I'm Learning To Wait

[JumpOff]

Hello,
I want to tell you something that's going on with me today. Now maybe this is really obvious to those of you who are more experienced, but I have had a small revelation. As a result of reading some of the "no indicator' and other threads on these boards, I've taken all the indicators off my charts. After I've made my decisions and entered positions, I flip them on to see if I would have made the same decision with that input. The answer is nope.

And here is the interesting part. Today is the first day when my gainers have outdone my losers. I have found one indicator to be helpful to me today, and that's been the MACD (I flip it on briefly, then turn it back off).

For you newbies who are not familiar with the MACD indicator, there are all sorts of theories about taking a position at a crossover, and whether the leading line is moving up or down, and whether it is above or below the horizon, and whether there is divergence between the indicator and the price. Well that's a lot to keep track of, and when I have it on my screen, I tend to give *it* more weight than I do the actual price action! Plus, I tend to anticipate the signal, because it is a lagging indicator (like they all are) and if I wait for the 'signal' the price has moved away from support or resistance and I'm at a loss as to where to put my stop.

The way I've been using it today, is to flip it on briefly and just look at the length and depth of the 'waves' to see if see if they are lengthening or shortening -then I flip it back off and follow the price action using trendlines. This has really helped my timing - I've been able to wait see the price confirm the support and resistance instead of pouncing on the indicator in anticipation of a crossover. Waiting for a good entry also gives me great clarity about when I'm wrong and where my stop should be.

The other thing that happened when I took the indicators off my screen was that I had an uncluttered view of the larger picture of major support and resistance. And I've made sure I do not have an open posistion when action starts to coil against those. This is when the big boys come out to play and I can't tell you how many times the price gets jerked around by big spikes at these areas. I've just let the action happen - sometimes it's relaxing to watch from the sidelines. Get a coffee, jog to the mailbox, or mow a patch of lawn for 5 minutes. By then, one group or the other is firmly in control and you can find good entries along the new or old trend.

I was beginning to think that I should start an advisory news service (just do the opposite of what I do and you'll be a guaranteed winner, - 95% historical success rate following this plan!).

Now I know that one day of good trading does not turn a newbie into a trader. But perhaps there is light at the end of the tunnel. I've been paper trading the Forex today with cms and I am 14 pips to the good. First time I've ever seen my account go *up*.

JO

 

[FetteredChinos]

well done JO. im pleased for you. no matter how you get there, being profitable is a GOOD thing.

long may it continue...

 

[trendie]

THE most important "indicator" is your bank-balance

 

[TheBramble]

And here is the interesting part. Today is the first day when my gainers have outdone my losers.

Well done.

The other thing that happened when I took the indicators off my screen was that I had an uncluttered view

Yes. It is a revelation. Apart from taking the inds off, I had a second 'breakthrough' when I got rid of the candles that I'd been using for almost 8 years (Red, Blues, Empties, Solids) and just switched to OHLC bars. (Thanks Skim). That was another piece of the puzzle solved.

Now, I just need to get rid of the price bars and the volume and then I'll be able to see all the way in....

 

[FetteredChinos]

do you need 3D glasses for that Brambs?

Red eye for sells, green eye for buys?

 

[starspacer]

'Flipping'

JO

Just like flipping a coin really!

Here is an interesting excerpt from a book entitled Where Are The Customers' Yachts by Fred Schwed:

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A Brief Excursion into Probabilities​

There is a mathematical demonstration of what would happen, what must happen, if a large number of men were set to playing a game of pure chance against each other. The demonstration is interesting, but the reader must determine for himself whether or not it is analogous to Wall Street speculation. Here it is:

Let us have 400,000 men (and women) engage in this contest at one time. (Something like the number in this country who try being speculators.) We line them up, facing each other in pairs, across a refectory table miles long. Each player is going to play the person facing him a series of games, the game chosen being a matter of pure luck, say matching coins. Two hundred thousand on one side of the table face 200,000 on the other side.
If the reader is at all mathematically inclined he should cease reading and work out for himself what is now bound to occur. Otherwise:

The referee gives a signal for the first game and 400,000 coins flash in the sun as they are tossed. The scorers make their tabulations, and discover that 200,000 people are winners and 200,000 are losers. Then the second game is played. Of the original 200,000 winners, about half of them win again. We now have about 100,000 who have won two games and an equal number who have been so unfortunate as to lose both games. The rest have so far broken even. The simplest thing from now on is to keep our eyes on the winners. (No one is ever much interested in the losers, anyway.)

The third game is played, and of the 100,000 who have won both games half of them are again successful. These 50,000, in the fourth game, are reduced to 25,000, and in the fifth to 12,500. These 12,500 have now won five straight without a loss and are no doubt beginning to fancy themselves as coin flippers. They feel they have an "instinct" for it. However, in the sixth game, 6,250 of them are disappointed and amazed to find that they have finally lost, and perhaps some of them start a Congressional investigation. But the victorious 6,250 play on and are successively reduced in number until less than a thousand are left. This little band has won some nine straight without a loss, and by this time most of them have at least a local reputation for their ability. People come from some distance to consult them about their method of calling heads and tails, and they modestly give explanations of how they have achieved their success. Eventually there are about a dozen men who have won every single time for about fifteen games. These are regarded as the experts, the greatest coin flippers in history, the men who never lose, and they have their biographies written.

Admittedly, it is preposterous to suggest that stock speculation is like coin flipping. I know that there is more skill to stock speculation. What I have never been able to determine is-how much more?

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Now I must get back to flipping that MACD on and off.....​

 

[JumpOff]

Starspacer,
I am too new at all of this to be insulted by what you just posted, but I expect some of the more experienced traders on this forum, who take money out of the market 2 out of every 3 days on average for *years*, recognize what you wrote as drivel. To equate trading with coin flipping because they both contain an element of chance shows that you do not understand the concept that requires casinos to ban "card counters" from their entertainment floors. I expect there is a professional poker player someplace just hoping you'll come by so she can "deal you in."

I am sure you are a nice person and meant well, but I'm not buyin.
JO

 

[TheBramble]

JO - could be wrong, but I don't think StartSpacer was having a pop.

I think the excerpt from WATCY isn't too far off the track when considering the entire set of all traders at any one point in time.

If we were not refreshed by new blood (and we are, thank goodness), we would find a steady decline in our numbers as the many lost to the few. I don't hold that all of the few who remained would be there purely by luck, but many would.

 

[starspacer]

Thanks Bramble

JO, I'm sorry that you perceived it as a criticism, it wasn't and isn't.

After all, I trade full time so I can hardly believe the quote literally.

I don't know enough about your trading strategy to level any criticism and even if I did know it, I wouldn't, on principle, criticise.

I have my own trading system, developed over many years, and in fact one of the indicators I do use is the MACD, although not the conventional one.

The point of the quote is that 9 out of 10 traders will lose money as they will in effect be gambling.

The other 1 out of 10 are the pros (just like the card counters you referred to).

Anyway, enough said. Whatever your trading strategy, I sincerely hope you are one of those 'others' and wish you the best of luck.

 

[JumpOff]

Is it me, or is it the platform?

Ok,
So by the end of the day yesterday, I found myself up a bit. A welcome change, but nothin to brag about as you will see below. Here are the pips per trade I gained/lost:
5,3,-7,2,6,8,-8,-8,4,2,-9,3,4,1,8,-8
that's 10 gainers for +44
and 5 losers for -40, so net for day +4

It was a mesmerizing day. My position entries were spot on along support and resistance, and I knew within about 60 seconds if it was going my way or I needed to close and wait for an entry going the other way (boy was that a weird feeling!).

But here's my trouble; the forex platform I am paper trading has a 3 pip spread, and won't allow a stop closer than 6 pips to the entry position (so basically, I'm down 9 pips if the market moves quickly against me. - And it did. In each of the 5 losers, I had the stop entered at the default minimum -6 pips away, and literally couldn't click fast enough to close those positions before they hit the default stops. In each case I had opened the stop window to adjust the stop closer, and it takes 5 clicks to get from there to the final "close this position" command.

So, if I were on a direct access futures platform, could I expect at least 1 pip better on the gainers per trade, and 2 pips less loss on the losers per trade? (That adds up to an additional 20 pips!) Do any of the futures platforms allow you to enter your stop at the same time you enter your position? I looked at the FXCM demo and their platform does that.

Well anyway - is this just whining? Or can I expect better results when I demo a futures trading simulator?

JO

 

[JumpOff]

No offence taken starspacer. I look forward to more of your posts.
JO

 

[SvenFoster]

JumpOff,

I too had a very similar revelation recently. I originally used no indicators with multiple timframes and then kept investigating more and more indicators candles etc... and then became less and less consistant and more and more frustrated
Then the headaches came and began wonder how I was taking the wrong end of a trade and doing it to often until....

one day, I was convinced that I should take all the indicators off(no indicator thread) and switch to bars(no ind + skims comment on body -vs- range) and change my charts in the following ways.

1. single colour bars only to focus on range only
2. multi timeframe but same setup
3. ensure that my charts are a 1000ft view not 30bars etc more like 300.
4. only trendlines, horiz S&R and very basic ?understanding? of waves etc

So am I consistently trading now? ...i wish, not even close but the point I'd make is that each day I watch the price I feel like I'm begining to get closer to understanding it.

The only thing that didn't work for me was talking to a teddy bear as a trading buddy but that was because he began to talk behind my back to the panda and giraffe about my trading strategy
At least the headaches have stopped.


PS: as for brokers that allow stops at the same time, take a look at www.oanda.com it allows you within 1 pip if thats the game your in.

 

[TheBramble]

It was a mesmerizing day. My position entries were spot on along support and resistance, and I knew within about 60 seconds if it was going my way or I needed to close and wait for an entry going the other way (boy was that a weird feeling!).

Perfect. Sounds really where you want to be.

But here's my trouble; the forex platform I am paper trading has a 3 pip spread, and won't allow a stop closer than 6 pips to the entry position (so basically, I'm down 9 pips if the market moves quickly against me. - And it did. In each of the 5 losers, I had the stop entered at the default minimum -6 pips away, and literally couldn't click fast enough to close those positions before they hit the default stops. In each case I had opened the stop window to adjust the stop closer, and it takes 5 clicks to get from there to the final "close this position" command.

OK - So factor a minimum 9 pip risk into your trading. Does that help?

With the first part of your comment in place, why do you care? As long as you're making (on average) more than 9 pips per winning trade and having at least a 50/50 W:L.

 

[Roberto]

The only thing that didn't work for me was talking to a teddy bear as a trading buddy but that was because he began to talk behind my back to the panda and giraffe about my trading strategy

Interesting how experiences can vary: the thing that works _most_ for me is talking to a lion who talks behind my back to other lions about my trading strategy! I am convinced that one day they will attempt to market the Mr. Furry-The-Lion Trading Strategy.

 

[JumpOff]

PS: as for brokers that allow stops at the same time, take a look at www.oanda.com it allows you within 1 pip if thats the game your in.

Thanks Sven, I did sign up for their "FXGame." It's a perfect simulator for where I am at - no cost, no commitment, no actual money being traded, no broker calling me..... And yet there is pretty tight action and I can learn how close a stop can be in that currency market before it becomes counterproductive...
JumpOff.

 

[JumpOff]

It's not the platform - its me.....

Whew, I've been making some stinking trading decisions in the last week or so. 20 losers in a row (well -ok there were 5 or 6 trades in there where I made a pip or two, but not enough profit on those to balance the spread and stop losses on the others). - And the fruit of all this is another 2 pieces of the "how to trade puzzle". All my losers have been really small; the oanda.com simulator platform allows you to put the stop where you want and I only moved it one pip on two of the 20 trades, - so most of the time I got out manually and early - I've got that part figured out.

So here are my two new puzzle pieces:
#1 Since I am trading intra-day for just a 4-5 hours at a time, there is no need for me to enter a position unless the 5 minute chart is moving with some speed and I have at least 2 hours of trading time ahead of me! Most of my losers have been buying/selling what I thought was a decent entry- but it just fizzled going sideways for an hour or so and then it was time to go handle other obligations - so I closed the trade at a tiny loss. It is better to wait on the sidelines or go do something productive for 15 minutes at a time, then cycle back to my desk to check the screen and see if there is any change. The price action isn't going to get up and move just because I happen to have time to trade right then, and will it to do so...

#2 Patterns mean different things depending on how much volatility you've got. Price action that has some volume or pressure behind it has a bouncy feeling. A break out that moves 25% depth of the previous channel doesn't mean anything if the previous channel was only 6 pips wide. I expect it might be easier to see the volatility fading out in an instrument that shows volume as well as price. With the Forex, I don't always "get it" that the big move of the day is over and the action is just fading out, until suddenly I realize I have the feeling I've been watching paint dry for the last half hour or so, and the price action is getting progressively smaller....

I'm also thinking I need to be paper trading something besides currencies - or at least not the EUR/USD pair. I can not be at my desk before 9:30 - 10:00 Eastern time U.S. in the morning, so I am missing the most active time.
Still learning to wait,
JO