My success rate in Day Trading is relatively high, but my capital is fairly low for this kind of career. I believe that in order to be successful at Day Trading, or even for general Investing, one should have about $100,000 to start. It`s a lot of money, I know, but the sad fact is that with low capital you would have to leverage your money, and the more you leverage the greater the potential to lose your capital.
It's true when they say never to wager more than 3% of you total capital. If you wagered more than that your account could go from 'big money' to 'scraping for change' in no time. Because even the best systems out there you still manage to lose some money. I can remember a system I designed that would make me 10 points almost every time entered a trade, but if lost even one trade I would either lose all my winnings and come out with a loss, or I would just breakeven. I found that a lot systems are like that: lots of wins, but bigger losses.
The ideal system would be one where your stoploss's would be smaller than your takeprofits, and the chance of winning is still greater than 50%. I have yet to discover a system such as this (at least one that caters to my personality), but I am always looking.
Sadly, given my capital, I can't carry on doing the Day Trading for a living. The money it takes to pay the bills AND build on my capital is not possible with the capital I got. So, I decided to get back into the Labour Force again. Just recently got excepted at a part time position, so I can still do some Day Trading and possibly some more School.
Unfortunately, the part time position I just got doesn't pay that well, and the amount I'd get comes just short of paying my bills. Hopefully over time my hours and/or pay will increase (from what I know, this will happen in coming months). In the mean time I'd be still looking for a better position.
Now, I've read in many books, articles and forums that having a part time job while Day Trading is a bad idea because your focus is not 100% on trading. There is some true to that statement, but if you trade on weekly, Daily, or even 4 or 1 Hour charts then having a job shouldn't interfere with your trading. For me the majority of trading I do is at 5AM, so if I want a job I can still wake up early for my trading and take off to work at 8or9 when my trading usually ends.Or better yet, work the Day charts and make only one trade a day.
So, to sum up what I'm saying here:
if you do not have some consistency in your income flow when you are Day Trading, then you should consider getting a part time job, or put Day Trading on pause till you can figure out a better system.
Also, I can't stress enough that if you decide to jump into Day Trading on whim, then you are going to fail! Study for months and months with either a demo account or a very, very small live account, and see how you fare. There is nothing worse then putting your hard earned cash into it only to see disappear.
Friday, 20 April 2012
Wednesday, 18 April 2012
Fractal System on Pause - RSI Divergence and CCI Back In PLay
The Fractal System I had going is going on pause for now, because I'm having too much trouble with my large losses and my small, but many, profits. If I could find a way make my stoplosses smaller and takeprofits larger then I could pull this system off, but for now I'm just going to go back to RSI Divergence and CCI.
There was some bonus to all this work on my Fractal System though. I found/created new indicators, new money management techniques, and other money saving, risk averting methods. I even found a profitable new system based on the 2 Bar High/Low method. I won`t go into detail on that one just yet, but I will post it on the Technical Analysis section at some point.
But for now I`m just focusing on RSI and CCI. So, I`m going to be posting potential trades based on these two and price action for the time being.
There was some bonus to all this work on my Fractal System though. I found/created new indicators, new money management techniques, and other money saving, risk averting methods. I even found a profitable new system based on the 2 Bar High/Low method. I won`t go into detail on that one just yet, but I will post it on the Technical Analysis section at some point.
But for now I`m just focusing on RSI and CCI. So, I`m going to be posting potential trades based on these two and price action for the time being.
Monday, 2 April 2012
TTM Breakout Strategy: Update
Made a couple changes to my TTM strategy, and posted them in the Technical Analysis section. So far it is going pretty good. I'm almost to the point where I'll test the demo account to see if it actually produces a profit, rather than more back-testing.
Friday, 30 March 2012
Fractal System: TTM Bars
I was thinking about including the indicator TTM to my fractal system. I've used the TTM indicator in a number of systems I've setup, but the TTM is always just one bar short of giving me my perfect system. However, now that I have a fast trend following system (the Fractal System), and a great positioning method, I might have a use for the TTM once more.
The Fractal System will essentially filter out false signals made by the TTM, and subsequently the TTM will filter out false signals made by the Fractals. This is the idea anyway. Still need to test a few things before I give the thumbs up, but so far so good.
The idea is this:
The TTM will typically display after the 2nd bar has closed (keep that in mind when looking at the picture; I would hate to have you think that the TTM bars are displayed at the close of the current bar).
In addition to TTM and the Fractal indicators we use a method called 2nd Bar Low/High. This method involves using the high and the low of the two previous bars to determine the entry and exit points: for example, if price passes the High of the two previous bars, then that would be our entry point, and the stoploss would be the Low of the two previous bars (vice versa for price passing the Low of the two previous bars).
This 2nd Bar Low/High is kind of what my Fractal Dimension Channel/Histogram does, only it's a little more selective. So I will be using the 2nd Bar Low/High mostly for stoploss values, and the Fractal Indicators as my entry points.
Setup is this:
The Fractal System will essentially filter out false signals made by the TTM, and subsequently the TTM will filter out false signals made by the Fractals. This is the idea anyway. Still need to test a few things before I give the thumbs up, but so far so good.
The idea is this:
The TTM will typically display after the 2nd bar has closed (keep that in mind when looking at the picture; I would hate to have you think that the TTM bars are displayed at the close of the current bar).
In addition to TTM and the Fractal indicators we use a method called 2nd Bar Low/High. This method involves using the high and the low of the two previous bars to determine the entry and exit points: for example, if price passes the High of the two previous bars, then that would be our entry point, and the stoploss would be the Low of the two previous bars (vice versa for price passing the Low of the two previous bars).
This 2nd Bar Low/High is kind of what my Fractal Dimension Channel/Histogram does, only it's a little more selective. So I will be using the 2nd Bar Low/High mostly for stoploss values, and the Fractal Indicators as my entry points.
Setup is this:
- When TTM displays a Orange or Green Bar, we wait for the Fractal Histogram to display a Red or Blue Bar for our entry.
- Stoploss is the 2nd Bar Low/High;
- TakeProfit (70% of order) is set a the next support level, or just 10-30 points from entry;
- Remainder of the order (30%) will be trailing the 2nd Bar Low/High stoploss for any further profit points.
RSI Divergence: New Territory
Hey everyone, I haven't been posting at all these past two weeks because I'm still trying to work a possible system with fractals. I believe I'm close to something here, but I'm still having problems with the all-so-many false signals. Still not giving up on it, but I have been looking around for a different setup. Which brings me to today's topic: RSI Divergence!
I've posted about this topic before in my blog, but I failed to notice this very interesting divergence pattern.
I call this pattern the Itty-Bitty-Tiny-Little-Winnie RSI Divergence.
This RSI Divergence pattern comes when the price makes a new High/Low, but the bar displayed is a down bar (if new High is made) or a up bar (if a new Low is made), and RSI is showing a decrease (if a new High is made) or a increase (if a new Low is made).
This might sound a little confusing, so I made you a picture (blue lines show the Itty-Bitty-Tiny-Little-Winnie RSI Divergence):
You can see from the picture that it can get most of the major tops and bottoms, which is wonderful for the everyday swing trader. I should also attach some rules to this pattern:
- If you make an entry using this pattern, then enter at the High/Low of the Diverging Bar
(the bar that displays the pattern).
- The Diverging Bar should be the opposite colour of the previous bar
- This Divergence pattern should only occur between two bars (which is why I call it the
Itty-Bitty-Tiny-Little-Winnie RSI Divergence)
So, if the Diverging Bar is displaying a downward reversal, then the entry point would be the Low of that Diverging Bar (opposite if the Diverging Bar is displaying a upward reversal).
I've seen this pattern on all timeframes and all markets, so if you want to include this pattern in your RSI Divergence armory then it could give you that nice reversal confirmation. I will also tell you that this pattern does not work 100% of the time (like all things that deal with markets). There are false signals, so cover your ass with a stoploss.
P.S. I may not have marked EVERY Itty-Bitty-Tiny-Little-Winnie RSI Divergence Pattern on the chart displayed, so if you see one don't think I'm ignoring it, I just didn't see it is all.
I've posted about this topic before in my blog, but I failed to notice this very interesting divergence pattern.
I call this pattern the Itty-Bitty-Tiny-Little-Winnie RSI Divergence.
This RSI Divergence pattern comes when the price makes a new High/Low, but the bar displayed is a down bar (if new High is made) or a up bar (if a new Low is made), and RSI is showing a decrease (if a new High is made) or a increase (if a new Low is made).
This might sound a little confusing, so I made you a picture (blue lines show the Itty-Bitty-Tiny-Little-Winnie RSI Divergence):
You can see from the picture that it can get most of the major tops and bottoms, which is wonderful for the everyday swing trader. I should also attach some rules to this pattern:
- If you make an entry using this pattern, then enter at the High/Low of the Diverging Bar
(the bar that displays the pattern).
- The Diverging Bar should be the opposite colour of the previous bar
- This Divergence pattern should only occur between two bars (which is why I call it the
Itty-Bitty-Tiny-Little-Winnie RSI Divergence)
So, if the Diverging Bar is displaying a downward reversal, then the entry point would be the Low of that Diverging Bar (opposite if the Diverging Bar is displaying a upward reversal).
I've seen this pattern on all timeframes and all markets, so if you want to include this pattern in your RSI Divergence armory then it could give you that nice reversal confirmation. I will also tell you that this pattern does not work 100% of the time (like all things that deal with markets). There are false signals, so cover your ass with a stoploss.
P.S. I may not have marked EVERY Itty-Bitty-Tiny-Little-Winnie RSI Divergence Pattern on the chart displayed, so if you see one don't think I'm ignoring it, I just didn't see it is all.
Thursday, 22 March 2012
Armada Markets: Available For Canadians!
I just recently signed on to Armada Markets, and asked them if they
allow customers from Canada. I received a email (with 30 minutes of
sending it by the way) from Armada saying:
"Both Armada Markets and LMAX Exchange accept clients from Canada"
This is a very welcomed relief since I saw on a Armada forum from the Forex Factory website that they do not except Canadian traders. After I deposit my funds into the Armada account and enter a trade, then I can fully verify that Canadians can trade with this company.
It is too bad that we have to dig so hard to find out if a broker is straight or crooked.
"Both Armada Markets and LMAX Exchange accept clients from Canada"
This is a very welcomed relief since I saw on a Armada forum from the Forex Factory website that they do not except Canadian traders. After I deposit my funds into the Armada account and enter a trade, then I can fully verify that Canadians can trade with this company.
It is too bad that we have to dig so hard to find out if a broker is straight or crooked.
Switching My Brokers
I missed yesterdays Tally (and will again today) because I decided to switch brokers, and right now I'm in that in-between area. After the problems made clear from my old broker Trading Point, I decided to switch to (hopefully) a better broker.
The broker I chose is called Armada Markets. So far from their demo accounts they seem very promising. If the demo account reflects what the live version represents (and Armada claims that it does), then their spreads look fantastic, and their no minimum TakeProfit or Stoploss will be a very welcome addition to trading system.
I will say that Trading Point did offer good customer service, and was willing to help me with my trading. I even believe that their spreads are adequate, but I cannot over look the minimum TakeProfit and Stoploss they apply to every trade.
What this means is I can't make 10 points of profit (this is after I've covered the spread) with a TakeProfit. I would have to manually exit my trade if I wanted those 10 points, which means I would have to constantly watch the price in order to catch those profit points.
Same goes for stoploss. If I wanted to put my stoploss 10 points below/above my entry point they wouldn't let me. I would have to put at a minimum of X amount below/above the entry price (the minimum depends on the market, but it can be anywhere from 10 to 150 points).
Keep this in mind when choosing a broker:
The broker I chose is called Armada Markets. So far from their demo accounts they seem very promising. If the demo account reflects what the live version represents (and Armada claims that it does), then their spreads look fantastic, and their no minimum TakeProfit or Stoploss will be a very welcome addition to trading system.
I will say that Trading Point did offer good customer service, and was willing to help me with my trading. I even believe that their spreads are adequate, but I cannot over look the minimum TakeProfit and Stoploss they apply to every trade.
What this means is I can't make 10 points of profit (this is after I've covered the spread) with a TakeProfit. I would have to manually exit my trade if I wanted those 10 points, which means I would have to constantly watch the price in order to catch those profit points.
Same goes for stoploss. If I wanted to put my stoploss 10 points below/above my entry point they wouldn't let me. I would have to put at a minimum of X amount below/above the entry price (the minimum depends on the market, but it can be anywhere from 10 to 150 points).
Keep this in mind when choosing a broker:
- The lack of freedom from choosing your own TakeProfit and Stoploss levels will result in losses
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