
So many false signals in day trading……….?
I use elder’s triple screen to Day Trade ^HSI options.
I’m a relative beginner, so i did a few hundred paper trades and things seemed to work out well. (about 85% accuracy).
The first 2 weeks of trading were good, then all of a sudden the 3rd week wiped me out.
Is my system flawed?
Screen 1: MACD, Bollinger bands, ADX (5 minute charts)
Screen 2: Stochastics, RSI (1 minute charts)
Are there better combinations to use for day trading?
thanks
Parabolic SAR in screen 1 as well.
We all go thru the same thing. The secret to success lies in money management – being able to stay in the game long enough for a relatively big winner to pay for a lot of small losers. It’s not about one or two trades – it’s an odds game – over 10 or 20 trades, a good system should win out. That is, as long as you follow Warren Buffets rules number one, “never lose money.” What he means is, never lose a lot of money.
Lots of indicators work well, but sometimes they don’t, and you have to be on a constant vigil and cut the loser quickly. But with options, you have the premium drain of a wasting asset and volatility fluctuation, and can rarely place a stop less than 50% of the entry price. But you can’t ever lose more than that on a single trade, and come back. It takes a 100% gain to overcome that.
Look at what would have happened, had you been unleveraged, or maybe margined 2:1 or 4:1 trading the stock outright. Is it the option premium fluctuation that got you, or the underlying?
You can make a lot more money trading the option (with winners), but you can lose a lot less trading the underlying. My theory is to lose less, stay in the game longer, and build it slower but more surely.
Daytrading software – Emini Trading – Trading Forex and Oil Trading- Trading Tools
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