How To Trade: Full Stop

[MacAttack]

There are other variables that have not been mentioned as of yet:idea:

What determines the odds of the 7.25 winner:?:

We must know EXACTLY what we are going to do, not what we MIGHT or MIGHT NOT do

TE

Odds are determined by many things I would think.
Potential Range. We should aim to capture a portion of it.
If a stock has a range of $2 good luck getting a $7 winner in 1 day.
If we determine that it has a $9 range then we move on to the next variables.
Short interest maybe, futures vs cash, trend, proven setup.
Stock should also fit our predetermined screening criteria which should increase the odds.........if we are running the correct screen. We want to buy what the generals are buying and sell what they are selling.

 

[The Expert]

Odds are determined by many things I would think.
Potential Range. We should aim to capture a portion of it.
If a stock has a range of $2 good luck getting a $7 winner in 1 day.
If we determine that it has a $9 range then we move on to the next variables.
Short interest maybe, futures vs cash, trend, proven setup.
Stock should also fit our predetermined screening criteria which should increase the odds.........if we are running the correct screen.

We already have an automated scan that prevents us from daytrading any stock that does not have a least a 50 cent daily range, but, the longer the DR is over 50 cent the better

So, we are now set up to pick from a list of potential candidates

What is next:?:

 

[MacAttack]

We already have an automated scan that prevents us from daytrading any stock that does not have a least a 50 cent daily range, but, the longer the DR is over 50 cent the better

So, we are now set up to pick from a list of potential candidates

What is next:?:

I really don't know. No wonder I've never made consistent money trading.
My guess is that the next step is to pick stocks that are actually in an uptrend if we are looking to buy.

 

[rainman2]

We already have an automated scan that prevents us from daytrading any stock that does not have a least a 50 cent daily range, but, the longer the DR is over 50 cent the better

So, we are now set up to pick from a list of potential candidates

What is next:?:

GENERALly speaking, average volume.

 

[forker]

EXACTLY:clap:

1% is way toooooooo much for daytrading, especially on the losers:smart:

However, if you care to change the variables in the equation, you will see that each variable will affect the outcome

It is the variables that one needs to concentrate on, not the TA

TE

holy crap, that must be a revelation for this forum... did you work that one out yourself?:smart:

 

[avasfx]

Lately i have decided to determine risk not based on % of the equity, but measure risk in cents on each trade, with loss limit on the whole day, trading (opening) fixed amount of lots. That gives me psychological comfort, risk is always determined for the day, s/l always is not bigger than 10-12cents, most of the time 2-5 cents.
I don’t understand why you have daily target? If today you don’t understand market or feel bad or something else, or you lost today amount for today trading… For me, what market will give me – I’m happy, the main thing is not to lose, is end day in +if it 100$ that’s ok, if it’s 2000$ it’s ok.

 

[Geraldo]

Hello Mr. Expert. I worked out some data (O-H-L-C) in a spreadsheet. Two stocks up until now (it is a bit time consuming), to get a picture of what you want to teach me/(some of) us.

A first conclusion: In uptrend the low is mostly very close to the open. In downtrend the high is very close near the open. However I did not remark you mentioning something about trends, so I wonder if this is relevant to how you see it. But maybe this is for later, as due to all the crapmasters who interfere, you did not get very far up untill now I assume. I reread (parts of) the tread more times to learn.

 

[Traduk]

The variables to make it are already there. Lose $320, Win $2,320 = $2000 Profit.
Need to know our "average range target".
If it was 5 points for example I think we'd require 464 shares with a 0.17 stop.
The winner in your example is 7.25 times the size of the loser which is probably low odds.

You have it wrong and the Expert hasn't corrected you.

There are 4 losers in his hypothesis. You have lumped them together as one to get a ratio of 1:7.25. The actual ratio is 1:29. Each trade is an entity on its own and in this hypothetical scenario would involve 5 X $80 risks, 4 of which are losers.

If you use 1600 shares you can afford a 5c stop loss but need the winner to yield $1.45.

If you go down to 800 shares you can afford a 10c loss but need $2.90 winner.

At 400 shares its 20c stop loss but needs $5.80 winner.

With an 80% loss rate the hypothesis can only be for probing a range looking for a break-out. Bear in mind that 3 losers causes stress and the exponential increase with each thereafter can cause damage.

Unless you are prepared to sit palms together pointing skywards for hours or days on end think again.

Use 10 trades in the W\L & R\R matrix. put the numbers in the W\L columns eg. 2:8, 3:7, 4:6 etc. Look at the instrument\s of interest and determine recent daily range.

Nobody ever gets a quart from a pint pot so be realistic. If you cannot reasonably expect to get an entry with a minuscule stop without getting hit 80% of the time it's a no go. and if an unusual move is required to provide winners of the size to make a profit it again is a no go, absolutely.

Once you get the idea of working win loss and risk reward ratios together and apply them to instruments of interest you approach the hard part of trading and may conclude that the best part of the equation to work on is skill level in selection and placement which by skewing the W\L ratio in your favour is not only more satisfying but increases chances of ultimate success.

Running a scatter-gun approach over multiple concurrent trades is comparable with investors who buy many different shares in penny stocks knowing that most are likely to fail but some may rocket into the stratosphere and cover all the losses with profit. For a trader, time is a luxury in thin supply.

 

[temporarilylight]

what instruments did you say you traded, TradUK?
if its currencies, it'd be nice to see you drop by the livecalls thread. I imagine we could learn from you if you have 10 years success under your belt.

 

[Traduk]

what instruments did you say you traded, TradUK?
if its currencies, it'd be nice to see you drop by the livecalls thread. I imagine we could learn from you if you have 10 years success under your belt.

E-mini S&P is my arena of choice. Have traded various indices and bonds but never Forex.

I should have another look around and include Forex. I find myself increasingly yearning to get back to times when what I traded actually trended a lot rather than fighting to the death over every tick. Maybe Forex facilitates that but I haven't looked.

 

[MacAttack]

You have it wrong and the Expert hasn't corrected you.

There are 4 losers in his hypothesis. You have lumped them together as one to get a ratio of 1:7.25. The actual ratio is 1:29. Each trade is an entity on its own and in this hypothetical scenario would involve 5 X $80 risks, 4 of which are losers.

If you use 1600 shares you can afford a 5c stop loss but need the winner to yield $1.45.

If you go down to 800 shares you can afford a 10c loss but need $2.90 winner.

At 400 shares its 20c stop loss but needs $5.80 winner.

With an 80% loss rate the hypothesis can only be for probing a range looking for a break-out. Bear in mind that 3 losers causes stress and the exponential increase with each thereafter can cause damage.

Unless you are prepared to sit palms together pointing skywards for hours or days on end think again.

Use 10 trades in the W\L & R\R matrix. put the numbers in the W\L columns eg. 2:8, 3:7, 4:6 etc. Look at the instrument\s of interest and determine recent daily range.

Nobody ever gets a quart from a pint pot so be realistic. If you cannot reasonably expect to get an entry with a minuscule stop without getting hit 80% of the time it's a no go. and if an unusual move is required to provide winners of the size to make a profit it again is a no go, absolutely.

Once you get the idea of working win loss and risk reward ratios together and apply them to instruments of interest you approach the hard part of trading and may conclude that the best part of the equation to work on is skill level in selection and placement which by skewing the W\L ratio in your favour is not only more satisfying but increases chances of ultimate success.

Running a scatter-gun approach over multiple concurrent trades is comparable with investors who buy many different shares in penny stocks knowing that most are likely to fail but some may rocket into the stratosphere and cover all the losses with profit. For a trader, time is a luxury in thin supply.

Thanks for the clarification. I see where I screwed up last night. I'm working on a spreadsheet now so I can quickly change the variables, but it's a pain in the butt. I have formulas in some of the cells, but if you want to change one of those cells then you have to overwrite the formula.

 

[The Expert]

Lately i have decided to determine risk not based on % of the equity, but measure risk in cents on each trade, with loss limit on the whole day, trading (opening) fixed amount of lots. That gives me psychological comfort, risk is always determined for the day, s/l always is not bigger than 10-12cents, most of the time 2-5 cents.
I don’t understand why you have daily target? If today you don’t understand market or feel bad or something else, or you lost today amount for today trading… For me, what market will give me – I’m happy, the main thing is not to lose, is end day in +if it 100$ that’s ok, if it’s 2000$ it’s ok.

2-5 cents

We must have a daily target, otherwise we have no plan

When you have an objective to achieve, the mind works differently than when not having an objective:smart:

The market will give you, or take away from you, exactly what YOU allow, for, if you have a small loss and let it get bigger then that is YOUR fault, if YOU have a nice profit and let it half in a few seconds/minutes, then that is also YOUR fault, and so on and so forth.

The reality is such that you MUST make good money, else you are just wasting YOUR time and before not too long YOU will get fed up and give up, like most do

The first REAL step in becoming a winner is to stop being a loser

TE

 

[timsk]

I'm working on a spreadsheet now so I can quickly change the variables, but it's a pain in the butt.

Hi MacAttack,
I don't know if TE has mentioned this yet or, indeed, if he intends to but, if you're day trading US equites, your Excel spreadsheet will need to take account of a stock's volatility. If you want to confirm the importance of this for yourself - perform this simple test: work out the appropriate trade size using a $1.00 stop and a $0.10 cent stop respectively. Trade GOOG with the $0.10 cent stop and MSFT with the one dollar stop and see what happens! There are many ways to measure volatility; using Average True Range (ATR) is one of the most common and is highly effective. Be warned, however, that ATR is an indicator and falls firmly in the camp of conventional TA. If your mind has been polluted by the notion that all TA and associated indicators are rubbish - then you'll need to find an alternative solution. Either way, ignore volatility at your peril! Incidentally, for anyone wanting 'proof' of the value of conventional TA and indicators - then ATR provides a water tight case, IMO.

Have a gander at Paul's excellent article that covers the issue in detail: Position Sizing as an Approach to Risk Management
Tim.

 

[The Expert]

You have it wrong and the Expert hasn't corrected you.

There are 4 losers in his hypothesis. You have lumped them together as one to get a ratio of 1:7.25. The actual ratio is 1:29. Each trade is an entity on its own and in this hypothetical scenario would involve 5 X $80 risks, 4 of which are losers.

If you use 1600 shares you can afford a 5c stop loss but need the winner to yield $1.45.

If you go down to 800 shares you can afford a 10c loss but need $2.90 winner.

At 400 shares its 20c stop loss but needs $5.80 winner.

With an 80% loss rate the hypothesis can only be for probing a range looking for a break-out. Bear in mind that 3 losers causes stress and the exponential increase with each thereafter can cause damage.

Unless you are prepared to sit palms together pointing skywards for hours or days on end think again.

Use 10 trades in the W\L & R\R matrix. put the numbers in the W\L columns eg. 2:8, 3:7, 4:6 etc. Look at the instrument\s of interest and determine recent daily range.

Nobody ever gets a quart from a pint pot so be realistic. If you cannot reasonably expect to get an entry with a minuscule stop without getting hit 80% of the time it's a no go. and if an unusual move is required to provide winners of the size to make a profit it again is a no go, absolutely.

Once you get the idea of working win loss and risk reward ratios together and apply them to instruments of interest you approach the hard part of trading and may conclude that the best part of the equation to work on is skill level in selection and placement which by skewing the W\L ratio in your favour is not only more satisfying but increases chances of ultimate success.

Running a scatter-gun approach over multiple concurrent trades is comparable with investors who buy many different shares in penny stocks knowing that most are likely to fail but some may rocket into the stratosphere and cover all the losses with profit. For a trader, time is a luxury in thin supply.

The Expert does not correct anyone unless they are silly and stupid:cheesy:

If people want to learn, then they must make a conscious decision to check exactly what they say and do, for, if they do so they will find that most of it is just pure and utter rubbish, and that is EXACTLY what they must stop doing

I never said it was easy to become an Expert, but it is possible for any person who takes it seriously, which, the majority just have not got the patience or commitment to do what is required.

Everybody want's it NOW:whistling

TE

 

[The Expert]

Hi MacAttack,
I don't know if TE has mentioned this yet or, indeed, if he intends to but, if you're day trading US equites, your Excel spreadsheet will need to take account of a stock's volatility. If you want to confirm the importance of this for yourself - perform this simple test: work out the appropriate trade size using a $1.00 stop and a $0.10 cent stop respectively. Trade GOOG with the $0.10 cent stop and MSFT with the one dollar stop and see what happens! There are many ways to measure volatility; using Average True Range (ATR) is one of the most common and is highly effective. Be warned, however, that ATR is an indicator and falls firmly in the camp of conventional TA. If your mind has been polluted by the notion that all TA and associated indicators are rubbish - then you'll need to find an alternative solution. Either way, ignore volatility at your peril! Incidentally, for anyone wanting 'proof' of the value of conventional TA and indicators - then ATR provides a water tight case, IMO.

Have a gander at Paul's excellent article that covers the issue in detail: Position Sizing as an Approach to Risk Management
Tim.

1% is WAY TOO HIGH for a newbie starting to learn about daytrading.

In fact, if I was mentoring someone I would not allow them risk any more than .15% per trade, and if I caught him/her doing otherwise I would give them one almighty KICK up the rear end :cheesy:

I know I said that there are no rules but to make money, but, no rules means exactly that, which means that having no rules is not a rule

There are certain KEY phrases that every newbie must memorize, and for daytrading US stocks, one is as follows.

"If I can't make money trading 100 shares, then how the hell am I going to make money trading 5000 shares" :smart:

Never be afraid to be a baby

Forget about the experts, excluding The Expert, of course

What you do not like to hear, is usually what you should be hearing:whistling

TE

 

[Traduk]

The Expert does not correct anyone unless they are silly and stupid:cheesy:

If people want to learn, then they must make a conscious decision to check exactly what they say and do, for, if they do so they will find that most of it is just pure and utter rubbish, and that is EXACTLY what they must stop doing

I never said it was easy to become an Expert, but it is possible for any person who takes it seriously, which, the majority just have not got the patience or commitment to do what is required.

Everybody want's it NOW:whistling

TE

Forget my intrusion and leave this interplay for the moment.

The guy is genuinely trying to learn and putting effort into creating a spreadsheet.

Put him right. Tell him aggregation comes after the fact, Compilation via individuals before the the fact.

Other factors enter the spreadsheet later on which involve money management etc,

You may banter with me because I can read you like a book with a few missing pages but please don't mess about with genuinely interested parties.

BTW You are trying to cover your butt and its obvious albeit disguised in partial riddle which is aimed towards your imaginary foes. Please put it right for Mac. I will not interfere unless you blunder again.

 

[The Expert]

Forget my intrusion and leave this interplay for the moment.

The guy is genuinely trying to learn and putting effort into creating a spreadsheet.

Put him right. Tell him aggregation comes after the fact, Compilation via individuals before the the fact.

Other factors enter the spreadsheet later on which involve money management etc,

You may banter with me because I can read you like a book with a few missing pages but please don't mess about with genuinely interested parties.

BTW You are trying to cover your butt and its obvious albeit disguised in partial riddle which is aimed towards your imaginary foes. Please put it right for Mac. I will not interfere unless you blunder again.

The Expert never makes a blunder, for, that is for weak minded individuals only

Spreadsheets are a waste of time and will not get anyone anywhere, but, YOU should know that

I introduce topics for a reason, as, The Expert always has a reason, for, that is why he is The Expert:smart:

:smart:TE:smart:

 

[MacAttack]

The Expert does not correct anyone unless they are silly and stupid:cheesy:

If people want to learn, then they must make a conscious decision to check exactly what they say and do, for, if they do so they will find that most of it is just pure and utter rubbish, and that is EXACTLY what they must stop doing

I never said it was easy to become an Expert, but it is possible for any person who takes it seriously, which, the majority just have not got the patience or commitment to do what is required.

Everybody want's it NOW:whistling

TE

I have to admit I want it right now, but I've spent years studying the wrong stuff, so I'm pretty desperate. I even have oodles of notes I took on Woodie's CCI. Embarassing to say it now. I spent the last couple years concentrating on the AHG thread from Anekdoten on elitetrader. He seemed genuine and really seemed to know what he was doing, but I just couldn't get it to work. It was just based on price action on the charts, no indicators really. I've read so many things over the years and taken so many notes and gone down so many wrong paths that my head is a little muddled with thoughts now. If I can just get started down the correct path I would be one happy and very thankful person.

 

[The Expert]

I have to admit I want it right now, but I've spent years studying the wrong stuff, so I'm pretty desperate. I even have oodles of notes I took on Woodie's CCI. Embarassing to say it now. I spent the last couple years concentrating on the AHG thread from Anekdoten on elitetrader. He seemed genuine and really seemed to know what he was doing, but I just couldn't get it to work. It was just based on price action on the charts, no indicators really. I've read so many things over the years and taken so many notes and gone down so many wrong paths that my head is a little muddled with thoughts now. If I can just get started down the correct path I would be one happy and very thankful person.

OK then MA, here are a few questions for you, and do not be shy or afraid to answer.

1. Where do you live - Country will suffice
2. How much risk capital have you, in $$$, and can you afford to lose it all
3. Are you married or single
4. Have you got children - just the number will do
5. Are you working in a normal job
6. At what time/s of the day can you access the PC or Laptop to trade

TE

 

[MacAttack]

OK then MA, here are a few questions for you, and do not be shy or afraid to answer.

1. Where do you live - Country will suffice
2. How much risk capital have you, in $$$, and can you afford to lose it all
3. Are you married or single
4. Have you got children - just the number will do
5. Are you working in a normal job
6. At what time/s of the day can you access the PC or Laptop to trade

TE

1. USA
2. Only $20,000 (lost all my money multiple times, I can lose again, but I'm not going to, never again)
3. Single
4. 0 Kids
5. Yes......normal job
6. All day (until my company notices I don't do anything)

Please don't tell me I don't have enough money. Even if I have to start making tiny but consistent profits I'll take it. Plus I can keep saving more.

I"m also not a total newbie. I trade worse than one though. I was a stockbroker (glorified telemarketer) at one of the deep discount brokers a few years ago. I've traded stocks, options, NQ futures for about 12 years. Never had a profitable year. Never !