Bottom Up or Top Down?

This is a discussion on Bottom Up or Top Down? within the General Trading Chat forums, part of the Reception category; Originally Posted by MoonRocket Of course the entry is important. My point is.......When a trader (particularly myself ) has become ...

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Old Apr 7, 2012, 3:50pm   #31
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Re: Bottom Up or Top Down?

Quote:
Originally Posted by MoonRocket View Post
Of course the entry is important.
My point is.......When a trader (particularly myself ) has become extremely focused on the entry he has already tilted his psychology into a certain direction.
How many times even after all your focus there was actually a better price or time to enter....almost every time.
But be assured VielGeld, I take my losses quicker then you, going by a couple of live trades of yours that I noted.
I try to find the best entry for the morning, afternoon or day if I can. What is that? The high or low. because, then, the risk can be just beyond that and the rewards can be very good.

However, I find that high or low may involve several entries and so it is essential to be very disciplined on the exits. If you think that the high/low is x, then any point beyond that means that the trade has not gone as planned and the reason for being in it is no longer valid. It is very difficult not to wait those extra few points but that is were discipline comes in. The trade has gone wrong.

You are right on the point that you can get in at any time but where should the stop be and is it at an acceptable risk?
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Old Apr 7, 2012, 3:56pm   #32
 
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Re: Bottom Up or Top Down?

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Originally Posted by DionysusToast View Post
Good point but I think you are thinking too much.... Or rather, being too literal...

It wasn't a case of "set your target and stop and don't under any circumstances tighten either of them".

It's about - giving yourself a goal and a stop of say 6 ticks and trading the ebb & flow. Of COURSE you can get out early. It would be a bit daft to have an exercise where you tune yourself into the market and don't react when you are tuned into the fact it's going against.

It's about getting into the flow of the market, getting into the way it moves, of course if you get in and it moves against you, you need to get out. The skill of course, is to recognise 'moving against' and 'just wiggling about'.

You must be right, I am being too literal. Because now it sounds like the exercise is to take an entry with a direction based on your understanding of the flow of the market and - with certain predefined risk limits - manage stop and target. This now sounds like normal trading to me, so I've obviously missed the point.

I think the 'always be in the market' exercise is a good one.
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Old Apr 7, 2012, 5:09pm   #33
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Re: Bottom Up or Top Down?

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Originally Posted by DionysusToast View Post
Funny - that topic came up in the conversation. To some extent I agree with what Mr Hare claims.

Get in on a coin toss & manage it.

Now - we didn't discuss tossing but we did discuss the way your focus entirely changes once you are in a trade.

In short "I wish I could read the action when I'm not in a trade as well as I can when I'm in a trade"

There is something about being in a trade that gives you a very accurate feel for whether it will work out or not. Now, whether you act on that is a different matter. I just can't get the same feel for the market without having any money on.
Yeah that makes sense, I'd say the same thing applies with an algo to a certain extent.
By that I mean unrealised profit / loss provides an easier framework to base trade management programming on.
Its a solid reference point.
Trying it to base trade management and exit off price alone is harder to program
(and makes no sense anyway), thats also why the entry has a random element.

I don't really think for a minute that anyone who trades randomly allows every
parameter to be truly random.
Time is a prime example, a random entry at 0430 GMT for instance doesn't make much sense.
My entries are really pseudo random, some parameters are totally devoid of randomness.

As for ninja, been a while since I looked at the 3rd party add ons...grown a fair bit:
NinjaTrader stock, futures and forex charting software and online trading platform. NinjaTrader Partners.

Quote:
Originally Posted by VielGeld View Post
To say that the entry is not important is pure bull, imo. Proper entry reduces risk.

It's once you've entered that the exit matters. Good entry = stay the course,
bad entry = bail asap. But a good entry will always provide a better opportunity to minimize loss, and maximize profits.
Completely agree, as mike said, entry, trade management and exit are all equally
important in short term trades or scalping.

Random entries can still work, obviously they will not be as efficient and are more suited to longer trade duration.
That also means the focus is firmly on managing the trade.
Thats the real purpose of the coin flip experiment in general,
and why its mentioned in that prop trader exercise list.

A coin flip entry is basically a trade management exercise.
It can also be the basis in part for an algo for the reasons I mentioned above.
When you consider typical strike rates of 40-60% (i.e. coinflip territory) you have
to wonder if that is any better than random anyway...(hardcore tape scalpers aside before anyone mentions it )
The real reason for discretionary trade being more efficient is not strike rate,
its trade management.

Last edited by Liquid validity; Apr 7, 2012 at 5:17pm.
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Old Apr 7, 2012, 5:32pm   #34
 
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Re: Bottom Up or Top Down?

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Originally Posted by Splitlink View Post
No, neither can I, no matter how small the stake. It sharpens the senses!

Mmmm, sounds a bit emotional. Not many people can keep themselves totally together under pressure. I think retailers stress themselves out, waiting for action to happen. Makes me feel all edgy just thinking about it.
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Old Apr 7, 2012, 10:30pm   #35
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Re: Bottom Up or Top Down?

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Originally Posted by DionysusToast View Post
YES, YES, YES. This is it:

"The best trades are made without thinking, when you surpass the concepts, the knowledge and you reach the subconscious, where creativity and instincts lays and connects you to Greater Energy. Once you there you flow, there is not contraction but only expansion to enter the doctrine of vibration. Yes, trading is very much knowing yourself and the realisation of one helps the other."

But you cannot get in the "flow" without a constant search of "yourself".
Yoga, meditation, breathing exercise do help, but more importantly the issue of "no mind versus heart".
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Old Apr 7, 2012, 10:49pm   #36
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Re: Bottom Up or Top Down?

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Originally Posted by Mike Kshemaraja View Post
YES, YES, YES. This is it:

"The best trades are made without thinking, when you surpass the concepts, the knowledge and you reach the subconscious, where creativity and instincts lays and connects you to Greater Energy. Once you there you flow, there is not contraction but only expansion to enter the doctrine of vibration. Yes, trading is very much knowing yourself and the realisation of one helps the other."

But you cannot get in the "flow" without a constant search of "yourself".
Yoga, meditation, breathing exercise do help, but more importantly the issue of "no mind versus heart".
Hey man, can you pass the spliff?
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Old Apr 7, 2012, 11:10pm   #37
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Re: Bottom Up or Top Down?

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Originally Posted by JRP2891 View Post
Hey man, can you pass the spliff?
LOL.

No sorry, not much to spare, you need to "find" your own. But I can bring you some if you wish next time I go to the "source".

Last edited by Mike Kshemaraja; Apr 7, 2012 at 11:25pm.
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Old Apr 8, 2012, 1:47am   #38
 
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Re: Bottom Up or Top Down?

DionysusToast started this thread
Quote:
Originally Posted by Shakone View Post
You must be right, I am being too literal. Because now it sounds like the exercise is to take an entry with a direction based on your understanding of the flow of the market and - with certain predefined risk limits - manage stop and target. This now sounds like normal trading to me, so I've obviously missed the point.

I think the 'always be in the market' exercise is a good one.
Well, the point is that most people layer a lot of extra stuff on top. They analyze the daily charts, add on some pivot points, a dollop of volume profile, a few market depth indicators. None of which are necessarily bad.

But the idea is - you don't put any of that on until you can trade without it - just going off very low level info...
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Old Apr 8, 2012, 1:54am   #39
 
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Re: Bottom Up or Top Down?

DionysusToast started this thread
Quote:
Originally Posted by JRP2891 View Post
Hey man, can you pass the spliff?
You might laugh and it does sound a bit 'hippyish' - but don't you ever have days where you just sit down and you 'just know' ?

Then other days where you trade as dumb as a rock.

Have you tried sitting down 10-20 mins before you trade and just relax, tell yourself it's going to be a good session and get any other worries of the day out of your head before you start.

It can certainly help to get you focused. I do understand why people get put off by words like meditation. Perhaps read up on the way people prep for a competitive endeavour right before the comp...

It's not all about skinny vegetarian Indian guys with long beards.
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Old Apr 8, 2012, 7:40am   #40
 
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Re: Bottom Up or Top Down?

Quote:
Originally Posted by DionysusToast View Post
You might laugh and it does sound a bit 'hippyish' - but don't you ever have days where you just sit down and you 'just know' ?

Then other days where you trade as dumb as a rock.

Have you tried sitting down 10-20 mins before you trade and just relax, tell yourself it's going to be a good session and get any other worries of the day out of your head before you start.

It can certainly help to get you focused. I do understand why people get put off by words like meditation. Perhaps read up on the way people prep for a competitive endeavour right before the comp...

It's not all about skinny vegetarian Indian guys with long beards.

What you have stated above is common sense, all traders need a basic routine. Pre-market, in-session and post-market. This surely is the basis of 'good dicipline'.
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Old Apr 8, 2012, 9:07am   #41
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Re: Bottom Up or Top Down?

Not sure if you ever drove a motobike at a very high speed, you need to get into that state of focus without focus so there is not tension, you, the bike, the speed, only one thing, to tense up or start to worry to fall is very dangerous.

And most importantly if you fall is absolutely essential that you let go and relax into your fall accepting it.

Has this go something to do with trading? In view very much so, in modern trading this state of no mind is essential, of course MM has also a huge impact, just like opening a pizza shop or any other kind of business.




Last edited by Mike Kshemaraja; Apr 8, 2012 at 11:37am.
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Old Apr 8, 2012, 9:09am   #42
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Re: Bottom Up or Top Down?

Sounds like your decision making process and experience is just hardwired into your brain,
meaning its more of a subconscious process.
HowStuffWorks "How Your Brain Works"
New brain connections form in clusters during learning - UC Santa Cruz
Meditation is just wiping the frontal lobe, same as you'd wipe a computers memory.
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Old Apr 8, 2012, 9:31am   #43
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Re: Bottom Up or Top Down?

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Originally Posted by Liquid validity View Post
Sounds like your decision making process and experience is just hardwired into your brain,
meaning its more of a subconscious process.
HowStuffWorks "How Your Brain Works"
New brain connections form in clusters during learning - UC Santa Cruz
Meditation is just wiping the frontal lobe, same as you'd wipe a computers memory.
Yes, and traders are like athletes, if you want or strive to be a top trader, you need to be fit like one, physical and emotionally. Keep in mind that when you sit in front of the computer to trade you are not trying to pull money out of the market but out of very prepared and street smart traders from all side of the world, Italian, English, Brazilian, Japanese and so on.

Who has the better chance to pull most of the money, the one that is the fittest and prepared.
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Old Apr 8, 2012, 9:36am   #44
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Re: Bottom Up or Top Down?

Quote:
Originally Posted by DionysusToast View Post
You might laugh and it does sound a bit 'hippyish' - but don't you ever have days where you just sit down and you 'just know' ?

Then other days where you trade as dumb as a rock.

Have you tried sitting down 10-20 mins before you trade and just relax, tell yourself it's going to be a good session and get any other worries of the day out of your head before you start.

It can certainly help to get you focused. I do understand why people get put off by words like meditation. Perhaps read up on the way people prep for a competitive endeavour right before the comp...

It's not all about skinny vegetarian Indian guys with long beards.
LOL, that is an archaic way to view meditations, nowadays people that appreciate
that development also are into Lamborghini, Patek Philippe or very fine Italian hand made suits.

Last edited by Mike Kshemaraja; Apr 8, 2012 at 11:02am.
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Old Apr 8, 2012, 10:59am   #45
 
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Re: Bottom Up or Top Down?

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Originally Posted by DionysusToast View Post
Have you tried sitting down 10-20 mins before you trade and just relax, tell yourself it's going to be a good session and get any other worries of the day out of your head before you start.
Yes - I do this every day I choose to trade wrapped up as a 30-45m prep before the session opens. It's quite ritualistic but it works for me. I see this as nothing more than mental preparation for a performance based discipline, putting me in the right frame of mind to handle situations that I cannot predict in advance.

What do you think professional sportsmen do before a big game/competition?
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