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I was very profitable for over six months beating SPY (my target indicator), mostly swing and some day trading stocks.
Until I saw the nice profit in my account and greed took over. So I lost 12% over two weeks trading MU while Trump was imposing sanctions on China. Sold close to the low before the stock bounced all the way back.
Why I took the trade? I saw a great setup on the daily chart. Why I failed so badly? In my optimism and carelessness, failed to put a real market stop loss (stop in the market, NOT mental stop).
So again the moral of the story for me is don't trade unless you have hard stops in the market with your broker. If you cannot do that, you don't have a good setup and your are not at least 60% confident of success.
Remember that you can always come back in if you get stopped out and a good setup appears...
If you lose 3% (the max loss I would allow), you can come back. Losing 12% messes up with the brain and it becomes very hard to come back.
Always remember that even with the best setups, you can fail 40% of the time. So RISK CONTROL.
I have been asked for the parameters of the multiple time frame price charts I use for trading ES. They are:
1. 80 tick chart, for momentary price action.
2. 640 (and occasionally 1280) tick chart, for all of today's price action.
At least in my experience, tick charts reveal the price patterns I seek better than time-based charts.
I also use a 10 second chart, not because I find time-based charts helpful, but only because tick charts won't chart multiple instruments, and I want to chart ES, $TICK, & $TIKI on the same chart, so I use a 10 second chart to do that.
barabas,
I have spent the last 12 years trying every method from stocks, options and futures. None have ever really worked for me. Stocks you have too worry about if the CEO is going to get arrested for child pornography. Options you have to follow 2 different prices the underlying stock and then the price of the option. Futures are news driven; you have to worry what the dollar, ECB or the fed is going to do next. Each product has its drawbacks. I, myself, am at the same point you are. Frustrated!
I've come to realize that there are some people that want to be a BULLFIGHTER but once they enter the ring and see the size of the bull and how big those horns really are, they come to realize that all they really wanted to do was dress up in a too-too, wear a funny hat and carry a cape.
This is the MOST ill informed post I have read in past 20 years. No, seriously….while you find no better way of laying out your frustration and failure, you also misinforming the community and discouraging other people from analyzing they mistakes and becoming successful. "...I quit a while back, when I was informed that only 5%-10% of day traders actually make ANY money...." - You "were informed"??? Really??? Who was that Good Samaritan who offered to you this priceless piece of information? Look...any person who have ever made it in this business of trading (including myself) will tell you that trading is SIMPLE but NOT EASY. I would be the first person to admit that this is a VERY difficult field to conquer and it takes YEARS of practice, self-analyses, thousands of hours of practice and restructuring of yourself psychologically before you even start to see glimpse of the hope. But to say that this game is rigged, that this is Vegas, that this is hoax is not only preposterous but also ill advised.
I understand, you did not make it...I also understand that you lost money. Perhaps you are correct and your best place is in the corporate world or whatever the business you were making your 170K a year....but at least be fair and look at what YOU as a trader did wrong and WHY you have failed instead of telling people they should sue their broker for their own mistakes.
Market does not care about YOU, ME oar ANYONE else. The only function of the market is to advertise price in order to attract buyers and sellers, conduct an auction to facilitate the trade and offer the liquidity. It's what YOU as a trader do with this information and how YOU execute your trading plan that is determining whether you will become successful in trading or not.
I think you ought to take your own advise - lick your wounds and get back to happily making that 170K a year while not posting nonsense on this board, discouraging people from learning and becoming successfull.
Hi Flyer, good points. If one trades stocks on daily chart (not day trading) then one can easily diversify across different sectors (or even add gold, oil, bonds, or derivatives). That way, no one stock or sector can hurt one badly. I used to get out of stocks around earnings, I think now I would just hold, IF adequate diversification is implemented. After all, in earnings, some stocks zoom and some crash (and some CEO gets arrested, and some CEO is released LOL), so it evens out.
I think what you have said is that if you had known when to fade the system signals you would have made
quite a bit of money... Is there a go / no go qualifier or buy / sell polarity qualifier that when overlaid will
give the right decision ? I don't think there is a fast enough "canned" sideways market indicator. A Range
chart can be stylized to give long wick reversal bars that show price rejection. Sideways market follows
reversal, reversal... with no normal trend bars in between. It is S/R and contextual as to how much sideways
to expect but is fast signal.
It looks like your decision to go full time was highly dependent on a daytrading 5 min bar system that has now
failed or gone into a drawdown phase. In a widely swinging or strongly trending market where price extension
is in the direction of the trend almost any indicator showing the trend will work with your rules not matter what
your rules happen to be. Once the trend or big swing changes direction the former "best entry" will be a fakeout
and factual best entry in the new direction. So having pegged this window of change , phase transition , polarity
shift , the system says buy but you sell. So in a sense the system is not well specified to allow it to accommodate
a change in price behavior , often a change in trend manifestation. This may be megaphone pattern or a dead flat market ledge that chops with false bar breakouts. If you are buying a bar breakout in an uptrend then see
if there is a way to buy later but lower in the price action , perhaps mid channel or something. If you can't tweak
the system in a few days then longer timeframes and other income is likely appropriate. Also, systems tend to
come back to life when the market gets back into their profit window conditions. So if you adopt an inverse entry
you may need to know when best to revert back to the original system for larger profit under the design market
conditions such as after a pivot breakout or Bollinger band pinch.
I always look at 60min and daily charts for S/R points , tag targets , stretch and larger trend. Basically a lot
of signals depend on signal strength as price amplitude. When I tested bar breakouts from 3 min to 240 min
it took a bar length of 45min to have directional follow through 50% of the time. A hourly bar is more rugged
and was given in Barron's back to the 1950s for the Dow. Indicators can bring longer time into the chart ;
a 20 period SMA and Bollinger band brings in 100 minutes. Daily and weekly charts have more signal content
and free up your days. Traditionally the S&Ps would go dead in August and the last 2 weeks of December and
I mean deader than the 1st half of FOMC day. There's just no system that is going to be worthwhile in such
periods except to anticipate it and sell some options premium , with attendant risk of being Trumped.
Lately as the ES has approached the old all time highs and rolled over sideways there have been some real
old fashioned dead zones , just waiting for the next news , earnings , tweat. It is a notable change in behavior
that could defeat a system or system entry.
Deutsch Bank (DB) just laid off 18,000 traders but closeout of operations may go back in time a couple
of months. Whatever market actions they were causing aren't there anymore unless completely taken over
by computers. This is unlikely due to a wide field problem. People automatically deal with a wide field of
inputs and computers are coming along nicely but maybe not there yet , at least as evidenced by the DB
stock price trend.
It is normal for systems to go through longish abhorrent drawdowns when markets go outside of their profit
window. In a flip of a coin 256 times , 8 heads or tails in a row will show up often , even 100% of the time.
I've heard numbers of 13 and even 19 for this coin toss experiment.
Linda Raschke has some good videos on this site and I like her few simple indicator approach.
Thanks for your post as the replies are a resource.
Addendum: For intraday, some pro traders link performance to ATR. The idea is that as ATR shrinks
and bars overlap more, a bar breakout oriented system will tend to fail and profit targets need
to be adjusted. For Tradestation this concept can be easily applied to candle body range instead of ATR.
It could be revealing to see what was changing with these ranges for 60min and daily bars when your system
started failing. A 5 ATR is much faster than a 14 or 20 RSI.
This is THE BEST post I have read in a while...KUDOS to you Sir and I can tell you are speaking from the experience because I can sign under EVERY word in what you have said. GREAT POST, truly a mentor type help many people need!!!
He is easy to write, and he seems to enjoy helping others. You might ask him how long he has made a living by trading the market, I believe he has been successful for a very long time.
If your lucky you got some direct help already. It's smart that you asked and it may be very smart that you did.
True, absolutly agree it is possible to make money trading as a retailer, but there is some truth to the remarks of @Scottiep.
As a result of ESMA ruling the EU brokers are forced to publish the % of their losing retail accounts. Most of them publish numbers around 75-80%, very little below 70%. If you take into account that that there maybe 10-15% dormant accounts you can conclude that only 10% of retailers are winners in the game of trading.
So yes, these numbers are more about FX/CFD brokers on less regulated/transparant exchanges. But they give us a bit of insight. For more transparent and better regulated markets like the US futures market these numbers will undoubtly be less worse, but not that far off imo.
I never disputed the fact that majority of beginners in trading loose their entire capital. This is a know fact. Been known for years. After all, the 90/90/90 rule has been in effect for the past 20 years - 90% of retail traders loose 90% of their initial capital within first 90 days. It's a FACT. However, this is NOT the point I was trying to make or dispute. My point was that it is unfair and ill advised to blame brokers for the mistakes beginners traders make. When people jump into trading without doing proper research and educating themselves on how to set the goals and accomplish them it leads to exactly that - loss of the money. The access to the trading platform and ability to click the mouse in no way shape or form guaranties that the person will make money. It will only guarantee that the broker gets more business as well as commissions and that exchanges will get more fees. Can the brokers (especially Introductory Brokers) be regulated better and be more transparent? Absolutely. But when (and IF) this happens it will still not guarantee the success to beginner traders and make them less likely to blow up their account.
I speak from experience. It took me 15 years to achieve the consistency and profitability. I blew up 5 accounts along the way. But I never gave up and knew that I will get to my goal if I continue to analyze my mistakes and improve my skill set and discipline in trading. ANY successful person in trading business have blown number of his personal and his customers accounts, it's unavoidable. It's part of the process. But every successful trader has also never gave up and made adjustments to his path in trading to reach his goal. Not easy, but brokers has very little to do with each personal success or failure.
Sorry for highjacking the thread as this is not really the main topic of conversation here, but I felt its important to put things in perspective.