Focus or Money Management?

[Splitlink]

Yes, with daily charts, that is the problem. How many losing trades can one afford before he has a winner?

On the other hand, short time frame charts can be exceedingly painful, because the market is able to trigger the stops set. In fact, they set the stops, themselves, in many cases, and remove them as they wish. It is, all, very manipulative.

As I have read, many times, "Where the stops are is the point that one should be entering--not exiting" Very easy to say, but not so easy to achieve correctly.

 

[tar]

Providing I have more winners than losers.

It's not the spread or the size of the stop or the timeframe - it's the win:loss ratio.

The cost % will affect the win rate and the win:loss ratio , the lost edge will hurt your odds , the more you give away the more you lose , so if you consistently give away 20% of a move surely this will hurt your odds and your win:loss ratio , its like swing trading aiming for 500 pips while paying 100 pips as a spread !

Lets say you aim for 15 pips and pay 2 pips : When the market moves in your favor you are up 13 and when it moves against you 15 pips you are down 17 , so instead of 15 vs 15 , the spread made it 13 vs 17 .

Another problem with short time-frames , is you tend to trade much more , check CV's example .

 

[Sigma-D]

As I have read, many times, "Where the stops are is the point that one should be entering--not exiting" Very easy to say, but not so easy to achieve correctly.

An extremely insightful point.

When you examine the charts at the end of the day, the most 'obvious' points to have got in are where the instrument has finished its minor reversal and resumes it's move with the predominant trend. These are also the tops and bottoms that we are advised NOT to chase.

When you examine the position from which these moves are born, they are the most contra setup possible with regard to the underlying trend. All you are getting is exit signals, not entries. I've tried trading these on this basis using this rationale and yes, when you crack a good one the ride is rather satisfying. The problem is, you bag far fewer home runs than whipsaws. The move that looks so perfect as the start of that 'massive' (for current markets) move of 60 pips is also identical to the setup the previous dozen times when nothing developed and you would have had to sit through hours of close to stop action, or worse, multiple failed entries.

Perhaps there are some that can discern the subtle nuances and differentiate the action between the myriad false starts and those rare rapid moves into profit from the dark abyss of informationless data from which all moves are born. I'm not one of them. I haven't met anyone who can. I don't know of anyone who can.

 

[robster970]

An extremely insightful point.

When you examine the charts at the end of the day, the most 'obvious' points to have got in are where the instrument has finished its minor reversal and resumes it's move with the predominant trend. These are also the tops and bottoms that we are advised NOT to chase.

When you examine the position from which these moves are born, they are the most contra setup possible with regard to the underlying trend. All you are getting is exit signals, not entries. I've tried trading these on this basis using this rationale and yes, when you crack a good one the ride is rather satisfying. The problem is, you bag far fewer home runs than whipsaws. The move that looks so perfect as the start of that 'massive' (for current markets) move of 60 pips is also identical to the setup the previous dozen times when nothing developed and you would have had to sit through hours of close to stop action, or worse, multiple failed entries.

Perhaps there are some that can discern the subtle nuances and differentiate the action between the myriad false starts and those rare rapid moves into profit from the dark abyss of informationless data from which all moves are born. I'm not one of them. I haven't met anyone who can. I don't know of anyone who can.

Stops are cheap liquidity. If there are a lot of them bundled in one area it represents an opportunity to buy/sell into the market at a discount.

Also Sigma, the data is not informationless, you just have to know what to look for. Sometimes it pays off and sometimes you do get a false start but even on the false starts, the auction rotations are generally large enough for you to pull something small out of the market as the move loses momentum. It is those with static trading strategies that lose in this situation and this is why I think many find it difficult.

Finally to answer the OP's question: Focus on those timeframes. The assumption is that you are not a tard and can manage your money. If you can't you should not be trading. Period.

 

[Splitlink]

Stops are cheap liquidity. If there are a lot of them bundled in one area it represents an opportunity to buy/sell into the market at a discount.

Also Sigma, the data is not informationless, you just have to know what to look for. Sometimes it pays off and sometimes you do get a false start but even on the false starts, the auction rotations are generally large enough for you to pull something small out of the market as the move loses momentum. It is those with static trading strategies that lose in this situation and this is why I think many find it difficult.

Finally to answer the OP's question: Focus on those timeframes. The assumption is that you are not a tard and can manage your money. If you can't you should not be trading. Period.

Well, I do keep my losses under control, but these stop areas are zones and can be dozens of stop points wide. My feeling is that

a) the trade should be taken in the direction of the movement remembering that it is a momentum movement, likely to reverse at any second.

and b) the time for entry should be at the earliest point possible that you think that the stop zone should be starting at, so as to get that momentum. Let it go go past, too much, and you have missed the boat.

Even knowing that, I find it very difficult to do in reality.

 

[robster970]

Well, I do keep my losses under control, but these stop areas are zones and can be dozens of stop points wide. My feeling is that

a) the trade should be taken in the direction of the movement remembering that it is a momentum movement, likely to reverse at any second.

and b) the time for entry should be at the earliest point possible that you think that the stop zone should be starting at, so as to get that momentum. Let it go go past, too much, and you have missed the boat.

Even knowing that, I find it very difficult to do in reality.

I don't agree and I trade like this all the time split. All it takes is practice. Personally I find this scenario to be one of the most reliable set-ups in my repertoire. Essentials for me are:

- DOM/T&S so I can see the order flow and whether people are hoovering up the market orders being generated as stops are initiated.

- Knowing the value areas where people have traded. Often these reversals are in places of transition from one value area into another and it indicates that value has been found again.

Point is split, there are big clues given if you know what to look for and the likelihood is that I would be your counter-party in this scenario.

Don't forget, I trade a product that is exchange based (futures) and so I have visibility and transparency of what is going on. FX is an interbank product with none of this visibility. It is why I don't go near FX. Why would I want to disadvantage myself like that?

 

[Splitlink]

I don't agree and I trade like this all the time split. All it takes is practice. Personally I find this scenario to be one of the most reliable set-ups in my repertoire. Essentials for me are:

- DOM/T&S so I can see the order flow and whether people are hoovering up the market orders being generated as stops are initiated.

- Knowing the value areas where people have traded. Often these reversals are in places of transition from one value area into another and it indicates that value has been found again.

Point is split, there are big clues given if you know what to look for and the likelihood is that I would be your counter-party in this scenario.

Don't forget, I trade a product that is exchange based (futures) and so I have visibility and transparency of what is going on. FX is an interbank product with none of this visibility. It is why I don't go near FX. Why would I want to disadvantage myself like that?

I've been into order flow. I guess, as you say, I don't see any real clues as to what I am looking for.

 

[SpreadDoctor]

Stops are cheap liquidity. If there are a lot of them bundled in one area it represents an opportunity to buy/sell into the market at a discount.

Also Sigma, the data is not informationless, you just have to know what to look for. Sometimes it pays off and sometimes you do get a false start but even on the false starts, the auction rotations are generally large enough for you to pull something small out of the market as the move loses momentum. It is those with static trading strategies that lose in this situation and this is why I think many find it difficult.

Finally to answer the OP's question: Focus on those timeframes. The assumption is that you are not a tard and can manage your money. If you can't you should not be trading. Period.

I agree with your post. Price targets obvious stop areas and it happen over and over again. It's certainly possible to make trades into stop areas and out of them after the 'profit release'. Like everything nothing is black and white and you will get false moves into the stops and whipsaw coming out, there are simply too many participants who understand this and therefore often it will not be a clean move in and out. Managing Money - spot on, this has to be mastered as 1 or 2 badly managed trades per day is enough to turn a profitable trader into a losing trader.

 

[robster970]

I agree with your post. Price targets obvious stop areas and it happen over and over again. It's certainly possible to make trades into stop areas and out of them after the 'profit release'. Like everything nothing is black and white and you will get false moves into the stops and whipsaw coming out, there are simply too many participants who understand this and therefore often it will not be a clean move in and out. Managing Money - spot on, this has to be mastered as 1 or 2 badly managed trades per day is enough to turn a profitable trader into a losing trader.

Interestingly, nobody has mentioned the elephant in the room; Who is in control, short term or long term traders? This will colour intraday activity and therefore determine what the agenda for an intraday session is likely to be. This is not the same as knowing where price is going but it does narrow down your hypotheses on how to trade a session. Then you can respond accordingly when sell-offs are induced in order to find where value (aka long term participants) are likely to step in and hold the price up.

Then you trade with them and not against them and you profit with the big boys and not the minnows.

If delta is going southbound and price is going nowhere, it's time to take the reversal train.

 

[SpreadDoctor]

Interestingly, nobody has mentioned the elephant in the room; Who is in control, short term or long term traders? This will colour intraday activity and therefore determine what the agenda for an intraday session is likely to be. This is not the same as knowing where price is going but it does narrow down your hypotheses on how to trade a session. Then you can respond accordingly when sell-offs are induced in order to find where value (aka long term participants) are likely to step in and hold the price up.

Then you trade with them and not against them and you profit with the big boys and not the minnows.

If delta is going southbound and price is going nowhere, it's time to take the reversal train.

steady on chap don't be giving everything away.

 

[counter_violent]

Interestingly, nobody has mentioned the elephant in the room; Who is in control, short term or long term traders? This will colour intraday activity and therefore determine what the agenda for an intraday session is likely to be. This is not the same as knowing where price is going but it does narrow down your hypotheses on how to trade a session. Then you can respond accordingly when sell-offs are induced in order to find where value (aka long term participants) are likely to step in and hold the price up.

Then you trade with them and not against them and you profit with the big boys and not the minnows.

If delta is going southbound and price is going nowhere, it's time to take the reversal train.

Post 12 sorta covers part of it but doesn't actually say it.

 

[wallstreetwarrior87]

Interestingly, nobody has mentioned the elephant in the room; Who is in control, short term or long term traders? This will colour intraday activity and therefore determine what the agenda for an intraday session is likely to be.

Exactly:clap:

If not, may as well get tossing - start with the coins

 

[robster970]

steady on chap don't be giving everything away.

God, what am I doing

Exactly:clap:

If not, may as well get tossing - start with the coins

Hola - I trust you are well?

 

[tar]

Interestingly, nobody has mentioned the elephant in the room; Who is in control, short term or long term traders? This will colour intraday activity and therefore determine what the agenda for an intraday session is likely to be. This is not the same as knowing where price is going but it does narrow down your hypotheses on how to trade a session. Then you can respond accordingly when sell-offs are induced in order to find where value (aka long term participants) are likely to step in and hold the price up.

Then you trade with them and not against them and you profit with the big boys and not the minnows.

If delta is going southbound and price is going nowhere, it's time to take the reversal train.

This is like the saying don't trade against the trend , make all your trades in the direction of the main trend , anyway what "in control" means ? Is it quantifiable ?

Lets not forget that in the case of Indices there are hundreds of individual stocks involved in the equation .

 

[robster970]

This is like the saying don't trade against the trend , make all your trades in the direction of the main trend , anyway what "in control" means ? Is it quantifiable ?

Lets not forget that in the case of Indices there are hundreds of individual stocks involved into the equation .

Ostensibly I am talking about a set-up here where short(er) term participants are testing to see where value lies from the long(er) term participants and therefore trading a reversal which is often (but not always) in line with a trend on a higher TF.

Think about how a trend often starts. There is a sell-off and for a few days after there are attempts to push lower. However you see that although there is higher selling activity (look at volume), the price is trading in a range. This is long term participants building a position. Then once all the sellers have gone, what is left? A demand/supply imbalance. Then price starts to go up and then momentum traders get on the bandwagon and add fuel to the move. Who is selling into them all the way up? Is the the participants who built the initial position? To do this you need a lot of money operating over longer timeframes.

In control means exactly what is says - are the long term traders in control in the current session or the short term traders? Yes it is quantifiable as you can see it in the form of the value areas that are created.

With the indices, futures market often leads the cash market, especially on S&P500 IMO.

 

[SpreadDoctor]

shhhhhhhh. thats enough now.

Ostensibly I am talking about a set-up here where short(er) term participants are testing to see where value lies from the long(er) term participants and therefore trading a reversal which is often (but not always) in line with a trend on a higher TF.

Think about how a trend often starts. There is a sell-off and for a few days after there are attempts to push lower. However you see that although there is higher selling activity (look at volume), the price is trading in a range. This is long term participants building a position. Then once all the sellers have gone, what is left? A demand/supply imbalance. Then price starts to go up and then momentum traders get on the bandwagon and add fuel to the move. Who is selling into them all the way up? Is the the participants who built the initial position? To do this you need a lot of money operating over longer timeframes.

In control means exactly what is says - are the long term traders in control in the current session or the short term traders? Yes it is quantifiable as you can see it in the form of the value areas that are created.

With the indices, futures market often leads the cash market, especially on S&P500 IMO.

 

[tar]

Ostensibly I am talking about a set-up here where short(er) term participants are testing to see where value lies from the long(er) term participants and therefore trading a reversal which is often (but not always) in line with a trend on a higher TF.

Think about how a trend often starts. There is a sell-off and for a few days after there are attempts to push lower. However you see that although there is higher selling activity (look at volume), the price is trading in a range. This is long term participants building a position. Then once all the sellers have gone, what is left? A demand/supply imbalance. Then price starts to go up and then momentum traders get on the bandwagon and add fuel to the move. Who is selling into them all the way up? Is the the participants who built the initial position? To do this you need a lot of money operating over longer timeframes.

In control means exactly what is says - are the long term traders in control in the current session or the short term traders? Yes it is quantifiable as you can see it in the form of the value areas that are created.

With the indices, futures market often leads the cash market, especially on S&P500 IMO.

Cash vs Futures cant make an assumption who leads , both affects each other , check the NQ when there's an earnings announcement for AAPL for example , it certainly is effected by the stock price .

Anyway the answer to your question - although its not yet clear to me - , shouldn't be : long term traders vs short term , but rather local vs paper .

 

[wallstreetwarrior87]

In control means exactly what is says - are the long term traders in control in the current session or the short term traders? Yes it is quantifiable as you can see it in the form of the value areas that are created.

With the indices, futures market often leads the cash market, especially on S&P500 IMO.

All good amigo!

You make a very good scenario here that can help with the other factor that has been mentioned - the spread cost.

Now to the serious daytrader, time is points and points are money, so granted there may not be 100 point swings to reduce to spread cost factor, but there is a way for those that can focus for longer periods (not for everyone, each to their own). I have mentioned this before:

Its called sweeping- and for this you need to know what to look for on the chart, in the book, and then confirm the result (transparent market needed to learn). Once you hone your skills, you can enter at the point price gets swept and be in the money right off the bat. If price does not go, you pretty much pay the spread (maybe plus a point).

Takes time to learn, but CAN be done.

So IMHO this requires both good money management and Focus (which is the question of the thread). The problem is that this is not mainstream.

Remember no one said it was going to be easy, so it is irrelevant what the various success rates are. Only you can decide how deep you want to go!

 

[robster970]

Its called sweeping

OK - I think I understand how to do that although that feels more like a scalping strategy and I can see a 3pt trade in today's session on ES around when it tagged 98 (after setting and IB high of 97.75) and then it looks like 97.75 through to 97.25 were swept to initiate the down move to 95.25.

Look about right? Gotta be fast and confident to take this kind of trade.

 

[wallstreetwarrior87]

OK - I think I understand how to do that although that feels more like a scalping strategy and I can see a 3pt trade in today's session on ES around when it tagged 98 (after setting and IB high of 97.75) and then it looks like 97.75 through to 97.25 were swept to initiate the down move to 95.25.

Look about right? Gotta be fast and confident to take this kind of trade.

Fast yes, must know your onions, have the right set up etc. Not for everybody, but just putting it out there for those whom have not considered it to be a possibility.

Scalping well depends on definition, but 10/20 pts/pips are regular moves when all the balls are aligned:cheesy: