Best Thread Firewalker's Journey: A path of discovery in search for enlightenment

[firewalker99]

Everybody tells you to be disciplined and stick to your plan but you'd love to take an off-the-peg-system because you know they work as they have made others money. You try and try to come up with a plan of your own but you never seem to move forward as you trade it, its good for a few days then you take a few losses, make a few mistakes, get pissed off, then start trading with no solid reasoning....

We have all been there mate... my PM last night, TheBrambles post I forwarded to you... You will get posters who say they paper traded until they were consistent and never blew an account (salt and pinch, large pinch...) Heres a good example for inspiration... Another member here traded for 3 years and blew £50'000 learning... he then spent a year studying and testing and paper trading and doing it all again.... He now earns 6 figures a year but it came through hard work, long slogs and alot of discipline.

I'm not saying you need lose 50k to become profitable but you do need a good plan before the disicpline becomes relevant as without one, you can't win...

This is where the long slog and hard work comes in... To achieve my MA system, I tested 10 years worth of charts, by hand, each day singulary, checking the best option for the stoploss, trailing or targets, entries and exits, money management and leverage... everything, sometimes going back and starting all over again... its a nightmare but a neccessary one. db and co' can help you understand the market but no-one can help you come up with a plan that fits your requirements.

I read you don't have access to alot of data? You need it...

What you need to do (all IMO of course) is thus.......

Take a look at 5 charts, see where you could see good opportunities... find one that produces more winners or more points vs losses on those charts...

Then, get a couple of years worth of data and study, study, study.... Do it till your eyes bleed and your addicted to Nurafen.... Do it until your trading your plan like a barman pulling pints.... Till you can trade your plan and not care! You need to test every situation and possibility and every angle. Check entries and exits until it will work more than you need and then you can trade it with discipline and unfetering emotion....

The profits from trading have to be earnt through alot of work... Its like anything similar... Trading on the web is so common that anyone thinks they can open an account and make millions but you wouldn't try brain surgery after reading a couple of books, or try to sue someone in court after a few episodes of Perry Mason... it takes work, and lots of it!!!

Sorry! but it will be worth it in the long run though...

Thanks I appreciate your comments, especially as they depict things as they are. You don't beat around the bush, but you don't convict or make a judgement. I know it's up to me and I know it's going to be hard work. You can tell that other member he's not alone in losing that kind of money. I wonder how he managed to pick it all up again, once over and try again. Anyhow, I admit I was naive from the start and because I actually made some money from the beginning it all seemed to easy. Of course that was just luck... This article actually tells a story all too familiar... http://www.precisefutures.com/free_doc/doc_1.html

 

[firewalker99]

Cheers FW but bear in mind that it is going to be my price action analysis and its not something I'm very good at! Still learning myself but hopefully it will give you some inspiration and ideas. A trading plan isn't just the entries and exits, its everything. Your time, your money, your risk comfort, your goals and targets so it has to be yours in the end...

I know, I'm not expecting you to draw up a plan for me, as I already have one (although not a good one) but perhaps by knowing where to look - or not to look - I'll get a step further.
Perhaps it's my lack of creativity that's making me fail... Unable to "see" things with an unbiased mind because of all the studying and learning I did. Like Einstein said, to think like a genius, you have to think like a child.

 

[firewalker99]

August 11 Summary

Having looked and compared charts over the last couple of days, I've often noticed how S/R of the previous day plays an important role in the price movements of the current day, especially when price ranges within the high-low interval of the previous day.

 

[wasp]

another view

Okay,

Alot of this is in hindsight and easier to point out now rather than in real-time, so that and the hindsight S/R levels makes life easier but basically...

Wait for a newer higher high and a higher low or, a lower high and a lower low followed by a break through a strong level of S/R. Buy/sell on the break and then once passed, trail the position by the previous highs/lows till it pulls back.

Obviously alot easier and more profitable when the market trends rather than ranges but looks like it would have a good W:L ratio...? You'd need to test it further obviously...

HTH

PS if it makes no sense whatsover I'll try and explain it a bit better! :cheesy:

 

[rainman2]

Take a look at my trading plan, I'm actually trying out something based on WRB breakouts. Thanks for the reply, but I think your analysis does include quite some hindsight analysis. If you're able to take those positions in real time (being on the right side of every trade each time) than congratulations. Am I right when assuming you're buying the first bar that breaks through S/R? Don't know what your target/exits are (apparently after the trendline was broken), but I've tried that approach too at one time, and it left me with empty pockets. Take a look at one of my older charts. Of course a lot has to do with drawing the "right" S/R lines.

Hi Firewalker,

I in no way intended to make it seem as easy as buy/sell the break of the WRB and cover on a trendline break. I was just more or less trying to drum up conversation about where high volume wrb's show up and do they more accurately define intraday s/r. Also how they interact with longer term s/r.

I am newbie trader who appreciates the fact that you "put yourself out there" on this board and asks questions that I think but don't ask. I have read so much and and studied so many charts all in trying to answer a simple question: " Why did price reverse THERE?" In my pursuit of trying to answer that question I always find myself looking to the left side of the chart and more often than not a high volume WRB has something to do with the reversal. Be it the top,midline or bottom of the WRB, I think all tell a story of future price direction.

A question to all, "do WRB's hold any value to you as s/r?"

 

[firewalker99]

Hi Firewalker,

I in no way intended to make it seem as easy as buy/sell the break of the WRB and cover on a trendline break. I was just more or less trying to drum up conversation about where high volume wrb's show up and do they more accurately define intraday s/r. Also how they interact with longer term s/r.

I am newbie trader who appreciates the fact that you "put yourself out there" on this board and asks questions that I think but don't ask. I have read so much and and studied so many charts all in trying to answer a simple question: " Why did price reverse THERE?" In my pursuit of trying to answer that question I always find myself looking to the left side of the chart and more often than not a high volume WRB has something to do with the reversal. Be it the top,midline or bottom of the WRB, I think all tell a story of future price direction.

A question to all, "do WRB's hold any value to you as s/r?"

Hmm, interesting thought. Perhaps you should post it on the "S/R: Mirror of the Erised" thread? I think more people will read it there than in my journal...

 

[firewalker99]

DAX overview last 6 months

* 6 month chart up to end of July

 

[firewalker99]

DAX overview last week 07-11 August

* Attached weekly chart with and without S/R

 

[ymonly]

price is moving in a direction............i see it ....why do i need anything other than that to enter the trade if i am with the trend.....???and i am entering buy dips sell rallies?? by the way, 50% system is coin flip.....emotional pain trap....for most.....i can't imagine working like a fool for a few years and coming up with a 50% system....wow...what a waste of time....there are 2 people i have learned from that influenced my system.........dbphoenix originally and later mr. marcus....thanks to both......

 

[firewalker99]

price is moving in a direction............i see it ....why do i need anything other than that to enter the trade if i am with the trend.....???and i am entering buy dips sell rallies?? by the way, 50% system is coin flip.....emotional pain trap....for most.....i can't imagine working like a fool for a few years and coming up with a 50% system....wow...what a waste of time....there are 2 people i have learned from that influenced my system.........dbphoenix originally and later mr. marcus....thanks to both......

Sorry, but I strongly disagree. I can respect your opinion, but you'd call people fools when they come up with a 50% system? Let me first state that I, personally, would be looking for a higher success ratio and would not feel comfortable with a 50% system. But what I'm thinking is of no matter. A win:loss ratio of 50:50 can be very very profitable, if accompanied with a risk:reward of 1:5. Doesn't even need to be that high. Anybody can do the maths: from a risk:reward 1:2 a 33% system would still be breakeven (of course this isn't realistic because it doesn't account for trade costs, slippage, commission,...) but you get my point. To what benefit is a 80% system if it incorporates signals which appear only once a week and you have to place your stop at 20 points with a target of only 5 points?

The only argument I find to hold some truth is that a low success ratio causes - indeed - emotional distress. As for most people the confidence level in a 75% system would be much higher than compared to a 50-50 system. So it's purely pyschological, some people feel no discomfort, others are more risk-averse. If somebody would have as much faith in his 40-60 system than in his 60-40 system - assuming both have a positive expectancy - than I cannot see any rational argument why this person would be a fool and had wasted his time coming up with this kind of strategy.

All this of course means in no way that I would be content with a 50-50 system so if anybody would answer this post, with all due respect comments in the likes of "well fine it that suits you" aren't what I'm looking for.

 

[Splitlink]

A win:loss ratio of 50:50 can be very very profitable, if accompanied with a risk:reward of 1:5. Doesn't even need to be that high.
.

You are, of course, bringing in the argument of close stops. If your lack of tolerance to a loss is clearcut, with no dillydallying on exits, then lower than 50:50 is possible. It can't be brought home often enough. If a trader hangs on too long to a losing trade it doesn't matter how good his ratio is, his gains will be mediocre, at best.

Split

 

[firewalker99]

You are, of course, bringing in the argument of close stops. If your lack of tolerance to a loss is clearcut, with no dillydallying on exits, then lower than 50:50 is possible. It can't be brought home often enough. If a trader hangs on too long to a losing trade it doesn't matter how good his ratio is, his gains will be mediocre, at best.

Split

Of course, one has to obey to his system and take a loss whenever it's there and go beyond that and look for a next possible entry. If a trader hangs on too long to losing trades, then even if his system provides him with a high probability for success, he could still me on the way to liquidating his account...

 

[dbphoenix]

All of which remains anchored in what one has read and what one has heard and what one has been told rather than in what one has experienced.

Yes, a win rate of 50% can be profitable with a profit:loss of 5:1. And when you've demonstrated that you can consistently accomplish a 5:1 profit:loss ratio, please get back to me. Until then, I suggest you pay closer attention to what ymonly had to say. Being satisfied with a win rate of 50% or less is usually a beginner's rationalization for being too lazy to find something better (experienced traders know what risk:reward really means*).

Db

*Edit: i.e., that risk:reward has to do entirely with probability. Pulling some target out of thin air is meaningless. Unless one has some idea of the probability of a target being reached, what is probable is that he will be disappointed. As for "risk", the market couldn't care less what the trader is willing to risk; it's up to the trader to determine what the market demands. He can then decide whether he wants to risk that much or not. Simply placing a stop somewhere according to how much the trader can afford to lose often does little more than guarantee that the trader will in fact lose it.

 

[firewalker99]

All of which remains anchored in what one has read and what one has heard and what one has been told rather than in what one has experienced.

Yes, a win rate of 50% can be profitable with a profit:loss of 5:1. And when you've demonstrated that you can consistently accomplish a 5:1 profit:loss ratio, please get back to me. Until then, I suggest you pay closer attention to what ymonly had to say. Being satisfied with a win rate of 50% or less is usually a beginner's rationalization for being too lazy to find something better (experienced traders know what risk:reward really means*).

Like I said, this was a generalization and had in no means any reflection on my personal thoughts nor targets. Everything I said was based on the simple mathematical promise of expectancy and not on what trader x or y has proven to do or said he was able to do so. For the record, I'm not willing to trade anything with a 50% win rate because after all I've been through I want something to have (a lot of) confidence in. So until - or if - I reach that point, I'll keep looking, trying, reading, searching, observing, analyzing...

 

[dbphoenix]

Like I said, this was a generalization and had in no means any reflection on my personal thoughts nor targets. Everything I said was based on the simple mathematical promise of expectancy and not on what trader x or y has proven to do or said he was able to do so. For the record, I'm not willing to trade anything with a 50% win rate because after all I've been through I want something to have (a lot of) confidence in. So until - or if - I reach that point, I'll keep looking, trying, reading, searching, observing, analyzing...

Expectancy is not a promise but a calculation. The point is that whatever one has pegged as his "reward" is wishful thinking unless he has determined the probability of actually reaching that target. Otherwise, he's just playing math games.

As for a setup that occurs once a week and has an 80% expectancy with a reward of "only" five points, how is that inferior to the beginner who overtrades every day and watches his equity dribble away? Those five points, if played with size, will look pretty good.

Db

 

[firewalker99]

Expectancy is not a promise but a calculation. The point is that whatever one has pegged as his "reward" is wishful thinking unless he has determined the probability of actually reaching that target. Otherwise, he's just playing math games.

As for a setup that occurs once a week and has an 80% expectancy with a reward of "only" five points, how is that inferior to the beginner who overtrades every day and watches his equity dribble away? Those five points, if played with size, will look pretty good.

Db

That 80% setup is without a doubt very good. But you left out the most important part of my sentence: and you have to place your stop at 20 points with a target of only 5 points? After every month, the fiffth week would be a losing trade that equals the profits he made. Otherwise I'd be glad to trade a setup with that frequency or expectancy.

 

[dbphoenix]

That 80% setup is without a doubt very good. But you left out the most important part of my sentence: and you have to place your stop at 20 points with a target of only 5 points? After every month, the fiffth week would be a losing trade that equals the profits he made. Otherwise I'd be glad to trade a setup with that frequency or expectancy.

And you're continuing to play with numbers rather than address what's involved in real-time trading with real money. Would you trade exactly the same size for your fifth week if the previous four weeks had all been winners? Would you have no contingency stops? Would you make no changes to how you scale in or out? What do all of your calculations have to do with real trading?

Db

 

[firewalker99]

*Edit: i.e., that risk:reward has to do entirely with probability. Pulling some target out of thin air is meaningless. Unless one has some idea of the probability of a target being reached, what is probable is that he will be disappointed. As for "risk", the market couldn't care less what the trader is willing to risk; it's up to the trader to determine what the market demands. He can then decide whether he wants to risk that much or not. Simply placing a stop somewhere according to how much the trader can afford to lose often does little more than guarantee that the trader will in fact lose it.

I would define my stoploss on several criteria like ATR and depending if the target(s) is(are) fixed or not. Anything based on how much I was willing to lose in absolute numbers, would be an inferior strategy and subjective. My "risk" in total, depends on the probability of the setup and volatility at that moment which define the number of contracts to enter the trade with. Incorporated in the probability of the setup, has to be a target of course. What about time stops?

 

[firewalker99]

Would you trade exactly the same size for your fifth week if the previous four weeks had all been winners?

If I would not, than I'd let myself be emotionally influenced on what happened before.

Would you have no contingency stops? Would you make no changes to how you scale in or out?

Do you mean with contingency stops, emergency stops where I pull the trigger manually? Wouldn't that seem like abandoning the plan? Then again, why would I change my entry/exit if I had 4 successive profitable weeks? Are you implying you should change your plan depending on the outcome? This seems to go against everything you've told me to stick with the plan.

What do all of your calculations have to do with real trading?

Nothing, I'm not real time trading. But all this has to be defined if I ever were to begin again.

 

[dbphoenix]

You're breezing by all the prerequisites as if they are givens and wading back into the theoretical. What evidence do you have that "defining" your stoploss based on anything you've posted has any value? How would you set your target? What evidence would you have that you had set it properly? What's the probability of your setup? What, as far as that goes, is your setup?

In any event, shouldn't all of this be in First Steps or in your journal?

Db