Useful things I've found on the Net.

[Bladerunner]

Good post Nine

thats a good post nine, saved to fav"s

see your pm box

Rols left this one on another thread


No he likes to play a lone hand and does not get out that often so thought I would drop it off here for others

Andy

 

[BSD]

"Feeling out of control sparks magical thinking:
October 02, 2008 mindhacks


Finally, the sixth study showed that feeling good about yourself reduces the frantic grasping for straws. There were three groups. One group recalled not having control, another recalled not having control and then performed a self-affirmation task, and a third group did neither. The first group saw more figures in snowy pictures and perceived more conspiracies than the other groups did. Apparently, increasing self-esteem fosters a sense of control over one's life and reduces the need to seek additional stability in random noise.

Absolutely true. Excellent stuff !

 

[Joey25]

The case against tiny winners

Found this quote on ET this morning. It's worth considering before throwing loads of contracts at tiny winners:

AustinP:

In a nutshell, the margin for error is least when scalping and most when trading for handles. While trading for handles, I can easily survive early chop, mental mistakes, software or connectivity glitches and erase several small loss trades with one moderate gain trade. Easy to wind up net profitable most days while overcoming the usual obstacles when our profit-to-loss ratio is wide.

Scalpers need a high win rate, ultra-fast connection, lowest possible trade costs and everything clicking correctly in order to succeed. The margin for error is narrowest. Those are the things we all learn firsthand, the only way we learn about reality of scalping.

 

[nine]

I agree with Austin once again Joey, as I often have on ET. There is another advantage to stretching the timeframe out - longer timeframes give you more time to make decisions so you reduce the effects of emotions and increase the impact of forebrain thinking. Much much better for new traders.

So, how do I resolve the magical thinking issue? Two things:
- I am aware of it and when it occurs so I have a plan for those times. Having a precise plan makes you feel more in control so magical thinking is automatically reduced. I also pep myself up a bit about the quality of that plan, my system, and my trading which helps counter any tendency to feel out of control.
- I have scripts which I read out to myself at various times during the day including one that covers off magical thinking. I've found that the scripts did more for my self control than NLP, hypnosis, willpower, etc etc etc. Reading out loud reduces emotionality, pulls the brain processing into the forebrain, and seems more convincing (to me) than other things I used to improve my performance.

 

[nine]

Really Good Free Software. Backup.

I've been making a move from paid software to free software to try and see if I can get the same functionality free. A few years back I couldn't have done it because some key software wasn't up to scratch. Surprisingly, this time, I have been doing pretty well in that shift so I thought I report on key components I'm now using. Starting with backup software.

We all know backup is important but few of us do it often enough. For me there are two key components of a good backup strategy:
- File backup so that you can keep a very regular update of things that change a lot. Examples include documents about my trading strategies, notebooks recording my thoughts, feelings, and actions, email, and spreadsheets of trading results.
- Disk and Partition Image backups which save the disk in a form that lets you recover from catastrophic viruses or disk failures.

I've used freeware for file backup for a couple of years and my recommendation there doesn't change: Cobian Backup

"Cobian Backup is a multi-threaded program that can be used to schedule and backup your files and directories from their original location to other directories/drives in the same computer or other computer in your network. FTP backup is also supported in both directions (download and upload).

Cobian Backup exists in two different versions: application and service. The program uses very few resources and can be running on the background on your system, checking your backup schedule and executing your backups when necessary. Cobian Backup is not an usual backup application: it only copies your files and folders in original or compressed mode to other destination, creating a security copy as a result. So Cobian Backup can be better described as a "Scheduler for security copies".

Cobian Backup supports several methods of compression and strong encryption."


For image backup (who wouldn't like to be back to trading in less than an hour after a catastrophe struck) I've been a keen user of the non-free Acronis software products and strongly recommend them. But I don't need them any more and have been using a free (for non-commercial use) product from Macrium called Reflect. This is an excellent backup product comparable with true image. Features of the free version are more than sufficient for most of us and there is a full version for those needing extra features.

"Absolutely free! No strings! The only free XP and Vista compatible disk imaging software with BartPE and Linux based recovery options.

* Create a disk image whilst running Windows using Microsoft Volume Shadow copy Service (VSS).
* Image to Network, USB, FireWire drives and DVD.
* Built in scheduler.
* 32 bit and native 64 bit versions.
* Industry leading compression levels and speed.
* Linux based Rescue CD with Network access and full GUI. Only 6.5MB in size!
* Built in CD/DVD packet writing engine. Supports packet writing to DVD DL media with Windows Vista.
* HTML log files."

 

[nine]

And just when I was moving to Software Dr Brett added a good post to his blog:


"When Good Trading Leads to Bad Trading: Breaking Problem Cycles

Consider the following scenarios:

1) A woman is motivated to lose weight and goes on a diet, losing 20 pounds over time. As she becomes more comfortable with her weight, she relaxes the diet and begins to put the pounds back on. Only after she has returned to her original weight does she reinstate the diet with renewed motivation.

2) An alcoholic attends AA meetings every day and remains sober for months. He tells himself he can become a social drinker and control his intake, only to relapse into his prior pattern of overdrinking and erratic behavior. When he is given another DUI citation, he is in jeopardy of losing his driver's license and returns to his AA meetings and prior sobriety.

3) A trader has gone through losses and trades smaller and more cautiously, planning out trades carefully in advance to maximize reward and minimize risk. As he makes money, he relaxes his trading criteria and takes a number of unplanned trades, resulting in losses. Once he loses the money he had made during his good trading, he returns to trading smaller and more carefully.

Each of these is a situation in which problems occur in cycles. The cycle involves strict, conscious, and motivated attempts at self-control followed by lapses of self-control. During the periods of self-control, the unwanted behaviors are contained; during the lapses, they spiral out of control and bring undesired consequences. Think about the eating patterns of a bulimic patient or the interaction patterns of spouses who repeatedly fight and make up. The problems are different, but the cyclical quality of the problems is constant.

Much of my book The Psychology of Trading deals with this problem of "multiplicity": how people can behave one way, in one state or frame of mind, and quite the opposite when those states shift. Reviewing cognitive neuroscience research, I conclude in the book, "People lose money in the markets because the person who places the trade very often is not the same person who manages and closes the trade. Quite literally, another self has taken over--another mind...People cannot sustain purpose in their lives--and trading is certainly a purposeful act--because they are fundamentally divided beings" (p. 79).

It takes the shock of significant consequences to change people's feelings and state of mind and shift them into the self-controlling mode. Once those consequences are not salient, the mind state becomes more relaxed, the urgency of maintaining control is reduced, and old behavior patterns come to the fore.

Conversely, when consequences are *always* salient, there is no problem maintaining desired behavior patterns. Most of us don't feel particularly tempted to steal merchandise from stores or drive at high speeds on the wrong side of the highway. We're quite aware of the consequences and following rules and doing the right things take no particular act of effort or discipline. Similarly, when a heart attack patient realizes his fragile health status, he finds it relatively easy to stick to a regimen of medications and proper diet. Salience of consequences promotes consistency in behavior: in classrooms, at work, and in day to day life.

The first step in breaking problem cycles of behavior is to become aware of those cycles as they are occurring and to focus attention on the likely consequences of those cycles. In practice, this means being very sensitive to the triggers that set the problem cycles in motion. For the alcoholic, the triggers are cravings or thoughts that it might be possible to engage in controlled drinking. For the trader, the triggers often are frustration and perfectionistic thoughts about how much money one should have made (or shouldn't have lost). If those triggers are accompanied by alarm--a concern for consequences--it will be relatively easy to interrupt the problem cycle and, in the case of trading, step back from the screen, calm oneself, and redouble efforts at careful, planned trading. The entire key is attaching that sense of alarm to those triggers.

I'll have much more to say about this in my forthcoming book on self-coaching, including specific techniques for sustaining self-control. Readers of the Trader Performance book might want to consult the chapter on "Behavioral Techniques for Enhancing Performance", which outlines, step by step, how to identify triggers and use exposure techniques to interrupt and reprogram them. In the exposure method, you use relaxation and guided imagery to vividly walk yourself through specific trigger situations, while you keep yourself physically calm and cognitively focused and mentally rehearse the concrete actions you want to take in those trigger situations: recognizing the trigger, reminding yourself of the dire consequences of repeating the problem pattern, and redoubling your efforts at cautious, controlled trading.

In other words, you want to respond to the trigger situations--the frustration, the thoughts of needing to trade to make money back, the overconfidence--the same way that you respond to losses of significant money. Instead of waiting until you lose money to become virtuous in your trading, you train yourself to become virtuous when you recognize the trigger situations and feelings that would take you out of your game. The more you mentally rehearse the trigger situations in the right state of mind and body, the more prepared you'll be to respond to them in a calm and focused way when they arise in real time."

TraderFeed: When Good Trading Leads to Bad Trading: Breaking Problem Cycles

 

[nine]

Out for a coffee. And now back. So how do I maintain the salience of self control.

I have a process.

Before I start trading each morning I:
1. Read my Overview document which sets out my goals for each day, warns me of my likely errors and guides me to righteousness
2. Review my spreadsheet "What I shouldn't do" which has the worst 3 days of trading from the last year and clearly shows the danger of indiscipline and the errors that I'm likely to make.
3. Review 3 charts showing me how the three markets I trade are NOT correlated meaningfully in the timeframe I trade to reduce the chance of magical thinking about one thing leading to another.

Then during trading I have sub one page sheets for the "setup identified, preentry" phase and the "in a trade phase." I read them one or more times for each trade. Given that my average trade lasts under 10 minutes this is quite an ask. But I have found that the act of reading them keeps me focused on the few things I must do before during and after a trade. It pulls me out of the "involved in the markets, in a trade, emotional, want the money" state into the "thinking, planning, doing the right thing" state that I need to be in to prevent error and perform at my best.

This process is what I developed after years of trying other things with varying success. It worked for me. It might or might not work for you - we are all different.

 

[_JWG_]

And one from Howard's Trading Tips Newsletter at Ensign Software:

Thoughts about Full Time Trading
by Jay West​

If you are serious about trying to become a successful full time trader, I offer these comments. If not, stop reading. It will be a waste of your time

Fantastic read.

Cheers
JWG

 

[raysor]

When I read the title of this post, I immediately thought of useful web sites. One I came across recently is Forex News | Forex Trading News | Currency Trading News In particular the financial calendar which gives a timetable of future financial announcements such as nonfarm payrolls etc. with their level of importance.

 

[fakhar]

a good piece of advice

 

[_JWG_]

"The most important exercise for a trader is that of the mind."

This is Steve Croft's approach to trading. With his unique and compelling delivery, all traders can benefit from Steve's trading experiences and anecdotes to stay mentally balanced and focused.

Mind of a Trader | Trading Post Financial Podcasts

 

[blancspa]

@+]

I thought I might divert into trading methods for a bit. So, what do I do, and what of my secrets am I going to reveal? LOL ... No specific ones!

What I will do is tell you a bit about the basis of my trading and point you in the directions that provided value for me. With the required diligence almost anyone could figure it out if my style fitted their mental set.

But before I do, one more post I liked on psychology and stages"



Originally Posted by phorex_phreak:
Traders Prayer

Step One: Unconscious Incompetence.

This is the first step you take when starting to look into trading. you know that its a good way of making money because you've heard so many things about it and heard of so many millionaires.

Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be?? - price either moves up or down - what's the big secret to that then - lets get cracking! Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven't got the first clue about what you're trying to do. you take lots of trades and lots of risks. when you enter a trade it turns against you so you reverse and it turns again .. and again, and again. You try to turn around your losses by doubling up every time you trade - sometimes you'll get away with it but more often than not you will come away scathed and bruised Well this is stage one - you are totally oblivious to your incompetence at trading.Stage one can last for a week or two of trading but the market is usually swift and you move onto stage two.

Stage Two - Conscious Incompetence

Stage two is where you realize that there is more work involved in this and that you might actually have to work a few things out. You consciously realize that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit. During this phase you will buy systems and e-books galore, read websites based everywhere from Russia to the Ukraine. and begin your search for the holy grail.

During this time you will be a system whore - you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. every time you came upon a new indicator you'll be ecstatic that this is the one that will make all the difference. You will test out automated systems on Meta-trader, you'll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your 'magic system' starts today. you'll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you'll find yourself chasing losing trades and even adding to them cos you are so sure you are right.

You'll go into the live chat room and see other traders making pips and you want to know why it's not you - you'll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You'll then reach the point where you think all the ones who are calling pips after pips are liars - they cant be making that amount cos you've studied and you don't make that, you know as much as they do and they must be lying. but they're in there day after day and their account just grows whilst yours falls. You will be like a teenager - the traders that make money will freely give you advice but you're stubborn and think that you know best - you take no notice and over leverage your account even though everyone says you are mad to - but you know better. You'll consider following the calls that others make but even then it wont work so you try paying for signals from someone else - they don't work for you either.

This phase can last ages and ages - in fact in reality it can last well over a year - My own period lasted about 18 months. Eventually you do begin to come out of this phase. You've probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times.



Then comes stage 3 Stage 3 -

The Eureka Moment Towards the end of stage two you begin to realize that it's not the system that is making the difference.

You realize that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right You start to read books on the psychology of trading and identify with the characters portrayed in those books. Finally comes the eureka moment.

The eureka moment causes a new connection to be made in your brain. You suddenly realize that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins. You start to work just one system that you mould to your own way of trading, you're starting to get happy and you define your risk threshold. You start to take every trade that your 'edge' shows has a good probability of winning with.

When the trade turns bad you don't get angry or even because you know in your head that as you couldn't possibly predict it it isn't your fault - as soon as you realize that the trade is bad you close it .

The next trade will have higher odds of success cos you know your simple system works. You have realized in an instant that the trading game is about one thing - consistency of your 'edge' and your discipline to take all the trades no matter what. You learn about proper money management and leverage - risk of account etc etc - and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile

You weren't ready then, but you are now. The eureka moment came the moment that you truly accepted that you cannot predict the market.

Then comes stage four Stage 4 -

Conscious Competence Ok, now you are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you're on a loser you close it swiftly with little pain to your account

You are now at a point where you break even most of the time - day in day out, you will have weeks where you make 100 pips a weeks where you lose 100 pips - generally you are breaking even and not losing money.

You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently. You'll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you've given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on. This lasts about 6 months

Then comes Stage Five Stage Five - Unconscious Competence Now were cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level.

You are running on autopilot. You start to pick the really big trades and getting 100 pips in a day is becoming quite normal to you. This is trading utopia - you have mastered your emotions and you are now a trader with a rapidly growing account. You're a star in the trading chat room and people listen to what you say. you recognize yourself in their questions from about two years ago.

You pass on your advice but you know most of it is futile cos they're teenagers - some of them will get to where you are - some will do it fast and others will be slower - literally dozens and dozens will never get past stage two but a few will. Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring - you're doing your job and that's that.

You can now say with your head held high "I'm a currency trader"

This is actually quite good

 

[nine]

Thanks blancspa.

Bbmac also posted a number of good psych articles (from Price Headley, Paul Counsel, LBR, and Daniel Gramza) at Trading Psychology

Actually I so like the Gramza article on Fear (May 2003 backissue of s f o mag) that I went looking for the second half of it - which I now realize that bbmac included. Here are both halves copied into an rtf document. Its the same content, just retains the original formatting.

 

[nine]

Something an experience trader, Steve46, posted over at TL. There is some good learning in this if one thinks about it:

I see the old adage of the majority losing in this profession and find it easy to understand. Few find their way, fewer still are willing to do the work to maintain whatever advantage they started with.

Most do not learn to manage money (risk) adequately, therefore they eventually (quickly or slowly) lose it all.

Also notable to me, are the many threads where newbies are looking for technical indicators. I believe the majority of professionals use moving averages, pivots and volume. Knowing that these are primarily visualization tools, they also use previous daily, weekly and monthly price points (highs, lows, settlements) as areas where price might look to "test". The concept of "tests" remains the most important single concept from which to find a tradeable approach, and of course when Market Profile was introduced, many found that a viable basis for structuring a trading plan.

Those of us who lasted long enough developed what used to be called a "feel" for the market. This simply meant that after a long enough exposure to the work, you knew what price was likely to do, because you "knew" what your fellow professionals where looking at, and what they were thinking. In other words you learned to "read" or anticipate human behavior.

Trading as a profession is an obstacle course. One either learns to overcome the obstacles or one falls by the wayside.

 

[nine]

And something a nine by another name wrote over there.

Although I'm not enamored with indicators, I find they have value. What all traders need to get over is the desire to pick the top and bottom of a move and be happy getting a decent slice in between. Indicators in the proper configuration can work in this regard despite the inherent lag.

Trading PA only has become sort of a club among its proponents who raise their noses and snub those "inferior" traders who haven't dropped their indicators and stepped up to the "superior" PA methods. There are many ways to trade profitably, don't lose sight of that, and don't let anyone tell you their method is better than yours if you are successful. Trading is like putting on a glove, it's not one size fits all.

As I read this I liked the tone of your post but found my face screwing up. A little like the pain some seemed to feel when the CarCo bailout failed (I went short spi and stw to my immense pleasure). But now the momentum has eased and posting time is here again.

What you're saying has elements of right (hence my agreement) but critical elements of wrong (hence my uncontrolled facial spasm).

Lets agree that picking tops and bottoms is not the easiest way to take money - so I don't do it either. Its an unfortunate ego driven habit that most pickers would be better of abandoning.

Lets agree that indicators can work. But here came the first facial spasm. You see its not just about lag. Lag puts one in late and out late which is a problem. But it can be overcome. The other bigger problem is that there is a reason for the lag - its the smoothing. And smoothing removes good learning opportunities. You see, when I watch the price bars I am looking for length, which ones get more or less volume than in the last push, the time between bar breaks and the general form of the retracement. In these subtleties lie the difference between 50% win rates and 80% win rates. So when your stoch or rsi or dblestoch or whatever presents a clear clean actionable signal - it does it at the expense of smoothing out valuable information.

In the next paragraph you talk about raising of the old nose. And it does happen a lot. But do you know why? Often its because the more experienced trader who has long since moved thru the indicator zone goes "oh god, another newbie passionately extolling the virtues of <subst indicator here>; I wonder how long it will take for them to get past it? Will they ever? Is it worth pointing things out? Or even trying?" And up goes the nose.

The trouble with indicators is this:
- it takes you away from observing how price behaves at or near or on the way to support and resistance
- it takes you away from observing how volume might or might not give you clues
- it takes you away from noticing the subtle nature of retracements, their progression thru a trend,
and the little differences between, say, SPI and STW.
- it removes information
- it adds lag.

Now, I've fueled indicatoritis and still do sometimes when I get bored and write a little code. I've written 1000s of lines of indicator code for Sierra Chart and even added a new one in a moment of boredom earlier this week. But. I don't use them. The day my trading really started to improve was the day I started removing them one by one. The finer improvements have included better and better observation plus gradually honing my key trading tool - me!

It ain't easy. But it can be done. And there don't need to be any indicators involved.



Confession: I still have one ema, because I'm too lazy to draw trendlines and channels and I just love to take that ema bounce that follows a larger consolidation in a trend.

 

[fakhar]

Something an experience trader, Steve46, posted over at TL. There is some good learning in this if one thinks about it:

I see the old adage of the majority losing in this profession and find it easy to understand. Few find their way, fewer still are willing to do the work to maintain whatever advantage they started with.

Most do not learn to manage money (risk) adequately, therefore they eventually (quickly or slowly) lose it all.

Also notable to me, are the many threads where newbies are looking for technical indicators. I believe the majority of professionals use moving averages, pivots and volume. Knowing that these are primarily visualization tools, they also use previous daily, weekly and monthly price points (highs, lows, settlements) as areas where price might look to "test". The concept of "tests" remains the most important single concept from which to find a tradeable approach, and of course when Market Profile was introduced, many found that a viable basis for structuring a trading plan.

Those of us who lasted long enough developed what used to be called a "feel" for the market. This simply meant that after a long enough exposure to the work, you knew what price was likely to do, because you "knew" what your fellow professionals where looking at, and what they were thinking. In other words you learned to "read" or anticipate human behavior.

Trading as a profession is an obstacle course. One either learns to overcome the obstacles or one falls by the wayside.

thats true. i agree with that

 

[boodi]

33. We begin to consistently make money.

34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had always dreamed of.

very very far on thehorizon

 

[nine]

The Floor Trader Futures System - Are you about to pay $3000 for a $500 trading system?​

Futures trading courses and systems are offered for sale at prices ranging from a few hundred dollars to several thousand dollars.
Many of these trading methods are not new or original. Often they are based on information found in trading books or articles written decades ago. In some cases they are old trading methods repackaged in new books (or made into software), and sold at high prices.
The original sources of these methods are sometimes obscure and unknown to the general public.
If you know where to look, however, some of these high-priced futures trading systems can be traced back to their original source - at a much lower price.

And there are some trading methods, of recent design, known only to a few Chicago traders, the few that actually make a living from trading - rather than from hawking books, software, and seminars.

I am an ex-floor trader and broker living in Chicago.
The basis of this system was told to me several years ago by a veteran floor trader at the Mid- America exchange in Chicago. He had two futures accounts: one for his day trading, and another for "position" trading, using this method almost exclusively. He was a millionaire and traded large positions, but he started his career with a small account. He made the millions from the market, using his methods, over several years. (He was a contemporary of Richard Dennis). He didn't mention who created the system.
The system was originally created for position trading. I developed some variations which work for day trading stock index futures.
Variations of this trading system are known to a handful of people in the Chicago trading community. I have been told of one individual who charges $1000 for instruction, using one of the variations.

The Floor Trader Method

A STORY FROM THE TRADING BATTLEFIELD​

I am a futures trader living in Chicago. I've worked in the industry for many years, as an exchange employee, order desk clerk, Series 3 broker, and finally as an independent floor trader at the CBOT (MidAm division). I learned much from the veteran traders at the MidAm, but the profit potential of floor trading was limited due to the scarcity of "outside orders" at that exchange. So I took the skills I had picked up from the floor and applied them to off-floor trading. I knew that I had to develop my own system for day trading, as the popular methods around then either didn't work, produced meager profits, or had a low win percentage.
I knew that the old "trend following" and "breakout" methods were unsuitable. Some traders, in interviews or articles, would say things like, "our system only produces a 40% win percentage, but the winning trades more than make up for the losers". To me, that type of trading was absurd.
I, and most normal people, would not want to endure 60% loss percentage. (A coin toss is 50%!).
(Some of the "systems" or "trading courses" still being sold today are based on these outdated principles.)
I became a Series 3 broker at a local FCM. My plan was to advise clients on futures trading while trading my own account. The owners of the firm were unusually tight-fisted about expenses. To cut costs, the brokers had to share quote terminals in groups of 2-3. This particular firm cut costs in other ways, including quality of floor service, which was to cause major problems later on.
But in the meantime, I studied charts and systems, made observations, and traded. I searched for a way to apply the floor trader's "scalping" technique to off-floor trading. The first year was tough, financially, but I made a breakthrough in the second year which led to the first profitable month of day trading I had ever posted. Then, the second month was profitable. And so on. I went from trading the NYFE to the S&P (at that time, the S&P was still $500 per index point). The win-loss ratio of this method was around 9 to 1. One week I made eleven winning trades in a row.
The customer business also picked up, for myself and everyone in the office. The Grain markets of 1996 were taking off and a lot of commissions and new accounts were coming in. We traded the customers all week, and partied every weekend. Some of us flew to Las Vegas, the Caribbean, or Mexico for three-day trips, but tried to be back by at least Tuesday - there was a lot of money to be made.
So I was day trading the S&P and winning, and my account grew, despite the cash withdrawals.
I also collected larger and larger commission checks. I increased my trading size, and even used my methods to day trade Coffee futures, which was a feared market at the time.
That summer I made a return trip to New York City, to visit friends and to live it up in Manhattan, of course. I could afford it now. I returned to Chicago a little hyped, thinking of relocating to Manhattan and trading full-time for a living. I decided to trade my account even more aggressively, increase my profits, and drop the brokerage part of the business, as the customers were becoming time-consuming. Then I would be free to live elsewhere.
I hit the markets hard Monday morning. I got nailed for a quick $450 loss near the open, but I bailed out, and made $600 later that day. I was even more confident, having turned a losing day into a winner. The next two day were all winners. I was ahead $2100 by Wednesday's close.
Thursday was a different story.
I didn't realize it at the time, but the events of that Thursday were foreshadowed by some disasters that had befallen several customers and IB's of the firm.
That spring, the Corn, Wheat, and Soybean markets were the busiest anyone had ever seen (since the 1988 markets, at least) but the floor operation used by our firm was doing a terrible job of handling the flood of orders we sent in. At the CBOT, and the CME as well. As the owners of our firm were obsessed with saving money any way possible, they usually hired the lowest they could find, which was often the worst they could find. Orders that should have been filled were coming back "unable"; orders we thought were unable were being reported as "filled" the following day. Stops were being "blown through" by hundreds of dollars. Customers went "debit"; some threatened lawsuits; one IB trading through us went out of business. I figured I could avoid the madness by staying with the S&P's, which hadn't had major problems up to then.
Well, the problem service reached the S&P, as well. On that Thursday, I placed a limit order to sell. I canceled the order a short time later. I stopped watching the indexes for awhile - the grain customers were keeping me busy. Market action indicated that the S&P order should be "nothing done" - provided it was canceled, on time, by our floor operation. It wasn't.
The sell order was "too late to cancel". That was bad enough. However, due to incompetence and ignorance in both the floor and office operations, the sell was not reported to me for nearly two hours.
To make a long story short, Thursday was a disaster. I was short the S&P without knowing it, and the market was rallying to new highs.
The next mistake was mine. Veteran traders know what I mean; one day you lose perspective, and trade emotionally rather than logically. I was enraged over the operations error, and instead of getting out immediately and salvaging the rest of my account, I attempted to "trade out of it".
I "averaged up" - sold more contracts. The funny thing is, my system called for being long the market - but all logic and reason went out the window that day.
The market continued higher. At the close, my account was "blown out". Eight months of winning trades destroyed by one afternoon of insanity.

I have long since left that firm, and the retail customer business. I am now focused on trading the markets and perfecting my methods.

Things have changed in the futures markets. The size of the S&P contract has been cut in half, and the CME finally introduced a mini S&P, long overdue. Electronic trading and Internet order entry has made precision day trading more feasible - much better than in the old days of phoning in orders.
Real-time quotes are now available over the Internet, along with chart graphics. I'm back on the day trading battlefield. I have refined the method I used back then, and it works even better than before.

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borrowed from my good friend NQoos (who borrowed some of my stuff so we're even )

I see the links or images I used don't work any more. The original article can be found at

The Floor Trader Method

 

[fakhar]

thanks for sharing the article

 

[blancspa]

Hi

What all those:
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mean?