Tap In's Corner - futures io
futures io



Tap In's Corner


Discussion in Trading Journals

Updated
      Top Posters
    1. looks_one Tap In with 656 posts (1,156 thanks)
    2. looks_two bobwest with 42 posts (118 thanks)
    3. looks_3 Inletcap with 21 posts (126 thanks)
    4. looks_4 lancelottrader with 20 posts (32 thanks)
      Best Posters
    1. looks_one Inletcap with 6 thanks per post
    2. looks_two ratfink with 3.7 thanks per post
    3. looks_3 bobwest with 2.8 thanks per post
    4. looks_4 Tap In with 1.8 thanks per post
    1. trending_up 82,572 views
    2. thumb_up 1,750 thanks given
    3. group 46 followers
    1. forum 855 posts
    2. attach_file 1,600 attachments




Welcome to futures io: the largest futures trading community on the planet, with well over 125,000 members
  • Genuine reviews from real traders, not fake reviews from stealth vendors
  • Quality education from leading professional traders
  • We are a friendly, helpful, and positive community
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts
  • We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

(If you already have an account, login at the top of the page)

 
Search this Thread
 

Tap In's Corner

(login for full post details)
  #801 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received


grausch View Post
Hi @Tap In,

I have been doing a fair bit of research on optimum exit points since it is one of the weak areas of my trading. Since you mentioned the difficulty you had with maintaining a 50% win rate while using a 2:1 reward to risk ratio, I thought the following may be of interest to you.

I used various trend identification techniques, namely Donchian Channels, price straddles at certain times (like Donchian Channels, but with price as the mid point), VWAP straddles (like price straddles, but these were only implemented when price was within 5 ticks of VWAP), and some others not worth mentioning. Each day would have two trades, either a long or a short. I did not test counter-trend strategies as I never found any way to really make these work.

Stops were either 20 ticks or 30 ticks - they were mixed up in different test, but once a stop was chosen it was consistently applied for an individual test. For a 20 tick stop profit targets ranged from 2R to 6R. For a 30 tick stop they ranged from 2R to 4R. One exit point was always time-based, i.e. exit at 16h00 unless stopped out before hand.

The results tended to be quite spread out. Most of my tests showed a clear preference for a 20 tick stop - I guess if you're trading breakouts, there just isn't enough profit potential to offset the losses from the 30 tick stops. With a 20 tick stop, the 2R system performed remarkably well with a higher win% and higher profit most of the time. However, when one of the 6R or time-based exits really scored, then the 2R was left behind. 2 large winners a month would swing the results in favour of the longer stops.

Trading 1 contract after 3 months, final win % for the 2R system was around 40% with average monthly profit just over $1k. The 4R system had a win% of 25% with average monthly profit at about $500. The 6R and time based exits had the same win% as the 4R system, but average gains of about $2k and $1.5k respectively.

Moving stops to break-even did not work that well (especially on the 6R and time based exits) since I was stopped out of too many good trades. Pyramiding suffered from the same fate, and if using multiple contracts, taking the full position and scaling out provided much better results - however, when scaling out it was imperative that the high R exits were still being utilised.

To summarise - using mechanical entries that identify trend, a 50% 2:1 ratio may not be optimal and holding for larger gains seems to pay much better.

Interesting results, especially the part about 6R having the same win rate as 4R. It seems like the probabilities would be against this happening unless the sample size was too small.

I find that reaching multiples of R drops off dramatically with higher R. For example, 1R 60%, 2R 28%, 3R 12%, 4R 6%, etc. A system that reaches 6R 25% of the time would be a gold mine! Bear in mind that I do not consider it reasonable for a discretionary trader to hold a trade to 2R, for example, and let it come back to entry without taking some profit along the way. Therefore, I do not count some trades that do this and end up reaching higher multiples of R. Over 90% of my trades that reach 1R and come back to entry ultimately end up hitting my stop with no more favorable movement. I would go nuts watching a 2R trade come back to zero, so I would have to be trading mechanically and walk away to accomplish what you researched.

Thanks for the post

Started this thread Reply With Quote
The following 4 users say Thank You to Tap In for this post:
 
(login for full post details)
  #802 (permalink)
 grausch 
Luxembourg, Luxembourg
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Stocks
 
Posts: 491 since May 2012
Thanks: 1,641 given, 1,149 received


Tap In View Post
Interesting results, especially the part about 6R having the same win rate as 4R. It seems like the probabilities would be against this happening unless the sample size was too small.

I find that reaching multiples of R drops off dramatically with higher R. For example, 1R 60%, 2R 28%, 3R 12%, 4R 6%, etc. A system that reaches 6R 25% of the time would be a gold mine! Bear in mind that I do not consider it reasonable for a discretionary trader to hold a trade to 2R, for example, and let it come back to entry without taking some profit along the way. Therefore, I do not count some trades that do this and end up reaching higher multiples of R. Over 90% of my trades that reach 1R and come back to entry ultimately end up hitting my stop with no more favorable movement. I would go nuts watching a 2R trade come back to zero, so I would have to be trading mechanically and walk away to accomplish what you researched.

Thanks for the post

You're welcome - I was quite surprised at the results too.

The win rate for 2R was higher than expected. I did not think basing trades on breakouts would lead to that high a win rate and expected a number similar to yours. There seem to be certain times that were more conducive to better trends, and during certain periods, early morning trends (between 2 and 4 am) tended to be very profitable, i.e. over 50% win rate. However, this changed later on and suddenly none of those trades worked. A larger sample may lead to different results, and perhaps I was just lucky with the chosen period.

The 6R system is not really such a goldmine. It gives back a lot of profits and I have had 9 negative days in a row. Sure, average monthly profit was positive, but intra-month swings can be severe. One month the two longer terms systems were up around $4k each and they ended up at $1.5k and 1.8k each - bear in mind this was one of the better performing "systems" for that month.

Overall it was quite disappointing to see results are at best $2k a month using a single contract. Using a $20k account, that would imply risk of 2% per day and returns of 10% per month. Cutting risk to my preferred 0.5% per day, would lead to returns of 2.5% a month. These are also backtested numbers, so it would be wise to place a haircut on them and in that case, the results become even more disappointing. Guess these type of mechanical systems will struggle to beat a truly competent trader.

Reply With Quote
The following 3 users say Thank You to grausch for this post:
 
(login for full post details)
  #803 (permalink)
 Inletcap 
Murrells Inlet SC
 
Experience: Advanced
Platform: Tradestation
Trading: ES, CL, ETFs
 
Inletcap's Avatar
 
Posts: 9,158 since Dec 2012
Thanks: 9,765 given, 25,979 received


grausch View Post
Hi @Tap In,

I have been doing a fair bit of research on optimum exit points since it is one of the weak areas of my trading. Since you mentioned the difficulty you had with maintaining a 50% win rate while using a 2:1 reward to risk ratio, I thought the following may be of interest to you.

I used various trend identification techniques, namely Donchian Channels, price straddles at certain times (like Donchian Channels, but with price as the mid point), VWAP straddles (like price straddles, but these were only implemented when price was within 5 ticks of VWAP), and some others not worth mentioning. Each day would have two trades, either a long or a short. I did not test counter-trend strategies as I never found any way to really make these work.

Stops were either 20 ticks or 30 ticks - they were mixed up in different test, but once a stop was chosen it was consistently applied for an individual test. For a 20 tick stop profit targets ranged from 2R to 6R. For a 30 tick stop they ranged from 2R to 4R. One exit point was always time-based, i.e. exit at 16h00 unless stopped out before hand.

The results tended to be quite spread out. Most of my tests showed a clear preference for a 20 tick stop - I guess if you're trading breakouts, there just isn't enough profit potential to offset the losses from the 30 tick stops. With a 20 tick stop, the 2R system performed remarkably well with a higher win% and higher profit most of the time. However, when one of the 6R or time-based exits really scored, then the 2R was left behind. 2 large winners a month would swing the results in favour of the longer stops.

Trading 1 contract after 3 months, final win % for the 2R system was around 40% with average monthly profit just over $1k. The 4R system had a win% of 25% with average monthly profit at about $500. The 6R and time based exits had the same win% as the 4R system, but average gains of about $2k and $1.5k respectively.

Moving stops to break-even did not work that well (especially on the 6R and time based exits) since I was stopped out of too many good trades. Pyramiding suffered from the same fate, and if using multiple contracts, taking the full position and scaling out provided much better results - however, when scaling out it was imperative that the high R exits were still being utilised.

To summarise - using mechanical entries that identify trend, a 50% 2:1 ratio may not be optimal and holding for larger gains seems to pay much better.

Nice work- would it be possible to plug in a second entry near puke point (say 5-10t away). This is going to blow your mind what happens to the $ gain!!!

Visit my futures io Trade Journal Reply With Quote
The following 5 users say Thank You to Inletcap for this post:
 
(login for full post details)
  #804 (permalink)
 bmtrading9 
Atlanta, GA, USA
 
Experience: Advanced
Platform: MC and Jigsaw
Trading: ES, MES
 
Posts: 1,834 since Mar 2013
Thanks: 3,001 given, 2,154 received


Inletcap View Post
Nice work- would it be possible to plug in a second entry near puke point (say 5-10t away). This is going to blow your mind what happens to the $ gain!!!

I really like that idea one question though what would be your stop on both contracts? For now I am experimenting with same stop as the original but that makes me nervous bcoz now if I get stop out it will be twice the hole.

Sent from my SAMSUNG-SM-G900A using Tapatalk

Follow me on Twitter Visit my futures io Trade Journal Reply With Quote
The following 2 users say Thank You to bmtrading9 for this post:
 
(login for full post details)
  #805 (permalink)
 grausch 
Luxembourg, Luxembourg
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Stocks
 
Posts: 491 since May 2012
Thanks: 1,641 given, 1,149 received


bmtrading9 View Post
I really like that idea one question though what would be your stop on both contracts? For now I am experimenting with same stop as the original but that makes me nervous bcoz now if I get stop out it will be twice the hole.

Sent from my SAMSUNG-SM-G900A using Tapatalk

My interpretation of puke point is the original stop and I am basing my testing on that. For instance if I entered a position with a 20 tick stop, I am adding another trade halfway to that, i.e. it carries half the risk of the first contract for a total risk of 1.5R.

I am doing these tests manually so that I can compare how the trades work at different points so it might take another day. Preliminary results are very promising, but I know that the dataset has a period of chop coming up and this may change the results.

Reply With Quote
The following 4 users say Thank You to grausch for this post:
 
(login for full post details)
  #806 (permalink)
 Inletcap 
Murrells Inlet SC
 
Experience: Advanced
Platform: Tradestation
Trading: ES, CL, ETFs
 
Inletcap's Avatar
 
Posts: 9,158 since Dec 2012
Thanks: 9,765 given, 25,979 received


grausch View Post
My interpretation of puke point is the original stop and I am basing my testing on that. For instance if I entered a position with a 20 tick stop, I am adding another trade halfway to that, i.e. it carries half the risk of the first contract for a total risk of 1.5R.

I am doing these tests manually so that I can compare how the trades work at different points so it might take another day. Preliminary results are very promising, but I know that the dataset has a period of chop coming up and this may change the results.

Thanks and yes- puke point = stop point!

Visit my futures io Trade Journal Reply With Quote
The following 2 users say Thank You to Inletcap for this post:
 
(login for full post details)
  #807 (permalink)
 grausch 
Luxembourg, Luxembourg
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Stocks
 
Posts: 491 since May 2012
Thanks: 1,641 given, 1,149 received

Completed testing now and I am ashamed to admit that my initial profit calculations had an incorrect formula that overstated the results. @Tap In - you were right to be skeptical of the results, they were significantly overstated.

In any case, I have redone the spreadsheets using adding in an easy way to test whether adding on retracements could work. Entries were determined by straddling price at 2am. I have not retested every single system I tried, since it takes quite a while and most of the results were not really that exciting. Trades were held until stops or targets were hit or until 16h00.

This time, the win% is more in line with what I would expect it to be. The best performing systems tend to be those that hold for 6R or more even if the win % was lower.

Since this evolved out of a discussion on pyramiding or averaging down vs a single contract, I will give a summary of the results of using a 20 tick stop and adding once the position has gone 10 ticks against it vs just trading a fixed number of contracts. Results are for the period 1 June 2016 to 31 August 2016 using the CL contract in Ninjatrader (thus I am not sure of how the contract is put together and whether or not it is a continuous contract). Spreadsheet is attached for those who are interested in reviewing the detail. Testing was done manually so there could be some errors, but if there are errors, the impact should be immaterial.

Results with averaging down at the following profit targets as follows:
40 tick target = -$7,715
80 tick target = -$10,655
120 tick target = -$6,915
16h00 exit = -$5,120

Results using just one contract with the following profit targets:
40 tick target = -$5,015
80 tick target = -$6,475
120 tick target = -$1,760
16h00 exit = -$2,250

All of the profit targets still yielded negative results, but averaging down yielded significantly worse results - taking stops on higher risk, when profits were not always realised on the bigger position just hurt returns significantly. At the same time, with the initial batch of "faulty" testing, pyramding as a trade works suffered from the same problem.

In view of these results, I think that trading multiple contracts is not as essential to trading success as I previously thought. Trading a fixed number of contracts could potentially lead to better results than adding to a position. Scaling out could smooth the equity curve, but the dip in profitability in 80 tick targets makes me unsure of how I would actually scale out.

@Tap In - Apologies if I side-tracked your journal a bit, but based on the previous discussions, I thought you would appreciate seeing these results.

Attached Files
Register to download File Type: xlsx CL Short-term 20t stop add.xlsx (131.3 KB, 3 views)
Reply With Quote
The following 4 users say Thank You to grausch for this post:
 
(login for full post details)
  #808 (permalink)
 ratfink 
Birmingham UK
 
Experience: Intermediate
Platform: NinjaTrader
Broker: TST/Rithmic
Trading: YM/Gold
 
ratfink's Avatar
 
Posts: 3,651 since Dec 2012
Thanks: 17,422 given, 8,403 received


grausch View Post
In any case, I have redone the spreadsheets using adding in an easy way to test whether adding on retracements could work. Entries were determined by straddling price at 2am. I have not retested every single system I tried, since it takes quite a while and most of the results were not really that exciting. Trades were held until stops or targets were hit or until 16h00.

This is interesting but doesn't that sort of arbitrary entry condition make the whole exercise rather inconclusive? Unless I'm missing something.

Cheers

Travel Well
Visit my futures io Trade Journal Reply With Quote
The following 4 users say Thank You to ratfink for this post:
 
(login for full post details)
  #809 (permalink)
 grausch 
Luxembourg, Luxembourg
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Stocks
 
Posts: 491 since May 2012
Thanks: 1,641 given, 1,149 received


ratfink View Post
This is interesting but doesn't that sort of arbitrary entry condition make the whole exercise rather inconclusive? Unless I'm missing something.

Cheers

Well, the idea was to identify a breakout with the hope that it would lead to a larger trend. I had used Donchian channels in some tests, VWAP straddles once price was within a reasonable range, VWAP crossovers and price straddles at specific times. These lead to easier back testing than trend lines and support and resistance lines, which is why I chose them.

As stated before, I did not test any counter-trend strategies as I found all of the indicators very unreliable in the past. Perhaps counter-trend strategies would benefit more from averaging down. I do not know - I merely investigated one aspect. I do think that the result should at the very least should raise the question of whether scaling in is that much more superior to trading a fixed number of contracts.

Reply With Quote
The following 4 users say Thank You to grausch for this post:
 
(login for full post details)
  #810 (permalink)
 ratfink 
Birmingham UK
 
Experience: Intermediate
Platform: NinjaTrader
Broker: TST/Rithmic
Trading: YM/Gold
 
ratfink's Avatar
 
Posts: 3,651 since Dec 2012
Thanks: 17,422 given, 8,403 received


grausch View Post
As stated before, I did not test any counter-trend strategies as I found all of the indicators very unreliable in the past. Perhaps counter-trend strategies would benefit more from averaging down. I do not know - I merely investigated one aspect. I do think that the result should at the very least should raise the question of whether scaling in is that much more superior to trading a fixed number of contracts.

I would certainly expect those sort of standard indicators to perform as you found. I am also a scaling-in sceptic, but I have to be an agnostic until we can test it against a daily thesis, rather than arbitrary levels. And nope, as you said, that's not easy. Enough smart traders make it work to decide for themselves, but the rest of us still don't know if that's because scaling-in is inherently a good idea or because they just have good theses, although we do have our suspicions...

Cheers

Travel Well
Visit my futures io Trade Journal Reply With Quote
The following 4 users say Thank You to ratfink for this post:
 
(login for full post details)
  #811 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received


grausch View Post
Completed testing now and I am ashamed to admit that my initial profit calculations had an incorrect formula that overstated the results. @Tap In - you were right to be skeptical of the results, they were significantly overstated.

In any case, I have redone the spreadsheets using adding in an easy way to test whether adding on retracements could work. Entries were determined by straddling price at 2am. I have not retested every single system I tried, since it takes quite a while and most of the results were not really that exciting. Trades were held until stops or targets were hit or until 16h00.

This time, the win% is more in line with what I would expect it to be. The best performing systems tend to be those that hold for 6R or more even if the win % was lower.

Since this evolved out of a discussion on pyramiding or averaging down vs a single contract, I will give a summary of the results of using a 20 tick stop and adding once the position has gone 10 ticks against it vs just trading a fixed number of contracts. Results are for the period 1 June 2016 to 31 August 2016 using the CL contract in Ninjatrader (thus I am not sure of how the contract is put together and whether or not it is a continuous contract). Spreadsheet is attached for those who are interested in reviewing the detail. Testing was done manually so there could be some errors, but if there are errors, the impact should be immaterial.

Results with averaging down at the following profit targets as follows:
40 tick target = -$7,715
80 tick target = -$10,655
120 tick target = -$6,915
16h00 exit = -$5,120

Results using just one contract with the following profit targets:
40 tick target = -$5,015
80 tick target = -$6,475
120 tick target = -$1,760
16h00 exit = -$2,250

All of the profit targets still yielded negative results, but averaging down yielded significantly worse results - taking stops on higher risk, when profits were not always realised on the bigger position just hurt returns significantly. At the same time, with the initial batch of "faulty" testing, pyramding as a trade works suffered from the same problem.

In view of these results, I think that trading multiple contracts is not as essential to trading success as I previously thought. Trading a fixed number of contracts could potentially lead to better results than adding to a position. Scaling out could smooth the equity curve, but the dip in profitability in 80 tick targets makes me unsure of how I would actually scale out.

@Tap In - Apologies if I side-tracked your journal a bit, but based on the previous discussions, I thought you would appreciate seeing these results.

Hey, no problem. I enjoy these types of discussions. Thanks for doing all that work. I am sure it will help you in the long run.

The more I go along in this endeavor the more I am convinced that money management is secondary to whether or not one is picking quality trades. Money management will either maximize or minimize the potential in one's trading, so it is important, but without good potential in the trades no amount of money management, scaling in, scaling out or anything else will make money.

There has been much discussion about the benefits of scaling in to reduce basis. I can see these benefits, but it still does not relieve the trader from the responsibility of picking quality trades. If the trader cannot pick more trades that go in his favor than go against him, all he will do with scaling is lose more money. Some have even said that it changed their trading. Did it really? Or did they just become more experience and better at picking quality trades?

What is a quality trade? Simply put, it is a trade that moves in your favor enough to take adequate profits before moving against you forcing you out at a loss. Whether a trader enters on one contract, or scales in with multiple contracts, he will have a "basis" on his entries. Whether a trader is all out on his exits, or scales out his exits, he will have a "basis" on his exits. Over a sampling of trades, how the basis of entries compares to the basis of exits in relation to the original puke point, will determine long term success. If the trader is being forced out, either with a mental or hard stops, 50% of the time or more he will have a very difficult time making consistent money.

The best way that I have come up with to measure the quality of my trading is to track how often price gets to 1R before it reaches -1R. I know I sound like a broken record with this but I believe it to be true. Keep in mind this is just a measuring tool. It does not mean I take profits at 1R. It does not mean I manage my trades based on 1R or any other multiple of R. It's just a measuring devise. It does not have anything to do with how I actually managed a trade. It is simply an objective tool that answers the question, "am I picking trades that move in my favor more often than they move against me?"

Over a large sample, a coin flip would yield 50%. I do not believe one can scale in or out in such a way as to make money on coin flips. I believe you have to be much better than a coin flip at picking trades to make money in trading. I am open to being wrong on this but I have yet to see proof.

This past week I attempted to hold trades for higher multiples of R. I was about 50% to 1R, so my win/loss was no better than it has been, and no better than a coin flip. Instead of taking profit at 1R, I held for more. The result is that I lost a lot more money than I would have if I had taken all profits at 1R. Why? Because I let some trades that were in the money come back for losses, and I never caught a big move.

Here is an exercise for anyone who is interested, especially those who are struggling: For the next week, month or number of trades, track your trades the way I do. Note your basis upon entry (whether all in or scale in), note the distance of your entry to your stop (whether mental or hard stop). This is your R. Now follow price until it either hits your stop or hits +1R. Do this irrespective of whether or not you stayed in the trade. Record the results. At the end of the period calculate what percentage of trades reached +1R before -1R.

Was it more than 50% yet you are still not profitable? Perhaps you are holding trades too long. Maybe you should consider taking all profits at 1R until your percentage is higher.

Is it 50% or less, yet you still think your problems are in your money management or psychology? Perhaps you are focusing on the wrong thing, and you need more work picking better trades.

Are you a profitable trader and it is less than 50%? I want to talk to you!

Started this thread Reply With Quote
The following 6 users say Thank You to Tap In for this post:
 
(login for full post details)
  #812 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received


ratfink View Post
Enough smart traders make it work to decide for themselves, but the rest of us still don't know if that's because scaling-in is inherently a good idea or because they just have good theses, although we do have our suspicions...

Cheers

Well said. Obviously I am in the camp that the thesis reigns supreme, which is why trading is hard. It would be a much easier endeavor if something as simple as scaling were the answer.

Started this thread Reply With Quote
The following 4 users say Thank You to Tap In for this post:
 
(login for full post details)
  #813 (permalink)
 bobwest 
Site Moderator
Sarasota FL
 
Experience: Advanced
Platform: Sierra Chart, NinjaTrader
Trading: ES, YM
 
bobwest's Avatar
 
Posts: 6,492 since Jan 2013
Thanks: 49,155 given, 21,795 received


grausch View Post
Well, the idea was to identify a breakout with the hope that it would lead to a larger trend. I had used Donchian channels in some tests, VWAP straddles once price was within a reasonable range, VWAP crossovers and price straddles at specific times. These lead to easier back testing than trend lines and support and resistance lines, which is why I chose them.

As stated before, I did not test any counter-trend strategies as I found all of the indicators very unreliable in the past. Perhaps counter-trend strategies would benefit more from averaging down. I do not know - I merely investigated one aspect. I do think that the result should at the very least should raise the question of whether scaling in is that much more superior to trading a fixed number of contracts.


ratfink View Post
I would certainly expect those sort of standard indicators to perform as you found. I am also a scaling-in sceptic, but I have to be an agnostic until we can test it against a daily thesis, rather than arbitrary levels. And nope, as you said, that's not easy. Enough smart traders make it work to decide for themselves, but the rest of us still don't know if that's because scaling-in is inherently a good idea or because they just have good theses, although we do have our suspicions...

Cheers

Well, I agree with everything said so far.

I do have a real level of doubt about using a backtesting type method to address the question. Basically, you need to start out with some strategy that you hope will apply, but you will also have to simplify things down so you will know when it tells you to do something.... I do not think that people who do scale in, such as @Inletcap, do it that way.

In effect, the backtesting is an attempt to approximate what a skilled discretionary trader would do, sizing up all the things (whatever they are) that he would size up to make the decision. I do think the backtesting idea is a good one to try, and maybe the results will tell us something, but I am pretty sure that it doesn't capture what these guys actually are doing.

So that limits what it is able to give us.

Just my cent and a half on this one. It is very interesting, but I really have no idea what is the best approach when it comes either to scaling or to testing a scaling hypothesis.

Bob.

Visit my futures io Trade Journal Reply With Quote
The following 4 users say Thank You to bobwest for this post:
 
(login for full post details)
  #814 (permalink)
 Inletcap 
Murrells Inlet SC
 
Experience: Advanced
Platform: Tradestation
Trading: ES, CL, ETFs
 
Inletcap's Avatar
 
Posts: 9,158 since Dec 2012
Thanks: 9,765 given, 25,979 received

@grausch I really appreciate your work on this- thank you!

Now, if someone could just share a mechanical system that "works", we could really dig in and do some back testing

I say this not being rude to @grausch, that's why I gave a sicere thanks first but we are all aware that back testing has it limits as one simply cannot input all the variables ( contextual clues) that a discretionary trader takes into account before executing and I've yet to be shown a mechanical system that works in the real world ( yes, I too have 100's that work on SIM- I'm talking the real real world with realistic drawdowns and consistent results). Without a truly dynamic entry, target and exit system, it is just too difficult to gauge the validity.

Visit my futures io Trade Journal Reply With Quote
The following 3 users say Thank You to Inletcap for this post:
 
(login for full post details)
  #815 (permalink)
 grausch 
Luxembourg, Luxembourg
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Stocks
 
Posts: 491 since May 2012
Thanks: 1,641 given, 1,149 received


Inletcap View Post
@grausch I really appreciate your work on this- thank you!

Now, if someone could just share a mechanical system that "works", we could really dig in and do some back testing

I say this not being rude to @grausch, that's why I gave a sicere thanks first but we are all aware that back testing has it limits as one simply cannot input all the variables ( contextual clues) that a discretionary trader takes into account before executing and I've yet to be shown a mechanical system that works in the real world ( yes, I too have 100's that work on SIM- I'm talking the real real world with realistic drawdowns and consistent results). Without a truly dynamic entry, target and exit system, it is just too difficult to gauge the validity.

@Inletcap - No problem. Several of us posted in this journal that trading multiple contracts was essential to success. I also posted that I found @Tap In's number of trades reaching 1R, 2R, etc. too low and that it should be possible to do much better. This is merely my attempt at putting my money where my mouth is.

Just to clarify - My goal was not to find systems that don't work... Once I corrected the profit formula and manually entered the number of profitable trades per day (was automatic previously based on the incorrect profit formula) none of the aforementioned systems registered a profit. The VWAP crossover / straddle was one of my favourites, but it ended up being the worst performer after correcting these items.

It would be great if someone could share a profitable system that we could perform the analysis on. FWIW, while I was performing this testing, I ran a pen and paper test alongside it using 8R - 12R targets, holding trades until Friday's close and only doing one trade a week. That was actually quite profitable, but the sample was too small for this to be conclusive, and this is @Tap In's journal and he is aiming to get funded by TST which prohibits holding overnight. Therefore I would propose to keep the discussion within that context.

I agree that a skilled trader could of course use pyramiding or averaging down to his advantage. Plenty of evidence of that in some of the journals here. I still think being able to vary size based on my assessment of the market is a definite asset, but after this testing, I won't go so far as to say that it is absolutely critical to success. In my own trading I am experiencing a higher percentage of stop-outs by pyramiding and moving stops up to keep the risk constant. That erodes a lot of the profit potential from landing some nice $4k days and it made this type of testing very interesting for me as well.

Reply With Quote
The following 4 users say Thank You to grausch for this post:
 
(login for full post details)
  #816 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

After a good sized up move in Globex, price has consolidated between layers of support and resistance. We may bounce around off these areas today unless OTF players get involved.



end of day


Started this thread Reply With Quote
The following 2 users say Thank You to Tap In for this post:
 
(login for full post details)
  #817 (permalink)
 Inletcap 
Murrells Inlet SC
 
Experience: Advanced
Platform: Tradestation
Trading: ES, CL, ETFs
 
Inletcap's Avatar
 
Posts: 9,158 since Dec 2012
Thanks: 9,765 given, 25,979 received


ratfink View Post
I would certainly expect those sort of standard indicators to perform as you found. I am also a scaling-in sceptic, but I have to be an agnostic until we can test it against a daily thesis, rather than arbitrary levels. And nope, as you said, that's not easy. Enough smart traders make it work to decide for themselves, but the rest of us still don't know if that's because scaling-in is inherently a good idea or because they just have good theses, although we do have our suspicions...

Cheers


Tap In View Post
Well said. Obviously I am in the camp that the thesis reigns supreme, which is why trading is hard. It would be a much easier endeavor if something as simple as scaling were the answer.

@ratfink

I think a lot of people feel that scaling in "arbitrary levels" based on a thesis subjects one to massive drawdowns and big upswings and requires balls of steele but I promise you that one can find a "consistent approach" to all the madness. "...because scaling-in is inherently a good idea or because they just have good theses" || "It would be a much easier endeavor if something as simple as scaling were the answer" - I've said a bunch of times- you don't have to be right, but you have to trade your thesis- scaling in and out of your thesis eliminates the pressure of getting it right and provides the opportunity to let it run when you are. Consistency and asymmetric returns can be achieved... Here is some proof that it can "work" from the very recent past- no cherry picking conditions or curve fitting these numbers on a backtest


Visit my futures io Trade Journal Reply With Quote
The following 7 users say Thank You to Inletcap for this post:
 
(login for full post details)
  #818 (permalink)
 ratfink 
Birmingham UK
 
Experience: Intermediate
Platform: NinjaTrader
Broker: TST/Rithmic
Trading: YM/Gold
 
ratfink's Avatar
 
Posts: 3,651 since Dec 2012
Thanks: 17,422 given, 8,403 received


Inletcap View Post
I've said a bunch of times- you don't have to be right, but you have to trade your thesis- scaling in and out of your thesis eliminates the pressure of getting it right and provides the opportunity to let it run when you are. Consistency and asymmetric returns can be achieved... Here is some proof that it can "work" from the very recent past- no cherry picking conditions or curve fitting these numbers on a backtest

The consistency of both your returns and your fantastic input to FIO tells us all we need to know as to whether the combination works - greatly appreciated from all of us that's for sure. Our doubting Thomas questions relate to which is more important, the quality of the thesis, the quality of the entries or the use of scaling-in as a methodology.

That said, I think what you've just clarified for me, that I have not seen well enough before, is the potential for pressure/stress reduction that it can offer, and that just might be more important than any relative weighting between the three.

[Except that you need good entries else you're going to get a lot of stop-outs, and you still need a good thesis else you're not going to get the asymmetric returns. After that scaling-in might help too. ]

I will investigate this more for my own benefit over the next year.

Cheers

Travel Well
Visit my futures io Trade Journal Reply With Quote
The following 3 users say Thank You to ratfink for this post:
 
(login for full post details)
  #819 (permalink)
 Inletcap 
Murrells Inlet SC
 
Experience: Advanced
Platform: Tradestation
Trading: ES, CL, ETFs
 
Inletcap's Avatar
 
Posts: 9,158 since Dec 2012
Thanks: 9,765 given, 25,979 received


ratfink View Post
The consistency of both your returns and your fantastic input to FIO tells us all we need to know as to whether the combination works - greatly appreciated from all of us that's for sure. Our doubting Thomas questions relate to which is more important, the quality of the thesis, the quality of the entries or the use of scaling-in as a methodology.

That said, I think what you've just clarified for me, that I have not seen well enough before, is the potential for pressure/stress reduction that it can offer, and that just might be more important than any relative weighting between the three.

[Except that you need good entries else you're going to get a lot of stop-outs, and you still need a good thesis else you're not going to get the asymmetric returns. After that scaling-in might help too. ]

I will investigate this more for my own benefit over the next year.

Cheers

Excellent- you got from my posting that exactly what I wanted to convey! Was a little afraid of how my message would be perceived - sometimes seeing is believing

Visit my futures io Trade Journal Reply With Quote
The following 6 users say Thank You to Inletcap for this post:
 
(login for full post details)
  #820 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

The trend overnight is down but price sits right at Friday' 's low. It could go either way from here. A push through to look for shorts and a bounce for longs. The longs may not have far to go since there are a couple of immediate areas of resistance to work through, but if they get through these it could get back to 45.00.



end of day


Started this thread Reply With Quote
The following 3 users say Thank You to Tap In for this post:
 
(login for full post details)
  #821 (permalink)
 Inletcap 
Murrells Inlet SC
 
Experience: Advanced
Platform: Tradestation
Trading: ES, CL, ETFs
 
Inletcap's Avatar
 
Posts: 9,158 since Dec 2012
Thanks: 9,765 given, 25,979 received

This link is kind of a continuation of things that have been discussed on here recently (not trying to take anyone away from your journal @Tap In). Am member ask how one could trade with a thesis and scaling without big drawdowns for use in TST- replies follow his post linked here


Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to Inletcap for this post:
 
(login for full post details)
  #822 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

Inventory day. The market rallied off a significant swing yesterday and into the globex hours. My two scenarios have it either probing lower at the open to find buyers at some of the support areas marked to continue the rally, or starting up right away to test areas above.



end of day


Started this thread Reply With Quote
The following 3 users say Thank You to Tap In for this post:
 
(login for full post details)
  #823 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

Big gap up overnight. It has not hit anything that I can see represents significant resistance so my bias is long until it drops through the 45.58 area. I will be looking for pullback opportunities.



end of day:


Started this thread Reply With Quote
The following 3 users say Thank You to Tap In for this post:
 
(login for full post details)
  #824 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

Price tested way down into Wednesday's range then bounced back to retest yesterday's high. It is siting inside yesterday's congestion area from 46.10 to 46.52. We have spent a lot of time in this area so I expect that whichever way it breaks it could go far. Longs above 46.55, shorts below 45.98, range trading in between.


Started this thread Reply With Quote
The following 3 users say Thank You to Tap In for this post:
 
(login for full post details)
  #825 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

The market is currently back testing Wednesday's POC after a big sell off Friday. The two scenarios have it either bouncing off the POC and continuing down or breaking through the POC and continuing to take back some of Friday's sell off.


Started this thread Reply With Quote
The following 2 users say Thank You to Tap In for this post:
 
(login for full post details)
  #826 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

After retracing most of Friday's sell off yesterday, the market has once again sold off in the Globex session. We are near Friday's POC and RTH low so I would expect price to eventually get down there to test those areas.

Bias is short and looking for a retrace to resistance. If price holds above yesterday's RTH low it would be a signal to look for longs.



End of day: Red scenario played out. Price did test the lower levels mentioned, then had a tradable bounce


Started this thread Reply With Quote
The following user says Thank You to Tap In for this post:
 
(login for full post details)
  #827 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

Price has drifted upward in the globex. It is above yesterday's POC. As long as it stays above the POC I will have a long bias. There is a big gap to fill from Monday to the upside.

A break below and I will be leaning to the short side.



end of day


Started this thread Reply With Quote
The following 3 users say Thank You to Tap In for this post:
 
(login for full post details)
  #828 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

After a tremendous run up from the inventory report yesterday price is consolidating in a large range of around 85 ticks during Globex. My bias will be long, expecting the market to test higher. Below 46.60 may signal a desire to test lower levels but there are a lot of support areas to react off of.

If it gets high enough there is a significant swing high at 48.39.



end of day


Started this thread Reply With Quote
The following 2 users say Thank You to Tap In for this post:
 
(login for full post details)
  #829 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

Price continues to push up to the major swing created on 9/8 at 48.39. My bias is long but I will be looking for a good sized reaction off that swing high.



end of day


Started this thread Reply With Quote
The following user says Thank You to Tap In for this post:
 
(login for full post details)
  #830 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

The market is up in the globex session and basing in a 45 tick channel. Bias is long until we get through the junk in the 48.00 area. There are a couple areas of support for long trades shown. There is a major swing up around the 49.15 area to be aware of.



end of day. Green scenario was closest to the day's action


Started this thread Reply With Quote
The following 3 users say Thank You to Tap In for this post:
 
(login for full post details)
  #831 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

Price is stair stepping upward toward August's high at 50.00. The days are starting to bunch up. There are a lot of high volume nodes below to act as support so my bias is till slightly long. If price begins to blow through the POCs of the last few days it will be time to switch bias to the short side.



end of day


Started this thread Reply With Quote
The following user says Thank You to Tap In for this post:
 
(login for full post details)
  #832 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

Price is sneaking up on a couple of major swings from August (thick yellow line and black line). Every 5 to 10 ticks there is heavy trading and then another level higher is established. I can only surmise that smart money is either liquidating or establishing positions, or both, as the market approaches the two resistance levels above.

Of course this is pure speculation and therefore I will try not to get too attached to this theory. In addition, today is inventory day which can blow all scenarios out the window in a matter of seconds. For now I am long biased until price reaches one of these levels or a clear reversal takes place in the mean time.



end of day


Started this thread Reply With Quote
The following user says Thank You to Tap In for this post:
 
(login for full post details)
  #833 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

The market is trading above its August high. Bias is long and looking for support for entries.



end of day, the red scenario


Started this thread Reply With Quote
The following 2 users say Thank You to Tap In for this post:
 
(login for full post details)
  #834 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

Price continues to work higher. On the daily chart we are in an area of previous congestion (not shown) from a couple of months ago. In the globex hours price is bouncing in a 70 ticks range between 50.00 and 50.70. Currently we are hovering around yesterday's POC. My bias is neutral at this point so I will have to wait for order flow signals around the POC and the edges of the ranges for clues.


Started this thread Reply With Quote
 
(login for full post details)
  #835 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

A powerful move in globex has taken back most of Friday's sell off. Long bias until evidence to the contrary.



end of day



Started this thread Reply With Quote
The following user says Thank You to Tap In for this post:
 
(login for full post details)
  #836 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

Price has tested some lower areas of yesterday's rally and is working its way back towards yesterday's RTH POC. There are a couple of scenarios depending on how it reacts if it gets to the POC. My bias is fairly neutral this morning.


Started this thread Reply With Quote
 
(login for full post details)
  #837 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

The market is in the range from the past two days. There is potential support and resistance all over the place so there are many options. Attached are a few of the options, but I will really just be looking for order flow clues for trade selection in both directions today.



end of day


Started this thread Reply With Quote
The following user says Thank You to Tap In for this post:
 
(login for full post details)
  #838 (permalink)
 michaelleemoore 
Market Wizard
Missoula, MT Nɫʔay(ccstm)
 
Experience: Advanced
Platform: NinjaTrader
Broker: NinjaTrader
Trading: CL, ES
 
michaelleemoore's Avatar
 
Posts: 3,436 since Nov 2012
Thanks: 5,542 given, 12,202 received


Tap In View Post
The market is in the range from the past two days. There is potential support and resistance all over the place so there are many options. It is inventory day so much can change after the report. Attached are a few of the options, but I will really just be looking for order flow clues for trade selection in both directions today.

remember, the EIA report doesn't come out until Thursday at 11 EST because of the holiday.

Follow me on Twitter Visit my futures io Trade Journal Reply With Quote
 
(login for full post details)
  #839 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received


michaelleemoore View Post
remember, the EIA report doesn't come out until Thursday at 11 EST because of the holiday.

oh right. Thanks!

Started this thread Reply With Quote
 
(login for full post details)
  #840 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

There is a stacked RTH POC at 49.80 to get through to the downside and the lows of Tuesday and Tuesday's POC to get through to the upside. In between I'll be trading S/R and order flow both ways.



end of day


Started this thread Reply With Quote
The following user says Thank You to Tap In for this post:
 
(login for full post details)
  #841 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 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.

Started this thread Reply With Quote
The following 9 users say Thank You to Tap In for this post:
 
(login for full post details)
  #842 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

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:






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.

Started this thread Reply With Quote
The following 18 users say Thank You to Tap In for this post:
 
(login for full post details)
  #843 (permalink)
 cory 
the coin hunter
virginia
 
Experience: Intermediate
Platform: ninja
Trading: NQ
 
cory's Avatar
 
Posts: 6,046 since Jun 2009
Thanks: 857 given, 7,918 received

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.

Reply With Quote
The following 5 users say Thank You to cory for this post:
 
(login for full post details)
  #844 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 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.

Started this thread Reply With Quote
The following 9 users say Thank You to Tap In for this post:
 
(login for full post details)
  #845 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 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.

Started this thread Reply With Quote
The following 13 users say Thank You to Tap In for this post:
 
(login for full post details)
  #846 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 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?

Started this thread Reply With Quote
The following 5 users say Thank You to Tap In for this post:
 
(login for full post details)
  #847 (permalink)
 snax 
Legendary Market Wizard
Chicago
 
Experience: Beginner
Platform: Sierra Chart
Broker: Edge Clear
Trading: MES
 
snax's Avatar
 
Posts: 1,596 since Feb 2019
Thanks: 6,391 given, 6,398 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

Visit my futures io Trade Journal Reply With Quote
 
(login for full post details)
  #848 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 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

Started this thread Reply With Quote
The following 5 users say Thank You to Tap In for this post:
 
(login for full post details)
  #849 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 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.

Started this thread Reply With Quote
The following 16 users say Thank You to Tap In for this post:
 
(login for full post details)
  #850 (permalink)
 lancelottrader 
Legendary Market Wizard
west palm beach florida usa
 
Experience: Advanced
Platform: ninja trader
Broker: Optimus Futures/ Rithmic
Trading: NQ
 
Posts: 1,049 since Oct 2011
Thanks: 1,034 given, 4,820 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
Reply With Quote
The following 2 users say Thank You to lancelottrader for this post:
 
(login for full post details)
  #851 (permalink)
 MWG86 
Market Wizard
Winnipeg, MB Canada
 
Experience: Intermediate
Platform: Sierra Chart
Broker: Ironbeam with CQG via Optimus
Trading: MES
 
MWG86's Avatar
 
Posts: 688 since Jul 2015
Thanks: 2,013 given, 1,522 received


Tap In View Post
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.

Sounds familiar...


MWG86 View Post
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.



Glad you're seeing success, keep it up!

Visit my futures io Trade Journal Reply With Quote
The following 4 users say Thank You to MWG86 for this post:
 
(login for full post details)
  #852 (permalink)
 Grantx 
Legendary no drama Llama
Reading UK
 
Experience: None
 
Posts: 1,787 since Oct 2016
Thanks: 2,807 given, 5,027 received

Great journal man. Well done for finding success and thanks for sharing your thoughts.

Visit my futures io Trade Journal Reply With Quote
The following 3 users say Thank You to Grantx for this post:
 
(login for full post details)
  #853 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

The following is more of the same, a continuing theme that I seem to have to keep reminding myself of:

A recent discussion in another thread on the number one reason most traders fail has caused me to think more deeply about my own trading.

The premise of the thread is that the #1 reason most traders fail is because they have an unhealthy need to be right on every trade. This need to be right causes hesitation and fear which adversely effects results. As the argument goes, they should think more probablistically over a series of trades rather than live and die by the results of each trade.

My argument is that the number one reason most traders fail is they never develop a tradable edge. Because of this, if more traders traded with a more probabilistic mindset, and executed more boldly on their perceived "edge", they would actually do worse because most traders don't have the edge they think they have.

This got me to think more deeply about my own edge. I've had a run of losses in the past few months because I have been trying to develop a more rules based style of trading. I get lost on these tangents every once in a while because I'm naturally drawn to the idea of a trading style that takes judgment and feel out of the equation. Perhaps it is the constant pressure of having to always be "on" that eventually gets to me, and a rules based approach takes some of this pressure off. "When A, B, C happens, go long. When D, E, F happens, sell."

The problem is, I have never been able to come up with any rules based plan worth a damn, and every time I go off on these tangents I end up going backwards in my account, or wasting precious time not trading the way I should be trading.

So how should I be trading? Well, I have concluded that my "edge", if you will, is the freedom to NOT TRADE. In other words, not execute, not take that next trade, to pass if I'm not feeling it, to filter.

My advantage (to the extent that it is), that no algo can take from me, that no big shark can use against me, is my ability to stay out of the market. In that way they can't touch me. They can't chop me up unless I let them. I don't have to blindly follow some suicidal plan that has me in deep drawdown. I don't have to endure loss after loss in chop while my "formula" attempts to get me in to the next trend. I can wait, and wait, and wait until the market screams at me to go.

For this reason, in thinking back on the times that I have performed best, it is precisely when I have concentrated on being "right" on the next trade that I am at my best (while keenly aware that I won't be right 100% of the time). If I only take trades where I have a high degree of confidence, I have a better chance of taking only the best trades and therefore causing the aggregate of trades to have an expectancy in my favor.

I see a lot of traders beating themselves up for not executing on their plan. In many cases their plan is not worth executing on in the first place (which might subconsciously be why they don't execute!). I believe they would be better off learning to spot, and wait patiently for, moments in the market that they can exploit with a high level of certainty of success. By taking only trades that they are very confident in, they'll have a better chance at seeing a positive aggregate.

To this end, the following, are some of the things I will focus on in 2020:

1) Never take a trade in which I am not extremely confident. I must feel it in my gut. Doing this will give me a better than 50% chance of being successful. This is my edge.

2) Never fret over "missed" trades. If I decide, for any reason, not to take a trade I must live peacefully with the decision.

3) Understand that a lot of time might go by between trades. Live peacefully with this.

4) Do not lament missing great days of movement. You didn't see a trade that you liked. Live peacefully with this.

Started this thread Reply With Quote
The following 12 users say Thank You to Tap In for this post:
 
(login for full post details)
  #854 (permalink)
 GruttePier 
Legendary Market Wizard
Amsterdam, The Netherlands
 
Experience: Intermediate
Platform: Ninjatrader 8
Broker: NinjaTrader Brokerage
Trading: CL, ES
 
GruttePier's Avatar
 
Posts: 1,777 since Dec 2013
Thanks: 4,516 given, 8,672 received

Good to see you back buddy!

I don't know what your profession is, but I think trading is even more difficult for traders with a rules-based profession like software developer, compliancy, controller, etc. I'm working in ICT myself and have struggled a long time with rule-based trading methods. When Ed told me to create a bias for the trading session, I realized this was very far outside my comfort zone. Until then I was always thinking in rules and adding/changing rules in my trading. I believe that in time you develop some kind of intuition to know when your rules work or when they don't. I guess that's why some call trading an art. It also explains why developing a automated rule-based trading system is so difficult.
So, yeah, I think you're on the right path realizing that your edge is not to trade while your rules say so trade.

Good luck man.

Visit my futures io Trade Journal Reply With Quote
The following 6 users say Thank You to GruttePier for this post:
 
(login for full post details)
  #855 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received


GruttePier View Post
Good to see you back buddy!

I don't know what your profession is, but I think trading is even more difficult for traders with a rules-based profession like software developer, compliancy, controller, etc. I'm working in ICT myself and have struggled a long time with rule-based trading methods. When Ed told me to create a bias for the trading session, I realized this was very far outside my comfort zone. Until then I was always thinking in rules and adding/changing rules in my trading. I believe that in time you develop some kind of intuition to know when your rules work or when they don't. I guess that's why some call trading an art. It also explains why developing a automated rule-based trading system is so difficult.
So, yeah, I think you're on the right path realizing that your edge is not to trade while your rules say so trade.

Good luck man.

Tax preparer in current profession, engineer by education, but spent a lot of my career in client relations and contract negotiation, so I'm all over the board. Definitely on the analytical side of personality.

More than anything it might just be trying to shirk the responsibility of having to make a decision on every trade. A rules based approached takes some of the interpretive decision making off my shoulders. But it's time to take responsibility and get back at it.

I'm looking forward to the day you can trade live again. You seem to be ready.

Thanks for the kind words

Started this thread Reply With Quote
The following 6 users say Thank You to Tap In for this post:
 
(login for full post details)
  #856 (permalink)
 Tap In 
Bend, OR
 
Experience: Intermediate
Platform: Sierra Charts
Broker: Global Futures/OEC
Trading: NQ, CL
 
Tap In's Avatar
 
Posts: 948 since Feb 2013
Thanks: 2,162 given, 2,063 received

My two most destructive emotional drivers are FOMO and Regret. Fear of missing out on the benefits of the next trade, and regret for missing out on what might have been on the last trade.

One feeds the other.

The antidote to both is DNGAF.

Started this thread Reply With Quote
The following 6 users say Thank You to Tap In for this post:


futures io Trading Community Trading Journals > Tap In's Corner


Last Updated on December 28, 2019


Upcoming Webinars and Events
 

NinjaTrader Indicator Challenge!

Ongoing

NEW BlackBird Features + FOREX Support w/Jeremy Tang @ SharkIndicators

Elite only
 

Our 12-year anniversary w/ $$,$$$ prizes (check soon)

June
     



Copyright © 2021 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada), info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts