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Hello TaoOfDow,
As a mainly discretionary trader of SP mini's here are few of my
thoughts--
When my setups occur, I assess the context when they originate--i.e.,
is the move accompanied by tick movement, trin movement, volume, time
of day.
Does the move begin out of congestion or not?
Do other indices confirm the move?
does the first impulse make it to the outer Keltner Band (2.5 sd's for
my purposes) or does it begin to hesitate or turn back sooner?
Obviously I use more of a trend following method and momentum strength
is a clue I weigh heavily.
You might also watch ticki and premium to see if the move is simply
program trading or has real market depth.
Low volume days are notorious for weak rallies whereas high volume
days tend to have more follow thru.
Watch the behavior of price at the 1 minute or tick level for reversal
formations, resistance and support.
There seems to be a tendency for price to move in three pushes up
(down) before a meaningful pullback. So is this the first or third
push and is it accompanied by divergence with an oscillator or with
tick. If the latter, I play for the end of the move and look to exit.
Saturday, November 17, 2001, 11:22:04 PM, you wrote:
T> Dear Rich,
T> It has been fruitful to me to consider several possibilities that are "out of
T> the box" that you have considered --- some of these have been mentioned by
T> others, notably Ted & Bob.
T> 1. Trading multiple contracts, each under its own parameters. The fellow in my
T> mind most associated with this idea is Joe Ross, of "Ross Hook" fame, who
T> advocated trading threes: taking one off after making one's commission expenses;
T> the second off after making a few, predetermined number of points; and the last
T> off upon hitting a trailing stop set up to catch a substantial move. Ted
T> elaborates on this specifically and Bob generally. I recall Bill Williams
T> saying that his hardest time trading was trading one-lots (and secondarily any
T> fixed number of contracts, all or nothing), and I find it emotionally easier to
T> trade several contracts, each with its own rules, than one size all or nothing.
T> That having been said, I find it easier still to trade one size all or nothing
T> very tightly (see #2 below) as well as varying the size of my entry depending on
T> the size of the anticipated move. This is one of these situations like Justice
T> Stewart who in answer to the question, "What is obscenity?" Replied: "I can't
T> give you a definition, but I know it when I see it." I can't give you an
T> objective description of "This is the start of a big move." But every now and
T> then, something goes off in me when I see something on the screen, and what goes
T> off in me says "Start of big move --- This is an opportunity --- Be courageous
T> --- Don't fuck up and play chicken --- Commit!!!" And for reasons that I can't
T> explain, my feelings more often than not (much more often than not) will be
T> realized. I just wish I had some control over whatever it is that goes off in
T> me. It just happens, often without my expecting it, in fact when I usually
T> least expect it. I've learned that it occurs, if at all, only when I have let
T> it go and am not looking for it. For a control freak such as myself who was
T> trained and has worked largely in analytic environments, it has been a real
T> challenge for me to get out of my analytic and into my intuitive. All I can say
T> is that I seem to be more successful as a trader when I rely less on my analytic
T> and more on my intuitive, although this has indeed been a long, difficult, and
T> stressful learning experience for me, and I still have much yet to learn with
T> it.
T> 2. Trading in and out through a move. Bob elaborates on this. The great
T> majority of my larger "trades" (a la 10-15 point "trades") consist of multiple,
T> smaller trades --- they hit my profit targets, I get out, and look to get back
T> in, just like with a new trade, although in the same direction as the last. I
T> basically don't use stops, especially trailing stops. I get out mostly on
T> profit targets, a small pullback upon the failure to hit a profit target, or a
T> small gain/loss or scratch following entry. The market does what I expect
T> (occasionally) or I'm outa' there (much more often than I would prefer --- God I
T> ain't). Bob has some cogent comments about this, which reduce down for me to
T> "Plan your trades, and trade your plan." I can guarantee you that when I start
T> messin' with my plan during the day, generally as a result of my perception of
T> what has transpired for better or worse with my trading earlier that day, I am
T> colluding with my own prospective failure. For me at least, I just don't have
T> what it takes to both think and trade, and when I try to do both, I shoot myself
T> in the foot and will soon (altogether too soon) regret my extravagance. Another
T> lesson that has been hard for me to accept, and I'm still working on it.
T> 3. Trading selected hours. In my experience, there is more opportunity for
T> profits available for trading during the first and last hour or two of the
T> market day than during the middle of the day (the "noon balloon"). No wonder,
T> all you have to do is spend a day or two on the floor and watch its population
T> fluctuate during the day. It's packed at the open, and after an hour or two,
T> sometimes you could roll a bowling ball from from one side to the other and not
T> hit anyone. Then the guys come back from lunch for the last hour or two before
T> "quittin' time." If I were looking for larger moves, these would be the times
T> that I would look for them.
T> 4. Trading selected days. In my experience, it pays to be at my desk
T> especially on Mondays and Fridays as opposed to other days of the week (Goldspan
T> days excepted, among others). If I were looking for larger moves, these (and
T> Greenspan days, among others) would be the days that I would look for them.
T> 5. Developing ways to discern, upon the initiation of a move, whether the move
T> will peter out after 3-5 points or extend further.
T> 6. Developing ways to discern, after a move has gone 3-5 points, whether it
T> will now peter out or extend further.
T> Frankly, I find entries more problematic than exits. The exits just seem to pop
T> out at me. It's the entries that I struggle with. I continue to attempt on
T> entry to buy the bottom tick or two or sell the top tick or two. I gotta get
T> over that. I'm driving myself nuts with it.
T> Lastly, I was surprised to read that you identified yourself as "an S&P ...
T> trader", in the sense that I was surprised to read that you are trading the S&P
T> and curious why you had not switched to the S&P E-mini. I guess I am going to
T> expose my naivity and ignorance here. In my experience, my (what I have come to
T> see as a long overdue) shift from trading the S&P to the S&P E-mini has been
T> nothing but positive. Perhaps you trade much more size that I or have other
T> reasons for doing so. Although I traded very little, I used to trade the S&P
T> through a commercial/wholesale desk that routinely traded 100s and occasionally
T> 1000s (I can remember standing in back of the head of the trading desk when he
T> sold 1000, old $500 contracts during a fast market down and his worst fill was
T> half a point off his desired price) --- my max was 10-lots, which was very, very
T> seldom; my usual was onesies and, if I was really feeling my cojones, twosies.
T> That desk gave me what seemed to me to be great service at reasonable rates
T> ($17/car). To my surprise and increasing pleasure, all in all (speed,
T> commissions, fills, relative absence of human interaction, etc.), I have come to
T> prefer my experience with the E-mini and electronic trading relative to open
T> outcry trading. Would you be willing to tell me what keeps you trading the S&P
T> as opposed to the E-mini? Maybe you are a member or a lessee?
T> Sincerely,
T> Richard
T> Rich Tuchow wrote:
>> I am an S&P day trader and keep going back and forth in my mind my exit
>> strategy. There are 2 schools of thought 1)let profits run 2)don't try to
>> be a pig on every trade. It seems that every time I grab the 3-5 point
>> profit the trade goes on to 10-15 points and every time I let profits run,
>> the 3-5 point profit disappears. I am not particularly found of trailing
>> stops because you have to be willing to give back a fair amount of profit.
>> Others use a staggered exit strategy such as take 1 contract off at 3 points
>> another at 5 another at 8 etc.
>>
>> I would be interested in hearing only from successful S&P day traders which
>> school of thought they follow.
>>
>> Thanks
--
Best regards,
Jim mailto:jejohn@xxxxxxxxxxxxxxxx
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