One more note from today's lessons. Wow, it amazes me how every single day I get better an learn or relearn things. Having been playing around with some pretty high end Jurik moving average derivatives I have come to the conclusion that nothing beats a hand drawn trend line. Zondor has shown me the light. thanks.
P.S. About showing me the light and the trendlines, thanks also to ZTR who has been instrumental in my development since joining futures.io (formerly BMT). He has changed the way I trade completely and has taken me to a very good place. Thanks to my trading bros!
OK. Time to journal it up and spell out what exactly I'm going to do. Possibly the most important thing I've learned about trading is that you need to be right in your execution and you have got to be fast if you are scalping.
I have backtested and reviewed my setups to the tune of, well, a very great number of hours indeed. I've found that when a scalp sets up time available for successful execution is about 5 to 20 seconds. Snooze and you loose, literally.
So what does this need for speed imply? I think it means you don't have time at all to think about what you are going to do when you are doing it. Each and every scenario has to to be planned and executed accordingly and without hesitation. This sounds complex but it aint chess. There aren't that many things to plan for. Market goes up X, market goes down Y, that's pretty much it. Given this and knowing myself to be the thinking type I have decided on a fixed tick scalp system as the best way to approach scalping the Dow.
Based on the way I scalp, or maybe it's not me and it's the way the market trades, whatever the case, I think a 13 tick stop loss is pretty ideal. On a a two car strategy I take the first at 13 ticks. I take the runner at 39. Both get stopped at 13. After T1 is reached S2 gets moved to break even. The runner is more like the type in track and field in so far as it's not trying to do a Forest Gump jog that never ends, rather it's just training for the 1000 meters. I wonder if Forest could trade? Probably, lol.
There are two reasons I like this fixed structure. 13 is an easy target to reach in the noise of a turning point but beyond that it seems chances get strained as the market decides whether that is the way it really wants to go or not. Then there is the positive energy and gratification that one gets from reaching that first milestone, making for a day of small victories is very pleasing because we like to win.
There is also the conservation of mental energy to consider, a critical benefit considering how much mental energy it takes to do this. It is so draining to watch every tick up and down and trying analyze the market in this state to figure out where to get out. I suck at that. I just know that statistically my targets are well placed and by conserving that precious energy I can focus better on what is actually going on in the market and I'll have a better chance of maintaining mental acuity for the entire session.
The second car at 39 might sound to some like I'm cutting myself off from a really big run but I think if you added up all the time you had 39 and got stopped at break even and compared it to what you would do trying to catch the big run it's probably a wash. From a pure utility standpoint it probably feels a lot better to get all those 39'ers, and if you are feeling good you are setting yourself up for more confidence and better trading. Furthermore, the 13-39 system may well provide a better than 1:1 Risk Reward ratio which I had previously thought an impossibility in this age of electronic markets. Also, 39 is a nice size leg and will often recoil in this area for a second bite of the apple
So that's how I see it now. The money management is taken care of. The execution is that and that alone, nothing else going on, just following the order. Profits will be realized and exits will actually get done. You can only be satisfied if you hit your targets. There is no downside. There is a feeling of confidence you get knowing there can be some certainty in your interaction with the market and from knowing exactly what you are going to do before anything happens.
As for the technical system I am using these days, well, I'm back to where I started almost two years ago on that front. I'm looking at my charts now and it's amazing, there is almost nothing left on them, they are blank again. I am thinking anywhere from 5 to 20 entries per day is possible. Maybe more. Here is my setup.
1. Two tick and range charts on YM, one short one long. One shows a few days the other a few hours. Take your pick and find the frequency you like best. Add on a 4 range ADXVMA and draw trend lines as needed.
2. Gomi CDHA bars. No indicators need apply. I'm only interested in the last 10 bars or so on a short tick, volume or range chart. I'm looking for trapped traders, active vs passive buying, and churn bars. All of this can be seen with a 5/2 max/min heiken ashi, I think. Seems to help anyways but I'm not sure about the quality of the data I'm getting, seems to work though.
3. I look at the Vix and the NYSE indices for the Tick, Trin, and advance decline line, the SPY volume, and the futures basis as calculated from the DJIA index. I'm trading with the trend so I look for turning points in the ADXVMA on the main YM chart and then all of this stuff either supports or doesn't. If it all does you probably have better than coin toss probability of getting it right, but you had better be fast.
At the end of the day I think you could take a 4 period ADXVMA on a chart of your choosing, any period, and if you could probably just a flip a coin at the flat areas and enter the market accordingly. If you just followed the money management I've set out you might do really well. Maybe even better than the you would knowing anything, very possibly. With a little extra trader's intuition the prospects improve. I'm stressing here that I think the key is executing a plan that has no open question marks to deliberate while you are doing the thing you are deliberating about. It might work for writing in your journal, but you aren't going to get anything done in trading if you don't know exactly what you are going to do before the $#!^ hits the fan!
OK. I'm ready. Lock and load, and may the gods of luck be on my side!
The following 4 users say Thank You to syxforex for this post:
I hope you'll share a few screen shots of the DOM, I am interested. You said there is no license cost, I wonder if my Dorman account thru my IB (Mirus) qualifies, or if I need to establish a direct Dorman account to qualify? Always interested in exploring my options.
It's obvious you spent a great deal of time and thought with the plan. I'm only trying to point out how much of your plan has already changed since you began your journal. I'm not saying change is bad. Usually change is good. I just want you to be aware of how much has changed, so you can get a realistic handle on what you have in front of you (your current method) and try to gauge it appropriately.
You've mentioned several times your account is under funded, you only have one shot at this, etc. You know that means the odds are very against you. My gut tells me you need to have a consistent method of signal generation, money management, and discretionary trading psychology under your belt for many weeks, even months, if you truly want to maximize your chances of success.
I can appreciate that you may not be in a financial position to wait. I understand, there are a lot of traders that can relate to that, I've talked to a lot of people in similar situations. The fact is, the market doesn't care about your situation. If you aren't ready, and other people are, you will lose. It doesn't matter why.
I want you to succeed. I also think positive thinking is an important factor. But I also want you to be realistic, and form those positive thoughts based on well documented and proven trading skills that don't change drastically in short time periods.
Have a great Friday, I look forward to more of your journal.
Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.
Need help? 1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first. 2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses. 3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make. 4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance. 5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers. 6) Help using the forum? Watch this video to learn general tips on using the site.
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The following 4 users say Thank You to Big Mike for this post:
Thanks so much Mike! I agree that I might be sounding over confident. And yes, everything has changed dramatically, I can hardly believe it myself. It's like something just clicked, I don't know how else explain it. Suddenly in my mind I know how to make money and feel like I can really do this. It's not fleeting or the false kind of feeling I've experienced time and time again where you find a new indicator or pattern and think wow I've found the holy grail. It's a deeper personal change that has occurred in concert with some very precision analysis. I can't tell you how much better I can scalp using the NYSE and CBOE indices as indicators.
Thanks a lot for being the voice of reason here. You know this stuff better than anybody so I am taking your advice, hard as it is, and going to sim for a few more days. If I still have this feeling I will go live. I may have been a bit melodramatic about the end of the world and the last chance to save it and all that. I've learned so much about day trading in these past two years since September'08, I will be building on it in the future whatever that hold in store. I'm not in a position to keep studying full time and two more weeks of sim is too long according the constraints I'm face with. It would probably be good for me to get off my arse and get a job driving a car anyways, it certainly would be motivation to be sure. I have totally accepted the risk I am taking here. 750$ of my account. That gives me enough room to get things off the ground trading the Dow with a scalping strategy, 13-39 as I have dubbed it. Although, waking up this morning and having coffee, I feel inclined to change it to a nice round magic number, 13-34
thanks a lot Mike, and good trading today!
The following 3 users say Thank You to syxforex for this post:
Mike u can try it for 2 weeks form Dorman or directly from CTS. I think u have to open an account directly thru Dorman. I will open a new thread on the Brokers and data Feed, so every one could share it's opinion.
Take your Pips, go out and Live.
The following user says Thank You to LukeGeniol for this post:
Dorman Direct does offer a two week trial. The simulator does not include all of the features. It is a somewhat complicated Dom with a lot of order management features. I really just need two buttons. What I like is how fast it is. It is clear to the naked eye how much faster than Kinetick or ZF it is. Run them side by side and see for yourself. It's also free and the commissions are same as ZF. Anybody using X trader should look at this.
Great day on Friday. I took 8 trades, 7 profitable. During two days of simming my new scalping strategy I am 18 for 20 and up 650 greenbacks. And there were mistakes made. I've been reborn as a scalper. It is so much easier. It's a great breath of fresh air to forget everything I know and just trade the noise. The 13 tick target seems to be the ideal. I would have done better than 1k in profits had I not been riding the second car and rather just shooting all for 13.
Thus I'm going to take Big Mike's advice and park the second car. Next week I'm just going to sim one car. On a three K account risking 13 for 13, the downside risk is 2.16% of capital, in line with generally accepted trading risk principles.
It's easy to pick these smaller scalps off and you get so many opportunities in a day. It is energy intensive and you need to have fast reactions so you really need to be rested and take a good break at lunch. Im only trading during NYSE hours as I'm using the Tick, Trin, ADD, and Vix indices as indicators. The main chart is the 89 Tick with the 4 ADX and the 21 range trend line is the guide. Find a flat area and flip a coin, or, look at the NYSE indices and take an educated gamble.
It's amazing that before I came to this site two months ago and met some trading buddies I was trading the Euro and looking for 2 to 3 trades per day, trying to take a big piece of the major move each day. I find base hits so much easier. They add up so quickly and it's easier to quit while you are ahead if you have done a few trades and you feel tired. I remember those long nights tracking 6E, waiting and waiting, and getting tired and desperate as the clock ticked down, all that stuff. Not my game as it does not suit my personality like the higher frequency does.
I like the hours I'm doing now. 930-1145 EST and 1245-345 EST. I like the pace. I like the constant flow of opportunities. I like being in and out, pocketing pips and then covering. Quite happy to be a lowly scalper!!!
So, this week I will keep at it. I need to get T4 Dom ironed out and if all is good I will take my first trade this week.
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Anoter good day simming. Well, it could have been better, yet I met my basic goals easily enough. I took 10 trades. 1 scratch at break even, 2 losers and seven winners for a net of 30 Ticks/one car on the day. Made two mistakes that otherwise would have seen an awesome day. I broke a basic and time tested rule, and one of my only ones. At any rate. I netted two wins and that's all I need to do each day to double my account to 6k this month. That is the goal. Two 13 Tick scalps every day. 26 Ticks using one car. It's not hard. Do it everyday and at the end of the month your 3k account will be worth 6k by the end of the month.
Going live tomorrow. The T4 Dom is blindingly fast. I get three and four ticks sometimes, changes in last traded priced, for each one I get on Kinetick. It worries me about Kinetick, that's for sure. Not happy about getting slow data now that I can see and execute in something faster. I'm using auto OcO orders on every entry. They are held on the exchange server and put in the que the moment I enter the market. So, basically I just fire and then sit on my hands. Some trades do have to worked a bit though, but not much.
Here is a picture of the T4 Dom. Best thing is it is professional grade and without the extra cost of a high end execution platform such at X Trader or CQG. The T4 can be custom colored as I have done it in high contrast. It has all sorts of features and it is easy to use considering how much it can do. In this picture market profile is not enabled. I have to set that still.
Here is a picture of the Dom.
The following 5 users say Thank You to syxforex for this post: