Big Mike's Trading Blog

Last Blog Post

2010-12-17T23:10:00.000-06:00

Well guys, with the end of 2010 almost here I thought I would take this opportunity to make a "final post" in my blog. The forum has completely taken over and it is quite obvious I no longer routinely update this blog, instead spending all my time on the forum.

So I just want to say thanks to all of my blog readers who have followed me for the last 18 months and that this is not "goodbye" but instead is just "see you soon" -- on the forum :)

Mike

Video recording yourself and your charts before, during, and after each trade

2010-08-01T09:59:00.002-05:00

Recently reading Brett's middle book "Enhancing Traders Performance". In each of his books, Brett is a big fan of video recording trading sessions for later review.

I recently played with this, and I'm ready to start video recording myself as an experiment. Camtasia makes this easy, it can record your screen and your webcam simultaneously and then mux that into a single picture-in-picture video. It's not super difficult once you practice getting it setup and remembering to pause between trades. I find that when I talk things through outloud it reinforces them, so I am going to experiment with this and practice talking outloud about my trades, then review the recordings and analyze patterns in my trading.

I will keep the raw recordings around after the fact, but I think what is more useful is to keep a separate "Video Analysis Journal" so you can refer to a specific event within a specific video, and make notes. I'm thinking of creating some columns in a spreadsheet that might capture some typical behavioral or trading-related conditions, and either grading myself or something like this.

So the idea would be to set the recording each morning. When entering a trade, remember to unpause the video. Talk about the trade, let the webcam capture your audio and video (body language), and the software also capture your entry chart. Talk about the trade prior to putting it on, during, and after so you can go back and match up what you were saying (thinking) to what your actions where and what really happened in the market.

Does anyone have recommendations on how to do a "post-video analysis", like how to break down the trades/events in the video so I can measure them as metrics and run some sort of analysis once I have a large enough sample?

Speaking of Trade Metrics, check out a new thread I just created and chime in.

Mike

MultiCharts 6.0 Final Released

2010-07-29T20:09:00.000-05:00

Today MultiCharts 6.0 Final has finally been released! And with it, TSSupport has launched an all new website, too!

Download 6.0 final here:
http://www.multicharts.com/trading-software-download/

For a list of changes in 6.0, see my forum post here:
http://www.bigmiketrading.com/platforms-indicators/2698-multicharts-multicharts-multicharts-22.html#post53482

Mike

Tired of NinjaTrader?

2010-07-22T05:49:00.000-05:00

If you are tired of NinjaTrader, then check out a few of these new threads on the forum:

First up is an X-Trader thread which I started. I'm looking at opening an account at Velocity Futures (see details here) and the logical platform was X-Trader. You can read more about why I think this is the best choice for me in the threads, but the short version is "I'm done with NinjaTrader". Even though for six months or so I've used MultiCharts exclusively for charting and backtesting, I still had to use NT for discretionary order entry (DOM). I got tired of nagging problems with NT (both 6.5 and 7 have their own unique issues) and one day I just realized all the time I had spent battling this program and said enough was enough.

Second is a thread started by MetalTrade where he is specifically looking for NinjaTrader Replacements. It's a new thread, but stop by and see if you can help him choose his next platform.

The third thread was also recently started by Mega, and he is on the search for a solid trading platform. His needs are a bit different than MetalTrade's, so check out his thread as well.

I know many of you are happy with NinjaTrader. Those that are happy are probably also the ones that don't experience constant problems :) But, you don't have to read much more than the Truth about NinjaTrader thread to see all the widespread problems people constantly encounter. If you aren't experiencing issues, count yourself lucky! :)

Mike

Naked Trading

2010-07-08T23:09:00.000-05:00

I'm still using a 5 minute chart with nothing but an ema20 and pivots.

For my range charts, which I got back into the habit of using these last many months, I am now completely naked -- not a single indicator.

"Look ma, no indicators!"

The only indicator that has been on these range charts for months and months is my ADXVMA paintbar indicator. It sure was pretty. But also, more or less worthless in my opinion, at least with my trading method and style. It's gone now!

You can check out the Price Action thread on BMT for the method I've been primarily using the last six months or so.
Mike

The Trading Wiki is launched

2010-06-28T09:48:00.000-05:00

Hey guys,

For many months now I've been wanting to add a Wiki to the site. For the past several weeks, I've finally had a chance to do that, and the moderating team and myself have been working on it.

I decided we needed a wiki because we needed to bring some structure to the forum. Right now, the forum itself is great for discussions, but not good for presenting or finding structured/organized information. It lacks the ability to present summarized information on topics. It's not the fault of the forum, it was designed as a discussion system after all.

A wiki can fix that. A wiki will act as a repository of information. The wiki itself is not meant for discussion, rather it is meant for organization and summaries of a wide range of topics. Let me try to paint a picture for you to give an example.

Right now, many traders on BMT come here looking for more exotic chart types (ie: Renko, MedianRenko, SbsRenko, WickedRenko, NoGapRangeBars, etc). Sure, there is information on these chart types spread out amongst 50,000 other posts on the forum. Sure, you can do a search for "medianrenko" and find information, but you'll get hits across hundreds of posts. It can be very difficult to find exactly what your looking for. Let's assume you are wanting to learn more about the advantages/disadvantages of each of these chart types, where to find them, and how to install and use them. That information is spread out across dozens and dozens, maybe 100+ posts.

Enter the wiki. With the wiki, a new article can be created for each of these chart types. An article for Renko, an article for MedianRenko, SbsRenko, WickedRenko, NoGapRangeBars, and etc. Within each of these articles an overview of the chart type can be presented, including advantages and disadvantages. It can also include links to downloading the indicator (still maintaining our Elite-only hierarchy where applicable), and/or links on discussion threads on the forum.

Since each of these articles have a similar core theme of "Bar Types", they can easily be placed in a category called "Bar Types". This way at the bottom of each of the article pages, the Category is shown, and clicking the category shows all the other articles that are also a member of the "Bar Types" category. This makes it very easy to find all these exotic chart types very easily.

That is just one example. Hundreds more exist, and I hope your creative juices are flowing A wiki is globally editable. That means that any member of BMT can create a new wiki, or edit an existing wiki that was created by someone else. A moderation queue exists to prevent any bad things from happening. The principle behind a wiki is to allow everyone to participate to improve the article and make it as good as it can be.

As articles are created within the wiki, posts on the forum that contain matching keywords (article names) will be autolinked. For example, if I were to write a post discussing backtesting, the word backtesting is automatically linked to the wiki. When you mouse over the word, a brief description is shown, and when you click the link you are taken to the wiki article. This also helps facilitate finding information, because it is a natural extension of the posts themselves.

Here are some other key features of the wiki:

History/version control: see the article as it existed at each point-in-time, and exact changes that were made and by whom.
Supports redirects. Sometimes, an article topic may be frequently described using different words, for example backtest and backtesting. You can create a redirect so that these frequently used words redirect to the main article, just as backtest -> redirects to backtesting in my example.
Globally editable. Find an error? Care to improve an article? It's easy, just edit it and do fix it.
Watch wiki articles and receive notifications/updates if they change.
Autolinking: each word within a wiki that matches a keyword or phrase in the system will be autolinked to the article.
Searchable: you can use the same tools you use today to search posts, and they will now find wiki articles as well.
Discussions: you can discuss articles right from the wiki interface. The discussion feature is meant to talk about the layout or content of the article, not to talk about the topic itself. That is an important distinction.

Guys, I look forward to your feedback on the wiki. It is a big endeavor, but I've never shied away from challenging projects or time consuming ones. With your help, our wiki can make the entire site exponentially better!

The wiki is public. There is no Elite and non-Elite within the wiki. However, some articles may discuss Elite-only indicators or strategies, so should that be the case just remember to not post any attachments that you would not post out in the open. You can link to the attachments as they exist in the Elite sections of the forum, and that way only Elite members can access them.

I've created several videos to get you started. You can find them on the main Wiki page, which is accessible from the main navigation bar at the top of every BMT page.

Videos:
How-to use the wiki
How-to create a wiki article
How-to attach images to a wiki article

I will be creating many more videos in the days and weeks ahead.

Please use this thread to ask questions or provide feedback on the wiki.

Thank you,
Mike

No shortcuts in trading

2010-06-22T21:04:00.000-05:00

Just a few quick words... As I was writing a bunch of replies tonight to peoples journals on the forum, one of them stuck and I wanted to share it here.

Often, I see the traders are in a hurry to make money and to be successful in trading. The simple truth is, there are no shortcuts in trading. You cannot rush things. No matter how much you want to.

You can blow up a bridge in seconds with enough dynamite, but it can take years to build a bridge.

Think of it this way. In very short order, you can do an enormous amount of damage to your trading account, and thus, your entire trading career. A few bad decisions can lead to devastating losses.

Whereas building up your trading account and learning to make right decisions -- this process can take years. You must do everything right or it will lead to cracks in the foundation, problems in the support infrastructure, and that will lead to disaster in the future. There are no shortcuts.

Mike

100 commission free trades to be given away from Mirus Futures

2010-06-14T18:10:00.000-05:00

As part of our ongoing 1-year anniversary on BMT, we're giving away a ton of cool stuff. This includes one hundred commission free trades from Mirus Futures. It will breakdown as 10 free trades to 10 lucky traders.

Mirus Futures will also be holding a webinar on Big Mike Trading on Thursday, June 17th at 3:00PM Eastern Time. They will go over their infrastructure and service, and also include details about Zen Fire. There will be a Q&A session at the end, so sign up to attend today!

To register for the webinar, go here and enter your email address:
http://www.bigmiketrading.com/webinars/

To enter for a chance to win the commission free trades, go here and follow the directions:
http://www.bigmiketrading.com/feedback-announcements/3811-big-mike-tradings-1-year-anniversary-webinars-prizes.html

Mike

A word about profit targets, stops, and finding the right method

2010-06-13T19:21:00.000-05:00

I posted this on my forum advice thread today but wanted to copy it into the blog as well.

I primarily trade 3 targets because it fits my personality pretty well.

Target 1 is a quick winner, let's say 6 ticks on CL. If the trade has trouble reaching target 1, then it's a red flag for me to look to exit the position immediately and try to minimize losses and then look to re-enter again later.

Target 2 is set based on price action so it varies a lot depending on the day and what price is doing, but I think a good average is probably around 18 ticks. I set it by looking "to the left" on my chart. Where is price likely to run into a possible problem? Target this area to get out.

Target 3 is also based on price action. It is beyond target 2. The thinking is, ok, if we didn't encounter a problem at target 2's level then price is actually likely to run further. I again set it based on "looking to the left", where is the next major area of support or resistance? I would say a good average for target 3 is probably around 50 ticks.

My maximum stop is 24 ticks. Usually the stop is a bit less, but again it always depends on price action. Let's use worst case scenario. 3 lots @ 24 ticks = 72 ticks of risk. Using my averages above, if my targets are hit I get 6+18+50 which is 74 ticks. So let's just call it 1:1 risk to reward after commission and a tick of slippage.

Now, my stops are rarely full stops. Usually, like I said above, if price doesn't "pop" up to that first target almost immediately, I look to get out of the trade with a small loss usually less than 6 ticks. I will re-enter the same trade later if it still looks good. Sometimes I do get trapped and take a full stop, usually what happens is my first target is hit, but then price runs back down against me. I set my stop to the point where I would be "wrong" about the trade. If I were to get out in this scenario --- target 1 was hit, so it had some momentum -- but target 2 and 3 were not hit, and price is moved against me --- if I were to exit here before a 'full stop' then I would be doing a disservice to myself, because I would look at the signal and say "this signal is still fine, I should be in this trade". Sometimes I do this well, sometimes I make a mistake and get out when I shouldn't only to watch the trade not hit my stop and then turn around and run to targets. I'm not perfect

Now also target 3 is not often hit. Let's say I trade five days a week. Target 3 is hit 3 out of 5 days probably. It is those days where usually I can be done for the day in that one single trade when target 1, 2 and 3 were all hit. I set myself up for this on purpose. That is the sole reason target 3 exists for me. CL often moves this much in a move, and when it does, I want to be able to have the opportunity to capture that move and then be done for the day. I realize only a handful of these trades come each week, but when they come I am usually in the trade.

Trading is about probabilities, right? But it's so much more. It's also a constant battle with yourself. Deep down. Your desires, your demons. Every trade you put on is a calculated risk. To me, I find that I perform better by reducing the exposure. I carry a pretty good sized risk per-trade, but I do not trade often. Maybe 1-3 times a day. If I have needed to put on five or six trades in a day, usually I am having a bad day.

Hope this helps.

Mike

Win three months of free data service from DTN IQFeed

2010-05-31T11:25:00.000-05:00

Hey guys, you may have seen the banners on the forum, but if not I wanted to let you know that part of our 1-year anniversary includes giving away $4,000 of trading related prizes.

DTN IQFeed will be doing a special webinar on Thursday, June 3rd at 3:00PM ET. You can sign-up for this webinar here. The webinar is open to everyone! Just scroll down a bit and find the IQFeed section and then put in your email address so you'll get the webinar link.

In coordination with IQFeed, we're giving away three months of data feed service to three winners (a total of nine months of service). This is premium service guys! You may have read all the debates on the forum about who has the best data feed, well generally DTN IQFeed always wins :)

If you are already an existing IQFeed customer, you still need to come participate in the webinar. There will be a few special prizes given to existing IQFeed customers during the webinar.

In order to enter to win the three months of free data feed service, you need to go to this thread and read and follow the directions.

You can also see all the other prizes and the details on how to win them by clicking here, including a lifetime license of NinjaTrader, a lifetime license of MultiCharts, 100 commission free trades from Mirus Futures, and 5 autographed copies of Al Brook's book Reading Price Charts Bar by Bar.

Mike

Los Angeles Traders Expo, June 9-12

2010-05-28T01:52:00.000-05:00

Scott from the forum wanted me to invite any fellow BMT'ers in the LA area to stop by for the free trading expo at the Pasadena Convention Center on June 9th to 12th.

More information here:
http://www.bigmiketrading.com/traders-hideout/3918-big-mike-trading-meetup-la-traders-expo-pasadena-june-9-12-a.html

Here is the brief summary from the convention website:

Thousands Of Your Fellow Traders Are Headed To Los Angeles On
June 9-12 – Here’s Why:

Just Four Days Can Help You Become a Better Trader…
Your FREE admission to the Expo is the best value around—here’s what you get:

SPECIFIC STRATEGIES THAT WORK: Since the first event in 1999, Traders Expo has been known for bringing in world-class instructors to teach strategies and tactics that traders like you have used to take their skills to the next level. Every session is designed to bring you the latest information available so that you can make better trading decisions starting with your very next trade. You’ll learn ways to find profitable trades that work immediately.

EXCHANGE IDEAS WITH THE BEST TRADERS IN THE WORLD: One of the most important aspects of attending the Expo is the chance to talk with fellow traders about what is working for them now. Some of the best traders in the country will be sitting next to you in the sessions, at the reception, and in the aisles of the exhibit hall. This is a fantastic opportunity to talk with fellow attendees about how they look for trades each day. Some of your best ideas for tackling the markets could come from a fellow trader you chat with in the hallway.

ROADMAP TO CREATE YOUR PERSONAL TRADING PLAN: As an active trader, you’re accustomed to looking at short-term charts and making quick decisions based on what you know at that moment. At the Expo, we’ll give you the opportunity to step back and look at the overall markets from a broader perspective. This is a chance to evaluate your trading style and performance and learn where adjustments need to be made to set you on track for a profitable 2010.

FIND THE TOOLS YOU NEED TO MAKE THE BEST DECISIONS: Software programmers and developers are constantly making tweaks and adding features to software to be better than their competition—and you are the beneficiary! The Exhibit Hall at the Expo allows you to evaluate all of the latest tools and services under one roof—research that would take weeks online.

----
Mike

Why don't I post my trades?

2010-05-19T16:43:00.000-05:00

Well, the fact is, I do post my trades here and there throughout the forum. I'll say when I took the same setup, or when I didn't trade because of xyz, etc. But it never fails, people always ask me why I don't have a thread that lists my trades, all one by one. I encourage fellow forum members to do this, after all, so why don't I practice what I preach?

Well, for one I am a firm believer in journaling as a means to an end that will uncover your strengths and weaknesses and help make you a better trader. The ENTIRE FORUM is my journal :) I've made thousands of posts, a great number of them citing specific examples of how I trade, what I use, what I do or don't do, etc. I use the entire forum as a place to share about my method, the psychology, the discretion, even the automation behind what works or doesn't work for me.

As such, even though I do keep a private trade log, I don't feel an overwhelming desire to share a thread with all my trades. A journal is for the benefit of the one doing the writing much more so than the ones reading it. It is my fear that people will just try to copy my method, and that isn't what I want. I don't believe you can be successful by simply copying someone else's method. You have to make it your own method, you have to own it. I am not going to greatly benefit from a journal of my trades on the forum, because I'm already actively discussing my strengths and weaknesses across the entire forum.

Each day, I personally respond to a dozen or more journals that are posted on the site by other traders. I mark up their charts, I act as a coach or mentor, I give them challenges, give them praise, and I even bust their balls. A little bit of my method comes across in each of these posts. But I want the trader to retain his method and focus on what works for him, I am simply providing a means in which to make that process easier and more enlightening.

Anyway, this blog is already long but I wanted to share a particular forum response that I just wrote when someone asked (again) why I don't journal my trades on the forum:

----

Quoting Richard:
I wonder: isn't it sending the wrong message to post about automated C2 systems (which are "magical indicators that say when to go long and short", after all), and not post examples of your subjective decision-making process? What are the people that need wake-up calls going to think when they see your threads about making (presumably) promising automated systems with 30-minutes of work?

Is it that, in your opinion, computers can be taught simple rules that work, but people can't? Or?

There may be a downside, having to field more questions from people, but I think it's worth it to help debunk the myth that all you need is a a couple basic mechanical rules to win. Then again, you have a much nicer personality than I do, so people probably want to follow up with you more. I hear nonsense and I shut it down :lol: hopefully leaving people bruised but smarter.
-- End Quote --

Maybe it's part of my master plan :)

In seriousness, it is quite evident to me that people want eye candy and they want indicators. One doesn't have to look very far to see evidence of this all over BMT. I have threads all over the forum that talk about my methods, you just don't have access to all of them as a non-Elite member. :( But, I do try very hard to convey a message of my beliefs which is that less is better, focus on psychology, focus on discipline, focus on money management, and eliminate the indicators. I've repeated that message here in this thread a thousand times.

With regards to the C2 systems, I've stated quite plainly that I do not trade automated systems, but that I do view it as a hobby- as an extension of the programmer inside of me. At least it has been downgraded from an addiction to a hobby, because if I look back today upon my work a couple years ago it would be easy to classify it as an addiction back then. I was consumed by automation, and I felt that automation was the only way I could make money. I felt this way primarily because I had such poor discretion and discipline, that I couldn't trust myself. I could see the signals of my pretty indicators, but I couldn't get the results I envisioned that I should be getting.

I am not alone. Many (most) traders turn to automation to solve this problem. But, you can't, and I believe traders that turn to automation to solve psychological and disciplinary problems in their own discretionary trading are, unfortunately, doomed to failure. And the scary part is, at least with discretionary trading you can really get a firm grasp on what you are doing wrong. With automation, there are so many added variables that the majority of people don't understand, they end up being consumed by the process (can't see forest for the trees) and end up wasting huge amounts of time, and money, on the process. It's like all the people caught up in the indicator mess, they keep explaining away a bad trade or worse they see right past the bad trade and they keep thinking indicators (or automation, in this case) will work. It's like a form of brain washing. Great traders can make great money, even with indicators on their charts. But it is firmly my belief these traders make great money not because of the indicators, but because they are great traders and exercise great discretion and discipline. Further evidence of this is all around, look at live trading rooms that sell indicator packages. They don't even take all the signals of their own package. Discretion is required. The room moderator may make great money every day, but it is likely because he is a great trader, and not because of the magical indicators on his screen.

Can automation be profitable? Of course it can. Can indicators be profitable? Of couse they can. However, in my opinion the overwhelming majority of retail traders would be far, far better served to eliminate automation and indicators from their trading and focus solely on becoming a more disciplined trader, and focus on solving/overcoming those trading related psychological issues, instead of running from them.

I post my C2 stuff hoping two things will happen. 1) My system makes a million dollars, somehow, even though I hold no hope for this based on my past experiences. I continue to try new ideas, because it is a hobby and I enjoy it. It fulfills my needs as a programmer. 2) I open eyes to fellow traders that automation doesn't work. Each system starts the same way: a grand idea, an awesome equity curve. This is the hook for less experienced traders, they watch the system contently and develop an interest. It is my hope that by being completely transparent people can start to move forward and see that automation is not the answer, as the system fails over time. They ask questions, why not re-optimize each day, why not this, or that. I answer to the best of my ability, and they hopefully have learned something useful about automation.

There are several more examples of automated trading in the Elite sections of the site, that you don't have access to as a non-Elite member. I choose to post the majority of the work that consumes the majority of my time in the Elite section, as a thank you to all those who support the site. In these areas people are working together to try to make a robust automated system work, or make indicators work. There are also some discretionary methods about trading naked discussed as a group, but the overwhelming majority of the users participate in or are interested in automation or indicators with signal generators -- not discretion. I think it's fantastic that there is group participation, and I strongly encourage it (why the section was created in the first place). I believe everyone is learning, and I believe that by having additional minds in the mix some problems can be overcome that you may not see by yourself.

Still, that said, I think people would quickly lose interest in a lot of what I have to say if I didn't keep them interested with tidbits or crumbs along the way. It is my hope that a) by not calling my trades, people understand trade calling is worthless anyway, and b) by posting chart mark up and examples of what I would have done, people can consider a different approach, and c) by participating in group threads discussing things like naked trading or price action based trading only, people can see indicators are not needed and in fact often times hamper your success.

So, I do the best I can is the summary of the post. :) I try to help as many as I can, and I try to do it in a way that is relatable to them by sharing my own past experiences but also cautioning them against making the same mistakes I have made.

Mike

My own trading method

2010-05-19T16:08:00.000-05:00

I continually receive requests on what I use for my own trading method. While this info is spread out all across the forum in the form of my replies and chart markups, I did write this one post and I wanted to share it here on the blog as well.

----

I only trade discretionary setups, I have no automation. Within my pre-defined method and plan, I have clear concepts of when to put on trades and when to exit them.

I am always evolving and hopefully doing so in a positive manner You can just read the first few posts of this ~~thread~~ blog to even see how my method has continued to evolve. I am more and more and more focused on price action solely, trading completely naked without indicators, and just focusing on what price is telling me, and pairing that with good money management and experience.

There is no hard fast rule of when to place or exit a trade. I just have concepts which are based on price action patterns. I prefer to follow trends and buy breakouts and sell breakdowns.

I don't use a calculator and say that this trade is 0.8:1 or 1.5:1 risk/reward. But, I do have a max risk, and if the max risk is not sufficient to properly place my stop, I don't trade that setup. I always aim for a big pay off. I position myself to reap rewards. By scaling out, I take some quick winners to help build my confidence and play to some psychological needs, and then I position other targets to reap maximum rewards. The targets are all based on pre-defined support/resistance areas. I know my targets before I ever enter the trade, and they are never a static amount.

I may take some trades that have a lower than 1:1 R/R, but I don't do so intentionally. They may just be something like 0.8:1 and I didn't judge it quite right. When you place a trade, you have no way of knowing if this trade is going to hit your target or not. Even if it does hit your target, you have no way of knowing if it will then blow through that support/resistance area and then continue running to the next level. All you can do is make smart decisions and position yourself to reap maximum rewards.

I do have daily targets. I've got a lot of other stuff I work on each day (forum, for instance), so I find that having a pre-defined target helps me trade to a goal, then stop. The goal is always evolving. The goal also does not have to be based on profit and loss, it can be based on how well I am trading, or how well the market is moving.

I don't anticipate the type of day. I do, in general, find Wednesday's to be some of the best days because of the increased volatility usually present due to the inventory reports (oil). Other than that, I trade what I see. I mark trendlines on bigger time frames and take note of key s/r areas. I then just focus on 'what-if' scenarios. If the market does abc, then I will do xyz. If the market instead does abc2, then I will do xyz2. I don't care which one the market does, and I have no interest in trading in the middle. I'm waiting for someone big to move the market, and I then hop on and ride the move. I don't want to be in the middle and try to do the moving. This method works with trend following.

Many people want me to say:
- Here is my magical indicator that says when to go long and short.
- Here is my stop and target amount.
- Here is why I entered the position.
- Here is why I exited the position.
- Here is when to trade.
- Here is when not to trade.
- Here is what your daily goal should be.
- Here is what your daily stop loss limit should be.

These answers don't exist in this way. And if you (not talking to you rassi, but everyone) are still searching for answers to these questions then I think you need a wake-up call because I personally believe you are on the wrong path.

Mike

More on Big Mike Trading's upcoming 1-year anniversary

2010-05-14T16:47:00.000-05:00

Just wanted to share with you guys...

I've confirmed now (5) events in June for our 1-year anniversary, which means there will be five corresponding webinars and opportunities for learning and Q&A, and at each event we'll be giving away special prizes. These are top-notch prizes guys, and worth a real $ 4,000 (not inflated BS pricing).

Stay tuned... :) And if you aren't already a BMT forum member, join now and get ready...

Mike

More Price Action Discussion

2010-05-12T09:05:00.001-05:00

Come stop by the forum and join the price action thread. Here are some recent discussions and charts...

Below are EUR/USD remarks from yesterday.

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

Below is a CL workspace.

Right is entry chart (6 range). Top left is 12 range, bottom left 25 range.

What you see here is what I like to call "hammered dog shit". It's a highly technical term, use with caution. The 6-range on the right looks like something exploded, and it looks and smells quite nasty. Price is ranging between 76.00 and 76.30. That's a death trap for many traders who get whipsawed.

Why is this happening? A few things. It's Wednesday, inventory report, etc etc. Sure. But also what is price telling you? The 12 range has a LOT of problems at these low areas. The 12 range also has a pretty clearly defined wedge with a few consecutive LH's.

The 25 range also shows a lot of consolidation at this price area. We're waiting for something to happen. Something will happen, and we'll either break through the wedge and make a HH+HL, or we'll breakdown the bottom support area and make a LH+LL again. I prefer to wait and then respond when that happens, and not trade in the middle of it.

Mike

The Hand That Feeds...

2010-05-03T19:40:00.000-05:00

Make sure you are trading your own method and your own style. Trying to copy someone else's method and trade it won't work. It. Will. Not. Work. You have to own it, and to own it you must understand every facet of it, and to understand every facet of it you need to basically create it or wield it with experience on your own with a lot of time and experience.

Trader A gets a puppy. The puppy has been with Trader A for 5 years, and is now no longer a puppy. Trader A asks Trader B to watch his dog while he is out of town for the weekend. Right before Trader A leaves, he feeds the dog one last time his breakfast. (hits a profit target in the market)

Trader B goes to feed the dog later that night, but the dog gets real defensive. This has never happened before to Trader A. The dog may even bite Trader B if Trader B does not understand the situation properly and doesn't give the respect the dog is requiring at that moment. (taking a big stop in the market)

Even though the dog has been fed thousands of times by Trader A, and never experienced this behavior with the dog, Trader B can try to perform the same action or mimic that action yet experience drastically different results. The same is true in trading, the market must be respected and in many ways you earn that respect within yourself.

You can quantify this in trading by talking about how Trader A would set a stop or target different than Trader B, or how they would exit a trade at a different position due to a (lack of) understanding of the price action, etc.

Don't try to copy someone else's method. Instead, you need to make it your own method. Go get your own puppy.

Mike

Example/Tutorial of real-time Price Action Trading

2010-05-01T07:31:00.000-05:00

The purpose of this video was to draw in real-time the HH+HL, LH+LL of the market, and then to trade those levels. I show you the exact entry price for each setup. The stop for each setup would be 1 tick outside of the last price action marker, in other words -- where the setup would "fail".

I forgot to mention in the video that the paintbars are colored by what side of the ADXVMA indicator they are on. This is the same indicator mentioned above. This indicator and paintbar coloring was not used in any way during the video, I simply forgot to turn them off and I like having them on anyway :)

Some setups have higher risk than others due to the distance from entry to that stop point. I also talk about how to place your targets using prior price action as a guide.

Example/Tutorial of Real-time Price Action Trading from Big Mike Trading on Vimeo.

I placed the price action markers in real time as I was scrolling through the chart. This is the exact same thing that I do for my chart that I trade from. I usually label them pretty quick, like I did in this example video and I think with time so can you. If things are moving too quick you'll want to try a larger chart.

For this particular trading style (trading breakouts) a range chart works best. The price action discussed in the video is really just the most basic examples. For more complex examples sometimes a 5 minute chart works better. You'll need to experiment to find what works best for you, as it is my belief it is subjective.

Please share your feedback so I can incorporate it into the next video... Use the Price Action thread on the forum.

Mike

P.S. I just watched the video, I wasn't too clear in a couple spots but I think overall it went well. I'll try to be a bit more clear next time. I haven't slept yet so am a bit tired :)

A quick look at CL 12-range today

2010-04-29T19:53:00.000-05:00

Here is my view on the 12-range for CL today. More can be found on the forum in the price action thread.

Let me say this first. Days like today can really be a major challenge to many traders. I am fearful that on days like today, many people won't update their journal because they went a little "full tilt"and did some major damage to their account.

A day like today may look somewhat simple in a historical perspective, but a lot of traders do very poorly on a day that is either trending or grinding like this one.

The best way to combat this is to adapt during the day. Make sure you have a fresh perspective. If you were trying to find a short all day, you should instead ask yourself "Is there a long opportunity here?" and really look for it. Make sure you aren't biased. Many traders are counter-trend by nature, and after a +150 gap they are just foaming at the mouth to go short.

The channel was very well defined early on, so it was pretty easy to only take longs. The issue was the channel was so tight, that if you tried to be a good trader and follow your rules (my rules) of buying the HH breakout, you were left with only table scraps of maybe 6-8 ticks per breakout.

Around 10am we broke down out of the TL a bit. Traders that shorted immediately got trapped somewhat, it wasn't a good idea to short directly into 85.00 area. CL traders should always pay close attention to the xx.00 and xx.50 marks, a lot of stops are placed at these prices and it sometimes takes time to break them down. It is smarter to enter just the other side of these price points, even if by only 2-3 ticks.

The disciplined traders that didn't just jump on the short and waited for the LH got it for a better entry to the short side.

The short didn't last long, because by noon we had made a HH signalling the likely end of this small bearish trend. Confirmation came at 12:30p with a HL+DB being formed. There wasn't much opportunity to trade this (for me) due to the time of day when it occurred.

Mike

Big Mike Trading Forum

2010-04-28T23:57:00.000-05:00

Hey guys,

We've got about 16 active journals now being updated daily on the forum, great job! I'm marking up charts and commenting on those on a daily basis, so my "advice" is still on those threads if you want to hunt for them. Most of the journal authors created them in the Elite Journals area, but a couple are in the regular Journals area.

I've also been spending a great deal of time on the Price Action thread lately. Anyone that has talked to me in the last few weeks knows that I've been on a "pure price action" kick, really shuttering everything except an ema20 and price, and just focusing on HH+HL, and LH+LL, trading those setups.

Next Tuesday I am holding a webinar and Q&A on trading multiple time frames and with-trend. The 100 person room limit should be resolved now, but you should still register early. I've put together a lot of example charts and will also try to devote a good portion of the webinar to Q&A.

A week after that, we've got another webinar planned from ZTrade101 where he will help everyone setup and configure the Volume Ladder for NinjaTrader. Some details are in the main webinar thread, and more details will be shared after next Tuesday when my webinar is completed. Trying to keep it to just one webinar at a time to focus on

Not long after that, benbrooke will be back for Part II of his Market Profile webinar, which will be a more in-depth look at trading with market profile. Again, some details are in the main webinar thread, and more details will be shared after ZTrade101 finishes his.

If you didn't already notice, I recently announced that Al Brooks will be conducting a webinar for BMT in June, he will be focusing on trading price action. June is the 1-year anniversary for BMT, and I actually have a lot of surprises for you guys including webinars, and lots of prizes -- some of them valued at $1500 each. I'll go into more specifics about our 1-year anniversary in a few weeks.

Every day BMT becomes a better place for traders to come together and help each other. Just recently we actually passed another famous trading site in terms of daily user activity, and we're only just getting started! So give yourself a big round of applause for the hard work that you've put into making this community extra special!

I am particularly proud of all the new journals that have been started recently, after one of my last blog posts kicked a bunch of you into gear :) These guys are making huge strides in their trading and making some awesome revelations about themselves and their trading. It's really a pleasure to be a part of and to help them become successful.

Thanks guys! More soon!

Mike

BMT Webinar: Using Multiple Time Frames to Trade With Trend

2010-04-23T22:24:00.000-05:00

I know many of you are excited that Al Brooks will be presenting a Price Action webinar on BMT as mentioned here, but since that is still a few weeks off I thought I would tide you over by presenting a webinar based on Using Multiple Time Frames to Trade with Trend.

The webinar will be held Tuesday, May 4th at 3PM ET. To register for the event, see this thread. I will show multiple examples of how you can use MTF's to trade with trend and incorporate this method into your existing strategy very easily.

Mike

The Market by Jungian

2010-04-23T16:33:00.002-05:00

Jungian is a member of Big Mike Trading. Bacon is also a member. They've been active participants in our Price Action thread.

We've recently been discussing using a simple decision matrix to journal your trades. All the talk of the Matrix lead Jungian to write the following and I wanted to share :) There is also a bit of a "mini-battle" going on between me and Cunparis (also a member of BMT) on my advice thread, the mini-battle is about indicators being good vs. evil, which is semi-relevant to understanding where this is coming from :)

---

The Market by Jungian
with apologies to Andy Wachowski & Larry Wachowski

Jungian: 'Cause I don't like the idea that I'm not in control of my trading.

Bacon: I know exactly what you mean. Let me tell you why you're here. You're here because you know something. What you know, you can't explain. But you feel it. You felt it your entire life. That there's something wrong with the Market. You don't know what it is, but it's there. Like a splinter in your mind -- driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?
Jungian: The Market?

Bacon: Do you want to know what it is?
(Jungian nods his head.)

Bacon: The Market is everywhere, it is all around us. Even now, in this very room. You can see it when you look out your charts, or when you turn on your indicators. You can feel it when you go to work, or when go to church or when you pay your taxes. It is the world that has been pulled over your eyes to blind you from the truth.

Jungian: What truth?

Bacon: That you are a slave to indicators Jungian. Like everyone else, you were born into bondage, born inside a prison that you cannot smell, taste, or touch. A prison for your trading. (long pause, sighs) Unfortunately, no one can be told what theMarket is. You have to see it for yourself. This is your last chance. After this, there is no turning back.

(In his left hand, Bacon shows a blue pill, the pill of indicators.)

Bacon: You take the blue pill and the story ends. You wake up out your bed and believe whatever indicators you want to believe. (a red pill is shown in his other hand)
You take the red pill and you stay in the Market and I show you how deep the rabbit-hole goes. (Long pause; Jungian begins to reach for the red pill) Remember -- all I am offering is the truth, nothing more.

(Jungian takes the red pill and swallows it with a glass of water)

---

You can find examples of the decision matrix's being shared on the price action thread.

Have a good weekend!

Mike

Pure Price Action: 6 range CL chart from today

2010-04-21T17:59:00.000-05:00

Here is a video of a chart I marked up today following the inventory report on CL (9:30am my time). You can ignore the pretty blue and red colors because no indicators are used in any of the trades shown. You don't need a blue-to-red indicator to tell you what price is already doing.

I made this video today on a 6-range chart because I recognize that a lot of traders prefer range charts, and prefer a smaller chart than the 5m I normally use. I hope you enjoy it and find it useful.

The discussion thread is on the forum in the Price Action thread.

Trading Price Action: 6 range CL chart, Apr 21 from Big Mike Trading on Vimeo.

Mike

Video: Price Action on CL (Crude Oil Futures) Tue Apr 20th

2010-04-20T23:09:00.000-05:00

Here is a video I made for the Price Action thread on the trading forum:

Trading CL (crude oil) with price action Apr 20 2010 from Big Mike Trading on Vimeo.

I look forward to discussing it on the price action thread.

Mike

Price Action Discussion

2010-04-19T23:50:00.000-05:00

On the forum, there is a thread where many traders including myself are sharing price action setups. We know price action is subjective, and we know a lot of traders struggle with identifying and defining price action setups that work for them.

Below is the post that I made to the thread today. I strongly encourage you to come check out the thread directly, and participate! It is for Elite forum members only, so if you aren't an Elite member, you may wish to consider joining if learning about price action is of interest to you.

----

Here is my view from today. I didn't trade today, and didn't even see the market in real time, so this view reflects that. I really hate 'analyzing' a day where I didn't see it evolve in real time, because watching a bar form is as important (more important?) than where it closes.

We started with a big gap of 120 ticks or so.

The first hour there really was just one possible opportunity to short with-trend, the third bar is a failed HH. It made a HH but closed lower and closed near its low, that is usually a very bearish sign. The second red bar worked past a potential triple bottom area. The third lower close continued th bearish trend with a LL and LH.

The sixth candle, a higher close, was an outside bar -- making both a HH and LL. It closed with a lot of bullish strength, the close was very near the high of the bar. This is usually a bullish sign. My with-trend only rules would preclude me from taking this long, as price was well below the ema20 so I consider it "counter trend". A series of HH and HL followed, with the exception of bar 9 which was a doji with a LH and LL. It was quickly followed with a strong bull bar, again closing near the high, and right near the ema20 level.

The eleventh bar showed weakness. We made a HH yet closed quite a bit lower from the high. Candles with big tails and wicks are usually a good indication of strength and weakness at certain price zones. In this case, the Daily S2 level was right there, so if you believe in pivots you would say that this pivot area was keeping price at bay, preventing it from moving higher as more sellers came in.

The second hour began with a bang. The news quickly drove price down and looks to be a bearish engulfing bar. The second bar, a higher close, made a LL and a LH. The third bar, a lower close, was an inside bar. It closed very near its low, a bearish sign. The high was also near the ema20, so you could try to anticipate an ema20 bounce here.

The fourth bar was massive, over 100 ticks in 5 minutes. I wasn't home so am unsure if a news story propelled this activity or if it was just a lot of stops being run as we hit a weekly low on CL. The fifth bar was an inside bar that closed near its highs. The sixth bar was a lower close, it made a one or two tick HH but closed near its low. You can picture this as a bullish trap. Buyers who came in looking for a 1-tick breakout of bar four to enter a counter-trend long position were trapped into this, and propelled the move forward as the market turned back bearish on the sixth and seventh bars.

The eighth and ninth bars represented we started to see some buying enter the market as we entered a weekly low range. A successive number of HH's and HL's followed, right up to the ema20.

The third hour begins with the tap against the ema20 after a long successive number of HH's and HL's. The first bar shows some weakness, as it has a big wick and closed directly on top of the ema20. The second bar made a LH and a LL, and was only able to move 1-2 ticks higher than the open. This is quite bearish, especially when combined with the fact we've now closed below the ema20 and the trend so far today has been bearish.

The third bar continues the bearish trend with a LL and LH, again only able to muster enough strength to move 1-2 ticks higher than the open. The fourth bar is an inside bar, but with a close near its low it shows weakness. The fifth bar is a LH and LL again, but we start to see possible buying come back to the market as the bar was basically a doji. The sixth bar, a higher closing blue bar, made a LL by 1 or 2 ticks and quite possibly trapped many shorts who re-entered the market. When the sixth bar closed higher, and then the seventh bar made a HH and HL, any possible shorts were hurting but it looks like the strength quickly wained and we had heavy selling re-enter the market for bars 8, 9, 10, 11 and 12 -- all LL's and LH's.

The fourth hour starts with more or less a double bottom, but it made a HH and closed near the high, so this outside bar shows strength. I cannot take a long here due to it being on the wrong side of the ema20 for my tastes. The second and third bars show HH's and HL's. The fourth bar, a lower close, is an inside bar that closed near its high. The fifth bar shows a bit of concern to question strength, as price was unable to close above the ema20 and we're left with a tall wick and a close near the low. The sixth bar is an inside bar that closes near the high, right on top of the ema20. The seventh bar is again a great cause for concern for bulls, as we make a HH and a HL, yet the bar is an inverted hammer and has a very large wick and closes very near its low, again on top of the ema20.

Because of the weakness of the seventh bar, bar 8 is unable to move even 1 tick higher from the open, and makes a LL and LH, closing below the ema20 and setting up a nice re-entry short. Bar 9 is another LH and LL. Bar 10 makes a lower low by 1 or 2 ticks, but then closes near its high. Bar 11, a lower close, makes a HH and a HL so is not suitable to enter a short position on. Bar 12 is a LH and a LL, but is a higher close.

Hope you guys are benefiting from all my typing!

Please share your feedback and your views.

----

Mike

Are you a trader, or aren't you?

2010-04-17T00:51:00.000-05:00

Trading is simple, not easy.

All the price action in the world, all the indicators in the world, all the money management and technical analysis in the world is great.... but at the end of the day, what you are really doing is just trying to trade better than everyone around you. You have to out-trade the crowd in order to make money.

The saying is that 5% of the traders make 95% of the money (or so). In order to join the 5% crowd, you've got to trade smarter than your peers. It is "simple", because most peers are full of psychological and disciplinary problems -- they make inconsistent decisions and don't follow their own advice or their own trading plans. The "hard" part is for you to not fall into the same ditch.

The reason that learning price action is a powerful tool, and what I believe a strong step in the right direction, is because it can be done without indicators. And indicators are the devil. You would be far better off to have none than to have five or ten. Price Action is the closest thing to the "holy grail", because it is the most basic, the most pure form of analyzing the market. You guys have no idea how many private messages and skype messages I get daily begging me for indicators. Indicators, indicators, indicators! They see a new indicator on my screen and think "Shiny!!! If I had this, I could make money!!". Indicators can be useful, but they cannot make you profitable. If you aren't already profitable then please... PLEASE... just delete the indicators until you are!

Many traders feel they cannot be trusted to trade discretionarily after suffering huge losses. They look for some black and white answer in trading, "go long here", "go short here" and no such thing exists. They would be far better off refocusing that energy into learning how to re-condition their thought process and their minds to be better traders. Trading is a very intense process, it brings out a lot of emotions, it brings out the "fight or flight" response, it basically amplifies all the things wrong in your life until they are so pronounced, so unbearable that either you run away or you face your deepest fears and overcome them.

It may sound like hogwash, and you may laugh, but I believe in what I am saying and I've got experiences to back up my beliefs. Perhaps trading is different for every individual, because every trader has a unique set of challenges to overcome, and in doing so they learn to trade differently, being molded by these challenges like water flowing around a boulder. They adapt.

For me, I literally had to become a different person in order to succeed at trading. I had to curtail my impulsiveness, I had to learn to state my beliefs only when I had substance and factual evidence to back them up, and most of all I had to admit that I was wrong. That last part is key. Every few months I thought "oh, I've had a breakthrough... now there is no stopping me! Now I can make money!!". Wrong again. It wasn't that there were no breakthroughs, because in fact there were many. It's just that no single breakthrough was enough to make me into a successful trader. It took many, many breakthroughs and many, many admissions of being wrong.

There are no short cuts in life. There sure as hell aren't any in trading. I know some "traders" who are making huge profits but they are doing so in a way that cannot be consistently maintained. They are averaging down. They are taking huge risks. They have no money management. They have no exit strategy. They never define a "I'm wrong if xyz happens" scenario, because they never plan to be wrong! These traders may come around every now and then and make a lot of noise with their big gains, but they will be gone soon enough. Stupid people can get lucky, too. But to be in the 5% of successful traders, you can't be stupid, and "traders" who trade with poor risk management, no money management, and no exit plan are quite stupid. The market will humble them eventually.

Yet still, even after I write long posts like this, and hundreds more, people still believe that indicators will solve their problems. If I have one mission, one clear objective with BMT other than empowering traders to help each other, it is to try to reshape peoples energy away from indicators and instead focus that energy into proper risk/trade/money management and into overcoming the psychological challenges of trading. If only they spent as much time in these areas as they do playing with indicators...

Mike