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Trader
Insights by Mod Bill McDowell, February 12, 2007
Throughout
almost every trading day from 5 AM Pacific until the
Chicago close at 1:15 PM In FuturesTalk, Moderator Bill McDowell
posts ALL Russell 2000 and Euro futures day-trades that are
valid according to his 'rule based' methodology. The postings include each trade entry and the trade tick
range and the trades are all updated and exhibited from time to
time in an Excel chronological log -- a final log of all the
day's trades is posted at end of each day.
The following are 5 principles that illustrate his
methodology.
1.
ENTRIES: Bill's
entry rules are based on a concurrence of support/resistance
breakouts and valid oscillator indications on 2 of 3 sets of
mid-term and short-term charts (4 of 6 timeframes). The rules
are designed to minimize the probability of entering a losing
trade while ensuring 'being in' all (or most all) major winning
trades. This means
giving equal preference to longs and shorts and taking valid
reversals.
2.
POST-ENTRY TRADE MANAGEMENT:
Bill believes that the secret to profitable day trading
is taking ALL valid entries and then applying consistent
trade/money management by learning to discern the direction of
the trade AFTER ENTRY. The approach necessitates entering a relatively large number
of trades and developing a 'scalping skill', not as an end in
itself, but for the 'early phase' of a trade that doesn't become
a major winner.
3.
TRADE TACTICS: Bill
recommends trading at least 3 contracts or lots (preferably 4)
and using an execution platform on which you can auto-program
1-contract (or lot) exits at 3 and 5 ticks.
4.
RESULTS: Unlike
most traders, Bill treats 'breakeven trades' as an extremely
important trade category, along with winners and losers.
If you average Bill's posted log data from August through
December last year, you get 70% winning trades (winning trades
must produce 15 or more total ticks from 4 contracts), 15%
breakeven trades and 15% losing trades.
(Data earlier than August is markedly better but is not
representative of the current market conditions.)
5.
TIME-TO-PROFITABILITY:
All traders are eager to cross the line to consistent
profitability. Few
do and for those that do it usually takes years.
For well over a year now Bill has been providing day-in
day-out consistent and comprehensive trade identification and
management information for the Russell 2000 and Euro futures.
Note:
In parallel with the FuturesTalk moderating Bill has been
conducting interactive hotComm based mentoring in groups of up
to 5 people in 2-hour weekly sessions over a 3-month period (12
sessions). The
third successive new group is now at midpoint.
If sound training is of interest to you, you may contact
him at drwmcd@aol.com.
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