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Ira, OatTrader, is there anyone out there who is real?!
You state:
If the system you use is reliable, it should be able to be used on any
tradable item.
As I said in my post, I don't believe in systems. If they worked everyone
would be rich and there ain't no Holy Grail. However, the method I use
works on the Bonds because of the characteristics of that market, but I
don't think for a moment it would just work on all markets. Furthermore,
the characteristic which I referred to make it an ideal market to trade,
from my perspective.
I was much more interested to learn of others view on how they day traded
and what elements they used. For example, you said ". I use a momentum
tool, a price projection tool, a timing tool and multiple time frame charts
to plot a course through the markets." This certainly suggested that you
trade all and everything, in much the same way. Do you care to mention
exactly what these tools are and how they work for you? Are there others
who would be interested in bringing up what they do day trading?
On the risk/reward ratio front, I prefer to go for 3:1 where I can, but
much depends on how the market is moving and where it has dictated that
your stop must be for entry at that time. As I said, that was a wholly
different subject.
Finally, you seem to suggest that whatever you do "the same rules apply to
day
trading as well as long term and swing trading" and I find that very
interesting. For me, while I can understand the value of certain
indicators for longer term trades, I think the lagging effect is too much
for day trading. I do not need confirmation of what the price action is
telling me and that is all a lagging indicator is going to do on a very
short time frame. But I would much welcome other people's views and
experiences.
Any guys with a signature go a comment?
Bill
-----Original Message-----
From: Ira <ist@xxxxxx>
To: t-bondtrader@xxxxxxx <t-bondtrader@xxxxxxx>
Cc: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Sunday, February 07, 1999 8:05 pm
Subject: Re: The leading edge
>You pose a lot of interesting questions. In trading there are several
things
>that are necessary to be successful. I have found the same rules apply to
day
>trading as well as long term and swing trading. Take the headings off of
a
>chart and I defy you to tell me what that chart refers to or what time
frame it
>is for. Therefore all trading whether long term or short term should have
a
>system that will work on any chart. The other is liquidity. If you can't
get in
>at your price and get out near your price, don't trade the market. There
are
>over 15,000 stocks and 50 futures and 20,000 options that give you quite a
>field to choose from. Unlike a floor trader or market maker you can trade
>anything you want at any time. Many a floor trader would like that
option. I
>haven't found any one indicator, pattern, or other phenomenon that will
stand
>alone as a successful trading tool. I use a momentum tool, a price
projection
>tool, a timing tool and multiple time frame charts to plot a course
through the
>markets. I have found that over the years this has produced a very
successful
>and profitable trading system. As for a 3:1 ratio, you only need that if
the
>system requires that to be profitable. I have found using my system that
1:1
>is sufficient if the trade has an 80% probability of success, 2:1 with a
70%
>probability and 3:1 only if the probability is 60%. The system you use
should
>be able to answer the following questions. Where have I been? Where am I
now
>and how did I get here? and finally, Where am I going? In the questions
the
>"I" refers to the underlying being traded. These are all technical in
nature
>and I believe that all fundamentals are reflected in the action viewed on
the
>screen. If the system you use is reliable, it should be able to be used
on any
>tradable item. You trade the bonds in order to limit risk. You don't
trade the
>grains because of the lack of profit potential in a predetermined time
frame.
>You should be able to trade all of these at the same time using the
correct
>strategies and obtaining the profit potential from each. Didn't mean to
get
>long winded. Have a good week, Ira.
>
>T-Bondtrader wrote:
>
>> Two posts arrived on my screen, one after the other and I print the
>> relevant lines of each below and would like to make some observations
and
>> perhaps stir up a discussion on day trading and the techniques used to
>> succeed on this form of trading. As most on this list know, I only day
>> trade and on one intrument only, so I have a vestige interest in the
>> subject.
>>
>> Earl Adamy wrote:
>>
>> Every day which goes by I get closer to trading the raw price patterns
and
>> formations on bar charts (like the triangles I posted this morning).
>>
>> OatTrader wrote:
>>
>> If a method only works on wide swinging ranges, when will you know when
>> that event is over?
>>
>> Earl, I know, has been a long standing contributor of RT and is an
>> experienced trader. OatTrader, whoever he or she may be, is I think
>> fairly new to the group and I have no idea how experienced, as a trader.
>> Nevertheless, both allude to important aspects of day trading and both,
>> from my standpoint, are concerned with the leading edge (they, nor you,
may
>> think that or think it only).
>>
>> The market I day trade is open for 6.66 hours and whatever it is that is
>> going to tell you what the market is going to do has got to be quick
about
>> it - or, for those who appreciate the number, in devlish short time!
RSI,
>> Stochastics, MACD and whatever can be overbought or oversold for that
long,
>> without the slightest trouble. If the market has gapped at the open
>> (especially in the opposite direcetion to yesterday's trend), then any
>> moving average can take an age to catch up - to even a respectable lag.
>> Since I am a non-believer in little red or green signals from some
system
>> or other, this leaves me with very little choice but to learn to read
the
>> market at the leading edge.
>>
>> So, for me, Earl Adamy, with his 'raw price patterns' is getting close
to
>> the truth of what's what. The formation of the price pattern is
probably
>> the best way of identifying what the market is likely to do and, if that
>> price pattern emanates from some aspect of previous support and
resistance
>> at key levels, we will start to get somewhere. How long that
'somewhere'
>> is going leads us nicely to OatTraders question: "If a method only
works
>> on wide swinging ranges, when will you know when that event is over?"
>>
>> The answer, as I see it, lies in the instrument being traded. The S&P,
>> which although I don't trade, I track closely on a 5 min chart against
the
>> T-Bonds, can tell you with amazing speed when it had decided
'somewhere'
>> is over! It is the sort of volatility, I am unable to even start to
trade
>> (yet it is the sort of volatility some people will only trade!). For
me,
>> preservation of capital comes before profit and I day trade for a
living,
>> so the S&P is out. But then so too is Oats or Corn or other very
illiquid
>> markets because of a mass of factors that are stacked against the
off-floor
>> trader.
>>
>> The answer lies, as so often is the case, somwhere in the middle. You
>> don't want a market that can wipe you out in five minutes, nor one that
may
>> not let you in for five minutes... To stand a chance of knowing where
a
>> market is going means having a method of knowing where it has been;
being
>> able to identify what made it turn when it turned and what the
difference
>> is between it turning and retracing. That means having a market which
>> moves sufficiently to be able to take out chunks of loot that are
>> worthwhile (i.e. enough $1,000 days, per contract) but moves with a
>> measured tread - so you can, indeed, get the measure of it.
Furthemore,
>> the market has got to operate all the year round in much the same
fashion,
>> which for me rules out Soyabeans, Coffee, Energy and others.
>>
>> Obviously, if you are day trading, it almost dictates that it must be
for a
>> living, because you are spending all day at it. To do that
successfully,
>> I have to concentrate and I can only do that on one thing at a time.
>> Hence I have found my instrument and that is what I play! And the
bonds
>> play a merry old tune, at that!! But it has to be played at the leading
>> edge. That means relying on price action, 'raw patterns' and knowing
>> (from the past) what the future - in the very, very short term - is
likely
>> to be. It means - and this is a vital, but quite another story -
having
>> the time (amongst everything else!) to spot the 3:1 trades, to give you
the
>> mathematical edge.
>>
>> So in summary, Earl, has come to the same conclusion I have - over time,
by
>> the sounds of it. And, Oatrader, will find his questioned answered if
>> were to trade an instrument that has an average in excess of half a
million
>> contracts going through, within a range and volatility that is
sufficient,
>> rather than deadly. But that may rule out Oats, I am afraid.
>>
>> Now, bearing in mind that I have not contributed for ages, I hope very
much
>> to have started a thread that may throw up some useful ideas and
concepts -
>> and a few people may have some comments and contributions on day trading
>> and how it is done.
>>
>> Best of trading
>>
>> Bill Eykyn
>> www.dbceuro.com/bille.htm
>
>
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