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The note below prompted my note that follows. For what it's worth, I've
summarized my newbie path to date. My hope is that more experienced traders
would offer up additional paths I should explore...Thanks for feedback in
advance....
- I started trying to daytrade the sp 10 months ago. I had some
background in T/A so I believed I was starting off with some significant
knowledge. Tripled my equity in 3 weeks. Lost my entire gain in 4 days.
At the time, I believed that the large loss had mostly to do with a lack of
emotional discipline. I still believe that.
- But I decided that I was just gambling until I had more knowledge and
mental discipline. I closed my account.
- I've read/skimmed lots of books, magazines, and mailing lists VERY
intensively outside my day job. (I've always had a knack for learning from
textbooks.)
- I've been a member of certain lists long enough now to know who to take
seriously and who to ignore.
- I used to post my opinions about trading to the lists. I don't any
longer because I don't want to imply to anyone that I know anything about
what it means to be a successful trader.
- I've bought software (TS, Metastock, Portfolio Maximizer, Jurik stuff
www.jurikres.com (all the indicators and also the neural net stuff--WAV,
DDR, and Braincel--but no GA)) and I systematically collect ela files posted
to the various mailing lists
- I look at every .gif posted to a mailing list and look at every url
posted to a list. I also browse the net like everyone else looking for
ideas
- I have it in mind to make a list of the stuff I've read and post it to
this list to get feedback from others about what else I should look at
- I went through a "mechanical system development" stage. I've decided
that it was and still is absurd for me to try to build a mechanical system
when I haven't SPENT TIME JUST OBSERVING BARS with important indicators
(from various timeframes) go by. Imagine my arrogance: I thought I could
purchase software and immediately begin to code some profitable system
without actually spending some time observing bars go by. More about this
below...
- I faithfully download .omz files from the omega site. I've got all the
.omz files back to 1/1/97 so that later I won't have to buy data.
- I've purchased data too. (LIFFE FTSE tick back to the mid-80s, 1.5
years of DAX tick, SP tick--including the globex session--back to the
beginning of the globex session 9/93) (The reason for purchasing the
foreign indices has to do with the close intra-day bar correlation of the
swing high/lows of the globex sp with comparable bar-length DAX and FTSE
swing high/lows. Given that I work days, trading the globex session is an
important part of my strategy for moving forward. I'm a 3am in the morning
person and I'm on the west coast so this works for me.)
- I think that CQG ( www.cqg.com ) has the best catalog of intra-day data
including night session. But it has to be transformed to be used within TS.
I'm almost done developing an Oracle database process to transform CQG tick
to ascii text files for any desired timeframe. (I do Oracle database
contract design and programming for a living.)
- Because I do information technology for a living it's embarrasing to
admit that I had no idea what a neural net was 5 months ago. Now, I've got
some kind of neural network learning session going on using Mark Jurik's
stuff about half the time. Worked a couple months on daily bar learning
sessions to test some concepts. I've now shifted my attention to intra-day
bars. This is a long term process but I've done enough at this point to
believe it will ultimately provide value.
- I just purchased Virtual Trader from Titan trading
www.titantrading.com ). This is one of the best things I've done. One of
the things I notice is that the folks who are successful spent YEARS
becoming so. And they all appear to agree that a key thing is to have the
capital to stay alive through the learning process. The terrific thing
about Virtual Trader is that it provides a means of getting the years of
close to real time training across different market structures without the
pressure of putting money down. I have actually stopped even trying to post
trades in VT for awhile. I'm just watching bars and indicators go by from
the sp that I have from the Omega site .omz files. In a couple weeks when
I've got my CQG data transformation process done, my plan is to practice
with sp 1 min bars and up and indicators from 9/93. It's clear to me that
TRADING PRACTICE will turn out to be as important.
- Imagine the arrogance that my attempting to trade constituted: I
believed I could profitably trade without observing bars for any significant
length of time and without any practice!!!
- So, I haven't been trading now for 9 months. I had hoped that I would
be trading again by year end. It's clear to me that I'm not ready yet. My
objective now is to be trading again by the end of the first quarter 1999.
But if I'm not, that's ok too.
- I would NEVER suggest that the kind of work I've summarized above is a
real substitute for the lessons that one can only learn from real trading.
I'd never say that my path is the best for everyone.
- It seems to me that there is a set of lessons that constitute the
minimum set of lessons that one must learn to trade successfully. It
appears that these lessons can be (and are) succintly summarized in many
different places. And there are books and articles that contain these
lessons stated in different ways. But it's not enough to memorize the
phrases that encapsulate these lessons. The lessons must be internalized
and this takes time. My hope is that, if you can internalize these
concepts/lessons from textbooks (I believe I can to a significant degree), a
great deal of actual-trading-newbie-pain can be avoided.
- One thing I'd like to do is to cultivate a set of
research/trading/mentoring relationships. I'm not sure how one goes about
establishing these.
So, to be honest, the net at present is that I'm NOT a "RealTrader" 8<)
Steven Buss
sbuss@xxxxxxxxxxx
Walnut Creek, CA, USA
-----Original Message-----
From: A.J. Carisse <carisse@xxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Sunday, November 22, 1998 11:00 PM
Subject: Re: Day Trading aspects
>My 2 cents on this, FWIW:
>
>> I had an ill-fated one month trial with daytrading the E-Mini. After a
>> month, I wasn't getting where I wanted, so I quit.
>
>One of the things that's pretty much a constant here is that traders tend
to
>*grossly* underestimate what it takes to develop enough of a mastery of
this
>type of trading to consistently succeed while staying out of trouble. One
>month would be more like a brief introduction. The idea at this point
would be
>to keep your "lessons" affordable.
>
>> One was that if I was trading breakouts (buying new highs, selling new
>> lows) it was the risk control that made the strategy work.
>
>Well, that's exactly its main advantage, in my view. What you're looking
for
>here is situations that can be readily assessed, so that you can allow for
>profit potential while keeping the downside at a bare minimum. You enter
>looking for the follow through on the breakout, and if it isn't there in a
very
>short period of time, your reason for entering the play has been violated.
>This is going to be a lot trickier with indexes, though, due to their more
>heterogeneous makeup.
>
>> When the
>> volatility stepped up, and I started giving it more room I started losing
>> money big time.. I should've just called it quits.
>
>Being able to cut losses isn't just the biggest advantage a trader has,
it's a
>necessity. Those who are unable to do so properly will not last long. One
>must first learn to control the downside - your survival may depend on it,
and
>even if your bankroll is high enough that this isn't as much of a concern,
you
>will develop some bad habits by not heeding this which may eventually cost
you,
>not to mention taking much more of a hit at this stage than necessary.
What
>this comes down to is developing a more risk averse mentality, where a
dollar
>of missed gains is much more preferable to a dollar lost. As time goes on,
you
>can adjust this, but this is always true to some degree.
>
>> The other notable thing was that I did better watching the ticker (i.e.,
>> straight time and sales) for managing the trade than by watching the
chart.
>> When I started watching the chart, I would let it retrace too much.
>
>I trade this way myself, and while I think that this depends on a trader's
>particular style and preferences, whatever's working for you is always
best.
>There was a time where I'd almost exit too early watching the thing on T+S,
so
>I avoided that.
>
>> I'll probably give it another shot when
>> I've developed a more disciplined approach.
>
>Realizing the importance of discipline is key. It sounds like you are
taking
>away some good lessons from this - being able to adjust, as well as
persevere,
>is the ticket here. Best of luck in the future.
>
>A.J.
>
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