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Hi Everyone -
**** While I'm at it....I've received a number of e-mails requesting info
on discretionary trading.....Well, let me just say what I've done....and
what others have told me about their own methods....
For those interested, here's what you may try:
Simply sit down in front of your screen and plot out your favorite very
liquid futures market. The S&P 500 is perfect - Plot out 1 minute and 15
minute and 60 minute charts. Then REALLY study the patterns. There are
patterns in there that cannot be quantified computer-wise 'cuz they are too
broad... at least for TS 4.0 type programming... This process may take
weeks or months...you want to make it a subconscious thing. Take a lot of
notes. Look for patterns that go way beyond the simple "buy a breakout of
an inside day" , and all that stuff)
You will find a few unique PRICE patterns but more importantly TIME
patterns that can give you an edge. There are many, but I use only a few.
For some reason they appear not to be overly exploited at this
time..probably 'cuz they are difficult to find, and certainly not found
through an optimization routine. (I even used a series of Neural Networks a
few years ago with not a hint of these patterns showing up....that was such
a waste of time...)
Point is....I use one computer to plot the charts, a second computer to
make manual calculations based on what I see, a third computer to keep
track of TIME, and a laptop connected to LEO to put in the trades (Thanks
to Barry Small for the Leo-Web tip!)
What happens during the trading session is this: (S&P) I simply keep
scanning for my favorite price and time patterns (they are totally
separate) and look at the simple price action as it unfolds. Keep it
simple. I do not force anything to happen...this is KEY. I am confident
that when a setup occurs something will go off in my head. What actually
happens with me personally is that suddenly I start to feel very anxious
and my heart starts to pound. It's almost as if my subconscious has
recognized the setup and I then consciously realize that I am about to put
my ass on the line for a few contracts. I do not use stops- I'm always
watching when in a trade. This keeps me sharp all the time with no frigg'in
crutches. My trades last anywhere from 30-90 minutes on average. I give the
market a lot of room to fluctuate sometimes when I "know" I'm right. (like
3-4 full points) Other times I'll be out in 60 seconds when I realize the
setup has failed and I screwed up.
1997 was a particularly super year. I actually caught the October '97
crash buying cheap $1 S&P 100 Put options and turned a $8,000 position
into over $90,000. (thank you, Neiderhoffer!) That was a rare option trade
that lasted several days. The next few months I gave back about $20K doing
those same options.(started getting over confident) I finally closed that
account and stayed only with the futures account to the present. Trades now
are only "Ninja" style for short time frames as I mentioned.
Hey, it's a battle with yourself every day, believe me.....We all earn our
keep as traders, that's for sure.
Hope this helps anyone looking to research a different method.
Good Luck to all -
Tom Cathey
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