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Thanks for taking the time out to answer.
That helps to clarify how DT's see themselves and what they do (the
fact that MR consciously sets a 'mental soft stop' confirms my
private theory/definitions.
I'm arguing over semantics (to me the words we choose to use,and the
way we use them, contribute to how we manage ideas) - I concede that
doesn't suit, or interest everyone.
I'll have a google for Lance Beggs and Mike Reed.
Good trading.
brian_z
--- In amibroker@xxxxxxxxxxxxxxx, "bilbo0211" <wjdandreta@xxx> wrote:
>
> >>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@> 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
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> > to
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> > > > >
> > > > > 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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> > > > >
> > > > >
> > > > >
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> > > >
> > >
> >
>
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