No trades today; I was at the monitor all morning but did not get an order flow transition I liked. Well I did but NT does not have Market if touched orders so I missed it.
That actually led me on my next mission...to find something more reliable then NT. After some chit chat with a mentor of mine he likes xtrader and uses velocity as his broker for one of his accounts. So I will begin to give them a look.
I spent A LOT of time the last few days going over gambling theory and risk management regarding poker and gambling in general. I am looking for ways to apply those statistical properties to trading. I am not the first nor will I be the last to do so but its fun and has definitely changed my current trading.
I am making the small modification to my trade plan:
From 930AM-1200 NOON it will be 2:1 And any other time will be 1:1. I am also limiting my daily loss to 2% which currently means two one contract trades or one two contract trade.
I am working on some new math models for risk management and creating a fixed amount of trades per day as a way to control what I can control in the markets. I ran some preliminary numbers and do not believe the results. So I will be looking them over with a fine tooth comb.
Tomorrow is another day and begins the second quarter.
Trade on and Risk little!
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So today was the new plan; and its off to a fun start. I will be trading this sim for April and see how I do when I adhere to strict risk management and limiting trades per day.
Since trade one occurred between 930-1130 it was the 2:1 model.
Now since all this in the long run is just a binomial coin flip, win or lose, my entries are not any reflection of some wise signal to buy or some skill. I will walk you through this morning trade. Also note, I do not feel that something that happened thirty minutes ago holds any relevance per se to what the market may do now. So I am only comparing one price rotation to the previous price rotation that correlates (down rotation with previous down etc.) My charts are a reversal chart (pf chart) thats it. Nothing more.
So the attached pic is the chart layout; upper row is filtered trades and then retail trades, the bottom row is filtered volume and retail volume.
On the column that begins the red reference line was the most recent down price rotation so I will make it as a buy region if I see all four charts showing same tick level as a buy in the down rotation and its within four ticks of bottom. Now when next down rotation occurs, every other bar, I will be watching to see how the tape feels about this level.
So the 31.25 level was marked for potential buy.
Price rotated up and then back down to my level, Now what did I see and NOT SEE is whats important.
I like to see an increase in big filtered buying, like they are defending a level, AND NOT SEE big selling. On the retail side I like to see trapped traders, those who went short a shitload and will soon realize they were wrong.
So you will see in the price rotation retail side we had 10K 4k SELLING THE NEW LOWS, and the previous down rotation was a fraction of that volume in the lows. On the filtered side, One does not see massive selling. I was watching 30.75 level for it was converting sellers to buyers and I saw filtered volume at 105 then spike to over 700 and all charts were giving me an order flow conversion so I took a shot to the long.
Now at 32.50 we had a sell signal, so I did get my 8T on the trade one and since it was after 1130 I had to change to 1:1 model.
Took a shot to the short side and moved stop to -2 when price went +2; got stopped out.
Net for the day +6T. But it will be the monthly stats that matter.
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I was off the last week from trading and doing some work in the hospital.
But when I was home I continued to do some more of my statistical work on past market behavior and guys I gotta tell ya....it does not matter what "system" one trades with or employs for signals; it still comes down to trade management and risk management.
I also think that many people on this site have EXPECTATIONS way out-of-line with reality. Why is it that the best of the best aim for 20% annually and some on this site think we can make 20% a month? I thought long and hard about some of the snake oil sales on line and people need to put their greed aside and think for a second....
Do you really think that someone can produce results like they "post" and their "secrets" or "special indicators" would not be utilized by the pros until the edge that existed would be null.
I know this is a tangent but I hate to see so many people starting with 5K, 10K, 25K and think they will magically pull out 5K-10K a month; or annual returns from 1200-2000%. Think about it guys.
Anyway, my work is showing that the market will give you what its going to give ya. End of story. Your better off just setting a fixed stop and target; ensuring target is 2-3x your risk and in the long run you will win IF and ONLY IF, you have a fixed number of trades a day.
Biggest pitfall for many of us in the beginning is saying Ill quit after say three losses a day...but then even with a 3:1 model then if for Mon-Wed you loss each day thats 9X trades in the hole and you need three straight winning days to get to BE. But if one would take their head out of their asses and stop dreaming of pie in the sky get rich quick and traded only once a day, win or lose and stop for the day then they would be able to employ the positive edge of risk management.
Sorry for the mild rant but I am getting sick of seeing shit about this and that indicator and buying and selling...and so help me God if I see one more person write about "more buyers then sellers..." Im gonna lose it. Guys, every buyer is matched with a seller. End of story. But buying excessively on the offer or selling excessively on the bid will move the market and yes every buyer is still matched with a seller.
More to come....
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