Currently day trade the snp. If one uses the 5 min as the focus period, 1 min as the LTP and 30 as the HTP, then the daily, etc is irrelevant? Even though I trade off the 1 min and 10 tick charts, I am always using 100 ticks, daily and even weekly to keep thing in context. What DG is suggesting is that this practice is not useful? Apples and oranges? I guess I've always looked at dailies, weeklies as being more "legitimate" in terms of establishing "true" value for a commodity. Even though a 30 min bar "closes" it doesn't really, in the sense that nobody goes home between bars and thinks about things. No world events transpire between the end of one 30 and the open of the next 30 (generally!). When talking about the daily, one is talking about a completely different dynamic, completely different animal. Perhaps I am guilty of introducing what might be considered a "fundamental" issue (versus strictly technical) here, but I believe it does have merit and MUST be factored in, when assessing context, regardless of one's trading timeframe. What are your thoughts on this?
D.A.
Not all closes are created equal
Re: Not all closes are created equal
You are right that the somewhat higher time periods (more than 5 minute) can be productive and certainly lead to profitable trading.& As it turns out, the daily timeframe is always useful and your instinct about daily/weekly and so forth is also good -- not that it is more "legitimate" or "true" in any way but that they are easy to follow and the trades are profitable. Even if day-trading one would eant to be aware of where the likely daily high will occur, don't you think? It is not that the technical approach on the shorter timeframes doesn't work, it does, but few have the ability or desire to focus attention so completely on this type of analysis in the shortest of timeframes over the long run. Nevertheless you will see in Lesson 26 on day-trading that the methodology works just fine on the shorter timeframes.
As your understanding and confidence in this methodology grows I suspect you may also lengthen your timeframe somewhat. But of course the selection of timeframe is a personal matter and different people have strikingly different preferences.
As your understanding and confidence in this methodology grows I suspect you may also lengthen your timeframe somewhat. But of course the selection of timeframe is a personal matter and different people have strikingly different preferences.
Re: Not all closes are created equal
When it comes to the snp, obviously capitalization is the key in determining the feasibility/wisdom of day vs position trading. The latter requires entry at a turnaround point (DG point) and even then the noise can be brutal. A stop of 5 points is usually all I will tolerate. If sufficient equity has materialized by day's end, carry over is then an option if one expects followthru. But it's the Microsoft kind of things that will drive one to sleepless nights and continues to be the strongest argument for limiting one's scope when margins are in excess of 20K for overnights (unless one is Drummond or Buffet).
Our guidelines are: no more than 20 percent of net worth in trading account, no more than 30 perecnt of trading account devoted to margin, and no more than 2 percent of trading account risk on any one trade. Then pick a tradable that lets you function within that environment.
Our guidelines are: no more than 20 percent of net worth in trading account, no more than 30 perecnt of trading account devoted to margin, and no more than 2 percent of trading account risk on any one trade. Then pick a tradable that lets you function within that environment.