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Tap In's Corner
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Tap In's Corner

 
Elite Member
Bend, OR
 
Trading Experience: Intermediate
Platform: Sierra Charts, TOS
Broker/Data: TOS, Global Futures/OEC
Favorite Futures: CL, GC, NG, YM, 6E, ZN
 
Tap In's Avatar
 
Posts: 937 since Feb 2013
Thanks: 2,145 given, 1,998 received

The most important thing I say to myself every morning: "you don't have to trade today"

No matter what the market is doing, this instantly takes the pressure off.

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Elite Member
Bend, OR
 
Trading Experience: Intermediate
Platform: Sierra Charts, TOS
Broker/Data: TOS, Global Futures/OEC
Favorite Futures: CL, GC, NG, YM, 6E, ZN
 
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Posts: 937 since Feb 2013
Thanks: 2,145 given, 1,998 received

Simple strategy

Here is a simple strategy struggling traders can use to begin to turn things around:

Step 1: Lower your expectations. Resign to make money more slowly. Just focus on moving forward with your account, being patient, waiting for just the right conditions to trade, and increasing your account in small increments. Your goal should be a higher win rate. This will build your confidence. This may mean you sit on your hands for several days in a row waiting for just the right set up. You can scale up later to build quicker.

Step 2: Establish your acceptable risk per contract, per trade. Long story short, I settled on $75 per contract, including commissions. I can net three or four losses in a day at this level and still be ok with it. Trade only one contract. Scale up later.

Step 3: Size your charts commiserate with your risk. Most trader’s charts are too big for their risk. You can’t use a 5 minute trigger chart with 10 tick stops. Too big. You need to see the bumps, and humps and S/R that is relevant to your risk.

I use the three chart system: 3 minute for long term context, 30 second chart for immediate conditions, and Lance’s 2 range chart for the trigger. It took a long time for me to accept these small charts due to the influence of commonly accepted trading advice.

Step 4: Sit on your hands until just the right condition shows up. What is the right condition? My bread and butter trade is a long thrust on the 30 second chart, coming off major (3 minute) S/R, or coming out of an established range, or after a large pull back in an established trend. Then wait for a smaller pullback or pause and enter when price resumes.

Here’s are some examples:

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Until this happens I do nothing. No more anticipating break outs, no more trading in chop zones, no more trading inside of ranges, no more trading when price is moving back and forth creating “fuzzy” charts, no more trading against trends, no more trying to catch a V reversal, no more guessing, no more “try it just for kicks” trades.

This is important: until that little voice in my head says, “YOU HAVE TO TAKE THIS TRADE!”, I do not trade.

This is where experience comes in. At some point you will hear this voice. Wait for it, trust it and don’t trade until you hear it. At first it will be infrequent. I have gone weeks without taking a trade. With time it will happen more often. Remember, the goal is a higher win rate and a slowly increasing account balance.

Step 5: defend your capital, take your profits. I move to break even ASAP, usually when price has jumped out to around 1R and often times less. I will do anything I can to avoid a loss. Losses are real. Break even trades are as if I never traded at all. No harm no foul. I take a lot of BE trades and have become ok with that.

My winning trades move out and never look back. I usually take profits at around 2R, sometimes a little more if the market is really on fire. Anything over that and I am getting greedy. Be thankful you picked the right moment and didn’t take a loss, book a reasonable profit and get ready for the next opportunity.

Rinse repeat, two steps forward one step back.

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Market Wizard
virginia
 
Trading Experience: Intermediate
Platform: ninja
Favorite Futures: NQ
 
cory's Avatar
 
Posts: 5,903 since Jun 2009
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Forum Reputation: Legendary


Nice! I am on pretty much the same steps, train to be patience, train to be ok with taking loss, train to wait, one step at a time.

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Elite Member
Bend, OR
 
Trading Experience: Intermediate
Platform: Sierra Charts, TOS
Broker/Data: TOS, Global Futures/OEC
Favorite Futures: CL, GC, NG, YM, 6E, ZN
 
Tap In's Avatar
 
Posts: 937 since Feb 2013
Thanks: 2,145 given, 1,998 received

Most traders must come to a fundamental realization before they can turn things around:

You are not as good as you think you are.


Once accepted, the trader can begin to focus on the things they know they can do rather than the things they think they can do.

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Elite Member
Bend, OR
 
Trading Experience: Intermediate
Platform: Sierra Charts, TOS
Broker/Data: TOS, Global Futures/OEC
Favorite Futures: CL, GC, NG, YM, 6E, ZN
 
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Posts: 937 since Feb 2013
Thanks: 2,145 given, 1,998 received


Tap In View Post
Most traders must come to a fundamental realization before they can turn things around:

You are not as good as you think you are.


Once accepted, the trader can begin to focus on the things they know they can do rather than the things they think they can do.

Ego kept me from coming to grips with this reality for a long time.

For anyone who has traded for a while, consistent profitability is just a decision away. The moment a trader decides to trade only what they know is the moment they start making money.

While this sounds well and good, there is a 95% chance my newbie self would not hear this advice.

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Elite Member
Bend, OR
 
Trading Experience: Intermediate
Platform: Sierra Charts, TOS
Broker/Data: TOS, Global Futures/OEC
Favorite Futures: CL, GC, NG, YM, 6E, ZN
 
Tap In's Avatar
 
Posts: 937 since Feb 2013
Thanks: 2,145 given, 1,998 received

I used to try to read the market, now I just react to the market. When there is nothing to react to, I do nothing.

So far today, there has been nothing.

However, I can't help but wonder on days like today, what did Lance do?

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Trading for Fun
Chicago
 
Trading Experience: Beginner
Favorite Futures: (April 17, 2019): /ESM9 - current expectancy = (12.0667 * 0.6818) - (8.00 * 0.3182) = 5.6815 ticks
 
Posts: 187 since Feb 2019
Thanks: 266 given, 227 received


Tap In View Post
Step 3: Size your charts commiserate with your risk. Most trader’s charts are too big for their risk. You can’t use a 5 minute trigger chart with 10 tick stops. Too big. You need to see the bumps, and humps and S/R that is relevant to your risk.

Hello Tap In. Thank you for sharing this journal. Many of the strategic things you talk about in your early posts resonate with things I am struggling with now. You articulate these ideas so clearly, I look forward to reading more.

I have a couple questions about the quote above. As part of my early morning preparation, I sort of toggle between 1, 3, and 5-minute candles in order to start finding something "actionable" or comfortable. I often settle on 3 or 5 minute charts more often than 1min. But I (for now) have 8-tick stops for /ES. It does place a lot of timing-pressure on trade entry due to volatillity, but my reasoning is I'm a beginner and I want to learn strict risk-management habits and sharpening my decision-making and timing, avoiding sloppiness at all costs.

My questions are:
1) Do you mean I should consider tuning my chart to measure the current level of volatility in ticks vs my stop-loss "width/depth" in ticks?
2) Do you feel 1-minute would be more appropriate for measuring this volatility as opposed to a deeper 5-minute candle?

Sorry for my long-winded post, I hope you are trading well.

Cheers,
snax

 
 
Elite Member
Bend, OR
 
Trading Experience: Intermediate
Platform: Sierra Charts, TOS
Broker/Data: TOS, Global Futures/OEC
Favorite Futures: CL, GC, NG, YM, 6E, ZN
 
Tap In's Avatar
 
Posts: 937 since Feb 2013
Thanks: 2,145 given, 1,998 received


snax View Post
Hello Tap In. Thank you for sharing this journal. Many of the strategic things you talk about in your early posts resonate with things I am struggling with now. You articulate these ideas so clearly, I look forward to reading more.

I have a couple questions about the quote above. As part of my early morning preparation, I sort of toggle between 1, 3, and 5-minute candles in order to start finding something "actionable" or comfortable. I often settle on 3 or 5 minute charts more often than 1min. But I (for now) have 8-tick stops for /ES. It does place a lot of timing-pressure on trade entry due to volatillity, but my reasoning is I'm a beginner and I want to learn strict risk-management habits and sharpening my decision-making and timing, avoiding sloppiness at all costs.

My questions are:
1) Do you mean I should consider tuning my chart to measure the current level of volatility in ticks vs my stop-loss "width/depth" in ticks? Don't change your risk, change your chart. The higher the volatility, the smaller chart. You want to see detail. Long bars are hard to trade
2) Do you feel 1-minute would be more appropriate for measuring this volatility as opposed to a deeper 5-minute candle? 1 minute, or even 30 seconds. 5 minutes is too big a chart to see the necessary detail at your risk tolerance.

Sorry for my long-winded post, I hope you are trading well.

Cheers,
snax

Thanks, my trading charts have evolved a bit over the past year. The most significant change was reducing the size of my charts to fit with my small stop (14 tick NQ, 6 tick ES, 7 tick CL).

Answers to your questions are in red

My basic three-chart arrangement is:

-5 minute chart for long term context. I only look at this a few times a day to see where we are relative to previous days
-30 second chart for immediate context. Breakouts of ranges, trend lines, reversals, etc
-2 Range for the trigger chart. The two range shows me the consolidation patterns within the 30 second bar. These are the patterns I trade off of based on my risk.

My average trade lasts 40 seconds. A lot can happen in 5 minutes. There might be three or four trades within a single 5 minute bar that would be very difficult to identify without smaller charts.

In times of high volatility when the bars get longer I will actually make my charts smaller. I'll drop the 30 second chart down to 10 seconds so I can see the consolidations. Of course, in doing so you have to make quicker decisions.

My trading is sort of a variation of this gentleman's: @lancelottrader

Check out his great videos if you haven't already

The following 5 users say Thank You to Tap In for this post:
 
 
Elite Member
Bend, OR
 
Trading Experience: Intermediate
Platform: Sierra Charts, TOS
Broker/Data: TOS, Global Futures/OEC
Favorite Futures: CL, GC, NG, YM, 6E, ZN
 
Tap In's Avatar
 
Posts: 937 since Feb 2013
Thanks: 2,145 given, 1,998 received

I posted this in another thread. I think it is worth further elaboration since it sort of fits with the theme of my posts of late.


Tap In View Post
Becoming profitable is but a decision away.

It is when we stop trading like the trader we WANT to be and start trading like the trader we ARE.

What is this "decision"? How can I just "decide" to be profitable? Aren't I being flip?

I like golf analogies, so here goes...

The #1 golfer in the world as of this writing is Dustin Johnson, a man known for his prodigious length off the tee. I "want" to play golf like Dustin Johnson. I "want" to be able to hit 350 yard drives and reach 600 yard par 5's over water in two with a 3 iron. I "want" to do this but I don't have the skill or talent to do this.

All I can be is who I am. I'm a guy who plays pretty good golf hitting it 280 off the tee, laying up to 100 yards, and hopefully wedging it in close for birdie. Most of the time Dustin will beat me on the hole, sometimes we will tie, and on occasion I will beat him. That's the reality.

When I try to play like Dustin because I "want" to play like Dustin, I fail. Every. Single. Time.

For struggling traders who have been watching the market for a long time (years+), I will argue that you have ALL the skills and talent necessary to be profitable, right now, starting today. The problem is that how you "want" to be profitable does not line up with how you "are able" to be profitable at this moment.

I wanted to take 5 trades a day, 100 trades per month, be profitable on 65%, with 2 to 1 gain to loss ratio. I wanted to be able to "read" the market, and catch every little twist and turn. I tried, for a very, very, very long time to develop this way of trading because this is what I "wanted".

The problem was that I did not (and do not) have the talent or skill to trade this way, so I found myself failing, often, and never really getting anywhere.

Then one day it dawned on me, what would happen if I focused solely on increasing my account balance, however slowly, and traded the way I "am" capable right now at this moment? What would this look like?

Well, long story for another day, it looked like this: wait, wait, wait, wait, wait, wait, wait, wait... and then, once in a month maybe, notice a condition where all the stars were aligned, and take the trade. More times than not these trades worked and my account balance grew. Slowly. Painfully slowly. Slower than I "wanted".

That's all I was capable of doing. I didn't like it, and I continue to work to get better, but that was it.

Now let me tell you what happened once I made this "decision" to trade the way I am instead of the way I wanted. I started seeing some progress. I started to develop confidence. I started identifying more high probability situations. I started planning to increase size. I started to feel like a real trader.

I have full confidence that every person who has been trading for a while and struggling can, if patient enough, wait for and identify high probability (albeit rare) situations. Start there, make the decision. Start building the account, however slowly, and good things will follow.

The following 15 users say Thank You to Tap In for this post:
 
 
Market Wizard
west palm beach florida usa
 
Trading Experience: Advanced
Platform: ninja trader
Broker/Data: Optimus Futures/ Rithmic
Favorite Futures: Cl, TF
 
Posts: 892 since Oct 2011
Thanks: 872 given, 3,854 received



Tap In View Post
Thanks, my trading charts have evolved a bit over the past year. The most significant change was reducing the size of my charts to fit with my small stop (14 tick NQ, 6 tick ES, 7 tick CL).

Answers to your questions are in red

My basic three-chart arrangement is:

-5 minute chart for long term context. I only look at this a few times a day to see where we are relative to previous days
-30 second chart for immediate context. Breakouts of ranges, trend lines, reversals, etc
-2 Range for the trigger chart. The two range shows me the consolidation patterns within the 30 second bar. These are the patterns I trade off of based on my risk.

My average trade lasts 40 seconds. A lot can happen in 5 minutes. There might be three or four trades within a single 5 minute bar that would be very difficult to identify without smaller charts.

In times of high volatility when the bars get longer I will actually make my charts smaller. I'll drop the 30 second chart down to 10 seconds so I can see the consolidations. Of course, in doing so you have to make quicker decisions.

My trading is sort of a variation of this gentleman's: @lancelottrader

Check out his great videos if you haven't already

Hi There. Thanks for mentioning me. Hope you're doing well with your system. It sounds good.

Failure is not an option
The following 2 users say Thank You to lancelottrader for this post:

 



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