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The brutal truth of day trading

  • #2,101
  • Jul 19, 2021 6:39pm Jul 19, 2021 6:39pm
Quoting RickM
{quote} Spread is irrelevant if you can find 25 setups on M1 compared to 1 setup on H1. Out of those 25 setups, one or two will be better than most H1 setups you ever see in half a day of WAITING. Trading costs is the fee we pay for very very cheap finanace. Trading needs to be undertaken when the probability of winning obscures the cost of trading.
I trade the H1. Trading an H1 chart does not produce frequent reliable setups. It does however produce infrequent quite reliable setups. Of course reliability is related to one's method. The H1 chart does not require one to sit in front of a computer screen for hours looking for setups. I generally have about 8 pairs I'm looking at at any given time. I can scan all 8 in about 10 minutes max. If there's no set up I go live life.

M1 charts on the other hand require one's constant attention. I'm happy with my infrequent setups on H1 and living life. At times I go 2 weeks without a trade. No big deal. No stress. I accept a minimum of 3:1 or more on any given trade so my R:R is excellent. My risk varies with market structure and dictates whether or not I take any given prospective trade. If the risk is too great no matter how awesome the setup I leave it. Once in the trade I rarely "manage" it because I set SL and profit target and walk away. Only occasionally will I move up SL in an effort to achieve a higher R:R. It's quite satisfying to enter a trade and wake up the next morning with your profit target filled. My win rate is well under 50% but by demanding a fairly high R:R I stay out of trouble.

I've given the FOREX M1 a try a few times but found it very difficult to profit meaningfully without taking multiple trades which interests me little. With futures it's a different story. I like tick charts for futures anyway.
  • #2,102
  • Jul 19, 2021 8:47pm Jul 19, 2021 8:47pm
Quoting GEfx
{quote} I agree that spread is irrelevant in a trade decision. But, please elaborate on the qualifier "better" regarding M1 vs 1H set ups.
Hi GEfx

In my opinion, the different is purely in delta volume or total volume.
In any H1 candle, the difference between a low value total volume reading and a high value reading is at most 100%.
On a M1 candle, the difference can be 1000% which gives me the benefit of seeing easily a exhaustion candle. Normal at a climax on M1, we can get up to 3000% difference in volume on that large long ranging candle that takes out stops and hits thin liquidity. That makes it a easy to see a high probability reversal trade.

Then we get my favourite setup (mainly because they are common on M1) which is a word I borrowed from another Forex Factory member called Divergence.
Thats the “Thrust” candle which is an aggressive candle creating the first real break against the previous trend. It contains extreme delta with multiple imbalance signals signalling the official start of a new trend (M1 trend).
We would see 5 to 10 of these on M1 in a session, you would be lucky to see any on H1.

Lastly I don’t trade time based charts but trade liquidity based charts. At example is EURUSD.
On quiet nights because the volumes are low, liquidity is better read on a three minute chart (500 tick chart works here as will) than a M1 chart.

Please bear in mind I am talking about day trade scalping here and may not relate to position trading.

Cheers
Trading thin liquidity at the boundary of the charts
  • #2,103
  • Jul 19, 2021 9:03pm Jul 19, 2021 9:03pm
Quoting Winston Reed
{quote} I trade the H1.
Let's said I took a long trade off M1 at 1.2000 and you bought it at the same level from H1 chart.
2 hours later we closed at the same price 1.2500.
so what is the different?
  • #2,104
  • Jul 19, 2021 9:04pm Jul 19, 2021 9:04pm
Quoting Winston Reed
{quote} I trade the H1. Trading an H1 chart does not produce frequent reliable setups. It does however produce infrequent quite reliable setups. Of course reliability is related to one's method. The H1 chart does not require one to sit in front of a computer screen for hours looking for setups. I generally have about 8 pairs I'm looking at at any given time. I can scan all 8 in about 10 minutes max. If there's no set up I go live life. M1 charts on the other hand require one's constant attention. I'm happy with my infrequent setups on H1 and living...
Hi Winston

I think it’s a lifestyle choice really.

I want to work for 3-4 hours a day, turn my computer off and never look at a chart the rest of the day.
In that time I have to trade to earn a wage, I can’t wait till tomorrow therefore I must aggressively find good trade setups and hit that trade button.

The truth is of course some days the markets will give us almost nothing. I may only find a few good trades worth taking and I may even stuff those up and earn $0.

Last night the guys were having a ball as the markets were lighting up like a Christmas tree.
It was the Best night for a couple of weeks and the best month in my opinion. Those are the days we just have to give it a bloody good crack.

The last thing I forgot to mention which M1 offers over H1 is the ability to trade by market speed.
If the market is fast on M1- it’s going to be really good day because there will be some huge expansion.

Cheers
Trading thin liquidity at the boundary of the charts
  • #2,105
  • Jul 19, 2021 10:12pm Jul 19, 2021 10:12pm
Quoting mixedbags
{quote} Let's said I took a long trade off M1 at 1.2000 and you bought it at the same level from H1 chart. 2 hours later we closed at the same price 1.2500. so what is the different?
What is the same is that we both opened at 1.2000 and closed at 1.2500. Everything else would have been different such as:
1. The reason for entry.
2. The reason for exit. .
3. The strategy that allowed you to stay in a trade on an M1 chart from 1.2000 to 1.2500.
4. The strategy that allowed me to stay in a trade on a H1 chart from 1.2000 to 1.2500.

I could go on but I think it's clear that the differences are vast.
  • #2,106
  • Edited 10:31pm Jul 19, 2021 10:17pm | Edited 10:31pm
Quoting RickM
{quote} Spread is irrelevant if you can find 25 setups on M1 compared to 1 setup on H1. Out of those 25 setups, one or two will be better than most H1 setups you ever see in half a day of WAITING. Trading costs is the fee we pay for very very cheap finanace. Trading needs to be undertaken when the probability of winning obscures the cost of trading.
Quoting GEfx
{quote} I agree that spread is irrelevant in a trade decision. But, please elaborate on the qualifier "better" regarding M1 vs 1H set ups.
Hello,

Additionally to higher profitability potential, a big part of what makes me prefer scalping to other speeds/ratios & frequencies, is the much bigger sample size one can obtain (much more efficient use of time = more practice/experience in less time), as others like RyuRyu have already explained.

Talking about manual trading, to all the people who say that most traders who are long-term profitable aren't intraday/scalpers: yes, they're right; because scalping is generally harder (like a high performance sport or competitive videogame) and/or more mentally exhausting (one more "brutal truth of day trading"), requires deeper constant concentration, better nerves/stress control, continuous focus and big stamina; therefore, definitely a lower percentage of the people doing it can really accomplish the job sufficiently well and with good enough consistency for the long-run (more than 9 months, and then year after year)... but the results speak of themselves; good scalpers make more, and their overall risk/exposure is also lower (it’s a fact).

Another "brutal truth" is that only a hand or two of REAL traders in this forum, actually trade somewhat like that. Most don't have knowledge of the tools, access to them or enough money, neither the know-how.

There are some (a few) very successful traders dealing with index futures (generally with "mini" contracts) exclusively from the DOM, "just" looking to win 1-5 ticks per transaction (either never losing more than that), "intra M1" without using any chart (or even for bias/reference/confirmation); working mostly with REAL limit orders (at least always for the opening, and ideally also for the closure). The very best (less than 1%), can achieve about 70-90% win-rate with 10-20% scratches (positions closed at BE without even losing the spread, minus the "round-trip" cost according to the contracts); aiming for 10-30 trades per hour, in a 4-5 hours daily window.

Quoting Winston Reed
{quote} I trade the H1. Trading an H1 chart does not produce frequent reliable setups. It does however produce infrequent quite reliable setups. Of course reliability is related to one's method. The H1 chart does not require one to sit in front of a computer screen for hours looking for setups. I generally have about 8 pairs I'm looking at at any given time. I can scan all 8 in about 10 minutes max. If there's no set up I go live life. M1 charts on the other hand require one's constant attention. I'm happy with my infrequent setups on H1 and living...
Yeah, as it has been already discussed, to each their own. Among traders, there are different knowledge, capabilities, personalities, temperament, preferences, objectives, desires and purposes, as well as various distinct tools & interpretations; ergo, strategies/methods/styles.

Also, on June 15th you wrote that you don't trade for a living, hence don't pursue/expect that kind of results, which is fine.

Quoting Techanalyst
{quote} FX is a decentralized market, meaning that counterparties trade between themselves, not on an exchange such as the NYSE. As such, to get a reliable volume indicator you'd have to get every major ECN and brokerage firm of the world over to publish their volume in a standardized format. Volume is used most often in stock trading, where it shows the number of shares that are being traded. Each market or exchange will track its own volume and distribute the data to traders. There is no volume reported for currency trading because there is no...
Well, without understanding exactly how… a fact is that Currency Futures move in total sync with Forex, so although ASK/BID volumes & liquidity (what really moves the market as the the orders are being executed) are of course smaller, at least proportionally they must be pretty equal... RickM has proved it, with sustained results.

--- --- ---
--- --- ---

EDIT: A note to RickM, BWilliam and the ones thinking alike:

AFAIK, nothing stated here by anyone, actually totally proves the "FX Markets Thin Liquidity" hypothesis… outside the portion that we can see from the smaller chunk of the the Currency Markets: Futures contracts books as limit orders (then executed [opened-closed] along with market ones and then registered on the T&S tape); but not what "big players" have in their pockets, always ready to "market-fire" whenever they need/please; starting by central banks and the biggest commercial ones, connected through their terminals and servers to one big infrastructure, making "revaluations" & transactions with the help of specialized automated quotes-matching algorithms (but certainly not deciding prices, "levels" or directional movement [including volatility and frequency], nor volumes and liquidity), synchronously working with some market-makers/liquidity-providers and prime brokers, inside the biggest OTC network/exchange.

Cheers!
- Víctor
  • #2,107
  • Jul 19, 2021 10:35pm Jul 19, 2021 10:35pm
Quoting RickM
{quote} Hi GEfx In my opinion, the different is purely in delta volume or total volume. In any H1 candle, the difference between a low value total volume reading and a high value reading is at most 100%. On a M1 candle, the difference can be 1000% which gives me the benefit of seeing easily a exhaustion candle. Normal at a climax on M1, we can get up to 3000% difference in volume on that large long ranging candle that takes out stops and hits thin liquidity. That makes it a easy to see a high probability reversal trade. Then we get my favourite...
Excellent explanation, and thanks for your thoughts. We trade the same markets, just from different worlds! I appreciate your comments and perspective on this market. Trade well, RickM!
  • #2,108
  • Edited Jul 20, 2021 10:03pm Jul 19, 2021 10:44pm | Edited Jul 20, 2021 10:03pm
Quoting joyny
{quote} Not all brokers. Scammers yes - they need 2 traders, their "consultants" for trader A tell "SELL" for trader B the same time the same symbol tell "BUY". With "all in". One of the traders loses all, but another wins huge. Then for that "winner" their "consultants" say "See how we made you a fortune - add more money will move you to our elite consultant which trades most lucrative deals". But for looser - they put that in black marketing were advertised "another consultant, another broker" who will be fair and "will fight back your money"......
Hey... I have also been in that "room", the "Infamous Scalpers Cave"... And I can assure you that there's nothing to "promote" for commercial purposes.
RickM is just proud of the small like-minded group of people people he has chosen to be a part of, with only a few almost daily working together while contributing as a team, as well as making good online camaraderie... Something very NICE to have in this generally solitaire endeavour.

EDIT: Maybe the word "cooperating" instead of "working" is more correct.

* But most importantly, they are for sure: genuinely sharing a little chunk of their space/time. Sometimes good-will actually exists.
  • #2,109
  • Jul 19, 2021 10:53pm Jul 19, 2021 10:53pm
Quoting RickM
{quote} Hi GEfx In my opinion, the different is purely in delta volume or total volume. In any H1 candle, the difference between a low value total volume reading and a high value reading is at most 100%. On a M1 candle, the difference can be 1000% which gives me the benefit of seeing easily a exhaustion candle. Normal at a climax on M1, we can get up to 3000% difference in volume on that large long ranging candle that takes out stops and hits thin liquidity. That makes it a easy to see a high probability reversal trade. Then we get my favourite...
Quoting GEfx
{quote} Excellent explanation, and thanks for your thoughts. We trade the same markets, just from different worlds! I appreciate your comments and perspective on this market. Trade well, RickM!
Hi GEfx...

I know you're not directly communicating with me; but hey, this is an open thread after all

Another clear "advantage" (in the right hands) of trading trade M1 or sub-M1 with all that volume/liquidity data, that I forgot to mention in my previous post, is, well, precisely that: The sheer quantity & quality of real-time available information from which we can quickly react, actually making better INFORMED decisions involving least possible "speculation".

By all means, I'm still only referring to "high frequency manual scalping".

Best...
  • #2,110
  • Jul 19, 2021 11:15pm Jul 19, 2021 11:15pm
Quoting Viktory
{quote} {quote} Hi GEfx... I know you're not directly communicating with me; but hey, this is an open thread after all Another clear "advantage" (in the right hands) of trading trade M1 or sub-M1 with all that volume/liquidity data, that I forgot to mention in my previous post, is, well, precisely that: The sheer quantity & quality of real-time available information from which we can quickly react, actually making better INFORMED decisions involving least possible "speculation". By all means, I'm still only referring to "high frequency manual...
Hi, great posts. Except one point.

"high frequency manual scalping cavers" represent one aspect.
"Quantified market structure lone wolves" represent the other aspect.

The combination of both, ying and yang, brings out the best. Imho
Know what you trade
  • #2,111
  • Jul 19, 2021 11:20pm Jul 19, 2021 11:20pm
Quoting Viktory
{quote} {quote} Hi GEfx... I know you're not directly communicating with me; but hey, this is an open thread after all Another clear "advantage" (in the right hands) of trading trade M1 or sub-M1 with all that volume/liquidity data, that I forgot to mention in my previous post, is, well, precisely that: The sheer quantity & quality of real-time available information from which we can quickly react, actually making better INFORMED decisions involving least possible "speculation". By all means, I'm still only referring to "high frequency manual...
Thanks for your comment and for sharing your thoughts. That approach obviously has merit. It is something that I have to look into. Good trading and best wishes!
  • #2,112
  • Jul 19, 2021 11:37pm Jul 19, 2021 11:37pm
Quoting Viktory
{quote} {quote} Hello, Additionally to higher profitability potential, a big part of what makes me prefer scalping to other speeds/ratios & frequencies, is the much bigger sample size one can obtain (much more efficient use of time = more practice/experience in less time), as others like RyuRyu have already explained. Talking about manual trading, to all the people who say that most traders who are long-term profitable aren't intraday/scalpers: yes, they're right; because scalping is generally harder (like a high performance sport or competitive...

I said nothing regarding the expectation of any kind of results because the conversation did not relate to that. However, I'll entertain the comment.

"Trading for a living" does not require one to pursue 10,15,20 or 25 trades per day. Certainly one can do that and if they do and are and have been profitable over the long term then more power to them. I often sense urgency in those who do enter multitudes of trades per day. I've even heard of some who enter as many as 75 trades per day. It's difficult to imagine. Those who truly trade for a living and have been doing so for years are not urgent about it or needing to find trades. They do it as naturally as anyone else going to work and aren't looking for an adrenaline rush.

It is not the number of trades one enters but the quality.
  • #2,113
  • Edited Jul 20, 2021 1:37am Jul 19, 2021 11:49pm | Edited Jul 20, 2021 1:37am
Quoting Winston Reed
{quote} I said nothing regarding the expectation of any kind of results because the conversation did not relate to that. However, I'll entertain the comment. "Trading for a living" does not require one to pursue 10,15,20 or 25 trades per day. Certainly one can do that and if they do and are and have been profitable over the long term then more power to them. I often sense urgency in those who do enter multitudes of trades per day. I've even heard of some who enter as many as 75 trades per day. It's difficult to imagine. Those who truly trade for...
Yes, it's another style, a different road...

EDIT: Besides, simply, some people absolutely LOVE the "challenge" involved with faster reaction-times & decision making ¯\_(ツ)_/¯
  • #2,114
  • Edited Jul 20, 2021 12:05am Jul 19, 2021 11:54pm | Edited Jul 20, 2021 12:05am
Quoting Viktory
Another "brutal truth" is that only a hand or two of REAL traders in this forum, actually trade somewhat like that. Most don't have knowledge of the tools, access to them or enough money, neither the know-how. Among traders, there are different knowledge, capabilities, personalities, temperament, preferences, objectives, desires and purposes, as well as various distinct tools & interpretations; ergo, strategies/methods/styles.
Very good explanation!

Let's be honest. How many traders here on FF are real traders and live from that? And how many are part-time "I'll trade after my main job" traders? How many are investing $ in algo/testings/development? And how many are searching for free EA and another one holy grail strategy? And now let's answer the question what TF and trading style is more preferable for the first and what for the second type of traders?

It is not good or bad. It is just a statistics. Much more people are part-time non-professional traders/gamblers. And it is impossible for them to trade 1m TFs (and there is no need to do that). They have no skills, no software for that. That's why they dream up fairy tales about RRR, mindsets and psychology. Because all they have is to draw some rectangles and lines on the charts. Less theoretical knowledge, more fables and magic. It has been like this at all times. They choose higher TFs and it is correct. By the other hand there are some traders who are trading for the firms. They can't use lower TFs because of their local rules and restrictions.

So who's left? We have a very small group of traders who can and have real ability to scalp or professional HFT firms (and they are very profitable btw).

As for me I don't see any purpose in trading higher TFs and at the same time I don't see any sense why to trade manually. But I trade 1H tfs on spot crypto just because there are only longs and it is long-term approach and there is no need to scalp because of fees and common sense. Also I'm trading stocks a little, and there is no need to scalp too. But I'm not good at that, so may be I'm wrong and it is possible.

So who said you have to choose only one side? Why not to be a daytrader and a scalper at the same time... Do what you like best and what you are good at.
Observer effect
  • #2,115
  • Jul 20, 2021 12:33am Jul 20, 2021 12:33am
Quoting BWilliam
{quote} Hi, great posts. Except one point. "high frequency manual scalping cavers" represent one aspect. "Quantified market structure lone wolves" represent the other aspect. The combination of both, ying and yang, brings out the best. Imho
Probably true. I didn't say "HFMS" is the only way to be highly profitable. In fact, I also have some "fate" in fractal "Market Structure" (usable within any time-frame, but normally better in longer ones), as it certainly seems that some traders can reliably "quantify it" in their favor

BTW, you often talk of mathematics, as if being a "quant" (the only ones I'm aware of, being PhDs in Physics, Statistics and CS; experts in Probability Theory, Stochastic Calculus & Processes, Numerical Analysis, Data Science/Mining and Machine Learning). What type/level of math do you use for your tools and analysis? What's the "secret" math that you can "interpret" driving the "Master Algo" that simultaneously governs all markets?

Just curious, really...
  • #2,116
  • Edited 12:55am Jul 20, 2021 12:44am | Edited 12:55am
Quoting ryuryu
{quote} Very good explanation! Let's be honest. How many traders here on FF are real traders and live from that? And how many are part-time "I'll trade after my main job" traders? How many are investing $ in algo/testings/development? And how many are searching for free EA and another one holy grail strategy? And now let's answer the question what TF and trading style is more preferable for the first and what for the second type of traders? It is not good or bad. It is just a statistics. Much more people are part-time non-professional traders/gamblers....
Also very good points! Not really much more to add

I would only expand on the "psychology" aspect: As many people mention, it's an important part of the "equation", yes; but logically, already IMPLICIT (a "must" = a natural requirement) for every highly demanding professional/competitive human activity; and of course, there are different personalities ("mindset") and skills, more or less akin to a diverse kind of labors.

Regards!
  • #2,117
  • Jul 20, 2021 12:58am Jul 20, 2021 12:58am
Quoting Winston Reed
{quote} I said nothing regarding the expectation of any kind of results because the conversation did not relate to that. However, I'll entertain the comment. "Trading for a living" does not require one to pursue 10,15,20 or 25 trades per day. Certainly one can do that and if they do and are and have been profitable over the long term then more power to them. I often sense urgency in those who do enter multitudes of trades per day. I've even heard of some who enter as many as 75 trades per day. It's difficult to imagine. Those who truly trade for...
[/b]

i do enter around 20 trades per day all quality trades i do not force a trade i stopped that long ago, With my broker i have a combative mentality and love the challenge to have as many wins without a loss, in the end its all about the cash and if you can add a bit of spice to your trade keeps you sharp
people leave, but this thread will go on for ever
  • #2,118
  • Jul 20, 2021 1:42am Jul 20, 2021 1:42am
Regarding 20-70 trades per day... There is another option - 1 trade per year or even 1 trade per 3 years. But... this 1 trade per year is from 1 EA hunting very rare deals (extremes) and big probability of profit for each that deal. And if you have 1000 such rare/extremes hunting EAs...

People tend to think that EAs intended to do a huge amount of operations and are good for M1 timeframes etc.. I'm now testing with live money another approach where EAs are used as silent hunters waiting 1 year for lucrative deals.

You can see here in this thread I wrote more about real examples of those "silent hunters" - have 60 EAs on 1 account for now of that kind. So far good... EA which in 20 years opened only 40 deals now produced already 2 profitable deals. Not much... I know... just illustrate the idea of what I am working on now. Will need 2 years to get evidence if that approach will work well.

I encourage other EAs coders to maybe try something similar so we can share ideas regarding this approach of "silent hunters".
  • #2,119
  • Jul 20, 2021 3:31am Jul 20, 2021 3:31am
Quoting gepards
Regarding 20-70 trades per day... There is another option - 1 trade per year or even 1 trade per 3 years. But... this 1 trade per year is from 1 EA hunting very rare deals (extremes) and big probability of profit for each that deal. And if you have 1000 such rare/extremes hunting EAs... People tend to think that EAs intended to do a huge amount of operations and are good for M1 timeframes etc.. I'm now testing with live money another approach where EAs are used as silent hunters waiting 1 year for lucrative deals. You can see here in this...
This is another great example of EA usage - to find the extremes. Robot must do what human can't. Sitting for weeks near the screen and miss the entry is the human job.
Observer effect
  • #2,120
  • Jul 20, 2021 4:48am Jul 20, 2021 4:48am
Quoting RickM
{quote} Hi Winston I think it’s a lifestyle choice really. I want to work for 3-4 hours a day, turn my computer off and never look at a chart the rest of the day. In that time I have to trade to earn a wage, I can’t wait till tomorrow therefore I must aggressively find good trade setups and hit that trade button. The truth is of course some days the markets will give us almost nothing. I may only find a few good trades worth taking and I may even stuff those up and earn $0. Last night the guys were having a ball as the markets were lighting up like...
An additional issue is trading with small capitals.

If one has 50K initial capital and needs 2.5K monthly net for living, that is difficult to achieve unless you place one or two trades per day minimum.

In order to see PA within these time intervals, you have to rely in lower timeframes such as m1, m5 or m15.

I see others that opt to place multiple small trades on higher timeframes, but that type of trading is much more complex imo.
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