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How I Trade For a Living
Started:August 30th, 2016 (10:48 AM) by rocksolid68 Views / Replies:48,917 / 662
Last Reply:November 7th, 2016 (02:55 PM) Attachments:94

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How I Trade For a Living

Old October 5th, 2016, 06:05 PM   #221 (permalink)
Market Wizard
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Yeah...

there are a few generalizations that you have to make about how a person trades. That said, It might have been better to say the close today, or the close of this bar is the close of the last bar plus or minus a random number. True enough we believe that it is not random or that we can extract some edge. I believe that is a separate discussion.

I think the issue was why or why not...when or when not to ADD TO A LOSER. Have I done it, yes. Have I done it and had it work out, yes. Is it wise? Almost never. Usually when I marry a position or insist that I'm (my analysis) is right and the market (price action) is wrong I get my balls ripped clean off. Considering a trade in the context of another trade is a bad idea. If you are under your typical comfort level size wise and would consider a fresh entry from flat, consider the trade. Price action is king. If price in the recent short period of time is different from your position, consider being wrong and keeping your balls attached. Losers expand until there is a capitulation cover and usually this is very painful...and it destroys focus for the next trade. When you are wrong kill the loser little and live to ride the next winner till it becomes a monster.

Opinion based on experience. If you ever see Price Action with a giant sack like Santa on Christmas Eve, rest assured that the sack is full of money and balls that used to belong to wldman.

     
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Old October 5th, 2016, 06:33 PM   #222 (permalink)
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Awesome! I love the debate! Keep it up!

Now, let me clarify something off the bat:

When I say 50/50, I do not mean 50% chance of hitting my target vs stop. I mean 50% chance of price upticking. Same for for down-ticking.

I think that momentum and trends are merely a matter of subjectivity and do not hold much "say" in the matter. I think that price has an equal chance to down-tick as it does an up-tick, even at day highs.

Let's look at ZB:

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"Holy! Look at the down-trend! Such momentum! This has a 80% chance of down-ticking!"

Not necessarily!

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"Woah. We are at the bottom of the range! We are going to blast higher! 80% chance of up-ticking!"

Not necessarily!

Haha. Both are seeing the same thing, just viewing it differently. This is the same for every price.

For every seller, there must be a buyer (and vice-versa). This means that no matter the price, people are taking trades with a different bias than the next guy. There has to be some sort of equilibrium for price to ever exist. If there were no buyers, we would have no price! If no sellers, there would be no price! Non-existent!

Like I said, there may be statistical anomalies that give one side an advantage of 4% or so. But never more than something like that.

If there was a 80% chance of something going lower, the market would get rid of that instantaneously. The market would be inefficient if it provided an advantage to one side of the market.

Thanks for all the input! I love getting all of you together for a discussion

     
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Old October 5th, 2016, 06:54 PM   #223 (permalink)
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rock...


are those day bars on the 30 yr?

     

Old October 5th, 2016, 07:23 PM   #224 (permalink)
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wldman View Post
are those day bars on the 30 yr?

Yes sir!

They are 120-minute bars

     

Old October 5th, 2016, 07:46 PM   #225 (permalink)
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So...

Futures Edge on FIO

Are you a NinjaTrader user?

 
if you look at a 5 minute bar chart you see a different picture. That would like like a raging up trend and that guy might think he is late to the buy. 4 16/32 looks like support. Does that look like pre fed hike expectation? Perspective, especially time frame would have a lot to do with the expectations. I'm standing by the don't add to losers (average in) view but don't let that discourage you if you have a way of doing things that gives consistent results.

     
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Old October 5th, 2016, 08:00 PM   #226 (permalink)
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wldman View Post
if you look at a 5 minute bar chart you see a different picture. That would like like a raging up trend and that guy might think he is late to the buy. 4 16/32 looks like support. Does that look like pre fed hike expectation? Perspective, especially time frame would have a lot to do with the expectations. I'm standing by the don't add to losers (average in) view but don't let that discourage you if you have a way of doing things that gives consistent results.

Most definitely! Perspective means a lot!

I am not telling anyone how to trade. I think that everyone should find their own way

The thread is name "How I Trade ... "

Thank you for your input nonetheless!

I think that giving my thoughts and rationale may help some with their trading! That is why I post

     
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Old October 5th, 2016, 08:02 PM   #227 (permalink)
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@rocksolid68
First of all, I hope you donít mind me jumping in to your journal uninvited with this little illustration of your idea.
Today on the TF was a perfect illustration of your idea of adding in to a trade, even when taking heat, if your original idea hasnít been invalidated.


Background: It was a gap-n-go on most of the indexes today. Very frustrating if you didnít buy at around 12 pm PST yesterday. The only thing to do at the open is hold your nose and jump in long with a big stop, or wait till around till noon for the move to be exhausted.


This was a sim trade

This trade is a very aggressive trade and I would only enter half size.

Chart: Initial Entry
After you are relatively certain the top is in, you wait for the LH and enter. The blue line is the stop, and is a 1 pt. or $100 per contract risk. At this point one of three things will happen.




1. You take a full stop

2. It will drop away from your entry fast

3. It will drop down a little then pop up for a lower high before it dumps (what ended up happening)

I short it at 1251.4 with two contracts and max risk of $200.


I take a little heat and then it moves down. I end up bailing on the trade with 6 ticks of profit x 2 =$120.



I saw that it didnít violate the first entry, or the initial stop. I re-enter at 1251.4 again with two contracts and move my stop to 1252.0. It falls away and I take the first contract off at 1245.3 and the second at target of 1244.6.


Totals:
1st $610.00
2nd $680.00
Total $1290.00


Not bad, but there is an even better way.

I should have held the first two and added two more contracts at the initial entry or a little higher and moved my stop to 1252. Why 1252? Because if it got above there, chances are the trade is no longer valid.


Total risk = $240.00. Slightly bigger than the initial stop of $200.00, but much less than entering at the start with 4 x $100 = $400 risk to start.


Using the same targets, I would have banked $2580. Yes, I took some heat, but I doubled my return for $40 additional risk.


While technically this isnít adding to a loser, it is aggressively levering up when your idea is still valid and at the same reducing your overall risk by $160.00. Much better than entering full risk on an unproven (at the beginning) idea. Since the initial trade only took 10 ticks of heat, I shouldnít have been so quick to bail out. I did realize my mistake and re-entered for a very nice trade, even if it was just SIM.


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I hope yo don't mind me posting this in your journal. But I thought it was a relly good illustration of your point about adding in.

     
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Old October 5th, 2016, 08:10 PM   #228 (permalink)
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rocksolid68 View Post

I mean 50% chance of price upticking. Same for for down-ticking....

there may be statistical anomalies that give one side an advantage of 4% or so. But never more than something like that.

Surely you are only trading when 'perceive' you have identified a location where there is that 4% anomaly, and price has a 48:52 chance of moving in your direction over your timeframe?

Or are you suggesting you can make tons of money by coin flip trading? - which is the same to me as saying 50% chance of upticking or downticking

Or is it more in the realms of - "i've identified where I think I'm wrong and price is not quite there yet. The PA doesn't look too shitty and obviously against me, lets average down, and hope that perceived anomoly that got me into this trade holds up"

If you're sure the 50:50 proposition is correct - would you mind drawing up a decision tree, with those probabilities, and talk us through how to trade that successfully.

     
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Old October 5th, 2016, 08:15 PM   #229 (permalink)
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Hickock View Post
@rocksolid68
First of all, I hope you donít mind me jumping in to your journal uninvited with this little illustration of your idea.
Today on the TF was a perfect illustration of your idea of adding in to a trade, even when taking heat, if your original idea hasnít been invalidated.


Background: It was a gap-n-go on most of the indexes today. Very frustrating if you didnít buy at around 12 pm PST yesterday. The only thing to do at the open is hold your nose and jump in long with a big stop, or wait till around till noon for the move to be exhausted.


This was a sim trade

This trade is a very aggressive trade and I would only enter half size.

Chart: Initial Entry
After you are relatively certain the top is in, you wait for the LH and enter. The blue line is the stop, and is a 1 pt. or $100 per contract risk. At this point one of three things will happen.




1. You take a full stop

2. It will drop away from your entry fast

3. It will drop down a little then pop up for a lower high before it dumps (what ended up happening)

I short it at 1251.4 with two contracts and max risk of $200.


I take a little heat and then it moves down. I end up bailing on the trade with 6 ticks of profit x 2 =$120.



I saw that it didnít violate the first entry, or the initial stop. I re-enter at 1251.4 again with two contracts and move my stop to 1252.0. It falls away and I take the first contract off at 1245.3 and the second at target of 1244.6.


Totals:
1st $610.00
2nd $680.00
Total $1290.00


Not bad, but there is an even better way.

I should have held the first two and added two more contracts at the initial entry or a little higher and moved my stop to 1252. Why 1252? Because if it got above there, chances are the trade is no longer valid.


Total risk = $240.00. Slightly bigger than the initial stop of $200.00, but much less than entering at the start with 4 x $100 = $400 risk to start.


Using the same targets, I would have banked $2580. Yes, I took some heat, but I doubled my return for $40 additional risk.


While technically this isnít adding to a loser, it is aggressively levering up when your idea is still valid and at the same reducing your overall risk by $160.00. Much better than entering full risk on an unproven (at the beginning) idea. Since the initial trade only took 10 ticks of heat, I shouldnít have been so quick to bail out. I did realize my mistake and re-entered for a very nice trade, even if it was just SIM.




I hope yo don't mind me posting this in your journal. But I thought it was a relly good illustration of your point about adding in.

Amazing post! Awesome detail as well!

You are ALWAYS welcome to post here! Especially when providing value such as that!

Thank you very much!

     
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Old October 5th, 2016, 08:21 PM   #230 (permalink)
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Forgot one thing. After price got below 1249.5 you could have moved your stop to even and been reasonably certain you wouldn't get taken out.

     

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