Anyone Making money???

[edgeliner]

Hey richa61416......

Why don't you post some of your ideas that seem to be working for the rest of us to critique. That is what forums are all about. Maybe others will have an idea as to how to improve it, or post ideas of theirs too????

[MicroAl]

Absence of winning strategies

If someone works very hard for a number of years to develop a winning strategy, I would not expect them to give away the exact details of their system.

There is also the problem that once a strategy becomes well known it will cease to work. A classic case is the breakout strategy of the Turtles, which lead to a strategy to take advantage of people using their strategy called Turtle Soup. Obviously depends on Time frame, liquidity of market etc.

I have heard the following advice many times "The only way to succeed in the markets as a day trader is to watch your chosen market day in and out for at least a year. Look at how the price action moves, try to recognise patterns of action. Trade the price action. Use as few indicators as possible"

I heard just yesterday of a couple of Traders who do very, very, well using just a couple of standard indicators.

What opened my eyes was listening to one of the squawk services from the S&P futures pit. Absolutely facinating how the locals try to run the stops, attract the institutional and retail orders in, etc. Listen to this for an illustration of how 'Trading is war'. It is not the holy grail, but certaintly opened my eyes as to what is causing those little squiggles on the screen we watch all day.

[TAJTrades]

I have heard the following advice many times "The only way to succeed in the markets as a day trader is to watch your chosen market day in and out for at least a year. Look at how the price action moves, try to recognise patterns of action. Trade the price action. Use as few indicators as possible"

I started to become successful when I stopped chasing the latest greatest indicator and focused on 1 instrument using the same workspace setup. My screens have not changed for over a year with the exception of some minor color changes and line styles. I feel that you can pick any small group of indicators and become successful once you understand the intimate details of the indicators relationship to price action. In other words have a torrid affair with you indicator mistresses! You can not get a college degree in 2 months nor are you going to learn to become a successful trader in 2 months. Even after watching the same charts with the same instrument for over a year I still learn something new.

I have not had a losing week in over 6 months however I still have a losing day occasionally. I trade the ES and take between 3 and 10 trades a day depending on what the market gives me. My issue now is trying to automate my trading method. About 10-15% of my decision making is subjective and its a $%^&* to code subjectivity! BTW, that little bit of subjective decisions was the difference between success and failure for me.

Everyone is different so you must find your own path.

[ctrlbrk]

TAJTrades,

I am curious, what kind of profit target per trade are you looking at, and what kind of profit target/stop loss ratio, and what time frame do you trade on?

Always looking for feedback in those areas.

Mike

[TAJTrades]

Mike

2 point Stops (Non Negotiable!)
Initial Target is 3 points. But like in a war ( and trading is a war) the plan usually is thrown out the window when the battle begins. I will not wait for a 3 point target if I see something in the price action that I do not like. And then there are times when price shots through the initial target and I just go with it. On a few occasions I can get a 10-15 point winner . I trade old school so I do not auto trade nor do I use the ATM feature. I do have alerts programmed when a potential setup exists but I may or may not take the trade. Experience has taught me when to tread lightly and every trade is a new experience. There are occasions when I will take a trade when the base setup is not there. That is the subjective part of my trading.

The 5 Min Chart is the King for me and then I use the 500 Vol Chart for timing the entry and spot the first signs of trouble. I also have 1440, 15 and 1 Min charts open. I only use three indicators, Bollinger Bands, StochasticsFast and then my own developed indicator for timing on the 500 Vol chart. I also have some Pivots and Fibs but I don't really rely on them for decision making unless they become PROVEN support or resistance. That is it; very simple. I need simple do to synapse power available LOL.

How about your TP and SL's? Charts, Indicators?

[ctrlbrk]

Have many strategies. None that are ideal, each has strengths and weaknesses, each has made and lost me money.

On a 5 range chart I keep first target at 1 point, second target 2-3 points, with a 2 point stop loss.

On a 15 minute chart, I tend to go for 5 point target and 5-7 point stop loss.

My strategies focus on high percentage, 75%+ success rate. Obviously with a higher loss than target, that is a must.

It's interesting to see you have a different strategy, your target is higher than your stop loss. There is much to be said about both approaches, but obviously I like yours better! lol

Mike

[heech]

I'll just talk a little bit about what I'm doing... if only because it's different from what others seem to be doing with NT.

I'm not day-trading at all. Instead, I'm using NT to do something like volatility arbitrage, dynamically delta hedge an option/stock portfolio, trying to profit off of theta. I will eventually look into doing the same with futures/future options, fx/fx options, etc.

I'm hoping that there are also other arbitrage opportunities out there that the big players aren't seeing. I have (almost) the same tools that the quant houses do... so, why not?

[Operandi]

The problem is that many people think that automated trading is the solution to riches whilst they languish on the golf course or beach.

This is very far from the facts, once you actually flick the switch and make the automated system live on your account.

The problems are many, not least the strategies employed by market makers and particpants to take your money from you. You need to spend many hours (as stated by the other posters) studying your market to see how things really work, and to recognise the tricks that are played upon you.

See how prices dip at support to run the stops, notice how that occurs particularly on even numbers, watch how time has a significant impact on changes to market direction. What about news or goverment induced rumours that turn the markets on a dime?

Building all these factors into an automated system is virtually impossible unless that system is extremely robust in live trading environments.

Backtesting is just not enough as there are no tricks being played on you.

We work very closely with a team developing high frequency trading solutions. That team of four consists of one Quant, two PhD level mathematicians and one programmer. That is the right ratio of sklills required to succeed in demanding currency markets.

The problem they have got is that what was working before Christmas, isn't working now. The market dynamics have shifted and they now have to redevelop chunks of their system accordingly.

Also more funds and insitutions are employing auto trading systems, each of which use a subset of the available indicators in various combinations. They are all competing in the same market, so for your system to succeed it must have a clearly definable edge and then that edge must be maintained or modified as the market dynamics change.

The problem is that developing an edge takes you further into the realms of real time analysis and statistical probabilities and further away from combinations, however clever, of standard indicators.

You need fast executing code and fast execution times to get your order in first. You are competing with institutions that pay $thousands per month to host their servers in the same datacenters as the exchanges. Network latencies and processing speeds at your end and with the broker systems are crucial.

How many times has your automated system returned a no fill response from the broker? The price has moved away from you at that crucial point of execution because others have got in first.

I'm struck by the parallels between trading and playing golf. Trading is actually very simple - buy when the price is going up and sell when it is going down, just as golf is basically simple.

However for you to make money means that you have to take money from someone else, and that is where things get complex, and where the trickery and manipulations come in. When you play golf you are playing against someone of your own level. When you trade, you are competing against the professional, with all their resources and technology, akin to playing golf with Tiger Woods!

[elliot5]

It has been interesting reading these posts, and the experiences of other guys with money on the line. I automate my trades because I do not have the emotional control required to take many losses in a row. I firmly believe that human psychology plays a major role in success in trading, and that lack of discipline contributes to more traders failing than anything else. My first strategy did so consistently badly after three months of live simulated trades that I simply reversed the buy/sell signals, and have never looked back since. I once worked as a risk manager for an old elliotician in London for a Japanese bank, and have never forgotten what he told me. "I can write down a system that will make you consistent money in the long run but you wont be able to follow it because you wont be able to follow it emotionally, and will lose your discipline". I admire you guys who can use subjectivity to make trades, but I find the more I look at my daily trades the more stressed I get and I find it best to just let the robot tick along by itself.

[ctrlbrk]

everington_f,

We think alike in some respects. I also greatly prefer automated systems vs. discretionary trading due to the emotional aspect. I think that for me, it's not so much about the losses during discretionary trading, but just "sitting there". It's the "bored" trades that kill me.

So, I design systems to trade during the day, while I try and do other things -- staying out of the computer area during market hours, for as much as I can. I've turned into a night owl doing this, writing strategies and night, and letting them trade during the day.

As for reversing your signals -- and the fact it's working -- lol! I find that interesting, because I've tried it and it still didn't work!

Mike

[TAJTrades]

I am in the camp with Operandi. I am not sure that I can compete with the talent that Goldman, BlackRock, JP and all the other monsters have. Those folks have entire staffs loaded with Phd's in various math disciplines and computer science. If they had the answer they would not need to hire traders for there own accounts. They would automate! That being said I am sure that there exists a few retail traders that have automated systems that are profitable. I am still searching for the "Pot Of Gold at the end of the rainbow" also. After writing 100's or 1000's of systems I have yet to find anything that comes close to my discretionary trading. I am currently forward testing 37 systems (I have written my own basic Trade Management routine within NT that allows that) and they all got either killed or were barely green last Friday yet my discretionay trading was nicely profitable.

I suppose that if we all had the same opinion there would be no market to trade. Bottom line is that you have to go with what you are confident in and what you are comfortable with. Maybe some trader will write a book with the title " Zen and the Art of Trading" sub titled "See The Chart - Be The Chart" LOL.

[Operandi]

This is turning out to be a great thread

From my experience, successful systems either become very complex with automated hedges and detection of correlating and non correlating data, or else they become very simple.

For example, I have developed for my own uses an intraday system that trades the ES with an 81% success rate. It is very simple, but it has only traded 22 times this year.

I'm testing the same strategy on a basket of other instruments so that the system is in the market much more often, but this requires a lot if effort in tailoring parameters to fit individual instruments.

There is no question, though, that becoming successful at trading, either manually, mechanical, or via automation takes a huge amount of work and constant maintenance and updating as market conditions change.

[ctrlbrk]

@TAJTrades,

All good points. But I'm not trying to 'win' against those guys. I'm trying to win against you!! lol The best I can do against the big boys is try to not get pulled in/faked out.

Your forward-testing idea seems intriguing, if you'd like to share more Feel free to PM... I think it was heech who said he wanted to devise a connector for NT to feed it several million ticks (probably tens of millions) of random market-moving-like data in order to better test his strategies. Sounds complex, and I am not sold on the emulation point. The walk-forward that is built-in to NT seems worthless to me, perhaps I am just not using it correctly.

@Operandi,

I am always scared of systems that result in less than 100 trades. With less than that, I am afraid of curve fitting, and there really isn't enough material to analyze. These are obviously just my opinions. I am not saying "bigger is better" or "more is better". I'm just saying I would feel a lot better with a system that traded 200 times, or 2000 times, and still had profitable win/loss ratio.

This is the battle I constantly wage. I also battle with how much backtesting (how many months back) is 'enough' to feel good? If a system works great for 90 days, is that good? Does it need to work for 3 years? etc...

I agree with a lot of what has been said about discretionary vs. automated trading. I've started creating some strategies (and indicators) that are less about executing orders, and more about preventing me from bordem trades, which is where I get in trouble from a discretionary stand point.

Mike

[Operandi]

I'm just saying I would feel a lot better with a system that traded 200 times, or 2000 times, and still had profitable win/loss ratio.

So do I, which is why I let this strategy just run, coz it works, but I'm sure that it will stop working at some point soon and why I'm working on another system that trades intraday, long or short, every day.

[MicroAl]

Emotional Control

Everington_f I totally agree with everything you have said. In Market Wizards, emotional control was often the main ability quoted as required for success before anything else. I have often read that Trading will expose every internal demon you have! I have certaintly come to the conclusion that some sort of automated trading is the way for me.

Regarding playing against the "Big Boys", I believe that one of the advantages we have is timing. One very successful trader was known to just trade a few days each month. His comment was that he waited till the money was piled up in a corner and then he just went in and picked it up. Is it true that the professionals have to trade each day due to the money each 'seat' is costing (I mean the investment banks etc not the floor traders). Perhaps someone could come back on this.

I realise that as stated below in many posts that many highly skilled professionals have spent many years trying to devise automated systems.
Is it true that the small guy has an advantage however in that, as they are not dealing in size, it is more easier to play support and resistance etc?