and commissions.

This thought exercise could be carried out to the nth degree with 3R, 4R and on and on and the results will get worse and worse. Now, it is quite possible that you could catch a 10R trade and make up for a lot of losses, but my experience is that if I am struggling to find 1R trades these 10 baggers will be too few and far between.

What will never happen is a trader getting to 1R 50% of the time AND 2R 50% of the time. For those who think they can devise a strategy of 50/50 winners to losers with 2/1 gain/loss, and not have a high rate to 1R, it's not going to happen. No, the answer to successful trading in my opinion is to figure out a way to pick a higher % of trades that move in the trader's direction, and it has to be way higher than 50% to 1R. This is why trading is hard. You actually have to be good! This is the dirty little secret no one seems to want to talk about. There is a whole bunch of stuff about trade management, scaling, stop movement, etc, but nobody wants to talk about just being good at picking trades.

I spent a fair amount of time trying to be a professional golfer, then a whole bunch of time working around professional golfers. There is one thing they all have in common. It is the prerequisite to making a living as a golfer: you must be a superior ball striker. Not just good, great. Better than 99.99% of all golfers. Everything flows from ball striking. Putting, short game, psychology just augment great ball striking. If you are not a superior ball striker, no amount of the other stuff will keep you around very long. To me, picking trades is akin to ball striking. No amount of trade management, scaling, psychology will help a trader who picks too many bad trades and not enough good trades.

At this point I don't even care if I make money or not on any given trade. I don't care if I exit a good trade at BE or take profits at 10 ticks on a 100 tick move. My focus is on picking better trades that move more often and to a greater extent in my direction than they do now. If I can do this consistently over a period of time, like a golfer who is hitting the ball really well, the profits will take care of themselves.

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  #756 (permalink)
 ratfink 
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I spent a fair amount of time trying to be a professional golfer, then a whole bunch of time working around professional golfers. There is one thing they all have in common. It is the prerequisite to making a living as a golfer: you must be a superior ball striker. Not just good, great. Better than 99.99% of all golfers. Everything flows from ball striking. Putting, short game, psychology just augment great ball striking. If you are not a superior ball striker, no amount of the other stuff will keep you around very long. To me, picking trades is akin to ball striking. No amount of trade management, scaling, psychology will help a trader who picks too many bad trades and not enough good trades.

Bang on the money. When you've walked with somebody who can borrow a wooden club he's never touched before hit a ball 320yds onto a green and then sink the 14ft putt you know there's a difference in what's under the hood. All the other stuff is really important, but sometimes the stuff that gets you into a pub for the rest of the day does still count more.

Thanks for a great explanation of your metric.

Cheers

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  #757 (permalink)
 MWG86 
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This is a point that many have made, but I have not been able to understand why except for psychological reasons, and that may be enough. From a logical perspective, if one were to trade two contracts and scale them out at different targets, and look at the P&L of each contract on its own over the aggregate of a set of trades, shouldn't each contract yield a positive return on its own? Otherwise, what is the point? And if each contract yielded a positive return, couldn't someone trading one contract just treat that one contract as if it were the first contract exited in a two contract trade? Then, when they get good and profitable on this one contract, they could add the second contract to take advantage of the runners.

For me, and I'm certainly not an expert, trading multiple contracts is about having flexibility. For a one contract AIAO trade with a tight stop, you have to get both direction and timing absolutely correct. By entering with one contract initially and having the flexibility to add more if price goes against you (to lower your overall basis on the trade) you still have to be correct on direction, but you have more leeway on timing. Hopefully the example below will clarify (I use "you" to refer to any trader, not yourself specifically).

Directional bias on the day is bullish, enter at 45.00, price goes down to 44.80 before turning back up and trades to 45.20.

Scenario 1 - AIAO with a 25 tick stop and a 1R profit target
Enter 2 contracts with a 25 tick SL, price goes against you by 20 ticks, hopefully you hold on and are 5 ticks away from your profit target with a 20 tick unrealized gain on 2 contracts when price is trading at 45.20.

Scenario 2 - Scaling-in and -out with a larger stop
Enter 1 contract with a stop where price proves your directional bias incorrect at 44.50. Price goes down to 44.80 and you add another long when price climbs back up through 44.85. Price continues to climb and you take 1 contract off at 45.10 for a 10 tick gain and have a runner at 45.20 (which was entered at 44.85 so is 35 ticks in the green).

Obviously this is just a hypothetical example to illustrate my point but I hope it shows the flexibility of multiple contract trading. It is helpful psychologically because when price goes against you by 20 ticks you're not fearing a SL but are rather looking for clues that your directional bias is still correct and trying to add more at a better price. Once you're in a profit position you can lighten your position to bank a gain without fearing that you've left profits on the table since you still have a position on. When price is hovering 5 ticks below your profit target you're not fearful that price is going to turn lower because if it does it means that you can add another contract at a better price as long as your bullish bias remains intact.

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  #758 (permalink)
 jokertrader 
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I am a struggling part time trader and thus will reserve my observations until later but feel compelled to ask
what is the goal? To practice the same way u will be in sim or to pass a combine and get funded? Reason I ask is certain suggestions here are great like multi contracts if u will the margin to start with...if not may not apply

Also 10-15 ticks can get tricky with CL since the right place to put a stop could be 20 to 25 ticks away

Getting the entry right is always good but some days just may not happen - did u see the multiple 10 ticks jumps this morning?

For me personally CL has always been my nemesis but it's also an addiction for me - not able to let it go

Ng and beans seem easier for me and after much practice I have realized not because my method is bad but since CL is a tricky big beast and I certainly would like to beat it up with multiple contracts and slightly wider stops IF need be but that requires a larger account (live is not the same as sim)


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 jokertrader 
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Sorry pardon my iPad finger meant to ask practice the same way u will go live?


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  #760 (permalink)
 bobwest 
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Scaling

I don't currently do anything but "all in all out," so my grasp of scaling strategies is entirely theoretical.

But if your longer-term read of the market is right, and stays right (), then adding on dips while keeping your initial position will win every time, and win bigger because your average price is better.... that is, you will win every time when you are right, and when you stay right long enough.

If you are wrong, you are just making sure you lose more by adding to a loser. So you had better be right, or be very quick on your feet when you find out you are wrong.

I think that's the whole issue of scaling.

Adding to winners as price advances is more problematic, because you are pyramiding, adding at higher and higher prices, so your average is higher (assuming a long, of course), but again, when you are right and stay right, you will do well.

Scaling out is taking a partial profit but letting something run, after you have been proven to be right, but don't want to keep pushing it. Again, if you are right.... etc.

So, the question is, is there a big move in progress, for which any smaller fluctuations are small pullbacks that you should take advantage of? There has to be, for scaling of any kind to work out. Otherwise the basic requirement of being right, and staying right for long enough, is not met and you will have to scramble.

I don't know how to do this, but that is what @Inletcap and Co. are doing all the time in the spoos thread. Making a consistent bet on being right on a rather long-term direction, and getting more into it on any adverse move, even if they hold for a loss for a while. When wrong, trying to get out with as little damage as possible, selling (again, thinking of longs) on any uptick, and relying on their lower average price to make the move against them hurt less.

So, to my mind, the issue is just, are you in for a bigger move or a smaller one? Because the big, sustained move essentially in one direction is what makes all those gyrations possible. Otherwise, you have to have your stops real tight, take your profits in a hurry, and hold for a minimum time before the trend changes.

If you are into the big move idea, you do well in trending days, less well or poorly in tightly-ranging days, and so-so in days with fairly wide ranges. If you are into the small move idea, you will do better in tight ranges, less well in trends; you will have to scalp, and be very right. In fact, you have to be very right under both scenarios -- it's really mostly or entirely a matter of your timeframe, and whether the market is going to accommodate your preference or not. In other words, in your chosen timeframe, are you right?

I think it all has to do with what you think the market is doing. If you have confidence in the big trend, that inclines you to one strategy. If you have no confidence in the trend, that inclines you to another.

That's my cent and a half on the topic, as someone who watches but doesn't do it. (So far.)

Bob.

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 rocksolid68 
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bobwest View Post
Scaling

I don't currently do anything but "all in all out," so my grasp of scaling strategies is entirely theoretical.

But if your longer-term read of the market is right, and stays right (), then adding on dips while keeping your initial position will win every time, and win bigger because your average price is better.... that is, you will win every time when you are right, and when you stay right long enough.

If you are wrong, you are just making sure you lose more by adding to a loser. So you had better be right, or be very quick on your feet when you find out you are wrong.

I think that's the whole issue of scaling.

Adding to winners as price advances is more problematic, because you are pyramiding, adding at higher and higher prices, so your average is higher (assuming a long, of course), but again, when you are right and stay right, you will do well.

Scaling out is taking a partial profit but letting something run, after you have been proven to be right, but don't want to keep pushing it. Again, if you are right.... etc.

So, the question is, is there a big move in progress, for which any smaller fluctuations are small pullbacks that you should take advantage of? There has to be, for scaling of any kind to work out. Otherwise the basic requirement of being right, and staying right for long enough, is not met and you will have to scramble.

I don't know how to do this, but that is what @Inletcap and Co. are doing all the time in the spoos thread. Making a consistent bet on being right on a rather long-term direction, and getting more into it on any adverse move, even if they hold for a loss for a while. When wrong, trying to get out with as little damage as possible, selling (again, thinking of longs) on any uptick, and relying on their lower average price to make the move against them hurt less.

So, to my mind, the issue is just, are you in for a bigger move or a smaller one? Because the big, sustained move essentially in one direction is what makes all those gyrations possible. Otherwise, you have to have your stops real tight, take your profits in a hurry, and hold for a minimum time before the trend changes.

If you are into the big move idea, you do well in trending days, less well or poorly in tightly-ranging days, and so-so in days with fairly wide ranges. If you are into the small move idea, you will do better in tight ranges, less well in trends; you will have to scalp, and be very right. In fact, you have to be very right under both scenarios -- it's really mostly or entirely a matter of your timeframe, and whether the market is going to accommodate your preference or not. In other words, in your chosen timeframe, are you right?

I think it all has to do with what you think the market is doing. If you have confidence in the big trend, that inclines you to one strategy. If you have no confidence in the trend, that inclines you to another.

That's my cent and a half on the topic, as someone who watches but doesn't do it. (So far.)

Bob.


More on this subject,

I think that if you learn to scale in and out of trades, you will be MUCH better off than if you do not.

Do you know how to predict a market's high of day? The low? No, you don't. So why pretend you do?

Admit you do not know how to predict those turning points in price to a precise enough location where you will be profitable, and then you can finally move on to reality.

I do not know where price will turn. I don't! Yet, with scaling, it does NOT matter! I am trading ES and I want to build a long, well, I sure as heck don't know if price will stop at 2010, 2015, or 2020, but what I do know is that it doesn't matter. I can scale in. I will buy some at every price point listed, which will give me a good average if we go higher, and a much better average if I lose!

All-in/all-out trader buys 3 lots at 2020 (stop loss at 2005) will take a 45 point loss (net). Meanwhile, if I buy one at each level, I will take a net loss of 30 points.

Now, let say we win and we go all out at 2050.

All-in/all-out trader makes 90 points net. I would make 105 points net.

Instead of pretending that you "know" where the market will turn at an exact price point, why not play as if it may turn in a certain area?



Hope this may help! This is just a bit of my thought process!

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rocksolid68 View Post
More on this subject,

I think that if you learn to scale in and out of trades, you will be MUCH better off than if you do not.

Do you know how to predict a market's high of day? The low? No, you don't. So why pretend you do?

Admit you do not know how to predict those turning points in price to a precise enough location where you will be profitable, and then you can finally move on to reality.

I do not know where price will turn. I don't! Yet, with scaling, it does NOT matter! I am trading ES and I want to build a long, well, I sure as heck don't know if price will stop at 2010, 2015, or 2020, but what I do know is that it doesn't matter. I can scale in. I will buy some at every price point listed, which will give me a good average if we go higher, and a much better average if I lose!

All-in/all-out trader buys 3 lots at 2020 (stop loss at 2005) will take a 45 point loss (net). Meanwhile, if I buy one at each level, I will take a net loss of 30 points.

Now, let say we win and we go all out at 2050.

All-in/all-out trader makes 90 points net. I would make 105 points net.

Instead of pretending that you "know" where the market will turn at an exact price point, why not play as if it may turn in a certain area?

Hope this may help! This is just a bit of my thought process!

nice one

this time we use a different market move with same numbers:

- all-in/out trader buys 3 at 2020 and sells 3 at 2050. that's a 90 point gain
- scale in/out trader buys 1 at 2020 (market doesn't go lower) and sells 1 at 2050. that's a 30 point gain

as countless times discussed, there're good reasons to do both. I personally only do aiao with futures. mainly because of scalping. on the other hand, with instruments like stocks, I like to scale in and out. mainly because it's more investing and not trading.

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 rocksolid68 
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Silvester17 View Post
nice one

this time we use a different market move with same numbers:

- all-in/out trader buys 3 at 2020 and sells 3 at 2050. that's a 90 point gain
- scale in/out trader buys 1 at 2020 (market doesn't go lower) and sells 1 at 2050. that's a 30 point gain

as countless times discussed, there're good reasons to do both. I personally only do aiao with futures. mainly because of scalping. on the other hand, with instruments like stocks, I like to scale in and out. mainly because it's more investing and not trading.

As always, I love when you input

However, you are assuming that the scaling trader does not scale up. I may only get one lot of at 2020, but hell, I would rather take a one lot winner for 30 points than a 3 lot loser for 45 points!

Anyways, like you said, there are benefits to both trading types. I think the key is to hone in on one and perfect it. For me, I would never have made it to the profitability heaven if it weren't for scaling (shout-out to @Inletcap for pointing the way). I was trying to pick areas where price wouldn't go against me more than a few points. This made me a poor trader and emotional trader.

Once I learned that I did not need to pick precise entries, but rather manage them better, I made a leap forward in my journey to consistency.

(PS, I do not "scalp" per se, but I think AIAO would be best for doing that, like you said.)


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jokertrader View Post
I am a struggling part time trader and thus will reserve my observations until later but feel compelled to ask
what is the goal? To practice the same way u will be in sim or to pass a combine and get funded? Reason I ask is certain suggestions here are great like multi contracts if u will the margin to start with...if not may not apply

Also 10-15 ticks can get tricky with CL since the right place to put a stop could be 20 to 25 ticks away

Getting the entry right is always good but some days just may not happen - did u see the multiple 10 ticks jumps this morning?

For me personally CL has always been my nemesis but it's also an addiction for me - not able to let it go

Ng and beans seem easier for me and after much practice I have realized not because my method is bad but since CL is a tricky big beast and I certainly would like to beat it up with multiple contracts and slightly wider stops IF need be but that requires a larger account (live is not the same as sim)


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The goal is to pass a combine, then pass the funded trader prep, then build an account, then make some money, then make a living. I do believe it can be done with 10-15 ticks of risk per trade, and I also know that someday, with increased size, I will need to widen stops and trade bigger ideas. But that is for the future. Right now I am just trying to get consistent at picking good trades.

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MWG86 View Post
For me, and I'm certainly not an expert, trading multiple contracts is about having flexibility. For a one contract AIAO trade with a tight stop, you have to get both direction and timing absolutely correct. By entering with one contract initially and having the flexibility to add more if price goes against you (to lower your overall basis on the trade) you still have to be correct on direction, but you have more leeway on timing. Hopefully the example below will clarify (I use "you" to refer to any trader, not yourself specifically).

Directional bias on the day is bullish, enter at 45.00, price goes down to 44.80 before turning back up and trades to 45.20.

Scenario 1 - AIAO with a 25 tick stop and a 1R profit target
Enter 2 contracts with a 25 tick SL, price goes against you by 20 ticks, hopefully you hold on and are 5 ticks away from your profit target with a 20 tick unrealized gain on 2 contracts when price is trading at 45.20.

Scenario 2 - Scaling-in and -out with a larger stop
Enter 1 contract with a stop where price proves your directional bias incorrect at 44.50. Price goes down to 44.80 and you add another long when price climbs back up through 44.85. Price continues to climb and you take 1 contract off at 45.10 for a 10 tick gain and have a runner at 45.20 (which was entered at 44.85 so is 35 ticks in the green).

Obviously this is just a hypothetical example to illustrate my point but I hope it shows the flexibility of multiple contract trading. It is helpful psychologically because when price goes against you by 20 ticks you're not fearing a SL but are rather looking for clues that your directional bias is still correct and trying to add more at a better price. Once you're in a profit position you can lighten your position to bank a gain without fearing that you've left profits on the table since you still have a position on. When price is hovering 5 ticks below your profit target you're not fearful that price is going to turn lower because if it does it means that you can add another contract at a better price as long as your bullish bias remains intact.

thank you for your examples. I still have to ask the question, if you analyzed each scale-in as separate trade over a large sampling of trades, shouldn't they be profitable on their own? If they are not, why do them? My point is that you should be able to make money on a single contract. You may not make a lot of money, but you should be profitable. Scaling in or scaling out might make you more profitable because you reduce basis or catch runners, but that first scale in and that first scale out should also be profitable on its own. Otherwise it is a drain on your account and serves no purpose other than as a psychological comfort.

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bobwest View Post
Scaling

I don't currently do anything but "all in all out," so my grasp of scaling strategies is entirely theoretical.

But if your longer-term read of the market is right, and stays right (), then adding on dips while keeping your initial position will win every time, and win bigger because your average price is better.... that is, you will win every time when you are right, and when you stay right long enough.

If you are wrong, you are just making sure you lose more by adding to a loser. So you had better be right, or be very quick on your feet when you find out you are wrong.

I think that's the whole issue of scaling.

Adding to winners as price advances is more problematic, because you are pyramiding, adding at higher and higher prices, so your average is higher (assuming a long, of course), but again, when you are right and stay right, you will do well.

Scaling out is taking a partial profit but letting something run, after you have been proven to be right, but don't want to keep pushing it. Again, if you are right.... etc.

So, the question is, is there a big move in progress, for which any smaller fluctuations are small pullbacks that you should take advantage of? There has to be, for scaling of any kind to work out. Otherwise the basic requirement of being right, and staying right for long enough, is not met and you will have to scramble.

I don't know how to do this, but that is what @Inletcap and Co. are doing all the time in the spoos thread. Making a consistent bet on being right on a rather long-term direction, and getting more into it on any adverse move, even if they hold for a loss for a while. When wrong, trying to get out with as little damage as possible, selling (again, thinking of longs) on any uptick, and relying on their lower average price to make the move against them hurt less.

So, to my mind, the issue is just, are you in for a bigger move or a smaller one? Because the big, sustained move essentially in one direction is what makes all those gyrations possible. Otherwise, you have to have your stops real tight, take your profits in a hurry, and hold for a minimum time before the trend changes.

If you are into the big move idea, you do well in trending days, less well or poorly in tightly-ranging days, and so-so in days with fairly wide ranges. If you are into the small move idea, you will do better in tight ranges, less well in trends; you will have to scalp, and be very right. In fact, you have to be very right under both scenarios -- it's really mostly or entirely a matter of your timeframe, and whether the market is going to accommodate your preference or not. In other words, in your chosen timeframe, are you right?

I think it all has to do with what you think the market is doing. If you have confidence in the big trend, that inclines you to one strategy. If you have no confidence in the trend, that inclines you to another.

That's my cent and a half on the topic, as someone who watches but doesn't do it. (So far.)

Bob.

I have tried scaling in the @Inletcap way on several occasions. I like the way he does it and would some day like to emulate his style. Pick a direction, determine a point when that direction would no longer be valid, then scale in, improving basis as it approaches the puke point.

I have usually used three scale ins of one contract apiece over a range of 30 ticks, with the last scale in at around 10 ticks from the limit. I have lost large chunks of money (in sim) each time. Why? because I was wrong. Each time. Simple as that. Oh sure, if I kept doing it I would catch my share of winners. But when you're wrong trading multiples like this the losses add up fast, even if you are reducing basis.

I found it very difficult to risk less than about 50 or 60 ticks, and that would blow out my combine. 30 on the first scale, 20 on the second scale and 10 on the third scale, or something like that. Bottom line is, whether you scale or go AIAO you still have to be right more than you are wrong.

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rocksolid68 View Post
More on this subject,

I think that if you learn to scale in and out of trades, you will be MUCH better off than if you do not.

Do you know how to predict a market's high of day? The low? No, you don't. So why pretend you do?

Admit you do not know how to predict those turning points in price to a precise enough location where you will be profitable, and then you can finally move on to reality.

I do not know where price will turn. I don't! Yet, with scaling, it does NOT matter! I am trading ES and I want to build a long, well, I sure as heck don't know if price will stop at 2010, 2015, or 2020, but what I do know is that it doesn't matter. I can scale in. I will buy some at every price point listed, which will give me a good average if we go higher, and a much better average if I lose!

All-in/all-out trader buys 3 lots at 2020 (stop loss at 2005) will take a 45 point loss (net). Meanwhile, if I buy one at each level, I will take a net loss of 30 points.

Now, let say we win and we go all out at 2050.

All-in/all-out trader makes 90 points net. I would make 105 points net.

Instead of pretending that you "know" where the market will turn at an exact price point, why not play as if it may turn in a certain area?



Hope this may help! This is just a bit of my thought process!

Thank you. You make good points

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Silvester17 View Post
nice one

this time we use a different market move with same numbers:

- all-in/out trader buys 3 at 2020 and sells 3 at 2050. that's a 90 point gain
- scale in/out trader buys 1 at 2020 (market doesn't go lower) and sells 1 at 2050. that's a 30 point gain

as countless times discussed, there're good reasons to do both. I personally only do aiao with futures. mainly because of scalping. on the other hand, with instruments like stocks, I like to scale in and out. mainly because it's more investing and not trading.

More good points!

But now, instead of comparing an AIAO trader who trades 3 contracts to a scaling trader who also trades 3 contracts, lets talk about a trader who only trades 1 contract compared to the scaling trader who trades 3 contracts. If the trader who trades 1 contract manages that 1 contract as if it were the first scale of a 3 contract trade, shouldn't he be profitable? Put another way, shouldn't all the contracts in a 3 contract scale be profitable on their own over the aggregate of a sampling of trades? If any one of the scaled contracts is not profitable on its own, what is its purpose?

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rocksolid68 View Post
As always, I love when you input

However, you are assuming that the scaling trader does not scale up. I may only get one lot of at 2020, but hell, I would rather take a one lot winner for 30 points than a 3 lot loser for 45 points!

Anyways, like you said, there are benefits to both trading types. I think the key is to hone in on one and perfect it. For me, I would never have made it to the profitability heaven if it weren't for scaling (shout-out to @Inletcap for pointing the way). I was trying to pick areas where price wouldn't go against me more than a few points. This made me a poor trader and emotional trader.

Once I learned that I did not need to pick precise entries, but rather manage them better, I made a leap forward in my journey to consistency.

(PS, I do not "scalp" per se, but I think AIAO would be best for doing that, like you said.)


It is hard to argue with success.

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 grausch 
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This is a point that many have made, but I have not been able to understand why except for psychological reasons, and that may be enough. From a logical perspective, if one were to trade two contracts and scale them out at different targets, and look at the P&L of each contract on its own over the aggregate of a set of trades, shouldn't each contract yield a positive return on its own? Otherwise, what is the point? And if each contract yielded a positive return, couldn't someone trading one contract just treat that one contract as if it were the first contract exited in a two contract trade? Then, when they get good and profitable on this one contract, they could add the second contract to take advantage of the runners.

Sorry for the late reply, but I live in a different time zone and usually switch off everything at 18h00 my time. I see several replies came in, and I also know you are trying to get funded by TST, which means your trading approach and goals will necessarily be quite different from mine.

In any case, that is one hell of an excellent question. I would say it depends on both the market and the trader on any given day, the only caveat being that both these approaches have different risk profiles as the trade progresses.

Regarding why I believe using multiple contracts is so crucial, I can only relay my personal experience. When I was still backtesting a ton, I very quickly came to a similar conclusion as you did with your post "Why do I make such a big deal out of 1R" ( ). Getting a win % of 50% with your average win being double your average loser is pretty damn difficult. I spent some time testing most common indicators (and several combinations) of those, and could not come up with a robust and reliable way to increase my win %. What I also found was that the backtests that did best always seemed to be the ones that shot for the largest wins.

The answer to maximise gains seemed quite simple - just hold them longer for larger gains. Unfortunately as you also noted, the longer you hold, the more likely the market is to give back significant portions of that profit, or even stop you out for a loss. My first order of business, was to devise ways to move my stop to breakeven. This cured the closed-equity risk problem, but it still left me with an open-equity risk problem. By taking profits at certain points, I can reduce the open-equity risk, but it comes at the trade-off of potentially lowering gains on massive movers. I chose to do this, because not all trades are big winners and I needed some way to pay for the churn on the account.

As noted above, scaling out smooths out the equity curve, but I was not happy with the fact that losing trades needed big winners to offset them. This is purely because losing trades were taken on a "full" position and winning trades were always scaled back. Each time you scale back a winning trades needs more ticks to achieve another multiple of R. My solution to this problem was to pyramid in as a trade moves in my favour, while simultaneously moving my stop up to keep risk constant. If the 1st contract had a stop of 20 ticks, then I would move the stop to 10 ticks away from my average price. As @bobwest noted, this leads to a higher price and also a higher stop increasing the chance of being stopped out. Again, this is another trade-off I choose to make, because it makes me feel more comfortable with the risk I am taking.

The above describes a way where I can potentially get 4 1R losers a week, 1 5R winner a week, and perhaps a 10R or even a 25R winner a month. It is not perfect by any means and quite often I sit with a losing day or week, when @Inletcap has been pocketing decent money. This is merely my way of maximising the size of my winners while trying to not lose too much of my account waiting for those winners to come along.

My trade management method is merely one way to skin the cat and my approach was developed with the assumption that I can't get a 50% win % with a reward to risk ratio of 2:1. By trading this way, I am also not always bound to a screen merely due to the fact that once I have booked a decent gain, I can just let trades play out. Sometimes they work well, other times a 25R gain turns into a 10R gain, which is exactly what happened yesterday.

Edit: While typing up this post, I forgot to add the following - I notice you quite often refer to the fact that trading 1 contract should yield similar results and in my second paragraph I gave a quick "answer". It is a damn excellent question, and there is no real easy answer. Based on the rest of my post, I think it is obvious that I consider my position to be a "trade" and my goal is to manage a position. When you look at trading in terms of single contracts, you always get stuck in a linear relationship, i.e. if you had no stop no profit / loss profile would be a straight line. Once you add in a stop, your profit and loss profile changes to that of a call / put option. Limited risk / unlimited upside, but the upside movement will always be linear. By pyramiding I am attempting to change the linear profit curve into an exponential curve. Scaling out of course reduces the exponential effect, but at least it gives an initial kick to the return profile.

Now, all of that being said is the way I approach things. Several traders here ( ) do things quite differently and some of them do much better than I do. I tried copying things the successful guys there do, and ultimately lost money doing so. Perhaps there is a skill in trading semi-random movements - if there is, I suck at it. I find it is easier to just try and hit home runs - I don't get them that often, but when I do, they tend to travel quite far out of the park.

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 Silvester17 
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rocksolid68 View Post
As always, I love when you input

However, you are assuming that the scaling trader does not scale up. I may only get one lot of at 2020, but hell, I would rather take a one lot winner for 30 points than a 3 lot loser for 45 points!


it's also very nice to have different opinions without yelling and cussing. really appreciate that

now we can add some more examples with the scale up method. you buy 1 at 2020, 1 at 2025 and 1 at 2030. unfortunately the market doesn't reach your target, but instead turns around and stops you out at 2005. that's a loss of 60 points. which is worse than the 3 lot aiao trader with a loss of 45 points!

but don't worry, I do realize that reality looks different. just trying to show that you can make a case for every scenario.


Tap In View Post
More good points!

But now, instead of comparing an AIAO trader who trades 3 contracts to a scaling trader who also trades 3 contracts, lets talk about a trader who only trades 1 contract compared to the scaling trader who trades 3 contracts. If the trader who trades 1 contract manages that 1 contract as if it were the first scale of a 3 contract trade, shouldn't he be profitable? Put another way, shouldn't all the contracts in a 3 contract scale be profitable on their own over the aggregate of a sampling of trades? If any one of the scaled contracts is not profitable on its own, what is its purpose?

excellent point!!

statistically speaking we could analyze every single add as a separate trade. if for the majority of trades you get to add 1 at 2015 and 1 at 2010 (just using the above simple example), then it would make sense to buy 3 at 2010 instead of scaling in. the same if for the majority of trades you only get to add 1 at 2015, then it would make sense to buy 3 at 2015. and of course if you don't get to add at all for the majority, then you should buy 3 at 2020.

now in reality you should do what you think is best. if your entries are pretty good and you're more of a scalper, then aiao might be the better way.

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  #772 (permalink)
 ratfink 
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As with most things in life it just comes down to the fact that we have to get good at doing something.

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 bobwest 
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ratfink View Post
As with most things in life it just comes down to the fact that we have to get good at doing something.

Truth.

I think the upshot of all this discussion is that if you can get the trade direction right, you will make some money. If you don't, you won't. (Gasp! )

Personally, I think the entire thing about all-in-all-out vs. scaling is immaterial unless you get the trade right first. Also, after you get the trade right, it's not really enormously material either, in the overall scheme of things. It's a preference about how you want to manage your risk and exposure, and it may make a difference, certainly, but not as much as just whether you are right or not.

Bob.

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 grausch 
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bobwest View Post
I think the upshot of all this discussion is that if you can get the trade direction right, you will make some money. If you don't, you won't. (Gasp! )

Disagree with you somewhat here - On any individual trade, I need to get trade direction right to make money, but there is no guarantee that I will make money even if I do. Usually a too close stop will get taken out and the market can then continue. Other scenario is that a market runs in your favour and then reverses - you were only temporarily right...in both cases direction was right at some point in time and the trade still lost money.

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 Inletcap 
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@Tap In

I have not had a chance to read the past couple of pages of responses but the last I read was your reply regarding scaling and why you see the importance of using 1R as a measure. I didn't reply immediately when I read this yesterday as I wanted to think about what you were saying and here is the thought that struck me...

We see the markets differently. I see the markets as a price discovery mechanism and from this perspective, I understand where you don't see what I see. Your comments about scaling and 1R show that you are not looking at the broader operation at hand- let me attempt to explain this statement:

Scaling- We are trading within a single days timeframe. We have no idea what the market is going to do. A day-traders primary responsibility is to assess the current condition and make a decision as to what type of day we are going to have (range, trend, reversal, etc.) and repeat this all day long. So why would one scale? Because we are not sure what the day will ultimately end up looking like and it affords one the opportunity to play two (or more) ideas at the same time.

Example- Its 10est, the markets been open for an hour and has traded above the open in a spike fashion and smacked into a naked POC from two days ago- You got long off the open with 3 contracts. Will the range continue to expand or will the market reverse and continue its downtrend? Nobody knows- but if you scale, you can lock in profits on your first idea and keep your options open to see if its a big reversal day that will attract volume and run into the close with a runner and you don't have to spend your day trying to find another entry which could potentially blow up in your face and rip the profits you already made out of your hands. I think that's pretty clear so I will say no more unless you have questions.

1R- Again- we are trading within a single days timeframe. I have to ask you some questions in order to get my point across here but I'm not trying to be illusive with my response. Keeping with the days timeframe:
- Are markets static or dynamic?
- Are all price "locations" within the day equal?

If you agree that markets are dynamic and not all trade locations are equal, how can 1R make any sense? In a static world, yes, but in the real world there are other factors. Not every trade comes with the same set of variables as the book authors want us to believe.

Example- Its 11est and the market has spiked up off the open for the first hour and is slowly grinding higher with relative volume near +35% for the day. It has not traded below +1SD all morning and is currently pulled back 20t to +1SD. This is a trend up day- taking a trade at 1SD is low risk as the market should continue up but do you just blindly take it? Hell no- I didn't tell you how far the market has already run- If we were 60% of the Avg Daily Range I say take it as fast as you can but if we've already moved 180% of the ADR, I don't feel there is enough room left to get on board today... Now, lets say we are at 180% of ADR- does this mean a reversal is coming? Probably not but maybe so, who knows- would a countertrend short make sense- Hell No!!!-- Its a trend up day. I use this example to show that not all trades are created equal and assigning a static risk/reward scenario cannot make sense.

OK- you ask for help regarding your trades- basically you've ask to look at your trades and tell you the good and bad. Taking your Friday trade- Your execution was good as you sold what you perceived to be overhead resistance and you bailed when the trade went against you- I get that! Why did that trade fail? You failed to focus on what the market was trying to do- it was trying to see if price could be accepted higher on a counter trend day. Why was it so choppy? Because it was a counter trend day- buying was being met with late sellers finding value in the retracement. Who was winning- Buyers were.. How could one know this? Price broke out of the OR and sustained trade above- It took out the ONH and tested value (VWAP) 4 times- each time it returned to value, buyers were standing there gobbling it up- eventually enough sellers gave up selling for the day and price was able to move past the resistance as expected since buyers were not in any way, shape, or form allowing it to go lower so why not let price discover higher prices to see what happens up there.

One last thing- sellers were finding value all day at the HOD- market was bracketing between VWAP and HOD- you took and entry against trend in the middle of the bracket.. If looking for a reversal, the logical trade location was at the top of the resistance band or just above it(if rally attempt failed) as it afforded a "lower risk" entry with the crowd of sellers standing behind you for back up.

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 ratfink 
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Inletcap View Post
If you agree that markets are dynamic and not all trade locations are equal, how can 1R make any sense? In a static world, yes, but in the real world there are other factors. Not every trade comes with the same set of variables as the book authors want us to believe.

That whole post is yet another fantastic explanation of the way you use context - and there's the rub - you know that by and large you are going to get better than average value trade locations (because you're damn good at it.) I think @Tap In's 1R metric is simply measuring whether he's getting better at it as well, and as such does have merit for the rest of us to bear in mind.

The reality gap is that your read of context is now pretty much automatic/subconscious in action, the rest of us have a fair way to go, regardless of the methods we use to do it.

Cheers

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 Inletcap 
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ratfink View Post
That whole post is yet another fantastic explanation of the way you use context - and there's the rub - you know that by and large you are going to get better than average value trade locations (because you're damn good at it.) I think @Tap In's 1R metric is simply measuring whether he's getting better at it as well, and as such does have merit for the rest of us to bear in mind.

The reality gap is that your read of context is now pretty much automatic/subconscious in action, the rest of us have a fair way to go, regardless of the methods we use to do it.

Cheers

LOL- My plan was to write the whole post and not use the word "context" so see if it could be sucked out by the readers

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 ratfink 
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Inletcap View Post
LOL- My plan was to write the whole post and not use the word "context" so see if it could be sucked out by the readers

Ok, hook, line and sinker then.

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 bobwest 
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LOL- My plan was to write the whole post and not use the word "context" so see if it could be sucked out by the readers

Like we couldn't see it, right?

Bob.

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 Tap In 
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Well, like a kid with a new toy, I enthusiastically came into the day eager with possibilities. Naturally, it wasn't the right day to do that. Four straight losses in a row and now I am done for the day because of the daily loss limit.

I don't even want to post the trades because they were taken with lots of voices in my head about "scaling", and "trading directionally", and "giving the trade room to work", and not "moving to BE". They show a trader a little too eager to "get on board" the prevailing trend. Don't get me wrong this is all great advice, but at the end of the day, I need to incorporate these ideas at the pace I can handle.

Not all the trades were illogical. Most were to the short side, and on pull backs to areas of resistance that I thought could hold. I gave them plenty of room to work, even holding through some unrealized gains that I normally wouldn't hold through. In the end, the market was no longer interested in going down. The one long trade was quickly stopped out a 20 tick loss. That was probably the worst trade as it went against my morning blueprint, but the way the market came off the bottom it looked like it was going up for a while.

I am bummed but not gutted. I need to take a step back tomorrow and regroup and really decide what it is I am trying to do.

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  #781 (permalink)
 Inletcap 
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bobwest View Post
Scaling

I don't currently do anything but "all in all out," so my grasp of scaling strategies is entirely theoretical.

But if your longer-term read of the market is right, and stays right (), then adding on dips while keeping your initial position will win every time, and win bigger because your average price is better.... that is, you will win every time when you are right, and when you stay right long enough.

If you are wrong, you are just making sure you lose more by adding to a loser. So you had better be right, or be very quick on your feet when you find out you are wrong.

I think that's the whole issue of scaling.

Adding to winners as price advances is more problematic, because you are pyramiding, adding at higher and higher prices, so your average is higher (assuming a long, of course), but again, when you are right and stay right, you will do well.

Scaling out is taking a partial profit but letting something run, after you have been proven to be right, but don't want to keep pushing it. Again, if you are right.... etc.

So, the question is, is there a big move in progress, for which any smaller fluctuations are small pullbacks that you should take advantage of? There has to be, for scaling of any kind to work out. Otherwise the basic requirement of being right, and staying right for long enough, is not met and you will have to scramble.

I don't know how to do this, but that is what @Inletcap and Co. are doing all the time in the spoos thread. Making a consistent bet on being right on a rather long-term direction, and getting more into it on any adverse move, even if they hold for a loss for a while. When wrong, trying to get out with as little damage as possible, selling (again, thinking of longs) on any uptick, and relying on their lower average price to make the move against them hurt less.

So, to my mind, the issue is just, are you in for a bigger move or a smaller one? Because the big, sustained move essentially in one direction is what makes all those gyrations possible. Otherwise, you have to have your stops real tight, take your profits in a hurry, and hold for a minimum time before the trend changes.

If you are into the big move idea, you do well in trending days, less well or poorly in tightly-ranging days, and so-so in days with fairly wide ranges. If you are into the small move idea, you will do better in tight ranges, less well in trends; you will have to scalp, and be very right. In fact, you have to be very right under both scenarios -- it's really mostly or entirely a matter of your timeframe, and whether the market is going to accommodate your preference or not. In other words, in your chosen timeframe, are you right?

I think it all has to do with what you think the market is doing. If you have confidence in the big trend, that inclines you to one strategy. If you have no confidence in the trend, that inclines you to another.

That's my cent and a half on the topic, as someone who watches but doesn't do it. (So far.)

Bob.

Spot on Bob- One thing to add. When you find a style that fits, you have to recognize when it doesn't work and you must abandon that style immediately when those conditions are present. I will get absolutely beat up when the market "goes nowhere" and I am very aware of this. Probably why RVOL is so critical to my days success or failure... If my thesis fails I kind of have to accept the other side to make things better- if the adverse move does not give enough schwag, I stand to be wrong twice in a single day and that can cut pretty deep if I've built two full positions. A "great" trader could recognize the operating conditions and change their "style" to accommodate immediately; Unfortunately, more often than not (for me), there is simply not enough time to process the information when in a painful situation so I've found it best to accept that my style cannot always work and when its not working, abstinence is best.

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 Tap In 
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Inletcap View Post
@Tap In

I have not had a chance to read the past couple of pages of responses but the last I read was your reply regarding scaling and why you see the importance of using 1R as a measure. I didn't reply immediately when I read this yesterday as I wanted to think about what you were saying and here is the thought that struck me...

We see the markets differently. I see the markets as a price discovery mechanism and from this perspective, I understand where you don't see what I see. Your comments about scaling and 1R show that you are not looking at the broader operation at hand- let me attempt to explain this statement:

Scaling- We are trading within a single days timeframe. We have no idea what the market is going to do. A day-traders primary responsibility is to assess the current condition and make a decision as to what type of day we are going to have (range, trend, reversal, etc.) and repeat this all day long. So why would one scale? Because we are not sure what the day will ultimately end up looking like and it affords one the opportunity to play two (or more) ideas at the same time.

Example- Its 10est, the markets been open for an hour and has traded above the open in a spike fashion and smacked into a naked POC from two days ago- You got long off the open with 3 contracts. Will the range continue to expand or will the market reverse and continue its downtrend? Nobody knows- but if you scale, you can lock in profits on your first idea and keep your options open to see if its a big reversal day that will attract volume and run into the close with a runner and you don't have to spend your day trying to find another entry which could potentially blow up in your face and rip the profits you already made out of your hands. I think that's pretty clear so I will say no more unless you have questions. this makes sense

1R- Again- we are trading within a single days timeframe. I have to ask you some questions in order to get my point across here but I'm not trying to be illusive with my response. Keeping with the days timeframe:
- Are markets static or dynamic?
- Are all price "locations" within the day equal?

If you agree that markets are dynamic and not all trade locations are equal, how can 1R make any sense? In a static world, yes, but in the real world there are other factors. Not every trade comes with the same set of variables as the book authors want us to believe.

Example- Its 11est and the market has spiked up off the open for the first hour and is slowly grinding higher with relative volume near +35% for the day. It has not traded below +1SD all morning and is currently pulled back 20t to +1SD. This is a trend up day- taking a trade at 1SD is low risk as the market should continue up but do you just blindly take it? Hell no- I didn't tell you how far the market has already run- If we were 60% of the Avg Daily Range I say take it as fast as you can but if we've already moved 180% of the ADR, I don't feel there is enough room left to get on board today... Now, lets say we are at 180% of ADR- does this mean a reversal is coming? Probably not but maybe so, who knows- would a countertrend short make sense- Hell No!!!-- Its a trend up day. I use this example to show that not all trades are created equal and assigning a static risk/reward scenario cannot make sense.great example

OK- you ask for help regarding your trades- basically you've ask to look at your trades and tell you the good and bad. Taking your Friday trade- Your execution was good as you sold what you perceived to be overhead resistance and you bailed when the trade went against you- I get that! Why did that trade fail? You failed to focus on what the market was trying to do- it was trying to see if price could be accepted higher on a counter trend day. Why was it so choppy? Because it was a counter trend day- buying was being met with late sellers finding value in the retracement. Who was winning- Buyers were.. How could one know this? Price broke out of the OR and sustained trade above- It took out the ONH and tested value (VWAP) 4 times- each time it returned to value, buyers were standing there gobbling it up- eventually enough sellers gave up selling for the day and price was able to move past the resistance as expected since buyers were not in any way, shape, or form allowing it to go lower so why not let price discover higher prices to see what happens up there.

One last thing- sellers were finding value all day at the HOD- market was bracketing between VWAP and HOD- you took and entry against trend in the middle of the bracket.. If looking for a reversal, the logical trade location was at the top of the resistance band or just above it(if rally attempt failed) as it afforded a "lower risk" entry with the crowd of sellers standing behind you for back up.

I am not doing enough of this kind of analysis. I am too much in the moment of what price action is doing NOW

This response took time. Thank you!

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 Tap In 
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grausch View Post
Sorry for the late reply, but I live in a different time zone and usually switch off everything at 18h00 my time. I see several replies came in, and I also know you are trying to get funded by TST, which means your trading approach and goals will necessarily be quite different from mine.

In any case, that is one hell of an excellent question. I would say it depends on both the market and the trader on any given day, the only caveat being that both these approaches have different risk profiles as the trade progresses.

Regarding why I believe using multiple contracts is so crucial, I can only relay my personal experience. When I was still backtesting a ton, I very quickly came to a similar conclusion as you did with your post "Why do I make such a big deal out of 1R" ( ). Getting a win % of 50% with your average win being double your average loser is pretty damn difficult. I spent some time testing most common indicators (and several combinations) of those, and could not come up with a robust and reliable way to increase my win %. What I also found was that the backtests that did best always seemed to be the ones that shot for the largest wins.

The answer to maximise gains seemed quite simple - just hold them longer for larger gains. Unfortunately as you also noted, the longer you hold, the more likely the market is to give back significant portions of that profit, or even stop you out for a loss. My first order of business, was to devise ways to move my stop to breakeven. This cured the closed-equity risk problem, but it still left me with an open-equity risk problem. By taking profits at certain points, I can reduce the open-equity risk, but it comes at the trade-off of potentially lowering gains on massive movers. I chose to do this, because not all trades are big winners and I needed some way to pay for the churn on the account.

As noted above, scaling out smooths out the equity curve, but I was not happy with the fact that losing trades needed big winners to offset them. This is purely because losing trades were taken on a "full" position and winning trades were always scaled back. Each time you scale back a winning trades needs more ticks to achieve another multiple of R. My solution to this problem was to pyramid in as a trade moves in my favour, while simultaneously moving my stop up to keep risk constant. If the 1st contract had a stop of 20 ticks, then I would move the stop to 10 ticks away from my average price. As @bobwest noted, this leads to a higher price and also a higher stop increasing the chance of being stopped out. Again, this is another trade-off I choose to make, because it makes me feel more comfortable with the risk I am taking.

The above describes a way where I can potentially get 4 1R losers a week, 1 5R winner a week, and perhaps a 10R or even a 25R winner a month. It is not perfect by any means and quite often I sit with a losing day or week, when @Inletcap has been pocketing decent money. This is merely my way of maximising the size of my winners while trying to not lose too much of my account waiting for those winners to come along.

My trade management method is merely one way to skin the cat and my approach was developed with the assumption that I can't get a 50% win % with a reward to risk ratio of 2:1. By trading this way, I am also not always bound to a screen merely due to the fact that once I have booked a decent gain, I can just let trades play out. Sometimes they work well, other times a 25R gain turns into a 10R gain, which is exactly what happened yesterday.

Edit: While typing up this post, I forgot to add the following - I notice you quite often refer to the fact that trading 1 contract should yield similar results and in my second paragraph I gave a quick "answer". It is a damn excellent question, and there is no real easy answer. Based on the rest of my post, I think it is obvious that I consider my position to be a "trade" and my goal is to manage a position. When you look at trading in terms of single contracts, you always get stuck in a linear relationship, i.e. if you had no stop no profit / loss profile would be a straight line. Once you add in a stop, your profit and loss profile changes to that of a call / put option. Limited risk / unlimited upside, but the upside movement will always be linear. By pyramiding I am attempting to change the linear profit curve into an exponential curve. Scaling out of course reduces the exponential effect, but at least it gives an initial kick to the return profile.

Now, all of that being said is the way I approach things. Several traders here ( ) do things quite differently and some of them do much better than I do. I tried copying things the successful guys there do, and ultimately lost money doing so. Perhaps there is a skill in trading semi-random movements - if there is, I suck at it. I find it is easier to just try and hit home runs - I don't get them that often, but when I do, they tend to travel quite far out of the park.

I think I understand your general philosophy on how you make gains. I like how you have recognized and come to grips with the various compromises inherent in choosing any style. Thank you for taking the time to share!

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  #784 (permalink)
 grausch 
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Tap In View Post
I think I understand your general philosophy on how you make gains. I like how you have recognized and come to grips with the various compromises inherent in choosing any style. Thank you for taking the time to share!

You're welcome. As you can see there were several reasons why I ultimately ended up using an approach that relies heavily on both pyramiding into and scaling out of trades and explaining it this way, was the only way in which I could explain why I think multiple contracts are so crucial to the way I do things. On another note, I have yet to hear of others shooting for 10R or 25R gains, yet I have seen moves of even larger magnitude in terms of R when I pyramid in this way.

Today I managed to bag 4R in gains by scaling out and exiting when I saw my gains evaporate too quickly. Usually I would have held through that, but for some reason I was just skittish today. The position would have been stopped out for 2R later, so even though I abandoned the position too quickly I have some ammunition for the rest of the week.

Regarding your day, I would suggest taking some time off, pondering over all the information you have been given and then just sieve through it all to decide what may work for you. My head would swim if I had gotten all of the different opinions you had and it would take me some time to sort through it all and then test the ideas I felt have merit.

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 Inletcap 
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Tap In View Post
I am not doing enough of this kind of analysis. I am too much in the moment of what price action is doing NOW

This response took time. Thank you!

Not to be a dick, but this is exactly what I hoped you would draw from this. I felt that if I just said it to you, it would have no impact and I'd sound harsh- finding that conclusion on your own is powerful!

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 MWG86 
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Tap In View Post
thank you for your examples. I still have to ask the question, if you analyzed each scale-in as separate trade over a large sampling of trades, shouldn't they be profitable on their own? If they are not, why do them? My point is that you should be able to make money on a single contract. You may not make a lot of money, but you should be profitable. Scaling in or scaling out might make you more profitable because you reduce basis or catch runners, but that first scale in and that first scale out should also be profitable on its own. Otherwise it is a drain on your account and serves no purpose other than as a psychological comfort.

I believe that @grausch said it best that he treats his trades as a position rather than multiple individual trades (paraphrasing here, so please correct me if this is not what you meant), and his job is to manage the position. This is how I think of it as well, when I do my daily review I'm judging each scale-in and scale-out in the context of the broader position and am not as concerned with each of them being profitable on their own. My goal is to walk away from the day in the green, if I have to have a few losing trades to make this happen then I'm fine with that.

Scaling is just one way to trade though and like everything else in this business there's not a one size fits all solution. I believe that @Silvester17's contributions to this conversation have illustrated that. There are times that AIAO will be more profitable on an absolute basis and there are other times that scaling-in and -out will work better, I think it's the trader's job to figure out which way (or a hybrid of the both) works best for them as an individual.

I recently adopted scaling-in and -out because I found that my directional bias on the day was more often than not correct, but my timing wasn't always perfect. I've wanted to be an AIAO scalper and have leaned my studies and effort over the past 2 years towards scalping as a result. What I've found though since I started journaling is that I'm pretty good at figuring which direction the market wants to move, my weakness oftentimes is timing (which I'm still working on). I threw in a golf example below that illustrates my thinking on this. Yes I still want to learn how to scalp successfully, but my overall goal is to be profitable. I can still work on my scalping technique, but if I can be more profitable leaning towards my strengths then I'd be foolish to be doing anything differently.

Take a golfer who wants to hit a driver like DJ and have a short game like Phil. This player spends most of his time on the range hitting driver and working on his flop shot. Then after a couple of months he does a meticulous study of his scorecards. This study finds that from 80-150 yards out he's consistently giving himself a makeable putt but when he's 50-80 out he's getting up and down only 40% of the time. If this golfer can recognize that the point of the game is to get the ball in the hole in the fewest shots then he can adjust his game accordingly to play to his strengths and dial down to a 3-wood off the tee giving himself 120 in rather than pounding driver every time. It's still important to work on his weaknesses but playing to his strengths will score better.


Tap In View Post
Well, like a kid with a new toy, I enthusiastically came into the day eager with possibilities. Naturally, it wasn't the right day to do that. Four straight losses in a row and now I am done for the day because of the daily loss limit.

...

I am bummed but not gutted. I need to take a step back tomorrow and regroup and really decide what it is I am trying to do.

Swing changes take time, the important thing is that you're working at it.

Good luck moving forward!

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 Popsicle 
Pretoria Gauteng
 
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@Tap In, I just want to say big thank you for a really awesome journal. The way you share both your struggles and tribulations are really inspiring and have definitely taught me a lot about both trading and trading psychology.

A big thank you to everyone who has replied and contributed their knowledge so freely too. I am not sure that you guys always realize just how much you contribute to making successful traders.

I know I could have just clicked the "Thanks" button about a thousand times, but it does not seem nearly enough for everything I have learned from this journal.

Popsicle

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 bmtrading9 
Atlanta, GA, USA
 
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Thanks @bobwest for directing to this excellent journal.

I haven't gone thru all the posts here but this what my understanding for few posts

1. First, I felt like I am reading my mind in this journal or maybe all struggling traders goes thru same stuff

2. 30K combine is the main culprit of the issues here, it is very very difficult to follow the rules and own method.

3. Seems like Tap is also suffering from the same issue like me (I may be wrong here) i.e waiting for the trend reverse then somehow miss the entry then debate if trend has gone too far to enter and wait for that reverse again...this cycle continues

This will definitely help (very easy to say but difficult to follow)

1. Do analysis etc. (seems like Tap is doing excellent job in that)

2. Put a limit order

3. Add one more contract at puke point (Thanks to @Inletcap) based on new conditions

but

definitely CL will be tough for 30K combine, we will be feeding constant money to TST while trying to get over that.

May be with QM (Mini Crude) we can scale up to 3 contracts....I did the same today

1. Got into one contract overnight thinking Europe will pop it but they didn't

2. Added one more but added it too late ( I was travelling to work)

3. Closed it for small profit

4. If I would have added it at my original add point I woulda made money...

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 Tap In 
Bend, OR
 
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MWG86 View Post
I believe that @grausch said it best that he treats his trades as a position rather than multiple individual trades (paraphrasing here, so please correct me if this is not what you meant), and his job is to manage the position. This is how I think of it as well, when I do my daily review I'm judging each scale-in and scale-out in the context of the broader position and am not as concerned with each of them being profitable on their own. My goal is to walk away from the day in the green, if I have to have a few losing trades to make this happen then I'm fine with that.

Scaling is just one way to trade though and like everything else in this business there's not a one size fits all solution. I believe that @Silvester17's contributions to this conversation have illustrated that. There are times that AIAO will be more profitable on an absolute basis and there are other times that scaling-in and -out will work better, I think it's the trader's job to figure out which way (or a hybrid of the both) works best for them as an individual.

I recently adopted scaling-in and -out because I found that my directional bias on the day was more often than not correct, but my timing wasn't always perfect. I've wanted to be an AIAO scalper and have leaned my studies and effort over the past 2 years towards scalping as a result. What I've found though since I started journaling is that I'm pretty good at figuring which direction the market wants to move, my weakness oftentimes is timing (which I'm still working on). I threw in a golf example below that illustrates my thinking on this. Yes I still want to learn how to scalp successfully, but my overall goal is to be profitable. I can still work on my scalping technique, but if I can be more profitable leaning towards my strengths then I'd be foolish to be doing anything differently.

Take a golfer who wants to hit a driver like DJ and have a short game like Phil. This player spends most of his time on the range hitting driver and working on his flop shot. Then after a couple of months he does a meticulous study of his scorecards. This study finds that from 80-150 yards out he's consistently giving himself a makeable putt but when he's 50-80 out he's getting up and down only 40% of the time. If this golfer can recognize that the point of the game is to get the ball in the hole in the fewest shots then he can adjust his game accordingly to play to his strengths and dial down to a 3-wood off the tee giving himself 120 in rather than pounding driver every time. It's still important to work on his weaknesses but playing to his strengths will score better.



Swing changes take time, the important thing is that you're working at it.

Good luck moving forward!

I like the golf analogy! Makes sense. Thanks!

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 Tap In 
Bend, OR
 
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Popsicle View Post
@Tap In, I just want to say big thank you for a really awesome journal. The way you share both your struggles and tribulations are really inspiring and have definitely taught me a lot about both trading and trading psychology.

A big thank you to everyone who has replied and contributed their knowledge so freely too. I am not sure that you guys always realize just how much you contribute to making successful traders.

I know I could have just clicked the "Thanks" button about a thousand times, but it does not seem nearly enough for everything I have learned from this journal.

Popsicle

I am glad you are getting something out of it. I am too. I'll let the others do the heavy lifting on how to actually trade until I get there.

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 Tap In 
Bend, OR
 
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bmtrading9 View Post
Thanks @bobwest for directing to this excellent journal.

I haven't gone thru all the posts here but this what my understanding for few posts

1. First, I felt like I am reading my mind in this journal or maybe all struggling traders goes thru same stuff

2. 30K combine is the main culprit of the issues here, it is very very difficult to follow the rules and own method.

3. Seems like Tap is also suffering from the same issue like me (I may be wrong here) i.e waiting for the trend reverse then somehow miss the entry then debate if trend has gone too far to enter and wait for that reverse again...this cycle continues
yep!
This will definitely help (very easy to say but difficult to follow)

1. Do analysis etc. (seems like Tap is doing excellent job in that)

2. Put a limit order

3. Add one more contract at puke point (Thanks to @Inletcap) based on new conditions

but

definitely CL will be tough for 30K combine, we will be feeding constant money to TST while trying to get over that.

May be with QM (Mini Crude) we can scale up to 3 contracts....I did the same today

1. Got into one contract overnight thinking Europe will pop it but they didn't

2. Added one more but added it too late ( I was travelling to work)

3. Closed it for small profit

4. If I would have added it at my original add point I woulda made money...

I've traded QM before. Not a bad option if you are going for bigger targets. Thanks!

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 Tap In 
Bend, OR
 
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the long term trend is up. Areas of support below at 44.53 and 44.38. Longs until it works through yesterday's POC at 44.38


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