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Daytrading - How to make a profit

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wayneL

VIVA LA LIBERTAD, CARAJO!
Joined
9 July 2004
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There seems to bee a bit of scepticism regarding daytrading as a viable and profitable method.

Well let some of us daytraders share what we do, discuss different methods etc.

I'll go through some current charts next week, but here are a couple of videos put out by CBOT showing one guys methods. (you'll need shockwave installed)

http://www.cbot.com/cbot/docs/cbotpivot1.swf

http://www.cbot.com/cbot/docs/cbotpivot2.swf

It is pretty much how most profitable index traders play...i.e. using floor pivots with a couple of pretty coloured lines thrown in for effect.

K.I.S.S. principles rule.
 
Re: Daytrading- How to make a profit

Wayne.

Look forward to your posts.

I must admit I'm like Knobby I feel that successful ---longterm (And 5 yrs at $1000+/week is certaintly long term) day traders are like hens teeth.

I,m sure you exist as Ive been talking to you over a year or so and seen your photo---think it was you!

Anyway 2 questions raised from your initial post.

(1) Could you define YOUR definition of Daytrading.
(2) You mention that most succesful daytraders also would have long term stratagies.Do you feel that longterm success hinges on having the longter startagy in place.
 
Re: Daytrading- How to make a profit


Excellent viewing thanks Wayne,(especially all the lovely coloured bits) look forward to future posts on the subject.

I think those of us with goals to reach, whether day trading or not will find the information you give invaluable.
 
Re: Daytrading- How to make a profit

Interesting stuff.
 
Re: Daytrading- How to make a profit

That was very interesting. Can not wait for more.
Peter
 
Re: Daytrading- How to make a profit

Tech

(1) Could you define YOUR definition of Daytrading.
(2) You mention that most succesful daytraders also would have long term stratagies.Do you feel that longterm success hinges on having the longter startagy in place.
Click to expand...

A.to 1/ Any trade that is entered with the goal of exiting that day before the close of trading is a daytrade in my book. There are still numerous timeframes amongst daytraders.

There are scalpers. (the screen trader version thereof, as opposed to pit scalpers who scalp the difference between bid and ask.) These traders take only a few ticks at a time and trade several times per instrument, per day. e.g. I know an english guy who takes 4 ticks only at a time, trading the euro. He trades 20 lots at a time and does very well.

There are traders who trade between pivots, like the videos above.

Then there are "swing" traders (still within the intraday time frame) who are looking for the larger intraday trends.

These are all still "daytraders"

I'm a bit of a heretic because if I like the pattern on the daily, I will hold overnight...or several days if the market is in the mood for giving away money.

A. to 2/ Depends on the trader. Some people yes, some people no. In my case, I like having my option strategies and swing trades as it takes the pressure off the daytrades. Psychologically, if I were relying only on daytrading, I don't think I would enjoy that pressure.

But some daytraders are the other way round. The income from daytrading takes the pressure off their long term decisions.

As usual, It's all a matter of individual psychology.

A few points about what I post:

1/ I don't want to be the guru here. So please, other daytraders add your thoughts, methods, criticisms etc. Don't leave me on my own here!

2/ I will not post entries/exits real time, as management of positions at busy times of the day will mean i won't usually have the time to do it straight away.

Consequently, I won't make any representations as to whether I have profited or lost. I will just point out the good or bad setups after the fact for educational purposes only. I think we are all a bit sceptical of retropective entries hey.

My view of the price action is just that, my view. All other views most welcome and encouraged.

Later.....
 
Re: Daytrading- How to make a profit

OK here is my screen setup.

The plots on it are the floor traders pivots...standard calculations, standard usage ie support & resistance

The yellow line is a 13ema flipper. It flips from the ema calculated on the lows to the highs and visa versa, as the price action crosses over. This functions a s a trailing stop in certain circumstances

The oscillators are stolen bill williams' profitunity template with a slight change of the parameters. Likewise the bar colours which reflect the oscilator direction. These are largely for decoration purposes or as a crutch if I feel i need one.

I will post the amibroker code in another thread. The pivot code is my work, and I am still amazed at myself that I managed it....code dumbs**t that I am. LOL
 

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Re: Daytrading- How to make a profit

Bugger it! I'll just post code here for anyone who wants it.

/* wayneL's intraday template */

GraphXSpace = 3 ;

/* These are the calcs for the oscilator values and plots the paint bars*/
Osc = EMA(C,8) - EMA(C,34);
acc = Osc - EMA(Osc,13);

col = IIf(Osc > Ref(Osc,-1) AND acc > Ref(acc,-1),colorBrightGreen,
IIf(Osc < Ref(Osc,-1) AND acc < Ref(acc,-1),colorRed,colorBlue));
barcolor= 1;// this sets the color of the body of the candlesticks to default
Plot( Close, "Intraday Template" ,col/barcolor, styleBar);

//---------------------------------------------------------------------------------

/* This is the code for the exponential moving average flipper */

mov = 13;
hi = EMA(H,mov);
lo = EMA(L,mov) ;
x1 = IIf(C>Ref(hi,-1),1,IIf(C<Ref(lo,-1),-1,0));
x2 = ValueWhen(x1!=0,x1,1);
st = IIf(x2==-1,Hi,Lo);
Plot(st,"",colorYellow,styleNoLine|styleDots);

//---------------------------------------------------------------------------------

/* This next code calculates the previous days high, low and close */

Hi1 = IIf(Day()!=Ref(Day(),-1),Ref(HighestSince(Day()!=Ref(Day(),-1),H,1),-1),0);
Hi = ValueWhen(Day()!=Ref(Day(),-1),Hi1,1);
Lo1 = IIf(Day()!=Ref(Day(),-1),Ref(LowestSince(Day()!=Ref(Day(),-1),L,1),-1),0);
Lo = ValueWhen(Day()!=Ref(Day(),-1),Lo1,1);
Cl1 = IIf(Day()!=Ref(Day(),-1),Ref(C,-1),0);
Cl = ValueWhen(Day()!=Ref(Day(),-1),Cl1,1);

//---------------------------------------------------------------------------------

/* Calculates and plots the pivots */

rg = (Hi - Lo);
bp = (Hi + Lo + Cl)/3;
r1 = (bp*2)-Lo;
s1 = (bp*2)-Hi;
r2 = bp + r1 - s1;
s2 = bp - r1 + s1;
r3 = bp + r2 - s1;
s3 = bp - r2 + s1;
r4 = bp + r2 - s2;
s4 = bp - r2 + s2;

Plot(bp,"",colorOrange,styleBar|styleNoRescale);
Plot(s1,"",colorTeal,styleBar|styleNoRescale);
Plot(s2,"",colorTeal,styleBar|styleNoRescale);
Plot(s3,"",colorTeal,styleBar|styleNoRescale);
Plot(s4,"",colorTeal,styleBar|styleNoRescale);
Plot(r1,"",colorTeal,styleBar|styleNoRescale);
Plot(r2,"",colorTeal,styleBar|styleNoRescale);
Plot(r3,"",colorTeal,styleBar|styleNoRescale);
Plot(r4,"",colorTeal,styleBar|styleNoRescale);

//--end----------------------------------------------------------------------------
 
Re: Daytrading- How to make a profit

Morning session - Russel emini contract - $10 per tick, $100 per point, per contract.

Now entering deadzone (lunchtime) time to get away from the screen, have some munchies, interact a bit with missus, (who stays up with me God bless her)
etc

I also have s&p, nasdaq and euro up on my screens, plus 1 or 2 stocks that I'm interested in for swings.

But many daytraders stick to one chart only. Other have charts and screens all over the place.

I believe one of our members here even has a screen in the bedroom.
 

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Re: Daytrading- How to make a profit

Arvo session didn't give too much away...10 or 20 ticks if you took the s1 exit.

But we are at support for this contract established on the 18th july with es also at support.

Longs tommorrow? We'll see.
 

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Re: Daytrading- How to make a profit

Wayne,

Great stuff. Unless I am being too personal what is the volatility of your returns like? Do you have a profit every day or do you have up and down days but profit every week or do you have up and down weeks but have a profit every month?

I have done this kind of stuff in demo accounts for forex and seem to make a fortune one month and then give it all back the following month. I am not sure whether I was just impatient and expecting too much or just a lousy day trader getting lucky occassionally.

MIT
 
Re: Daytrading- How to make a profit


Hi Mit,

Nobody makes a profit everyday. There are some days when you should walk away and not trade at all. People learn to sense these days and the conditions that precipitate them. Generally it will be very unusual not to make a profit every month. If not some serious navel gazing is in order...disipline is the key.

One thing with daytrading, it is VERY EASY to start overtrading and this is when you give money back. Even experienced traders must watch their disipline with this.

Forex is one of those instruments that has definate time frame where you should not trade. I look at currency futures (same thing as forex essentially) ONLY between the hours 2 AM and 4 AM and between 8 AM and 10 AM. (that new york time BTW) Outside of those times I am most definately NOT INTERESTED unless I have taken a trade and am managing it.

cheers
 
Re: Daytrading- How to make a profit

Hi Wayne,
Great charts and explanations, thanks for sharing and I hope more of your fellow daytraders join in the thread to make it even more interesting.

About your post #10- the chart refers to an 'S1', is that some sort of fibonacci level (the dotted horizontal line?). Just wondering; seen some on Rembrandt's XJO charts in the past so thought must be the same. Sorry if it's a dumb question, thought it better to ask in case it's important.
 
Re: Daytrading- How to make a profit


Hey Rk

It is a label for the first level of support of floor traders pivots.

Here is a brief explanation:

http://www.trading-naked.com/Floor_Traders_Pivots.htm

Cheers
 
Re: Daytrading- How to make a profit

Anyhow, whilst browsing the trading naked site for the above link i found these articles on daytrading, or rather, the combination of day and position trading, which is what I advocate as well.

The first one is from Linda Bradford Raschke, who is well known as one of the "Market Wizards"

http://www.trading-naked.com/library/Raschke0203SFO.pdf

This second one is a chapter from one of Joe Ross' books on the same topic. Joe's reputation is rather more chequered than Linda's, but it is a good article nevertheless.

http://www.trading-naked.com/library/JoeRossTrading_Manual_C17_127_134.pdf

There is also a wealth of info on this particular site. Here is the link to the "library" from which I found the above:

http://www.trading-naked.com/Articles_and_Reprints.htm

Enjoy!
 
Re: Daytrading- How to make a profit

Mate I am dumder then you, how do you use those codes? I have do not have much knowledge about computers.

Thanks for your help,
Peter
 
Re: Daytrading- How to make a profit

wayneL, I hope you are planning on posting more of your insight. I'm playing with pivots at the moment and with some early prelim testing I can see how one can make pivots work. I plan on looking into them more thoroughly.

Thanks,
Andrew.
 
Re: Daytrading- How to make a profit

Artamon said:
wayneL, I hope you are planning on posting more of your insight. I'm playing with pivots at the moment and with some early prelim testing I can see how one can make pivots work. I plan on looking into them more thoroughly.

Thanks,
Andrew.
Click to expand...

Andrew,

I'll try and and to this thread as time and opportunity permits.

I have actually modified my template, and using a slightly different caclulation, based on fib numbers, plus a dynamic 3 day pivots, which seems to be working better. A chap called Frank Dilernia has written a book based around these (and other) calcs, which is a useful (but difficult) read.

If you have amibroker professional, I can supply my code.

Cheers

<edit> hmmmmm my actual chart has a black background , but its showing up white on the screen shot....much prettier with the black background.
 

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Re: Daytrading- How to make a profit

Hi Wayne,

I have read some of Frank's posts on Reef and have just started AFL with Amibroker.

If the offer to provide the code still stands, I would be grateful so I may 1/ understand how you are working with Frank's theories and 2/ see how you have put it together to plot the chart in AFL.

Many thanks,
Peter
 
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