Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now, It is Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
It depends if there are set rules or just flexible criteria. I don't have set rules where if this is above this I don't trade etc. I look at a variety of data (many would argue way too much) and then I decide if it's a high probability setup and if so I take it.
For example I use sine waves. I like to see two setups where two timeframes make cyclical turns together or the smaller timeframe breaks out in the direction of the higher timeframe. But I will trade against the higher timeframe if my other data is pointing to a high probability of a move in the other direction. I'm not breaking a rule. It's all just guidelines.
I personally don't believe it's possible to code up what I do with discretion. Even if it were, it'd be so complicated that testing it and fixing bugs and training it would take so long that market conditions would change and then it'd no longer be profitable. That's the key here: a discretionary trader can use discretion and adapt to changing market conditions. An ATS won't adapt. It'll just enter a drawdown and by the time the trader figures out that it's not coming out of the drawdown and pulls the plug it'll probably have loss money. That was my experience any way.
I've shown how I can achieve profit factors > 10 using discretion. I don't think an ATS can do that.
however all that isn't an argument against automation. For a simple setup if it's automatable then automate it. I traded a mechanical (but not automated) stock system for a long time. It was not optimal but since it required only a few seconds effort each day I traded it. I stopped btw when my discretionary trading started performing better than the stock system, it didn't make sense to continue it.
for the inside bar, I could automate it but I prefer not to. one reason is it's a lot of work programming, testing, fixing bugs, etc. I've done it before and it takes a long time. By the time someone succeeds in doing that it may not be profitable any more. For inside bar I feel it's not worth it. I get an audio alert, put in a bracket order and I'm done. I also like to trail my stop a bit and that requires discretion.
The following 2 users say Thank You to cunparis for this post:
You know what you know but you do not know what you do not know.
You do not see things how they are, you see things how you are.
In life you do what you want but you do not want what you want.
The following user says Thank You to gabga100 for this post:
Do recognize that there is a big difference between HFT and automated systems. HFT systems need co-location as much they need their computers need power supply; they are essentially latency arbitrage systems working across different exchanges. The time-frame they trade in is very small.
Automated systems will typically trade in a much larger time-frame to HFT. It may stretch from a few seconds to minutes or even hours. You do not need co-location as much as an HFT. That being said, many automated system shops also co-locate since traders want to eliminate anything which can potentially take away their edge. Further co-location is not that expensive compared to the other costs associated with trading; it is taken as a cost of doing business, and hence becomes a big money spinner to the service providers.
""I am also interested in seeing whether Shodson's strat, when fully developed, becomes profitable. I think that the most important part of this Three Setups approach is to make sure to only take trades in the morning U.S. time and avoid the news (as Jeff says "Know when to trade"). If that part is successfully automated, then I wouldn't be surprised if that strat could be applied to a plain old zero-line cross on an Eco, SMI, CCI, or a MA crossover to achieve similar results that Jeff experienced""
Dragon - do you mean, the three setup results could be similar to either of these zero-line cross on an Eco, SMI, CCI, or a MA crossover or you meant combine both setups?
If discipline = "the ability to strictly follow [your] rules" then a computer is the most disciplined trader there is.
If discipline = "following your rules but reacting according to the 10,000+ hours of screen time you've put in and how you feel about the way the market is moving" then a computer will fail because it doesn't feel markets.
I have tremendous respect for successful discretionary traders that can read a tape and a market, but I don't think they have hard and fast rules they stick to 100% of the time, they are mostly guidelines but they give themselves discretion to artfully go around them to ameliorate their psychological makeup and, hopefully, improve their success.
The following 5 users say Thank You to shodson for this post:
Emini,
I was just pointing out that maybe the money management, time of day, avoiding news, were probably more important aspects to these setups than IB or OB. From the looks of it, I am probably completely wrong about this.
The following user says Thank You to Dragon for this post:
Three consecutive dojis indicate a trading range. Al Brooks refers to them as (iii) setups. I would not say that a trading range indicates a trend change. You need to look at other criteria to find out what it stands for.
Let us assume that the (iii) setup occurs outside a Keltner Channel or Bollinger Band, that it follows an expansion bar with high volume (climax bar, stopping volume) and that one of the dojis is a churn bar. Then I would think that the odds favor a reversal. But even in this setup, you often will first have a false breakout (final flag of bull/bear trap), before price reverses.
If the (iii) setup occurs near the moving average, I would not see any reason that a trading range, which is nothing than a type of congestion, should resolve in a reversal. In the contrary, I would assume that trend continuation is more likely, if the market shows a clear trend in a higher timeframe.
In any case, you would want to wait for a breakout of that trading range, before entering a trade.
The following user says Thank You to Fat Tails for this post:
...so I thought I'd do some more "don't trade during lunch" backtesting, this time with CL-07. You can draw your own conclusions. I have what looks to be my favorite 24-tick target scenario highlighted in blue.
The following 5 users say Thank You to shodson for this post:
For inside bar I feel it's not worth it. I get an audio alert, put in a 
