Beginners are taught the importance of developing a trading plan. The problem with a trading plan is that most trading plans will read like a wish-list. They are not likely to be based on facts or empirical evidence. Example of a well-intentioned but poor trading plan: My plan is to trade the ES using tape … Continue reading Beyond a Trading Plan
I wanted to share what I see as working in my own trading when I use discretion and what is not working. What tends to be working Predicting/forecasting direction primarily on smallest time frames for a few points at most. Predicting and picking good points where the market is likely to turn on a medium … Continue reading What should be discretionary vs systematic?
It is difficult to imagine a singular rules-based trading system that can accurately capture what expert level discretionary traders do because the expert trader is primarily forward thinking and speculating. Yet, even the expert discretionary trader faces two significant problems. The first problem is that even if one achieves a high accuracy in speculation, it … Continue reading Coin flips and graybox thoughts
Data only makes sense, only has meaning, when it is understood in relation to something else. Four common forms of making sense of data are: percent change, normalization, standardization, and relative ranking. These forms are very useful for building trading systems, and many machine learning techniques do not work well unless the data has been … Continue reading Percent Change, Normalization, Standardization, Percent Rank
My opinion on trading size... revised Recently, trading psychologist Dr. Steenbarger, in a post at SMB Capital's blog, recommended that traders think about scaling out, that is diversifying and adding more trade setups, instead of sizing up their best trades. On reflection, I was doing well on my TopStepTrader combine until I took every trade … Continue reading Sizing Up Part 2
The futures day trader may naturally want to know: what markets are offering the best opportunities? One option is to look at the daily range in dollars and total volume of the popular futures contracts. Another option is to look at the markets that the best performing trading systems are trading well. Striker Securities and … Continue reading What futures are offering the best trading opportunities?
The traditional way to backtest or develop strategies is to take a very long history and run your rules over that history. The objective is to find rules that produce stable or consistent returns. However, I have recently been experimenting with another technique for developing intraday strategies where I load from only a single to … Continue reading Technique for backtesting intraday strategies
If you are a discretionary trader then you may have wondered what the optimal stop loss and target might be. One answer is to use simulation and the power of optimization in an attempt to find universal optimums under given conditions. A strategy is developed that will enter randomly but only under certain conditions: the … Continue reading Using simulation to discover optimal stop loss
I am currently trying out for a TopStepTrader account and recently opened a OneUp Trader account, as well. I was also taking all the same trades in my live account with only a single contract: however, I recently placed a pause on attempting to match in the live account because I am experimenting with some … Continue reading My TST and OneUp Trader Journey
The dream of trading for substantial profits can often seem like merely a pipe dream for the small under-capitalized trader. One might find some surprising inspiration in the rise of MMA's super star Conor McGregor. He has pursued his dream of MMA and combat sports with a conscious, deliberate mindset, and yet people have doubted … Continue reading Is trading a pipe dream? Lessons from Conor McGregor