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>>So that I might get some tangible of benefit out of the discussion
could you explain to me how
- an observed 4 day/week * 200 tick * 10.45AM move
- based on market behaviour
- 90% Wins
- actually traded until the market behaviour was rubbed out by regulators
is Discretionary Trading?<<
I am not sure what you mean by 'based on market behaviour', maybe
that's the discetionary part, but from the statistics you quoted,
there is no way to tell if the trades were mechanical or discretionary.
Why do you think Joe was only able to get 100 ticks out of an average
200 tick move? This was not some obvious 200 tick price move that
everyone noticed. This was a stealth move that looked different
everyday, was not exactly 200 ticks everyday and was only discernable
to the most observant traders and may have required more than one
trade to extract 100 ticks.
>>how did Joe know that it was 4/5 days, 200 ticks, 90% wins,
10.45AM. Did he computer test, write it down with pencil and paper or
see it in the tealeaves?<<
He discovered it through observation that's why it requires
perspicacity to be a good DT.
>>if Joe had been a competent AB user, at the time, do you think it
would have been possible for him to code and automate that trade (if
he wanted to)?<<
Not likely.
All DT's don't trade the same way but the biggest difference between
mechanical and discretionary traders is in trade management (also
called trade exit).
Trade exit is more important than trade entry because it determines
whether or not you make a profit (it's possible to trade profitably
with random entries).
MT's have fixed rules for entry (like buy when 8MA is above 12MA and
RSI crosses above 30), an initial stop and fixed rules for exit (like
use a 5 ATR trailing stop). It is a 'set it and forget it' style of
trading.
DT's have an entry point based on what they see, an initial stop
(which Joe calls a catastrophic stop because he never expects it to
get hit), and an initial exit strategy. Once a trade is entered, DT's
monitor price action, indicators, whatever and manage the trade. If
things don't go according to plan, they may exit the trade, move their
stop up, reduce their profit target, etc. What they don't do is sit on
their hands and wait for either their initial stop to get hit or their
initial exit strategy to take them out of the trade.
If you want to be a DT, you will need a lot of screen time studing
price behavior et al.
Here is a quote from Mike Reed's (DT, day trader specializing in stock
index futures) online article "10 Steps to Professional Day Trading"
"Advice on Day Trading: Rule #1 - Practice exiting trades at
break-even, using a one-tick target, a two or three tick soft stop
(mental stop) and a 1.5 point hard stop. Never *allow* the market hit
your hard stop. Exit by moving your target toward your hard stop, not
by moving your hard stop towards your target. With time, all of this
must become a reflex. You won't always be able to keep your losses
down to 2 ticks, but only on rare occasions should you find yourself
letting the market hit your hard stop. ("Rarely" means only about once
every 50-100 trades after you get the hang of it.)"
Lance Beggs is a DT who uses price action and support/resistance and
has a very good website with links to mostly his own free educational
videos (includes one of Mike Reed's, aka tradestalker).
Bill
--- In amibroker@xxxxxxxxxxxxxxx, "brian_z111" <brian_z111@xxx> wrote:
>
> I am also wondering:
>
> - how did Joe know that it was 4/5 days, 200 ticks, 90% wins,
> 10.45AM. Did he computer test, write it down with pencil and paper or
> see it in the tealeaves?
>
> - if Joe had been a competent AB user, at the time, do you think it
> would have been possible for him to code and automate that trade (if
> he wanted to)?
>
>
> brian_z
>
>
> --- In amibroker@xxxxxxxxxxxxxxx, "brian_z111" <brian_z111@> wrote:
> >
> > Bill,
> >
> > If we can set aside the idea that we are in opposition perhaps you
> > can help me.
> >
> > I haven't thought about the topic very much, in the past, but
> digging
> > into the topic, via this thread, I find:
> >
> > - it is a all a storm in a teacup
> > - it is mainly a reflection of prejudicial viewpoints
> > - people are ever so politely sugar coating and trying to
> camouflage
> > their prejudices
> > - the Larry Connor articles are hackneyed, lame and lack
> intellectual
> > vigour (typical of the type of stuff that circulates around the
> > trading traps)
> > - there is very little that we can get out of the discussion, that
> is
> > any use at all for trading, (except perhaps that those who define
> > themselves as DT's, and try to defend their position, would be
> better
> > off not bothering)
> > - there might be some trading benefit in the analysis, for the few
> > who can squeeze something out of the nuances
> >
> > So that I might get some tangible of benefit out of the discussion
> > could you explain to me how
> >
> > - an observed 4 day/week * 200 tick * 10.45AM move
> > - based on market behaviour
> > - 90% Wins
> > - actually traded until the market behaviour was rubbed out by
> > regulators
> >
> > is Discretionary Trading?
> >
> > If I can understand what DT is I would like to try it out for
> myself -
> > it sounds like it can be very profitable.
> >
> > So far I just can't understand exactly what it is that I have to do.
> >
> > brian_z
> >
> >
> >
> > --- In amibroker@xxxxxxxxxxxxxxx, "bilbo0211" <wjdandreta@> wrote:
> > >
> > > Bill,
> > >
> > > Those are interesting articles. Connors has some unusual views
> (and
> > > very expensive books <g>).
> > >
> > > Below is an example of how a perspicacious DT can gain a trading
> > edge.
> > > It's a quote from Joe Ross' Trading Tidbits.
> > >
> > > IIRC, the S&P contract in 1997 had a tick size of 0.05 worth $25
> and
> > > Joe's normal trading size for the S&P was 25 contracts
> > (from "Trading
> > > By The Minute").
> > >
> > > How much money was Joe making?
> > >
> > > " In 1997 I experienced a fantastic winning streak day trading
> the
> > S&P
> > > 500, prior to electronic trading, and prior to the e-mini S&P
> > 500.
> > > In January of 1997 I noticed that at about 10:45 EST the market
> > > moved up about 200 ticks, four days each week, better than 90%
> of
> > > the time. It never happened on Friday, but Monday through
> > Thursday
> > > were great. I had no clue as to why it did it or who or what
> > caused
> > > it. All I knew is that it worked. So at about 10:40 EST I would
> > > begin watching. Within minutes the attempt to move up those
> 200
> > or
> > > so ticks would take place, and I would grab off about 100
> ticks,
> > > call it a day, and head for the Bahamian beach.
> > >
> > > Then, sadly, in August of that year it stopped working. The
> > exchange
> > > cut the S&P in half and introduced the E-mini. I have never
> again
> > > seen that phenomenon work, but believe me I have looked. "
> > >
> > > Bill
> > > --- In amibroker@xxxxxxxxxxxxxxx, "wavemechanic" <timesarrow@>
> > wrote:
> > > >
> > > >
> > >
> >
> http://www.tradingmarkets.com/.site/stocks/commentary/lcbattlep/082720
> > 04-39801.cfm
> > > >
> > > >
> > >
> >
> http://www.tradingmarkets.com/.site/swingtrading/commentary/lcbattlep/
> > 09022004-39899.cfm
> > > > ----- Original Message -----
> > > > From: sidhartha70
> > > > To: amibroker@xxxxxxxxxxxxxxx
> > > > Sent: Wednesday, August 20, 2008 10:52 AM
> > > > Subject: [amibroker] Re: 'Rule Based' versus 'Discretionary'
> > > trading...
> > > >
> > > >
> > > > I think you're right Brian. We do all use rules of some sort.
> > > >
> > > > But I guess discretionary traders don't use 'hard and fast'
> > rules and
> > > > can't always define the same set of rules by which they
> choose
> > to
> > > > define an entry or exit.
> > > >
> > > > For example, as we all know, something as simple as defining
> a
> > trend
> > > > programatically can be more problematic as you might at first
> > think.
> > > > However, a good trader can see very quickly what state the
> > market is
> > > > in by looking at various time frame of chart.
> > > >
> > > > Likewise, divergences of various sorts can be easy to see
> with
> > the
> > > > naked eye but difficult to code in their entirety.
> > > >
> > > > Like driving a car, or a golf swing, you learn the 'rules'
> but
> > when
> > > > you get really good you are no longer thinking rules... you've
> > > > effectively let go of the rules and are just 'doing'...
> > > >
> > > > --- In amibroker@xxxxxxxxxxxxxxx, "brian_z111" <brian_z111@>
> > wrote:
> > > > >
> > > > > Here is my definition:
> > > > >
> > > > > We are all rule based traders.
> > > > >
> > > > > Mechanical Traders are a specialist group who have
> programmed
> > > > > computers to autotrade their rules OR automatically
> announce
> > their
> > > > > rules via computer communications (audio, email, chart
> > prompts,
> > > > > spoken text etc).
> > > > >
> > > > > I am prepared to continue the discussion with any seers,
> > > inituitives
> > > > > etc, who come forward, and adjust my definition to meet
> > anything
> > > new
> > > > > that comes out of that.
> > > > >
> > > > > In advance I admit to the possibility of exceptions to the
> > rule.
> > > > >
> > > > > brian_z
> > > > >
> > > > >
> > > > > --- In amibroker@xxxxxxxxxxxxxxx, "brian_z111"
> <brian_z111@>
> > wrote:
> > > > > >
> > > > > > >Descretionary traders make decisions that are based on
> > personal
> > > > > > >knowledge and circumstances, perhaps using many factors
> > > unknown to
> > > > > > >themselves. Like which journal they read the night
> before.
> > > > > >
> > > > > > This is the nub of the question for sure, and the point
> > that I am
> > > > > > investigating.
> > > > > >
> > > > > > I suspect that when they (self-nominated DT's) think they
> > are
> > > > > making
> > > > > > discretionary decisions they are in fact making rule
> based
> > > > > decisions.
> > > > > >
> > > > > > That is why I asked for specific examples
> > of 'discretionary'
> > > > > decision
> > > > > > making e.g. I haven't seen Bilbo's chart yet but I
> consider
> > it
> > > > > highly
> > > > > > unlikely that the decision about whether a trend is in
> > place is a
> > > > > > discretionary decision - I can define a trend in several
> > > different
> > > > > > ways - all of them can readily be written as a rule (in
> > words or
> > > > > with
> > > > > > code) - I don't care if the definitions are 'correct' or
> > not as
> > > > > long as
> > > > > > the system that they are part of works i.e. my rules for
> a
> > trend
> > > > > depend
> > > > > > on the context.
> > > > > >
> > > > > > As Dennis said, our rules might be difficult to program,
> > > causing us
> > > > > not
> > > > > > to automate the trade, but mentally we are still running
> the
> > > rules
> > > > > and
> > > > > > if we are honest with ourselves we do know what the rules
> > are.
> > > > > >
> > > > > >
> > > > > > >For a novice traders to try and mimic the techniques (of
> > > > > Discretionary
> > > > > > >Traders) without
> > > > > > >having similar backgrounds merits caution.
> > > > > >
> > > > > > What I am suggesting is that, over time, the sub-
> conscious
> > mind
> > > > > will
> > > > > > automate what was intially habitual conscious behaviour,
> > and even
> > > > > make
> > > > > > some improvements on it, so that 'we' can skip the
> > conscious part
> > > > > for
> > > > > > some 'tasks' e.g. driving the car becomes second nature.
> > > > > >
> > > > > > That won't happen for new traders, in a short time, so
> they
> > do
> > > need
> > > > > to
> > > > > > persevere, be patient and not try to mimic people who
> have
> > been
> > > > > around
> > > > > > for years.
> > > > > >
> > > > > > IMO formal (written) rules based
> > trading/backtesting/optimization
> > > > > is
> > > > > > the best place to start - it grinds the basic lessons in
> > very
> > > well.
> > > > > >
> > > > > > If anyone can look at a chart, and without recourse to
> any
> > rules,
> > > > > know
> > > > > > which way the price is going to move and trade
> successfully
> > > (long
> > > > > > term) on that basis then that is something else
> altogether.
> > > > > >
> > > > > > If it is at all possible to do that then it definitely
> > can't be
> > > > > taught.
> > > > > >
> > > > > > That is why I asked, "Anyone doing it?".
> > > > > >
> > > > > > It is just like >100%PA returns - anything is possible
> but
> > once
> > > > > someone
> > > > > > confirms that they have done it then it moves from the
> > realm of
> > > > > > possibility into reality.
> > > > > >
> > > > > > In the meantime I will stick to my guns by saying
> > that "except
> > > for
> > > > > > people who KNOW what the price is going to do everyone
> else
> > is a
> > > > > rule
> > > > > > based trader and categorizing traders, as DT's or MT's,
> is
> > > > > arbitrary".
> > > > > >
> > > > > > brian_z
> > > > > >
> > > > >
> > > >
> > > >
> > > >
> > > > ------------------------------------
> > > >
> > > > Please note that this group is for discussion between users
> > only.
> > > >
> > > > To get support from AmiBroker please send an e-mail directly
> to
> > > > SUPPORT {at} amibroker.com
> > > >
> > > > For NEW RELEASE ANNOUNCEMENTS and other news always check
> > DEVLOG:
> > > > http://www.amibroker.com/devlog/
> > > >
> > > > For other support material please check also:
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> > > > Yahoo! Groups Links
> > > >
> > > >
> > > >
> > > >
> > > > No virus found in this incoming message.
> > > > Checked by AVG - http://www.avg.com
> > > > Version: 8.0.138 / Virus Database: 270.6.6/1623 - Release
> Date:
> > > 8/20/2008 8:12 AM
> > > >
> > >
> >
>
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