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Hello A.J.,
I agree to most aspects of your article, unless one is buying new
highs/selling new lows, this is going with the direction of the trend,
anything else would be a countertrend in a smaller timeframe.
Thru the years and thousands of daytrades, at least it seems, has worn me
out.
All the countertrend trades would pay me an occasional large profit, but a ton
of losers. I believe one of the largest enemies of trading is overtrading,
especially if one is starting out. Until a trader can consistently pull
profits out going with trend, which means stay profitable for a least 6-9
months, then they can "try" picking tops/bottoms, but with a lesser
percentage of contracts or smaller contracts such as the E-mini or at the Mid-
Am.
Since I for the most part consider myself a long term trader, at least
that is where 90% of my profits arrive, intraday trading is a very costly
endeavor, more trades which means more slippage/commissions and less money per
trade. However, I still daytrade and I use a longer term approach to my short
term trading. I use the 40 simple moving average on the dailies and 60 minute
bars, closes above on both - only buys, closes on both - only sells. This will
have me trading only in the strongest of trends. I switch to 15 minute bars
and wait for a counter trend move, like a rubberband stretching from a car
that is going 60mph and when the right distance away, I switch to the 5 minute
for an a-b-c pattern, buy/sell breakout in the direction of the main trend, I
use recent lows/highs plus some as protective stops. I always want to make
sure that I have at least a 4 to 1 reward to risk, we already know where the
risk will be, multiply by 4.
Now if the highs/lows of recent past from my entry point is the risk times 4,
I will put on the trade, if not - no trade, I have to make sure all my efforts
will be paid after com/slip.. The S&P and the Meats are very repetative, prone
to taking out the extremes only to go the other way, how many times have you
entered a trade near the extremes, you become happy to see new highs/lows only
to witness the market taking out your stop, in other words, there wasn't any
room left for the market to go. Also, greed is an enemy, I leave my greed at
the door, after I have entered the trade, I place an MIT order 1 tick away
from the extremes, if I'm trading multi contracts, I place breakeven stop
after taken profit. On remaining contracts, I switch back to 60 minute bars
and use the highest/lowest of two bars as a trailing stop and take the trade
overnite. I place an order to take profit on the Globex 13.00 beyond the close
and if filled, I look to reenter after the open unless market violates
trailing stop. I can trade this method on any timeframe, the only
difference is the larger the timeframe the larger the protective stops. I
trade stocks with this method as well.
Please, this is for "entertainment value" only and is in no way a
reason to trade my style. Test, test,test,test is the only way of learning if
ideas of any value. I test till I have 100-300 occurances and then papertrade
1-3 months till I know my method backwards. I would rather spend 3 months with
a useless method, than to lose any of my funds.
Oattrader
P.S. Are there any traders willing to describe their methods, this is
what forums were really made to offer, at least what I believe. Good trading
to all.
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