It's been a while since I've discussed my trading, so I figured now is a good time to log what I've been up to.
Since about the beginning of March 2006, I've primarily concentrated on position trading. Actually I was forced to. My family and I were in the process of moving back to Illinois, and I just didn't have time to day trade. It turned out that this was the best thing that could have ever happened to me. Position trading made several things possible. First it gave me more time to research and study. Second it slowed things down, so I could really evaluate my entries. Third it gave me the time to develop a "day trading" method.
Just to recap my position trades are based primarily on daily and 4-hour charts, while looking at the weekly charts for the big picture. The average hold time for the trades is 2 - 10 days, but I'll keep them longer if need be. It's a pretty simple strategy really. I look for price patterns, and use support, resistance, and Murrey Math lines to confirm. I don't use any other indicators. No moving averages, no MACD, no fancy renamed indicator, just plain old price. Below is an example of a trade I took last week.
..................(yeah, it really is this simple)
Money management for my method is pretty simple. For every $1 that I risk I need to have a profit potential of at least $2.50. I only risk 1% of my account on any given trade. This amount is figured specifically for each trade. In September the percent will increase to 2%. As I progress in my trading I will continue to raise the percent until I reach 4%. This however will depend on the detailed statistics I've been keeping. I need to make sure my win/loss ratio, risk/reward ratio, and draw downs, can handle the 4% risk. For now I appear to be on track. The other thing that's made the difference for me is that I do a lot of fundamental research. When the Technical Analysis and fundamentals line up good things happen.
So this is working why day trade? Well the bottom line is what else should I do. Trading is my career now, so why not make additional money from day trading? They way I look at it is if I can day trade without cutting into my position trading profits I'm going to do it.
Let's talk day trading....You hear a lot of folks saying that you just can't make it as a day trader. The say the "Big Guys" all position trade. Is this true? Could be....I'll say this it's a lot easier finding 2 or 3 trades a month that make 100 - 200 pips than finding 60 trades that make 10. But like I said as long as i can do it without eating into my position trading profits I'll continue on. During my quest to find position and day trading strategies I've met a lot of folks. Some good and some not so good. Most of the good ones being in the Futures arena, with a few being from the Forex market. One of them in particular makes six figures a month. Yes, I said a month...I actually hang out in a private Futures Chat room that he occasionally attends. He is amazing to watch. The other folks in there are too. It's kind of funny. Most traders can't call live trades in a chat room. They freak out and get all defensive. Well these folks do it every day. They don't care if one of the other members just called a short, if their system says long they call the long. There's no egos, no selling, just people that trade for a living and love it.
Anyway lets talk about my day trading strategy. I started trading real money with it at the beginning of this month (July). Again it's based on pure price. It's pretty simple I use advanced candlestick formations to tell me what's going on. Noticed I said "advanced". Not the basic stuff you buy in the book stores or the Steve Nison's DVD's. Don't get me wrong you need the basics. I was just at a point where I needed to take it to the next level. The only other thing i use is pivot points. Not as part of my strategy, but to give me a sense of what other folks are doing. I think traders often under estimate what the other guys are doing. I'll give you an example. Typically a pivot trader will play breakout of certain pivot lines. Well lets think about that for a moment. Where does every course you've ever purchased tell you to put your stop loss on a break out play? An X amount of pips just on the other side of the pivot/trend line that caused you to get in the play. So I know if that break out occurs and things start to reverse, once it gets on the other side, folks are going to be crapping their pants, stop losses are going to be getting triggered, and I'm riding the wave to quick profits.
My day trading was profitable or break even every day this month. So other than dealing with pure price, what else has made a difference for me. I've listed them below.
1. The first thing I did was to set a realistic goal of how many pips i needed to make per day, weak, and month. Not how much i wanted to make, but realistically how much did I need to make. Throw out my position trades. If i needed to make a living just off of day trading, how many pips did I need to make? I came to the conclusion that I needed 20 pips a day trading a single lot. It may not sound like much, but that equates to 400 pips a month. With proper money management that's plenty. How'd this help? Well I quit looking for the strategies that hit the home runs. I wanted a strategy that consistently produced 20 - 30 pips a day with minimal risk. Seriously I don't care if the market moves 200 pips in one day. As long as i get my quota, it's all good. This little change in my behavior had a major impact on my trading. I no longer get caught up in the rat race. I don't get frustrated because I didn't get more. Greed doesn't take over because I want to make more. I get in, get my quote, and when the market tells me to get out I get out. Period, no second guessing, no shoulda, coulda, woulda. Just a simple strategy with a simple goal. I just want my piece of the pie, and that's all. If i get more great. If not awesome.
2. I think like the mass, but don't trade like them. Other than the pivot example above I also don't put my stops in obvious places.
3. I trade only one pair (EUR/USD). This allowed me to really get in touch with it's price movements and it's behavior.
4. I started recording the close of every 15 min candle during my trading sessions. This really keeps me in touch with the market. It enhanced my reaction time and also helped me anticipate price movements and trade setups.
5. I developed a strict routine that i do every morning prior to trading. Having the proper mindset is everything!
6. I started using mental stop losses. Don't get me wrong I have an emergency hard stop, which has never been hit. There were just to many times that my stop loss was hit because of a spike and then the trade would go in my direction. Just got tired of it.
7. I keep a written journal and record every trade. Along with the actual trade I'll write down my emotions before, after, and during the trade.
8. I also save an image of the chart from every trade.
9. On the weekends I review my journal and images of every trade I took during the week. This enhances my discipline and helps me learn to spot my trade setups.
10. And probably the most important thing i do is visualization. Every day I spend 30 minutes visualizing a typical trading day except on this day I don't make mistakes I get in when I'm supposed to, I manage the trade according to my plan, and I exit when the market tells me to. My emotions are under control, and fear/greed is not part of this trading day.
Anyway I hope all this makes some sense and hopefully someone can use part of it in their journey.
Trade Well.....
Since about the beginning of March 2006, I've primarily concentrated on position trading. Actually I was forced to. My family and I were in the process of moving back to Illinois, and I just didn't have time to day trade. It turned out that this was the best thing that could have ever happened to me. Position trading made several things possible. First it gave me more time to research and study. Second it slowed things down, so I could really evaluate my entries. Third it gave me the time to develop a "day trading" method.
Just to recap my position trades are based primarily on daily and 4-hour charts, while looking at the weekly charts for the big picture. The average hold time for the trades is 2 - 10 days, but I'll keep them longer if need be. It's a pretty simple strategy really. I look for price patterns, and use support, resistance, and Murrey Math lines to confirm. I don't use any other indicators. No moving averages, no MACD, no fancy renamed indicator, just plain old price. Below is an example of a trade I took last week.
..................(yeah, it really is this simple)
Money management for my method is pretty simple. For every $1 that I risk I need to have a profit potential of at least $2.50. I only risk 1% of my account on any given trade. This amount is figured specifically for each trade. In September the percent will increase to 2%. As I progress in my trading I will continue to raise the percent until I reach 4%. This however will depend on the detailed statistics I've been keeping. I need to make sure my win/loss ratio, risk/reward ratio, and draw downs, can handle the 4% risk. For now I appear to be on track. The other thing that's made the difference for me is that I do a lot of fundamental research. When the Technical Analysis and fundamentals line up good things happen.
So this is working why day trade? Well the bottom line is what else should I do. Trading is my career now, so why not make additional money from day trading? They way I look at it is if I can day trade without cutting into my position trading profits I'm going to do it.
Let's talk day trading....You hear a lot of folks saying that you just can't make it as a day trader. The say the "Big Guys" all position trade. Is this true? Could be....I'll say this it's a lot easier finding 2 or 3 trades a month that make 100 - 200 pips than finding 60 trades that make 10. But like I said as long as i can do it without eating into my position trading profits I'll continue on. During my quest to find position and day trading strategies I've met a lot of folks. Some good and some not so good. Most of the good ones being in the Futures arena, with a few being from the Forex market. One of them in particular makes six figures a month. Yes, I said a month...I actually hang out in a private Futures Chat room that he occasionally attends. He is amazing to watch. The other folks in there are too. It's kind of funny. Most traders can't call live trades in a chat room. They freak out and get all defensive. Well these folks do it every day. They don't care if one of the other members just called a short, if their system says long they call the long. There's no egos, no selling, just people that trade for a living and love it.
Anyway lets talk about my day trading strategy. I started trading real money with it at the beginning of this month (July). Again it's based on pure price. It's pretty simple I use advanced candlestick formations to tell me what's going on. Noticed I said "advanced". Not the basic stuff you buy in the book stores or the Steve Nison's DVD's. Don't get me wrong you need the basics. I was just at a point where I needed to take it to the next level. The only other thing i use is pivot points. Not as part of my strategy, but to give me a sense of what other folks are doing. I think traders often under estimate what the other guys are doing. I'll give you an example. Typically a pivot trader will play breakout of certain pivot lines. Well lets think about that for a moment. Where does every course you've ever purchased tell you to put your stop loss on a break out play? An X amount of pips just on the other side of the pivot/trend line that caused you to get in the play. So I know if that break out occurs and things start to reverse, once it gets on the other side, folks are going to be crapping their pants, stop losses are going to be getting triggered, and I'm riding the wave to quick profits.
My day trading was profitable or break even every day this month. So other than dealing with pure price, what else has made a difference for me. I've listed them below.
1. The first thing I did was to set a realistic goal of how many pips i needed to make per day, weak, and month. Not how much i wanted to make, but realistically how much did I need to make. Throw out my position trades. If i needed to make a living just off of day trading, how many pips did I need to make? I came to the conclusion that I needed 20 pips a day trading a single lot. It may not sound like much, but that equates to 400 pips a month. With proper money management that's plenty. How'd this help? Well I quit looking for the strategies that hit the home runs. I wanted a strategy that consistently produced 20 - 30 pips a day with minimal risk. Seriously I don't care if the market moves 200 pips in one day. As long as i get my quota, it's all good. This little change in my behavior had a major impact on my trading. I no longer get caught up in the rat race. I don't get frustrated because I didn't get more. Greed doesn't take over because I want to make more. I get in, get my quote, and when the market tells me to get out I get out. Period, no second guessing, no shoulda, coulda, woulda. Just a simple strategy with a simple goal. I just want my piece of the pie, and that's all. If i get more great. If not awesome.
2. I think like the mass, but don't trade like them. Other than the pivot example above I also don't put my stops in obvious places.
3. I trade only one pair (EUR/USD). This allowed me to really get in touch with it's price movements and it's behavior.
4. I started recording the close of every 15 min candle during my trading sessions. This really keeps me in touch with the market. It enhanced my reaction time and also helped me anticipate price movements and trade setups.
5. I developed a strict routine that i do every morning prior to trading. Having the proper mindset is everything!
6. I started using mental stop losses. Don't get me wrong I have an emergency hard stop, which has never been hit. There were just to many times that my stop loss was hit because of a spike and then the trade would go in my direction. Just got tired of it.
7. I keep a written journal and record every trade. Along with the actual trade I'll write down my emotions before, after, and during the trade.
8. I also save an image of the chart from every trade.
9. On the weekends I review my journal and images of every trade I took during the week. This enhances my discipline and helps me learn to spot my trade setups.
10. And probably the most important thing i do is visualization. Every day I spend 30 minutes visualizing a typical trading day except on this day I don't make mistakes I get in when I'm supposed to, I manage the trade according to my plan, and I exit when the market tells me to. My emotions are under control, and fear/greed is not part of this trading day.
Anyway I hope all this makes some sense and hopefully someone can use part of it in their journey.
Trade Well.....
Brent
7 comments:
i appreciate the info posted.
I've been trading for six months on my own and have developed a very similar strategy as to that which you've outlined. 20 pips a day is plenty in my day trading account, i've recently set up a long term position account, as to take advantage of both opportunities. I've also realized recently that all of the major players in this field all postion trade.
Thanks again for your post and keep it up.
jheater13@hotmail.com
Very insightful post. I too have been looking for a strategy for longer term trading. As for the 20 pip a day method, I agree and disagree with this. To achieve this you must have a very high win/loss ratio. I can't seem to find a strategy with a high win/loss ratio as well as high reward/reward ratio. Good luck with your trading.
Sorry I meant reward/risk
Hi Anthony, thanks for stopping in. Yeah I probably should have worded my 20 pips a day statement a little different. Not really looking for a specific amount, but more like a daily average. Can't really put that kind of restraints on the market. It does what it wants to. What I'm really looking for is to exploit the market with my edge and consistently average 20 pips a day out of it (day trading). Some days I might get 40 and some 0, and that's okay.
Good luck in your search....
Brent
Hi Brent,,
Interesting read..I have been trading for 8 yrs and live in the UK.I tarde Uk ftse futures and US R2000 futures..
here is my blog
http://paulus10.blogspot.com/
If any vacencies come up in your futures trading room..Id like to chat and post trades..pushy I know ..but if you dont ask you dont get.
hope your trading is still going well
All the best
Paul
you talked somewhere of using advanced candlestick charts to help you trade. you said that it was not the ones in the Nisson books or the typical ones talked about, where did you get this information from if you do not mind me asking? if not from a book was it a seminar, mentor,...
thanks,
Magnus
Whats the name of your private chat room please?
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