Questions for the pros

Pavlec

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Hi,

I've been trading for 2 years now and I still didn't find any "edge". I've traded stocks and in the last year I'm on the ES. I've tried every strategies that I saw on forums and books and never found anything close to an edge. HH/HL, S/R, Wave, Pivots, Countertrend etc...

I'm not asking for a strategy here, I just want pros to give me some hints so that at least I search in the right direction. This is the three questions I think will help me the most in my search for an edge.

1) What kind of r:r should I look for:

a) Scalping style (small target/big stop)
b) Normal style (Same target/same stop)
c) Trend style (big target/small stop)

2) What timeframe should I watch:

a) Very fast TF (under 5 minutes/tick/range)
b) Fast TF (5-15 minutes)
c) Normal TF ( 30-60 minutes)
d) Slow TF (daily)

I know for some this questions is stupid. But I read a lot that under the 10 minutes TF its only noise and we cant trade it. And I know that I need to look at all of them but the answer I want is which one should I watch for 10 000 hours?

3) Should I use my time and energy at watching the DOM and T/S or I can concentrate only on charts?

Thanks for the peoples who will reply you will help me a lot. I want to work and find it by myself but I really need some help since I don't know anyone who trade and sometime I ask myself if it's even possible to do money in trading. And sorry for the english it's not my first language.

Pavlec
 
We can't answer the timeframe question for you. That's one you have to sort out for yourself. It needs to be one you can work with consistently. There isn't a best one - just best for you. Once you've made that determination you can work on trading effectively in that timeframe.

As for the R/R ratio, that's a performance metric for evaluating system results. It's not a style, or anything like that. People get WAY too hung up with R/R.
 
I've been trading for 2 years now and I still didn't find any "edge". I've traded stocks and in the last year I'm on the ES. I've tried every strategies that I saw on forums and books and never found anything close to an edge. HH/HL, S/R, Wave, Pivots, Countertrend etc...

How did you determine that you never tried a strategy with an edge?

A trading system has two primary components. A strategy and the trader. A poor trader using a good strategy will get poor results.
 
We can't answer the timeframe question for you. That's one you have to sort out for yourself. It needs to be one you can work with consistently. There isn't a best one - just best for you. Once you've made that determination you can work on trading effectively in that timeframe.

As for the R/R ratio, that's a performance metric for evaluating system results. It's not a style, or anything like that. People get WAY too hung up with R/R.

So if I understand you, professionals doesn't have fixed stop and target like a 20 ticks target and a 10 ticks stop?


HowardCohodas said:
How did you determine that you never tried a strategy with an edge?

A trading system has two primary components. A strategy and the trader. A poor trader using a good strategy will get poor results.

Because I did test alot of strategies and I saw that the probabilities are not enough for an edge. Ex: Support and resistance, I place MAJOR s/r on my chart and ~50% of the time it will rebound or will pass throught without a prob.

You look like you know what your talking about so can you give me a hint of something I should concentrate more on?

Thanks for the repliers
 
Because I did test alot of strategies and I saw that the probabilities are not enough for an edge. Ex: Support and resistance, I place MAJOR s/r on my chart and ~50% of the time it will rebound or will pass throught without a prob.

With all due respect if you are noticing that price respects S/R only 50% of the time you are either drawing it wrong or using it incorrectly.

I would need more info to help you.

-Tom
 
With all due respect if you are noticing that price respects S/R only 50% of the time you are either drawing it wrong or using it incorrectly.

I would need more info to help you.

-Tom

Hi TraderDante,

I know your reputation here so I'm not challenging you in this reply, but what do you call a rebound? 2 ticks is a rebound for you? For my theory If I put my limit order at a resistance and have a 4 ticks target and stop as example ~50% of the time I will win but long term will lose because of the commisions. So the other way to do it is to let it run but now the questions is when do you close it?
 
Hi TraderDante,

I know your reputation here so I'm not challenging you in this reply, but what do you call a rebound? 2 ticks is a rebound for you? For my theory If I put my limit order at a resistance and have a 4 ticks target and stop as example ~50% of the time I will win but long term will lose because of the commisions. So the other way to do it is to let it run but now the questions is when do you close it?

I call a rebound 10 ticks at an absolute minimum.

I'm not a scalper so I don't care about a 2 tick bounce. If you draw your levels correctly and you choose the right ones depending on price movement into them you will get a 10 tick+ bounce almost every single time. Sometimes the R won't be great but you have to look at that in light of a successful fill on your target e.g. your win/loss.

At any rate, I don't trade for those small gains. I tend to go for the larger swing points and just as I use levels to get in, I use them to get out too.

As an example of a level play, the last FX trade I did was to buy GBP/USD at 1.5535. (see chart) There was about 4 pip drawdown on this which is usual and an immediate bounce to 54's for +19 give or take your spread. Anyway, getting out on the first 5m reaction doesn't interest me so I held this and exited at 1.5635 for a full point as this was the next level I thought price would rebound too.

Last futures trade I did was on Friday in the Dec Bund. I bought 125.88 which is a no-brainer level. Coincidentally, this also had a 4 tick drawdown and then an immediate bounce on the Non-Farm figure to 126.51. I screwed this trade up a bit, taking 26.33 for only 45 ticks as it didn't quite hit the target of 126.63 until yesterday. Anyway you get the drift.

Hit the right levels at the right time and you will get it right way over 50% of the time.

I would not give up on S/R. It's the most powerful thing I've ever seen.

Just my 2 cents.
 

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I call a rebound 10 ticks at an absolute minimum.

I'm not a scalper so I don't care about a 2 tick bounce. If you draw your levels correctly and you choose the right ones depending on price movement into them you will get a 10 tick+ bounce almost every single time. Sometimes the R won't be great but you have to look at that in light of a successful fill on your target e.g. your win/loss.

At any rate, I don't trade for those small gains. I tend to go for the larger swing points and just as I use levels to get in, I use them to get out too.

As an example of a level play, the last FX trade I did was to buy GBP/USD at 1.5535. (see chart) There was about 4 pip drawdown on this which is usual and an immediate bounce to 54's for +19 give or take your spread. Anyway, getting out on the first 5m reaction doesn't interest me so I held this and exited at 1.5635 for a full point as this was the next level I thought price would rebound too.

Last futures trade I did was on Friday in the Dec Bund. I bought 125.88 which is a no-brainer level. Coincidentally, this also had a 4 tick drawdown and then an immediate bounce on the Non-Farm figure to 126.51. I screwed this trade up a bit, taking 26.33 for only 45 ticks as it didn't quite hit the target of 126.63 until yesterday. Anyway you get the drift.

Hit the right levels at the right time and you will get it right way over 50% of the time.

I would not give up on S/R. It's the most powerful thing I've ever seen.

Just my 2 cents.

Thanks a lot Tom, that's exactly the kind of reply I wanted. I will work on it now.

Pavlec
 
So if I understand you, professionals doesn't have fixed stop and target like a 20 ticks target and a 10 ticks stop?

Pros trade in a wide variety of ways. I'm sure some have fixed stops and targets, but I'm also sure those that last don't use the same sized stops and targets in all market conditions.

That wasn't my point, though. There are two sides to system performance. One is the frequency of success and the other is how profitable winners are vs. losers. You cannot focus on just one side of that equation - though people seem to do it all the time, either getting overly fixated on a high win % or on a certain R/R benchmark.
 
Pros trade in a wide variety of ways. I'm sure some have fixed stops and targets, but I'm also sure those that last don't use the same sized stops and targets in all market conditions.

That wasn't my point, though. There are two sides to system performance. One is the frequency of success and the other is how profitable winners are vs. losers. You cannot focus on just one side of that equation - though people seem to do it all the time, either getting overly fixated on a high win % or on a certain R/R benchmark.

Excellent post.

If you take the EUR/USD for example and you examine the high probability "gap play" which, incidentally, is the easiest way to make money consistently - check the following out over the period I have been trading it (these are from my stats).

If you went for a 2:1 R on those trades you would have won just 46% of the time.

If you went for a 1:1 R you would have won 76% of the time.

If you went for a 0.5 R you would have won 89% of the time.

All of those scenarios represent a profitable "edge" but some traders will prefer different styles depending on a whole host of different factors.
 
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I've tried every strategies that I saw on forums and books and never found anything close to an edge. HH/HL, S/R, Wave, Pivots, Countertrend etc...

This is your problem. The answers are not in books and forums.

If you could forget all that crap & then start afresh with a single instrument and figure out how it behaves without any pre-conceptions. Then base a trading plan around that & you'll probably be profitable in 3 months (based on the fact you are 2 years in)

Of course - you need to journal every trade. The maximum adverse excursion, how you felt, how it fit your plan, how well you followed your plan etc. etc. to get the benefit of any method.

As HC says - there is the method & the trader. I'm not sure how well you can judge any method without a journal.
 
This is your problem. The answers are not in books and forums.

If you could forget all that crap & then start afresh with a single instrument and figure out how it behaves without any pre-conceptions. Then base a trading plan around that & you'll probably be profitable in 3 months (based on the fact you are 2 years in)

Good post from Dion here Pavlec.

As he writes in the second paragraph, watch a single market, see how it behaves and base a trading plan around that.

As for the first paragraph, ignore that as I've just given you the answers in the post above on the EUR/USD.

:)

(Well, it's a start at least...)

Good trading!
 
Over how many weeks are those stats trader Dante and what stop size and entry point are you using for that?

Hi SimpleTrader,

Those stats are from 23rd November 2009 to the 6th December 2010 so they represent 54 weeks of trading.

I usually hit market at 9pm if there is a gap and use a technical stop but the statistics above are based on the FxPro charts so they are easy to validate if you have the time to go through it all.

If you had hit market on the FxPro open with a fixed R, those are the results you would have achieved.

i.e. using the fixed R of 0.5, you would have hit market on a 40 point gap with an 80 point stop and seen your target hit 89% of the time for a winner.

(I should add that a gap constitutes any difference between the Fri close and the Sun open of more than 10 pips)
 
This is your problem. The answers are not in books and forums.

If you could forget all that crap & then start afresh with a single instrument and figure out how it behaves without any pre-conceptions. Then base a trading plan around that & you'll probably be profitable in 3 months (based on the fact you are 2 years in)

Of course - you need to journal every trade. The maximum adverse excursion, how you felt, how it fit your plan, how well you followed your plan etc. etc. to get the benefit of any method.

As HC says - there is the method & the trader. I'm not sure how well you can judge any method without a journal.

It's already done I have over 100+ pages of my trades and ideas on each trading days. Your argument is good but if books and forums are craps what is good then? Do you support the S/R idea? I'm far from beeing succesful but I think It doesnt mean I know nothing about the market.
 
It's already done I have over 100+ pages of my trades and ideas on each trading days. Your argument is good but if books and forums are craps what is good then? Do you support the S/R idea? I'm far from beeing succesful but I think It doesnt mean I know nothing about the market.

Books & forums are crap. Certainly if you are looking for the perfect spot to enter which many people appear to be.

Try 1 entry, 1 market and a fixed set of hours at the market each day.

Write up a set of rules & then follow them diligently for 1 month. Write a journal with details of every trade including how you felt once in the trade it and what the market did after you entered. Do nothing else in this time, no research, no web sites, no books. Do not even think of other entry techniques. Relax, spend some time doing other things when not trading.

After 1 month review the log.

I would wager your problem is that you quickly establish that something doesn't work and then move to the next thing.If you have 100 pages of ideas, then it's not possible you've done the above for all of them. You need to focus on just one thng and really give it a shot.

I don't think it matters much what you focus on -but consider that some markets are faders markets - i.e. tend to reverse at prior highs/lows and some markets favour breakouts and this could be as good a place as any to start.

Why not do this in a journal here ?

A journal will help immensly but most people just don't see the value in it.
 
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DionysusToast said:
I would wager your problem is that you quickly establish that something doesn't work and then move to the next thing.If you have 100 pages of ideas, then it's not possible you've done the above for all of them. You need to focus on just one thng and really give it a shot.

You're right on this one, maybe a little exaggerated but yea when I don't see anything I like I try another thing.

DionysusToast said:
I don't think it matters much what you focus on -but consider that some markets are faders markets - i.e. tend to reverse at prior highs/lows and some markets favour breakouts and this could be as good a place as any to start.

Thanks I've wrote it in my journal I will work on it.

DionysusToast said:
Why not do this in a journal here ?

Because I don't have a working strategy yet. A journal for me is when you got your strategy and just want to improve it and works on the details. I will not "example" work on a waves hh/hl strats and 1 month after that I work on a scalping S/R one and after that a T/S DOM one "example". The first goal of this topic was what should I concentrate more on. So that I don't lose my time on useless things.
 
Pavlec - consider that what you are looking for cannot be found. If you are looking for a mechanical set of rules with a positive expectency, then your search will be long and fruitless.

Note that my presumption here is you are day trading - adjust as necessary if not.

What you never get with searching is experience and this is the holy grail. You are in a catch 22 situation. You can't have a journal because you don't have a strategy but you wont get a strategy if you don't have a journal.

The journal builds experience, it doesn't have to be here but it does have to be somewhere.

If you want something to start on - pick a US index futures market and fade the overnight highs and lows. If you do this every day, you will learn a lot about that market and how it moves. With experience you will begin to get a feel for when those highs and lows will hold and when they wont.

If you want to trade Europe hours - pick a market on the Eurex and trade breakouts. Same deal with the journal.

Do this with no indicators on your screen - just the price. Add in a DOM/Time and Sales if it's not too distracting. Don't bother with any market internals like TRIN, TICK, PREM etc. etc.

At the end of the day, the market you choose will tell you what to concentrate on more. How does that market behave ? Don't focus in individual candles - look at how the whole day develops. The more days you watch, the more you get a feel for it. This is what you are missing, not some entry technique.
 
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