Bottom Up or Top Down?

[MoonRocket]

A very successful trader said the exit was more crucial then the entry.
I think he maybe right although I myself get very focused on entry and then grab the profits when available.
I'm slowly coming around because I realise if too much focus is on the entry, it is harder to except that the trade could be going wrong.

 

[Mike Kshemaraja]

A very successful trader said the exit was more crucial then the entry.
I think he maybe right although I myself get very focused on entry and then grab the profits when available.
I'm slowly coming around because I realise if too much focus is on the entry, it is harder to except that the trade could be going wrong.

Well, excepting that the trade could be wrong is very important in my view. Is part of the development and maturity of the trader. The outcome of the last trade is not important but the overall one is to be taken in much consideration. We take our trade if is a valid one that is part of our plan, if the trade goes wrong, that is good if taken with the knowledge that losing is part of the business.

The problem arises when we take an invalid trade because our emotions kicks in (revenge, greed, fear,frustrations on so on) specially when that invalid trade turns to be a winner.

 

[VielGeld]

To say that the entry is not important is pure bull, imo. Proper entry reduces risk.

It's once you've entered that the exit matters. Good entry = stay the course, bad entry = bail asap. But a good entry will always provide a better opportunity to minimize loss, and maximize profits.

 

[Mike Kshemaraja]

To say that the entry is not important is pure bull, imo. Proper entry reduces risk.

It's once you've entered that the exit matters. Good entry = stay the course, bad entry = bail asap. But a good entry will always provide a better opportunity to minimize loss, and maximize profits.

Absolutely.

And I would like to add that entries are more important specially for scalper than longer span ones.

 

[MoonRocket]

To say that the entry is not important is pure bull,

Of course the entry is important.
My point is.......When a trader (particularly myself ) has become extremely focused on the entry he has already tilted his psychology into a certain direction.
How many times even after all your focus there was actually a better price or time to enter....almost every time.
But be assured VielGeld, I take my losses quicker then you, going by a couple of live trades of yours that I noted.

 

[DionysusToast]

I agree.



What do you think about this bit?

Funny - that topic came up in the conversation. To some extent I agree with what Mr Hare claims.

Get in on a coin toss & manage it.

Now - we didn't discuss tossing but we did discuss the way your focus entirely changes once you are in a trade.

In short "I wish I could read the action when I'm not in a trade as well as I can when I'm in a trade"

There is something about being in a trade that gives you a very accurate feel for whether it will work out or not. Now, whether you act on that is a different matter. I just can't get the same feel for the market without having any money on.

BTW, I still don't know why you don't just sell your software outright to ninja,
or negotiate a royalty deal.
Correct me if I'm wrong, but 3rd party plugins are pretty rare in this area aren't they?
Could be putting people off with the machine ID transfer problem if you decide to knock it on the head?

Well - there's plans but not in that direction.

 

[Mike Kshemaraja]

In short "I wish I could read the action when I'm not in a trade as well as I can when I'm in a trade"

.

Yes is much easier to feel the market more only when we are in the trade (some traders send "the scout" before sending the troops, for those reasons).

But in my view is wrong to do that, we should be engaged in the market specially when we are not in the trade, and entering the market should be only a consequence of that connection. (If we feel a sentiment of excitement when we enter the trade, that means that we still have a lot of work to do with ourselves).

We can do that (engaged) by a close and constant examination of the condition of the market.

Often it becomes difficult to keep the focus on, specially when the market gets into one of his dull move, is then tough that we mostly should not slip into boredom because the stalling of the movement tends to accelerate as a consequence of that balance.

 

[Splitlink]

Funny - that topic came up in the conversation. There is something about being in a trade that gives you a very accurate feel for whether it will work out or not. Now, whether you act on that is a different matter. I just can't get the same feel for the market without having any money on.

No, neither can I, no matter how small the stake. It sharpens the senses! 😀

 

[DionysusToast]

Basically what this says to me is that if you don't have an edge on entry that's sufficient to overcome costs and spread, then you won't make it. I disagree with this. There are two parts to the trade, the entry and then the exit. If you have a good edge on entry, you could make money with fixed stop and target same size, like the prop trader suggests. If you have a good edge on exit then you can make money from a random entry system. If you have both, then you can make a lot of money.

However, I suppose he has a point, in that if you can't find an edge with entry, you're unlikely to find one with exit, since that's harder imo.

Good point but I think you are thinking too much.... Or rather, being too literal...

It wasn't a case of "set your target and stop and don't under any circumstances tighten either of them".

It's about - giving yourself a goal and a stop of say 6 ticks and trading the ebb & flow. Of COURSE you can get out early. It would be a bit daft to have an exercise where you tune yourself into the market and don't react when you are tuned into the fact it's going against.

It's about getting into the flow of the market, getting into the way it moves, of course if you get in and it moves against you, you need to get out. The skill of course, is to recognise 'moving against' and 'just wiggling about'.

 

[DionysusToast]

Finding flow | Psychology Today

AGINE THAT YOU ARE SKIING DOWN A SLOPE and your full attention is focused on the movements of your body and your full attention is focused on the movements of your body, the position of the skis, the air whistling past your face, and the snow-shrouded trees running by. There is no room in your awareness for conflicts or contradictions; you know that a distracting thought or emotion might get you buried face down in the snow. The run is so perfect that you want it to last forever.

If skiing does not mean much to you, this complete immersion in an experience could occur while you are singing in a choir, dancing, playing bridge, or reading a good book. If you love your job, it could happen during a complicated surgical operation or a close business deal. It may occur in a social interaction, when talking with a good friend, or while playing with a baby. Moments such as these provide flashes of intense living against the dull background of everyday life.

These exceptional moments are what I have called "flow" experiences. The metaphor of flow is one that many people have used to describe the sense of effortless action they feel in moments that stand out as the best in their lives. Athletes refer to it as "being in the zone," religious mystics as being in "ecstasy," artists and musicians as "aesthetic rapture."

It is the full involvement of flow, rather than happiness, that makes for excellence in life. We can be happy experiencing the passive pleasure of a rested body, warm sunshine, or the contentment of a serene relationship, but this kind of happiness is dependent on favorable external circumstances. The happiness that follows flow is of our own making, and it leads to increasing complexity and growth in consciousness.

 

[Splitlink]

Of course the entry is important.
My point is.......When a trader (particularly myself ) has become extremely focused on the entry he has already tilted his psychology into a certain direction.
How many times even after all your focus there was actually a better price or time to enter....almost every time.
But be assured VielGeld, I take my losses quicker then you, going by a couple of live trades of yours that I noted.

I try to find the best entry for the morning, afternoon or day if I can. What is that? The high or low. because, then, the risk can be just beyond that and the rewards can be very good.

However, I find that high or low may involve several entries and so it is essential to be very disciplined on the exits. If you think that the high/low is x, then any point beyond that means that the trade has not gone as planned and the reason for being in it is no longer valid. It is very difficult not to wait those extra few points but that is were discipline comes in. The trade has gone wrong.

You are right on the point that you can get in at any time but where should the stop be and is it at an acceptable risk?

 

[Shakone]

Good point but I think you are thinking too much.... Or rather, being too literal...

It wasn't a case of "set your target and stop and don't under any circumstances tighten either of them".

It's about - giving yourself a goal and a stop of say 6 ticks and trading the ebb & flow. Of COURSE you can get out early. It would be a bit daft to have an exercise where you tune yourself into the market and don't react when you are tuned into the fact it's going against.

It's about getting into the flow of the market, getting into the way it moves, of course if you get in and it moves against you, you need to get out. The skill of course, is to recognise 'moving against' and 'just wiggling about'.

You must be right, I am being too literal. Because now it sounds like the exercise is to take an entry with a direction based on your understanding of the flow of the market and - with certain predefined risk limits - manage stop and target. This now sounds like normal trading to me, so I've obviously missed the point.

I think the 'always be in the market' exercise is a good one.

 

[Liquid validity]

Funny - that topic came up in the conversation. To some extent I agree with what Mr Hare claims.

Get in on a coin toss & manage it.

Now - we didn't discuss tossing but we did discuss the way your focus entirely changes once you are in a trade.

In short "I wish I could read the action when I'm not in a trade as well as I can when I'm in a trade"

There is something about being in a trade that gives you a very accurate feel for whether it will work out or not. Now, whether you act on that is a different matter. I just can't get the same feel for the market without having any money on.

Yeah that makes sense, I'd say the same thing applies with an algo to a certain extent.
By that I mean unrealised profit / loss provides an easier framework to base trade management programming on.
Its a solid reference point.
Trying it to base trade management and exit off price alone is harder to program
(and makes no sense anyway), thats also why the entry has a random element.

I don't really think for a minute that anyone who trades randomly allows every
parameter to be truly random.
Time is a prime example, a random entry at 0430 GMT for instance doesn't make much sense.
My entries are really pseudo random, some parameters are totally devoid of randomness.

As for ninja, been a while since I looked at the 3rd party add ons...grown a fair bit:
NinjaTrader stock, futures and forex charting software and online trading platform. NinjaTrader Partners.

To say that the entry is not important is pure bull, imo. Proper entry reduces risk.

It's once you've entered that the exit matters. Good entry = stay the course,
bad entry = bail asap. But a good entry will always provide a better opportunity to minimize loss, and maximize profits.

Completely agree, as mike said, entry, trade management and exit are all equally
important in short term trades or scalping.

Random entries can still work, obviously they will not be as efficient and are more suited to longer trade duration.
That also means the focus is firmly on managing the trade.
Thats the real purpose of the coin flip experiment in general,
and why its mentioned in that prop trader exercise list.

A coin flip entry is basically a trade management exercise.
It can also be the basis in part for an algo for the reasons I mentioned above.
When you consider typical strike rates of 40-60% (i.e. coinflip territory) you have
to wonder if that is any better than random anyway...(hardcore tape scalpers aside before anyone mentions it 😛 )
The real reason for discretionary trade being more efficient is not strike rate,
its trade management.

 

[darkcider]

No, neither can I, no matter how small the stake. It sharpens the senses! 😀

Mmmm, sounds a bit emotional. Not many people can keep themselves totally together under pressure. I think retailers stress themselves out, waiting for action to happen. Makes me feel all edgy just thinking about it.

 

[Mike Kshemaraja]

Finding flow | Psychology Today

YES, YES, YES. This is it:

"The best trades are made without thinking, when you surpass the concepts, the knowledge and you reach the subconscious, where creativity and instincts lays and connects you to Greater Energy. Once you there you flow, there is not contraction but only expansion to enter the doctrine of vibration. Yes, trading is very much knowing yourself and the realisation of one helps the other."

But you cannot get in the "flow" without a constant search of "yourself".
Yoga, meditation, breathing exercise do help, but more importantly the issue of "no mind versus heart".

 

[JRP2891]

YES, YES, YES. This is it:

"The best trades are made without thinking, when you surpass the concepts, the knowledge and you reach the subconscious, where creativity and instincts lays and connects you to Greater Energy. Once you there you flow, there is not contraction but only expansion to enter the doctrine of vibration. Yes, trading is very much knowing yourself and the realisation of one helps the other."

But you cannot get in the "flow" without a constant search of "yourself".
Yoga, meditation, breathing exercise do help, but more importantly the issue of "no mind versus heart".

Hey man, can you pass the spliff?

 

[Mike Kshemaraja]

Hey man, can you pass the spliff?

LOL.

No sorry, not much to spare, you need to "find" your own. But I can bring you some if you wish next time I go to the "source".

 

[DionysusToast]

You must be right, I am being too literal. Because now it sounds like the exercise is to take an entry with a direction based on your understanding of the flow of the market and - with certain predefined risk limits - manage stop and target. This now sounds like normal trading to me, so I've obviously missed the point.

I think the 'always be in the market' exercise is a good one.

Well, the point is that most people layer a lot of extra stuff on top. They analyze the daily charts, add on some pivot points, a dollop of volume profile, a few market depth indicators. None of which are necessarily bad.

But the idea is - you don't put any of that on until you can trade without it - just going off very low level info...

 

[DionysusToast]

Hey man, can you pass the spliff?

You might laugh and it does sound a bit 'hippyish' - but don't you ever have days where you just sit down and you 'just know' ?

Then other days where you trade as dumb as a rock.

Have you tried sitting down 10-20 mins before you trade and just relax, tell yourself it's going to be a good session and get any other worries of the day out of your head before you start.

It can certainly help to get you focused. I do understand why people get put off by words like meditation. Perhaps read up on the way people prep for a competitive endeavour right before the comp...

It's not all about skinny vegetarian Indian guys with long beards.

 

[darkcider]

You might laugh and it does sound a bit 'hippyish' - but don't you ever have days where you just sit down and you 'just know' ?

Then other days where you trade as dumb as a rock.

Have you tried sitting down 10-20 mins before you trade and just relax, tell yourself it's going to be a good session and get any other worries of the day out of your head before you start.

It can certainly help to get you focused. I do understand why people get put off by words like meditation. Perhaps read up on the way people prep for a competitive endeavour right before the comp...

It's not all about skinny vegetarian Indian guys with long beards.

What you have stated above is common sense, all traders need a basic routine. Pre-market, in-session and post-market. This surely is the basis of 'good dicipline'.