Institutional Equivalent Education?

I saw this email too late for anybody to get the 'refund', but the course and the information about what is required for Scalping (at the bottom of the email) is still useful for people to know:-

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https://ecp.yusercontent.com/mail?ur...M1xToil8_A--~D

Final Call for the Refund Offer

December 2020 was another great month for the MAX Scaping System, with no losing trades! You can go into the New Year with a scalping method that givew you absolute confidence.

This is the last day for the very special New Year's deal, with a $150 refund! That's your bonus for early enrollment, and it disappears at 8 a.m. New York time tomorrow.

This scalping system is...

 

1. Extremely reliable with 95% wins
2. Providing steady gains
3. Two class webinars teach you how to do it
4. Great addition to your trend trades

This scalping system is not...

 

1. Providing hi-frequency trading
2. Get-rich-quick scheme

There's nothing quite like the feeling of "pulling the trigger" and already knowing your trade is most likely a winner. 95% is truly awesome! You can attend the class webinars or choose to learn entirely by video. With either choice, you get full support and all indicators and templates...no hidden costs!

MAX ETF Scalping Course
Session 1: 14 January, 3:00 p.m. EDT
Session 2: 21 January, 3:00 p.m. EDT

25% New Year's Discount!
$1999 $1499

Enroll before midnight EST on January 7th and receive a $150 refund! Please allow 8 hours for us to process your refund.

Click here to Enroll

If you need monthly payments, a credit card can be used at the above link.

In case you missed our prior MAX Scalping Preview webinar last year, you can watch the playback and learn much more about MAX scalping. Please note that the excellent win rate was maintained throughout the year, and also that US traders are having success with Oanda for scalping. Click Here to Watch


IMPORTANT INFO

This information is critical for all traders.

Brokers
We will leave it up to each individual to choose your own broker for your country's circumstances.It is impossible for us to stay current on what is available or allowed in each country.

The only broker in the USA reasonable for this scalping method is Oanda. Residents of other countries have more options.

Here are questions you should ask any broker you are considering for scalping trades:

1. Do you have a lot of customers to produce good activity/volume on the charts?
A good $ volume would be at least several 100s of millions per day.
This way the tick volume on the charts will be reasonably well correlated to the actual trade volume.
(Unlike the Futures markets, Forex (& MT4) do not display the real contract volume as there is no central exchange.
https://smartforexlearning.com/forex...-shouldnt-use/
One of the indicators used in the Scalping Course requires a good representation of the volume for accuracy.

2. Is your Trade Execution fast enough for scalping?
We want almost instant execution of trade orders...1 second is too long.
You can check the "Ping" Value in the Account.
Less than 150ms is recommended.

3. What are your Spreads like?
We prefer 1/2 a pip or less.
Items 1 & 2 above are required to minimize potential losses due to small/slow moves.

4. Commissions -- some brokers use commisions instead of spreads, and others charge a commission in addition to the spread..
The commission must be small - no more than the equivalent of a 1/3 of a pip when converted.

Best Times/Markets to use
This scalping method can be used in all sessions,. The Lonson Session and the first 4 hours of the US Session are usually the most productive.

Best Pairs for Scalping
7 Majors + EURGBP (Good spreads & volume)
The following are not good for Scalping on the MT4 Platform:
DAX, Gold, other Indices, CFDs (Unless you are trading future contracts directly on a platform (eg Ninja).

Indicators
All required indicators are included in the course. No additional purchases are required.

Hoping your New Year is having a great start!

The MAX Team
Eusebio, Chris, Craig
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The start of a year is a time to renew our determination to make the comming weeks more profitable than those of the past year.

Here is Lance Beggs' latest email (of Your Trading Coach).
***************************************************
https://ecp.yusercontent.com/mail?ur...zGpT8n.52w--~D

YTC Trading Newsletter - 8th January 2021

1. The Second Week Restart
2. YTC Price Action Trader - Feedback
3. First Day Back from a Break

Hi Traders,

I'm a big believer in getting the year off to a good start. A thorough review of 2020 combined with effective planning and preparation, with the aim of taking 2021 to never-before-seen levels of performance.

If you've already done this, as I have, then you may have no need for this week's newsletter.

For everyone else... this one is for you.

Happy Trading,

Lance Beggs.

The Second Week Restart

One week down. Fifty one to go.

I hope you're off to a good start.

But I know there are some who already dread the outcome this year. At least two of you were chatting with me this week, following Wednesday mornings social media post.

https://ecp.yusercontent.com/mail?ur...2kV0Y2c5_Q--~D

Their problems go FAR beyond what was discussed in this post. Not only was their daily performance sub-standard. But this also occurred on the back of almost non-existent year-end review and planning.

In one case there was none at all. Just cruising into the new year with the same plan and (lack of) preparation that guided his performance the prior year.

In the other case, there was an attempt at a review, but the outcome was little more than generic and useless statements such as the all-too-common, "I need to be more disciplined with taking my trades".

If a social media post can act as a wake-up call to two of you, then I'm almost certain there are more.

The good news is that the second week of the year gives you a second chance at starting the year right.

The 7 Ps were repeatedly drummed into me during my Army life - Prior Preparation and Planning Prevents Piss Poor Performance.

In the trading world that's not enough. You need edge. And you need the ability to execute it.

But it's going to be a damn sight harder if you don't plan and prepare.

Hence some of my other social media posts:

On the 28th of December:

https://ecp.yusercontent.com/mail?ur...nx7xgigsqA--~D

On the 3rd of January:

https://ecp.yusercontent.com/mail?ur...dB8jfiQNzg--~D

Nothing will change this year... unless you change.

So if your thoughts at the end of this first week of trading are basically, "Here we go again - same old crap!", then it's time to change.

Schedule time this weekend. Or maybe even the whole second week (you've still got another 50 to go). Take the whole month of January if you need.

You've been gifted a do-over.

Don't waste this opportunity.

Review your 2020 performance.

Identify the gap between actual and desired performance.

And develop a plan to bridge that gap.

And please... implement a process for regular review and feedback throughout 2021.

https://ecp.yusercontent.com/mail?ur...j4zxW3tt9g--~D

The second week of the year gives you a second chance at starting the year right.

Prepare for this coming week in the way that you WISH you prepared for the first week, having now learnt with the benefit of hindsight.

Go for it,

Lance Beggs
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And now an email from Boris Schlossberg (of BK Forex) which is unusual because I agree with most of it:

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Dear Ian
Timeless Tips for Trading

Now that we are respectable members of the suburban bourgeoisie, @HedgeFundGirl decided to buy an Air Fryer for our cavernous kitchen. So naturally I hopped on YouTube to learn all about the wonders of grease free cooking, but instead of looking at endless recipes for fried chicken I actually found a clip that showed me the 10 most common mistakes made with the product - and that was far more useful.


So in the very same spirit, as we kick off the New Year here are some of my timeless tips for trading from the school of hard knocks.


Do it on a Demo.

This seems so obvious but I am always amazed at how few people follow this rule. Have a new algo you need to test? A new indicator, hell do you just want to figure out how to place a buy stop versus a buy limit on the platform? Always, always, always do it on a demo. Every broker has a demo platform. No matter how experienced you are whenever you always need to get comfortable and knowledgeable about all the buttons by trying them out first on fake money.

This goes double for any script, indicator or Expert Advisor you want to try. Code is like a virus - you never know what’s truly inside you let it run in its natural environment. Running code on demo is less a matter of time and more a matter of volume - do at least 10-30 trades on a demo to make sure nothing funky is going on.

(btw - do I do this myself? Hell no. So this is clearly a case of do as I say not as I do - but I promise to try much harder this year. At least in my case I burn nickels and dimes instead of G’s and Racks on my trading experimentation)


Get the F out.

You hit a buy instead of a sell? You entered a candle too early or a candle too late? You opened with 100,000 instead of 10,000? Get. The. F. Out. It doesn’t matter if the trade is working. It doesn’t matter if you think you can trade out of it. It doesn’t matter if you now suddenly like the short side of the market instead of the long side. The error trade is the Keyser Soze moment of the market. It never looks dangerous at first but it will always burn all your money, your confidence and your sense of self worth in the end. Maybe not the first time, maybe not the second, maybe not the third but always in the end. Get. The. F. Out.

Adding to Losers is For Losers

Paul Tudor Jones made that statement iconographic in the history of trading but it is actually false in lots of circumstances. Adding to losers is the perfect strategy if you are countertrading in a choppy market. Adding to losers is the foundation of dollar cost averaging - which remains the single best way to long term invest because of the upward drift of stocks. Adding to losers can even work in strong trends as long you properly size and catch the retracements.

There is only one problem. If you are adding to losers as a speculative trader you are always one trade away from bankruptcy. It's the equivalent of having beachfront property in Carolina low country. Eventually the Hurricane will wash away the house.

That’s because adding to losers will not only stress your finances but much more importantly will really stress your psyche. Holding a trade on the losing side of the market is like being screamed at by an angry mob. Eventually you will just want to leave - and typically you always cover the position a few percent from the low or the high.

Ok, fair enough. We should never add to losers. But that’s not what really happens in trading. In real trading you may be disciplined in your stops - up to a point. Take three stopouts in a row and the willpower starts to waver. If the next trade starts moving against you - what do you do? You pull your stop of course, because you are convinced by the gambler's fallacy that the market can’t go any higher or lower. What do you do next? You ADD.

This is always the moment of greatest vulnerability for anyone who trades. You never start out planning to add to your losers, but somehow you end up doing it.

At that moment it’s always good to refer to tip #2.


Be Smaller

Re-reading Jack Schwager’s Hedge Fund Market Wizards I came across an interesting quote. One of the traders says, “It’s never the price. It’s always the size.” He was referring to how traders get into trouble. This is very true. Small size can absorb far greater variance in price letting you stay in the trade until it makes money. You can absorb 100 pips of adverse movement on a 10,000 unit position versus a 100,000 unit position. On a 1,000 unit position you can absorb 1000 pips of negative movement. Size matters - just not in the way we have been taught.

If you want to trade larger then make your account smaller. Keep only the margin you need for the strategy and size you want to trade. If the strategy is working you won’t need any more money. If you are margined out - that the market’s way of telling you the strategy has stopped working for now. Say thank you and be grateful that you kept the rest of your money in reserve.

Kill You Trade Blotter

You should never know if you are winning or losing when you are trading. Your only job is to take and make good trades that are true to your process. The moment you look at you P/L you will no longer be trading the market but trading your equity. The market couldn’t care about equity. In fact the market’s only job is to take your equity away. Trading after all is just a civilized way of raiding and looting and if you want to win the game, the key is to never keep score but just to keep playing well.

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Where I disagree with Boris is about adding to losers. Some of my own trading style requires me to add to losing positions, but it is all pre-planned to be within my maximum tolerated loss!
These trades are where I have huge value in my direction but can't quite be certain (liquidity and Order Flow) as to where the short -term Top or Bottom will actually be. I don't want to get stopped out when value is even more in my favour, so I pre-plan a range of 3 or so entry levels with a common Stop Loss price.
For my personality there is nothing more likely to get me on-tilt than getting stopped out without giving the trade enough room and failing to load-up when the value in my favour increases!
This type of trading was popularised by 'Buzzy' Schwartz aka 'Pit Bull'.

In another forum I have seen a discussion where the OP claims that Fundamentals are of no use to day traders.

Here are my responses to that claim:

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Since I'm predominantly a News trader ( FX, Oil, Gold, Equity Indices) , Fundamentals matter a great deal to me. All of my trades last less than 16hrs since that is as long as I can work at my desk before I need a long break or some sleep.

I'm not saying that Price Action, Market Internals, Market Correlations, Orderflow etc. don't matter.
They ALL matter but some matter more than others to each individual trader - depending upon your skills resources and timeframe and style!
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Here are some examples of short lasting fundamentals for the US equity Indices today :

At 18:00 (UK time)there is a US10yr Bond Auction. Depending upon whether it is 'successful' or not, this could influence the US Equity Indices for the next 1hr or even longer.

Later there is the 'Market On Close ignition' but this is only valid for 1hr and 50 minutes (until the Market On Close confirmation).

The Market on Close confirmation is only valid for 10 minutes.

Next is the NY Cash Markets close. Valid until the NY cash market Open tomorrow . - Why? Because large US cash market traders will be unable to exit their positions until there is sufficient volume again although they can still hedge positions in the Futures market (until Futures Close) if they are desperate.

Then there is the US Futures close. Valid for the same reasons as for cash market close.

All of these Fundamentals are potentially tradable!
*****************************************************************

Some retail traders are like a man with a hammer, but no screwdriver. Every situation looks like a nail, even if it's a screw.
Because some of us don't have the tools to trade both Trending Markets and Range-bound or Sideways Markets.

Here is a recent email from Lance Beggs (of Your Trading Coach) which talks about this problem:
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https://ecp.yusercontent.com/mail?ur...FATfW4yMrQ--~D
YTC Trading Newsletter - 15th January 2021

 

1. Structure within Structure - 2
2. YTC Price Action Trader - Feedback
3. I Know Nothing!

Hi Traders,

I only traded Monday this week (due to family needs). And what a crappy session that was. But still... it allows us to see one way that I like to trade the structure WITHIN a larger sideways structure.

Happy Trading,

Lance Beggs.

Structure within Structure
Sideways trend structure is more common than many new traders imagine.

So it's important to learn how to recognise a sideways market. (For my Sideways Trend Definition, see Page 101 (and Fig 3.44) of Chapter 3 of the YTC Price Action Trader.)

And it's important to find the way that YOU best trade this market. Some traders thrive in sideways conditions, preferring them to a more directional environment. Others, like me, take them as a signal to step back a little, slow down and only take the best of the best trade opportunities.

Typically I approach it in this way...

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But I do remain somewhat focussed on price. Not intensely. Just a relaxed, casual observation.

Because there are times when I may be able to see edge within the structure. And when I might be tempted to exploit that edge.

The prior article on this topic demonstrated one such example, where the sideways range was particularly wide and a stable directional trend developed within that larger structure.

But more often than not it's when something like this occurs...



Continued in next post....

continued from previous post ...

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Just like occurred here... in a rather messy example on a day with particularly unfavourable conditions. But hey, that's the nature of this game. It's not always smooth price flow and easy movement to the target.

Note that the market doesn't start off with a sideways trend. That trend structure forms a little later. First, there is some opportunity to play off the prior day's low (PDL) support.


Continued in next post...

continued from previous post....

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Note the choppy overlap of the candles, with endless wicks (tails) above and below. These are conditions I particularly dislike. If I can profit on a day like this, I consider myself lucky.

It's time to stand aside now.

Don't push your luck in unfavourable conditions. You'll rarely win.

As it says in the last image, take your profits and move on. Next time, it might be different.

Happy trading,

Lance Beggs

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My note on the 'sideways breakout' that Lance showed: I don't use trend lines like that, so for me it wouldn't have been a potential sideways breakout until a little higher up.

The Latest from Lance Beggs of YourTradingCoach.
(if you want to see how I did on FOMC day, trading the Micro E-Mini S&P, take a look at my post here:
https://www.forexfactory.com/thread/post/13386249#post13386249

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Hi Traders,

A massive part of your success or failure in this business depends upon your ability to manage your mindset at those times when very little goes right.
Let's look at an example.

Happy Trading,
Lance Beggs.

Managing Your Mindset
A massive part of your success or failure in this business depends upon your ability to manage your mindset at those times when very little goes right.

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Let me repeat...

A massive part of your success or failure in this business depends upon your ability to manage your mindset at those times when very little goes right.

Missed opportunity:

1. Our aim is to consciously remind ourselves that you don't have to catch everything. This will not be the last time that opportunity presents itself in the markets. Let it go. And move on to the next.
2. See here: https://yourtradingcoach.com/trader/it-wasnt-mine-to-take-but-the-next-one-will-be/
3. Key point: A verbal reminder of "It wasn't mine to take. If it was, I would have caught it.". Then focus and project forward.

Chopped up:

1. Our aim is to minimise the damage. Don't let it get out of control.
2. See here: https://yourtradingcoach.com/trading-process-and-strategy/two-attempts-then-reassess/
3. And here: https://yourtradingcoach.com/trading-process-and-strategy/two-attempts-then-reassess-2/
4. Key point: After two failed attempts at a trade idea, pause to reassess. You're either wrong. Or your timing is out.
5. Further: Three failed attempts triggers a compulsory "stand aside". Let that trade idea go. Move on to the next.

But beyond this, you need standardised methods for stepping away and quickly clearing your mind.

1. Our aim is to have a process that is quick and repeatable. So when faced with out-of-control emotion, we know immediately what to do.
2. See here: https://yourtradingcoach.com/trader/sometimes-you-need-time-out/
3. Key point: Act immediately via the YTC Price Action Trader Regroup and Focus AA Statements.

And perhaps most important of all - a general underlying pre-acceptance of all possible losses.

1. Our aim is to ensure we're trading with complete acceptance of all possible outcomes, in particular the potential for a full session loss.
2. See here: https://yourtradingcoach.com/trader/pre-accept-all-possible-losses/
3. Key point: If you are not completely 100% ok with a full session loss, then you have no business trading today. You need to cut position size and risk. And quite possibly go back to the sim to build confidence in both yourself and your strategy.

One final time:

A massive part of your success or failure in this business depends upon your ability to manage your mindset at those times when very little goes right.

So make sure you spend some time thinking about how YOU can best manage YOUR mindset.

Happy trading,

Lance Beggs


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Good stuff on FOMO from Boris Schlossberg:

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Dear Ian
GameStop, Newton, Shakespeare and You

So by now who hasn’t been accosted by both friends and strangers regarding the GameStop saga? Who hasn’t had their neighbor, colleague, or relative start the conversation with, “Hey, what’s a short squeeze and should I get involved?”

The GameStop story is truly epic in size and scope. It not only touches on the themes of modern technology (commission free trading and instant coordination via social platforms), the most arcane mechanics of the business (clearing, 2 day settlement, collateral for variation margin) and on the much broader theme of class warfare (the derisive use of “amateur traders” to describe the Reddit army, the fake outrage over $GME’s ridiculous 20B market cap, while solemnly justifying $TSLA $750 market cap and granting it entry to the S&P 500).

But let’s set those details aside for a moment. The real - the most galling aspect of the GameStop story is that it makes a mockery of us all. Here we are, whether investors or traders trying to master the market one basis point at a time. Trying hard to make 20% unlevered 50% levered per year and all these guys without any effort, any research, any training make 1000%, 5000%, 10000% in a matter of days.
So let’s be honest. Let’s acknowledge that beyond the manufactured fury lies jealousy. Who would not want to make 1M from $10,000 in just one week? After all we spend all our lives trying to achieve that goal. But therein lies the rub, as the Bard would say (he actually didn’t quite say that but go with me). Jealousy is literally the single most toxic emotion you can have not just in life - but especially in the markets.

Let’s all go back to the 1700’s when the East India Company was the GameStop of its day. The details were different, but the mechanics were the same. At that time the price action in East India Company caught the eye of Isaac Newton - one of the brightest minds in human history. Here is what happened. Mr. Newton bought the East India Company stock early and sold it for a tidy profit. But then the stock kept climbing and climbing and climbing and Isaac Newton bought back in only to ride the trade to a massive loss after it all crashed.


Newton is remembered as the father of physics and calculus but is forever enshrined in the trading lexicon the following quote, “I can calculate the motion of heavenly bodies, but not the madness of people.”

Mr. Newton, who by all accounts was a shrewd investor and had accumulated a considerable profit of 13,000 pounds in his prior forays into the market, lost it all and then some ( some accounts suggest his net loss was 20,000 pounds) because he was the classic victim of FOMO.

And what is fear of missing out but just jealousy in another form? How many of us are guilty of fomo in the markets every day? I would argue that once we master the setup and actually learn how to trade the markets almost all of our errors come from fomo.

We missed the entry and see the trade working? F-k it let’s chase and enter.

We made good money but the trade keeps going without us? F-k it let’s double down and rejoin the move.

We are eking out 50 basis points a day in FOREX or futures while these Reddit bastards are making tenfold in one week? F-k it let’s plow into that trade.

Guilty.
Guilty.
Guilty.

The Bard was well aware of jealousy’s corrosive power to destroy everything around us. Newton showed that no one - no matter how smart - is immune to its seductive force. So we must always be on guard - because in the end this is the one thing that can truly destroy us. Yes GameStop was easy money. Yes we missed the play completely. And no we should not chase it now

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Do you get annoyed when you miss a losing trade? - You should if you really believe in your edge!

Latest from Lance Beggs (of YourTradingCoach):

***************************************************************************
Hi Traders,

Today - an occurrence which is often dismissed as simply being "good luck". But in fact is evidence of poor business practice. And is potentially reducing your edge.

Happy Trading,

Lance Beggs.

If you don't get annoyed when this happens, then you don't quite understand edge.
I had an interesting thought while trading (or trying to trade) the following sequence:

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Continued in next Post

Continued from previous Post:

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And then I thought...

1. In over 10 years of writing for YTC, I don't recall anyone EVER sending me a chart and saying that they're pissed off that they missed a trade... WHICH WOULD HAVE LOST.

Maybe, like my initial reaction, you simply write it off as "luck". And then move on.

But maybe it's also because you don't get annoyed when you miss losing trades.

But you should.

If it's a valid trade in accordance with your trading plan, then your edge relies upon you taking as many of these trades as you can.

Your edge plays out over a whole series of trades.

By avoiding a loser I've helped my stats - this time.

But that's not the point.

Think bigger picture - to a data set comprising EVERY VALID TRADE I MISSED OVER A LIFETIME.

If these trades were valid trades then I'm confident that they should provide a positive expectancy, over the full sample. They should provide edge. And by missing them I've cost myself profits.

Take them all. And manage them as best you can.

Here's the key point to take away...

If it's a trade with edge and you missed it due to lack of focus, it doesn't matter that it lost.

This might be good luck.

But it's evidence of poor business practice.

You should feel annoyed. And you should be reviewing the reason for missing the trade and trying to ensure that next time you're more focused and ready to take that entry.

Because next time... it might just be a multiple-R winner.

In the meantime... this was a good opportunity for me to practice some of the mindset ideas we discussed last week - https://yourtradingcoach.com/trader/managing-your-mindset/.

This clearly wasn't my trade to take. If it was, I would have taken it.

Let it go.

Now focus... and get back into the game.

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I have posted about account sizes and trade unit sizes in 2 posts here: https://www.forexfactory.com/thread/...5#post13419125

So here is an example from yesterday (Friday 19th February) of my trade management for one of my styles of trading.
I actually trade the Micro Mini S&P future (so that I can get enough units per trade for my trading style), but I do all my analysis and OrderFlow considerations on the Mini S&P Future ( the ES ).

Here I shown showing how I try to handle Entries SL movement and Take Profits. Note that I have some psych trading problems and so often fail to avoid chasing price with a SL in profit. :
Note that I mislabelled the last trade as both 5 and 6 (trade 2 didn't trigger) so I only took 4 trades in total.
Overview:

First trades in more detail:

Last trade in more detail:


More notes:
1. I'm just showing the trade management side of things and so ignoring my TV screens for big picture and Value.
2. I always trade multi-unit, multi -level when I'm 'fading' i.e. 'Buzzy' style.
3. My chart shows the 'Historical Market Depth ' = historical LOB in brighter colour when LOB is thicker. 4. I use Sierra Chart Package 5 with the following studies 'Large Volume Trade Indicator', 'Volume At Price Threshold Alert' and the Iceberg study from David's OFten suite.
5. I start a potential series of 'fade' trades when I have a confirmed Level 2 Liquidity area - not before. 6. I use Limit orders for entry, so don't wait for candles to close, I will use potentially 3 different entry levels I try to limit it to 3 but sometimes will go deeper. If the 1st entry isn't on a 3rd 'Lady' I will take my TP1 profit earlier e.g. 5 ticks instead of 10 (depending upon volatility at the time). 7. On the trade marked 3 (my 2nd actual trade (number 2 didn't reach my entry price) I took TP1 after only 9 ticks instead of 10 because I saw a possible Iceberg indication from David's study.

I used 3 unit entries.
Results in ticks : Trade 1 +5, +1, +1 Trade 3 +9, +1, +1 Trade 4 +10, +1, +1 Trade 5 (but labelled both 5 and 6 in error) +10, +30 (1 tick below high LOB liquidity), + 42 (again 1 tick below high and long lasting LOB liquidity).
For a total of approximately 101 ticks after commissions.

In the interests of respecting the NDA I signed I won't explain some of the terms I used above since students of Ray will know what they mean.

Edited to add a little more information:
Those trades took 25 minutes from the first entry to the last exit. They made approximately $125 in total on a small account - well over 2%.
I vary my pyramid of entries according to the location of the thicker liquidity levels on the Limit Order Book, but aim for between 5 and 10 ticks between levels.
That works for me, but it is a personal decision based upon account size, risk tolerance and confirming factors for the trade. Each trader needs to experiment in order to find out what works bets for them.

The latest email from Boris Schlossberg talks about how most people create trading systems and how he thinks it should be done.
As you read it, it turns out he is only talking about automated trading systems. Though trading systems can also be manual, indeed many must be manual because of using information from different sources which cannot be readily aggregated onto a single platform.
Every trading system I have ever used has been a manual one, though the very first one could have been automated had I known how to do that at the time.

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Dear Ian
System Trading for the Rest of US



Here is how everyone who develops a system. They get an idea for a trade setup. They write some code or hire someone to do it. They back test it - maybe tweak a few variables until it looks good on paper and then run the system in live market conditions.

The backtest says 50% gains with 20% drawdown (Make up any numbers you like). Real life results however are losses, losses, losses. This happens all the time. Every time. Sometimes it takes a while for losses to kick in, sometimes the losses start right away, but it is astounding how frequently and consistently all trading systems devolve into losses.

This is true of all pro quants as well. Don’t be fooled by DE Shaw’s and Renaissance’s of the world - most quant strategy funds haven’t been able to beat the returns on Treasuries much less the S&P 500 over the past decade.

There are a lot of fancy mathematical explanations for why most trading systems fail, from data snooping to curve fitting to just underestimating the frequent discontinuity jumps in price.

But I think the problem is far more fundamental than that. The development process is all backward and therefore is designed to guarantee failure regardless of whether you are a PhD in physics or just a regular Joe with a MetaTrader account.


Almost everyone starts with a trade idea and tests it. This seems prudent and cautious and responsible and is...100% wrong. Instead of testing your idea in the make believe world of software you need to live trade it in the real brutal world of the market right away. It doesn’t matter if you lose once, twice, one hundred, one thousand times. In fact the more you lose the more valuable you experience will be because the value of any system is not in knowing when to trade it but in knowing when not to. Systems don’t need to be complex. In fact the simpler the better. A basic Moving Average system could be turned into a winner with a right set of rules - but you will never discover those rules unless you are willing to get down and dirty with the market.

The modern world of scientific method, statistical analysis, computational power and sophisticated software has given us the illusion of control and the arrogant belief that all answers lie in data. The truth is that the discovery method is totally and utterly unstructured and unpredictable. You must let the mind roam free to make unexpected connections if you are to have any chance of developing a modest edge in trading.

Part of the reason is that unlike the physical world which has repeatable and highly predictable behavior characteristics which we can forecast with 99.9999% degree of accuracy - landing a spacecraft on the exact spot you want from 135 million miles away in space - trading systems are applied to the psychological world which we know is hardly predictable at all. To extract any useful knowledge you need to run a lot of “experiments” in order to even understand the basic forces that underlie your trade setup.

How many experiments? I really don’t know. In my own case I did about two thousand trades over the past six months before I could even begin to gain confidence that I had a mild edge in my NQ scalp set up. Why so many? Part of the reason is I am a slow learner, but the other part is that a robust system is not about what are the entry, stop and target - which are all answers to the question of how. A robust system is about what kind of entry, what kind of stop, and what kind of target - which are all answers to the question of why where key variations make all the difference between success and failure.

The modern approach to system development - idea, code, backtest and release into the wild is all wrong. You can’t eliminate the human element from the process and that human element is you. To develop a system you need to always proceed from manual to mechanical in order to discern the multiple flaws in your logic which you can then try to codify.

This is a messy process that requires a lot of losing and of course no one wants to lose financially or psychologically but this is the only way to truly learn and discover an edge. Trading on tiny capital bases (my $1000 trade account idea) helps to keep the risk in check.. But more importantly you first need to expect to lose it all if you are to have any chance creating something of value for the long run. It was only after I resolved that I would rather lose the whole account than interfere with stops and targets that I actually started to see some progress.

One of the greatest ironies is that while we believe that systems are an highly robust, fortress-like approach to trading, in reality they are incredibly fragile, subject to the psychological whims of the market and to the personal foibles of their creators.

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I'm primarily a New event type trader and hence a discretionary trader.
Unlike Boris I don't believe in having a fixed Stop Loss size or a Fixed Target.
For me there is an emergency Stop Loss which is fixed and there is also an Ultimate Target price, but neither of those stand more than a 1 in 1,000 chance of actually being hit. I will close my trade at a loss as soon as i recognise that It was the wrong trade at that time. Similarly, I will move my Stop Loss into a Stop Profit situation and manually trail the price attempting to milk as many pips/ticks as I can from the trade.

The reason for that is because trading the markets is like getting into the ring with a professional boxer. And as Mike Tyson famously said 'Everybody has a plan until they get punched in the face!'
The thing is that market volatility changes, market drivers change, trend go into reverse, Politicians (and even central Bankers) open their big mouths and in general sh*t happens - so the trader needs to be able to respond to that! I don't know of any automatic trading system which can handle all of that - so I will stick with my discretionary systems.

Boris Schlossberg's latest email is about Momentum and why it works (for some people):

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Dear Ian
Money on Momentum

The race may not always be to the swift nor the victory to the strong, but that's how you bet.
Damon Runyon.

You don’t have to read How I Made Two Million Dollars in the Stock Market by Nicolas Darvas or William O’Neals How to Make Money in Stocks to appreciate that momentum works. There is plenty of academic literature that proves that point.

Cliff Asness of AQR fame wrote a paper with several colleagues that methodically eviscerates every argument against momentum. They show that the phenomenon works for big cap socks as well as small ones. They show that transaction costs do not in fact erase all of the gains. They show that it works both on the short side and the long side. They even show that it is not particularly tax punitive because the strategy forces you to sell losers and keep winners thus creating short term capital losses and long term capital gains.

Other researchers have shown that momentum works on forex, on commodities, on non-US stocks and although there is not yet enough history to do a study we have all seen that momentum works on crypto.

There are a myriad of explanations for why momentum works. At first investors underreact to information and then they overreact thus creating massive waves of buying and selling. Investors are also prone to the disposition effect (they hate losses twice as much as they like wins) and therefore cut their winners and keep losers. Melvin Capital’s misguided attempt at shorting GameStop was perhaps the most vivid recent example of momentum gone wrong (or right depending on which side of the trade you were on).

I would agree with all the assessments and just add one thought of my own. I think momentum works simply because human nature (and by human nature I mean me) can’t help it. We are seemingly programmed to try to “buy low” and “sell high” - a sensible set of behaviors in every other part of life except an auction - which is exactly what the market is. I can’t tell you how many times I’ve made money being on the right side trend only to give it all back when I decided that it has gone up or down “enough” and then switched to the other side only to give back all my gains.

This happens so often that I have now basically outsourced all momentum trading to my algo and am constantly surprised at how much better it trades than I do because it does not try to pick a top or a bottom.

Momentum is not foolproof. It is at its core a continuation strategy and as such will be whipsawed to death by sharp reversal markets. There is nothing worse for the momentum trader than a series of V shaped bottoms followed by upside down V shaped tops. You inevitably wind up selling bottoms and buying tops. Fortunately such stylized trading environment does not occur too often and the data incontrovertibly confirms that taking the opposite side of that bet (e.g. that continuation will occur) is the long term winning bet,

My momentum system never really suffers from the “chop effect”, but it comes at a cost. The trades I make both in our chat room and on the algo try to capture just the smallest initial slice of the move. It is often the case that we will catch the first 10 of the next 100 point burst in the Nasdaq futures and no more. Does that hurt? Is that frustrating? Only if you don’t understand the cardinal rule of trading.

In trading you can lose small and win small or lose big and win big. That’s it.. Those are your only two choices. Since I am perhaps the most extreme example of disposition effect ( I hate to lose five times more than I like to win) I’ve structured my strategy to never win big and never lose big. Others in my room have a different outlook and trade for far more points than I do.

The beauty of momentum is that it’s flexible enough to accommodate everyone’s risk preferences. It can be adapted to micro scalp the 1 minute chart ( as we do twenty times a day in my trading room). Or it can ride multi month moves like we are seeing in Bitcoin. Regardless of how you structure your trading, just know that buying high and selling higher is a much better way to go than buying low in hopes of selling high. That may seem much more sensible, but that is not how markets work.

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I agree with his views, but I want to highlight an important thing that he says about Momentum being flexible.
This is where each individual trader's personality needs to be reflected in their trading plan.

The two extremes are:
1. Always trying to capture huge swings.
2. Just aiming for a tiny profit (rather as Boris seems to do- no wonder he needs an Algo).

Personally I prefer to be somewhere in the middle - aiming for a smallish profit on 1 unit in order to cover expenses and keep the win rate up, but allowing the 2nd (& 3rd etc) unit more wiggle room to enable more of any big swing to be captured. Ray's students often find that this makes the difference between a barely profitable account (since spreads/commissions eat up so much profit from a trade of a few ticks/pips) and a healthy profitable account. The main changes I made that turned my account around were just these:
Multi Unit entries aiming to 'take profit too soon' on the first unit. Then using dynamic trade management - a combination of Structural Targets and trailing 'Stop Profits' to manage the additional units with the aim of extracting as much from the move as both it and my personality will allow!

Hello ianf0ster,

Can you tell me which platform Ray is using in the video were he is trading on a "-L2-20secChart"?
Is it Sierra Chart?

https://www.forexfactory.com/thread/...2#post12694332

The exercise that he is trading "initial Intern exercise phase 1 (trading MOMOs)", is it included in the "Sharp edge institutional ultimate trade program"?


Best Regards.

Hi Daniel,
L2's can be traded using any platform, also L2's can be traded on various timeframes. But some platforms don't offer very short timeframe charts such as 20 seconds (or tick charts etc), thus out of the (4) different platforms that Ray has demonstrated on I can narrow it down to either Sierra Chart or Ninja Trader.

So far as I remember, the Initial Intern exercise phase 1 (trading MOMOs) has been included on every course that Ray has done - even the short 3 day ones. He has also done it as a part of 'Reading The Tape', but that was some time ago and since this particular 'course' seems to have morphed into an ongoing education session every Monday (except holidays) which is charged monthly and has new students starting at random, I have no idea if/when he will cover it again.

I hope this helps.

Thank you very much for your help.

More from Boris Schlossberg about how most people create trading systems and how he thinks it should be done.

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Dear Ian
Eventually Every System Will Make you Lose Control
System trading development is the art of turning chaos into order and there is of course no greater chaos than the market. The market is the ultimate meta-model where the interpretation of the act trumps the act itself.

In trading the behavioral determinant is never based on the intrinsic value of the security but on the market players interpretation of that value and then further on the interpretation of that interpretation in an endless recursive loop.

That’s how you get moves utterly divorced from reality like the rally in the GameStop stock or the seemingly perplexing action of markets falling hard on good news and rallying strongly on bad news. That is why every technical pattern has an anti-pattern that can be more powerful and dangerous - a retrace turns into V shaped bounce, a double bottom transforms into a breakdown of a range and so on and so on and so on.

No one understood this endless game of social expectations better than John Maynard Keynes who unlike every economist you know was also a great trader. His trading record of 30% compounded returns for decades stands as one of the greatest investing achievements of all time and it was the direct result of him never taking the stock market seriously. The question that Keynes always asked wasn’t - is this company valuable, but rather is everyone going to rush into this stock because they think that the company is valuable.

Keynes' approach seemingly validates technicians who ignore all fundamental information and strictly focus on price. But be careful. That assumption is just as dangerous as the blind faith in fundamentals alone because as I already noted the market is a never ending recursive behavioral loop with players constantly trying to exploit your edge against you. That’s how the great trend traders of the 1970’s and 1980’s called the Turtles - led by Richard Dennis were utterly decimated by the markets of late 1980’s and 1990’s.

The Turtles relied on a technical 20 day breakout system that worked famously well in the momentum based commodity markets of the 1970s but failed miserably in choppy markets of the 1990s. Every breakout was a fakeout and on the opposite of their bet were many mean reversion traders only too happy to take away their money. You don’t hear about any billionaire Turtles today do you?


I’ve written a few times about my own experience with Dennis after we raised money for him at Drexel in the late 1980’s only to see him lose it all in a series of bets so amateurish that it would make the most YOLO based Robinhood trader blush. That’s because every system will make you lose control no matter how well it trades now or in the past.

Eventually, every system will make you lose control by doing the exact opposite of what you think it should do despite making money for years, despite being backtested on a million markets with a trillion Monte Carlo simulations - blah, blah, blah.

That’s why I found Jack Schwager's interview with Marsten Parker in Unknown Market Wizards so helpful. Parker is the only systematic trader interviewed in the book and is also one with the longest continuous record of his performance. Parker was successfully trading his ideas for decades before suddenly hitting a drawdown so savage that it wiped out 40% of his lifetime earnings in a matter of months - compounded by his own admitted behavioral flaws that made him lose control.

Parker has since rebuilt his account to fresh equity highs with a series of common sense rules that we should all consider.

 

1. Stop trading the account if it is down by more than 10%. (Note Parker is trading a large stock portfolio that is essentially unleveraged. If you are trading a tiny FX or futures speculative account you could set the mark at 25% or even 50%)
2. Stop trading a specific system if the equity curve for falls below the 200 day moving average and don’t even consider restarting the system unless it recaptures the moving average and stays above it for more a few weeks (Again the particulars of measurement aren’t important as long as they are consistent but what’s crucial is to abandon the system the moment is starts to show any consistent evidence of loss
3. Try to create at least 2 or 3 systems that are distinctly different from one another (Easier said than done, I know) because it will provide you with a measure of diversification and will make it easier to turn off the losers if you have some winners still running. Barring that just stop trading and do new research to find a system that looks to be working more effectively in the current environment.

The last piece of advice is contrary to everything we’ve been taught about “system hopping” but is perhaps the most important note. If we accept the notion that the market is a highly fickle, adaptive organism then our whole Puritan ideology of staying faithful to “the one you brought to the dance” is not just wrong but incredibly destructive to our financial well being. To survive in the market we have to treat our systems with the naked opportunism of a Hollywood talent agent. Our whole approach to system trading should echo the inimitable words of Sonny Corleone, “It's nothing personal, it’s strictly business.”
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Here's the latest email from Lance Beggs of YourTradingCoach:

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YTC Trading Newsletter - 26th March 2021

 

1. Surviving the Opening Chop
2. YTC Price Action Trader - Feedback
3. Finish the Day with Belief in Your Future

Hi Traders,

I'd like to expand upon a topic I discussed via social media on Monday and Tuesday this week, to ensure the message gets out to a wider audience.

A simple method to limit damage to our P&L during any opening chop.

Happy Trading,

Lance Beggs.

Surviving the Opening Chop
We all love highly direction markets. Especially a strong momentum drive right from the open.

But not every day is so kind to offer one. Sometimes price gets stuck at the open.

And if we don't have plans to manage ourselves during this opening chop we risk hitting our session stop before the day really gets underway. Ok... maybe not you... but I know I've done it.

There is of course our usual rule - "If two trade attempts fail, consider standing aside. If three fail, it's a compulsory stand aside".

But there is another option that can help you survive any opening chop, even if you haven't made any trades.

I posted these via social media on Monday and Tuesday.

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Let's step through this second example.

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(The First Principle, for those not familiar with how we assess likely future price movement.)

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Continued in next post...

... Continmued from previous post.

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Please note that I'd make this decision even if I had no trades so far. This decision is nothing to do with the trades. It's simply recognition of price being stuck in the opening range. And a conscious decision to limit risk exposure until price removes itself from the chop zone.

Continued in next post...