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Been "trading" three years...


Hi Everyone! :-)
been trading for three years E-minis (YM, NQ).
Started with sim, then live, then sim again, then live and so on.
Good news is, I didnt loose a lot of money.
I studied lots of books about trading psychology, analyses, positive thinking, etc.
I consider myself as a very disciplined and positive person.
But I noticed something and I would like to know your opinion.

Every of my strategies worked for maximum one or two months. I always adapted the volatility or current "mood" of market, but it didn´t help.
But after few weeks, I always ended up on B/E or worse.

I discovered that some of my internet friends on forum, who claimed to be full time traders, have got trading web pages, when they offer mentoring to trade and selling trading books and strategies.
It seems that there are just two groups of traders:
1) guys who make money by selling books and "know hows" and do not trade.
2) guys who loose money by trying to trade by those books and know hows.

It is quite dissapointing not to make any money after three years of keen studying. So my final question is:

Is there around the world a guy, who makes money of trading from home?
Because I think I tried everything (trend line breaks, moving averages, triangles, flags, etc.) and nothing worked...

Bless you, Sanderson
Since you seem to be sincere, I will share a private exchange I have had with another member of this forum-



beyondMP wrote on 20-Jan-12 8:36:54 AM EST:
You sound like a very intelligent individual. I suggest you use that to your advantage and think about what you are seeking.

I will offer a little "hard earned" advice.

1. There is no incentive for a successful trader to share his "secret sauce", he doesn't need your money or your acceptance.

2. Beware of any method or system that teaches you "how to lose", it only means their method doesn't work.

3. Understand there are only 2 ways to trade. Either probability based or event driven. Event driven is the way of "successful"(those making the kind of money you are talking about). Probability based is what you find in almost all of the "published wisdom" regarding trading; and amounts to just another form of gambling.

4. "Dreams" only exist in our minds. You get exactly what you seek, be careful with your thoughts.


N******* wrote on 20-Jan-12 9:18:16 AM EST:
Thanks so much for this insight. I will take it to heart and research event driven trading. Do you have any suggestions to point me in the right direction for this type of trading?


beyondMP wrote on 20-Jan-12 9:59:58 AM EST:
There is little directly published referencing it. However, you find it discussed in many of classics of trading....Livermore, Wycoff even Gann. Livermore's entire trading was based on some event occurring that caused him to enter a market; he is the most "obvious" example.

Technical analysis is based on the assumption of quantifying human behavior and trying to find patterns that explain price movement. This is a false assumption, as price movement is based on an event or series of events that cause people to act.

Traders that have found these connections are reluctant to share them. There is a reason Coca-Cola has their formula in vault. And, Apple and Samsung are suing each other over patent infringements. If you know "A" results in "B" moving a certain way, you just take advantage of it for your own gain and let the others wonder why their accounts are always getting smaller.

It is different perspective of price movement, that can be figured out with some trial and error and objective observation.

N******* wrote:
Wow... This is probably the best advice I have gotten in a long time. I will pick up those books and attempt to develop my own strategies around the topic.
Dear beyondMP,
thanks for Your thoughts, I will definitely look into it.
Sending warm greetings to US from Europe!
Originally posted by beyondMP

Since you seem to be sincere, I will share a private exchange I have had with another member of this forum-

beyondMP wrote on 20-Jan-12 8:36:54 AM EST:
You sound like a very intelligent individual. I suggest you use that to your advantage and think about what you are seeking.

I will offer a little "hard earned" advice.

1. There is no incentive for a successful trader to share his "secret sauce", he doesn't need your money or your acceptance.

2. Beware of any method or system that teaches you "how to lose", it only means their method doesn't work.

3. Understand there are only 2 ways to trade. Either probability based or event driven. Event driven is the way of "successful"(those making the kind of money you are talking about). Probability based is what you find in almost all of the "published wisdom" regarding trading; and amounts to just another form of gambling.

4. "Dreams" only exist in our minds. You get exactly what you seek, be careful with your thoughts.


N******* wrote on 20-Jan-12 9:18:16 AM EST:
Thanks so much for this insight. I will take it to heart and research event driven trading. Do you have any suggestions to point me in the right direction for this type of trading?


beyondMP wrote on 20-Jan-12 9:59:58 AM EST:
There is little directly published referencing it. However, you find it discussed in many of classics of trading....Livermore, Wycoff even Gann. Livermore's entire trading was based on some event occurring that caused him to enter a market; he is the most "obvious" example.

Technical analysis is based on the assumption of quantifying human behavior and trying to find patterns that explain price movement. This is a false assumption, as price movement is based on an event or series of events that cause people to act.

Traders that have found these connections are reluctant to share them. There is a reason Coca-Cola has their formula in vault. And, Apple and Samsung are suing each other over patent infringements. If you know "A" results in "B" moving a certain way, you just take advantage of it for your own gain and let the others wonder why their accounts are always getting smaller.

It is different perspective of price movement, that can be figured out with some trial and error and objective observation.

N******* wrote:
Wow... This is probably the best advice I have gotten in a long time. I will pick up those books and attempt to develop my own strategies around the topic.


Are you referring to positioning a trade before the event or after the release of the event? I have read Livermore's books and didn't get the same take away.. I trade news events as well and typically, I don't care what the news is but how prices reacts to the news.. Is that what you're referring to? There has been a few good posts here in the past (likely lost in the archives) that touches on how to do this..

Probability trading can and does work but often its the nuances of trading that differentiates profitability.. Most look for probabilities from mechanical set ups, which I believe is also a mistake.. The probability has to be taken from a holistic view and that is the beginning.. Then there is also the aspect of execution.. There is a reason most traders are not profitable because many aspects have to come together and its plain difficult.. HOWEVER, once a trader gets past that, good trading is effortless.. not necessarily easy, but effortless.. Trading is a big catch-22 in almost every case on the trader's journey..

Guys, I am surprised...
More then 166 reads and nobody wrote something like "Hey, I am a full-time trader using just technical analyse, it works!"
This makes me feel like I really spent three years of learning averages, breakouts, etc in vain:-(
I am showing you chart from yesterday...it might help to get some more reactions from you guys:-)

Click image for original size
expect
I once read that it takes 10 years to become profitable in this business. Not sure that is true as it is different for everybody...it did take me 3 years to become consistently break-even.

I am at year 5 and am now consistently profitable. Many lessons have been learned - here are the key ones for me:

1. Purely technical trading is NOT the answer. But it IS important.
2. Jedi is right when he sais "probability has to be taken from a holistic view" - For me, I look for a synthesis of technical set-ups, current internals, & developing day types.
3. I stay out of markets that are confusing (see point 2 above) or when the VIX is low combined with a low ADX on the 30 or 60-minute chart. Those markets will just chew you up. I will at times not day trade for several days in a row.
4. For me, I trade several time frames - trend trade intermediate-term trend using equities, swing trade SPY & QQQQ using options, and day-trade using the e-minis. This has helped my overall equity curve as I continue to master day trading (I trade fewer contracts than I used to because I earn from my other methods too).

I am not where I want to be but have persisted on the journey.
S & J-

The timing of the placement of a trade depends on the type of event you're trading against.


Livermore's reasons for his trades was always some sort of behavior occuring; the action of one bucket shop against another, a news event or the movement of another stock or future.


It is "theortically" possible to be successsful trading probabilites but any success is determined by the decision making abilities of the individual trader, not the perceived "edge". As the OP has found, the needed concentration for profitable decision making can only be sustained for a limited time. As soon as, that concentration is relaxed, the trader's account moves to "breakeven" or worse.

When a trader finally realizes his success is based solely on his own decision making ability, he can move on from the din of technical analysis "junkies" and look for the profitable "situations" that have nothing to do with his ability and rely on the movement of the markets.

Quite a few years ago, I attended a round table discussion where Nicholas Taleb was the featured guest. The audience was made of struggling TA traders, all seeking the answer to their trading woes. When asked to describe his trading method, Taleb had a different take from any of the members of group. In its simplest form: He would identify an "event" he would want to trade against and then wait for that event to occur, regardless of how long it took-hours, days, months or years.
TA assumes it is possible to determine future movement based upon past movement, interpreted by some combination of "indicators". In truth future movement is always based on some "event" occuring that changes the mix of buyer and sellers. You can trade the "event" or the changes in buying and selling. Or, my favorite, a combination.
But, when all is said and done, ain't we trading against just a few BIG institutions

If we can find where they like to trade our chance improves, correct
Originally posted by beyondMP



Quite a few years ago, I attended a round table discussion where Nicholas Taleb was the featured guest. The audience was made of struggling TA traders, all seeking the answer to their trading woes. When asked to describe his trading method, Taleb had a different take from any of the members of group. In its simplest form: He would identify an "event" he would want to trade against and then wait for that event to occur, regardless of how long it took-hours, days, months or years.



Perhaps I misunderstand but it sounds to me like he is a news contrarian that commits to a losing position until it becomes a winner and hold as long as necessary.. I wouldn't recommend that..

IMO, concentration is only necessary when the market is on the move which is typically in the morning but that's also where your best opportunities are with the highest r/r.

If people think of technical analysis in terms of looking for a perfect mechanical method, it is my opinion that this is a pie in the sky. However, there is definitely an edge that can be had in reading the market and it doesn't take a big one to make a difference.. Using casinos as an example, their edge is believed to be around 2-3%..

This is only my opinion and experience in the market and a crude attempt to make a comparison but I believe understanding the market is like a young man trying to understand women. There are no mechanical method that works on all of them, it depends on the characteristics of the individual girl. However, they do give you clues that can be read and there are some things that are true for all women, but that's just the beginning. Now you read her correctly, can you execute to get her to fall for you? And if you can, do you know yourself enough to know this is the right woman for you? If the relationship doesn't work out, it doesn't always mean there is something wrong with the girl, she's just not the right fit for you, so it takes self knowledge as well.. So you can read the girl, and execute well enough for her to fall for you, and you know enough about yourself to know what works and doesn't work for you, now do you know how to tell when you're wrong?

To trade successfully, you have to know how to read the market, time your entries and exits in your execution and size appropriately for the r/r, and know yourself enough to use methods that are in harmony with your personal traits, and you have to know what needs to happen for your premise to be negated.

So to start off, finding the perfect mechanical method that works in all market conditions is a pie in the sky and that's exactly what new traders try to do. Then when you do find a method that has a real edge, that's only the beginning and wont guarantee profitability as you will still need to learn to execute it.. and if you cant execute it, it can be a psychological inclination that is hindering it.. With that said, whenever a vendor blames the student or their psychology, that is all fine if they show they can execute themselves.. From a new trader perspective, this will be very difficult to distinguish..

I know it sounds a bit esoteric but I hope it helps some..
Originally posted by redsixspeed

But, when all is said and done, ain't we trading against just a few BIG institutions

If we can find where they like to trade our chance improves, correct



Every trader tries to align with the big traders and the big traders try to align with the market.. Big traders also loose, they just have bigger stops and can ride it out better.. At the end of the day, we're all trading what we see and although it certainly helps to see what the bigger traders are doing so as not to get run over, markets are interrelated.. If the type of day is well suited for range, a big trader is not going to create a trend day unless its at a tipping point like with Soros and the British pound and etc.. Learn to read the market, practice execution and know your own inclinations.. those are the important things imo..
Originally posted by Sanderson

BeyondMP:

"What, in your opinion, is the single most important factor needed for a trade to be successful?"

I had to think about this question the whole day to be honest. I figured out lots of answers - I do not know if this is what you expected me to write, but I would answer your question this way.

For a trade to be successful is important to follow the rules of the strategy. It depends of trader´s expectations - for one trader a small profit is enough so he takes few bucks and the trade is successful. Another trader aims higher and therefore he can end up on SL or B/E without the success. So I would say the most important factor is expectation.

Sorry if I am completely wrong with the answer:-)

Sanderson


I won't judge your answer. However, I will offer mine.

I will quote a nearly 100 year old book, since I think Richard D. Wycoff said it best in "The Day Trader's Bible" originally published in 1919. By the way, when you read his book you find out that all the books about trading that follow his, simply, repeat the same concepts he put forth(not the method but the concepts).

He defined a Day Trader: "as one who follows the immediate trend. This means that he pursues the line of least resistance. He goes with the market--he does not buck it."

My answer is-

The market must move in the direction of your trade for it to be successful, plain and simple.

Most TA traders act, as if, TA is the cause of market movement. TA is just a reporting method, not the cause. So, to elevate your trading from just hope for movement, you need to understand the forces that move your particular market.

This is not as difficult as it might seem. I will give you a simple example from the current market. Yesterday, we saw major movement after the Fed's statement. Observers of the indices know the pattern of movement after a major Fed announcement. There is always a 3 pulse move, the direction of the first move(up-yesterday) is the direction of the third pulse. So, you saw the first move up, waited for the pullback, then entered your trade. It didn't matter what method of trading you were using, the results would have been the same, a move up.

Again, this is a very simple example. However, there are identifiable "causes" that can be observed and used in intraday index trading. And, remember, watch the market movement after you enter, let it tell you what to do, not your TA. Or, some preconceived action that may or may not be the correct one.