Day Trading with TOS

Day trading’ was mentioned a couple times in the ‘Simon Sez Teaching’ thread. That’s not something I normally do. But the TOS platform lends itself to it. So I figured, "Why not?’ given that the current market is so precarious. A better --and more accurate-- term for the activity would be ‘intra-day trading’. But I’m not going to quibble with the terminology.

TOS offers a menu of technical indicators that would take a week to explore. But I like to keep my charts simple and clean and have settled on the following as being ‘good enough’.

My current plan is to run a grid of six charts and to not over-think the entries and exits. Just take the signals as they occur. But what to trade is going to take a bit of thinking. I’m inclined to trade single shares of high-volume, low-priced stocks/ETFs until I know I can keep myself out of trouble.



welcome and good to see you Charlie. I was wondering if you have ever back tested the simon sez pattern for 2 or 3 bars per day vs the one bar per day that quill uses? i believe you have said in the past that the simon sez isn’t that reliable per quills rules but I was wondering if you get better results using a 240 minute bar or even 3 bars per day since it is an option. Thanks …doc

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I’ve only back-tested parts of Quill’s systems. But you could easily do it yourself with programs like StockAnalyze, MetaStock, AmiBroker, or even a spreadsheet. It’s just a matter of writing the code and pulling the data.

What you’re going to find is this. Quill doesn’t so much have a system, as


Years and years and years of doing thousands of trades means he has acquired instincts that guide his choices, more so than a set of rules.

The rules are a good place to begin. But they aren’t the whole of his campaign. A feel for knowing when to say yea or nay to a chart is what matters, that, and an 80-hour workweek as he constantly strives to improve his game.



Charlie have you ever found a system that is 75 percent or better?


“Have have you ever found a system that is 75 percent or better?”

The short answer is “Yes”. But what happens in a back-test and what happens in actual, out-of-sample trading are mostly two different things.

There a plenty of commercial trading systems that promise high right/wrong ratios. and there are a few traders, notably Linda Raschke, who have a track record of achieving that.

But a high “right/wrong ratio” isn’t what I’m looking for when building/testing trading systems. What I want is the system to be making the same guesses I would for a bare bones chart, so I can speed up my analysis.

Hence, I expect to be wrong on 3 trades out of 5, but to be overall profitable for cutting my losses promptly.

As an aside. Over a 9- month period, my daughter did 90 trades with only a single loss. But she 's a discretionary trader, not a systems trader, hence, one of a kind and inimitable.

Lastly, there’s a trader’s proverb that goes like this. “Do you want to be right? Or do you want to make money?” The two aren’t the same thing or even connected, as Taleb lays in his books on randomness. What matters is the cost when you’re wrong and the payoff when you’re right. In short, does the system offer a positive expectancy? (Cf Van Tharp on this.)

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That I think is the key, don’t be afraid to be wrong but keep them on a short list.


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Charlie - Thank you for sharing your knowledge and experience over the years.

With the emphasis here on right-sizing purchases and risk management via stop-loss orders, can you recommend a reference on both of these topics?




Go to Investopedia and type “setting stops” in the search box. Read the half dozen related articles and then decide what makes sense to you for your type of investing and trading.

Seriously, there is no 'one-size-fits-all" answer to the topics. You’ve gotta do what your own personality is comfortable with and what is permitted/required in the markets you’re trying to engage.

Me? I’m a ‘Chicken Little’ trader who hates drawdowns. If a position doesn’t prove almost immediately that my entry was correct, I’m outta there. My daughter is even more risk-adverse than I am. But she’s also far more self-confident than me and won’t buy or sell unless it’s at her price. As I mentioned elsewhere, over a nine-month period she did 90 trades with only one loser and that --she says-- was because she had misread something.

In addition to poking around at Investopedia, I’d suggest you demo the following scanner/backtester.



Mike, to be frank, if you are asking those basic questions, I STRONLGY urge you avoid “trading” until you spend a ton more time learning. If you are at Schwab, you can use the ThinkorSwim platform to practice with paper money, I hope you can do that, maybe for a year first! Even with that, you will find your human nature will impact you decisions more than you expect when you have real money at risk.

I am about to start trying the SimonSez system to see what I can learn, but I am using a tiny percent of my funds. If I lost every penny the first day I would be disappointed in myself, but it would not change my lifestyle one bit. If I tripled my money the first day, it would not change my lifestyle one bit. Start small when you do start.

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Without your defining what you mean by the term ‘trading’ (as opposed to the oh so righteous term ‘investing’), I suggest that you don’t discourage anyone from dipping a toe into trading.

What, really, is the diff between ‘trading’, ‘investing’, ‘speculating’ and ‘gambling’? All of them have this in common. All are bets about an unknowable future. In that sense, all of them are just gambling. If small money is being bet, then any of them is just a harmless hobby, not much different than fishing. In time, with practice and thought, fish can be brought to net, just as profits can be brought to an account.

What paper-trading mostly teaches is bad habits. The fills are unrealistic, and the losses don’t hurt. Only when actual money is on the line are the emotions engaged and decisions --based on one’s research-- matter.

Fortunately, in these days of fractional-share trading, the amount of money that needs to be put at risk can be tiny. Schwab’s slices are limited to shares of stocks in the SP500 index. But at IB, one can fractionally trade most stocks and ETFs. Fidelity offers a ‘basket shares’ program that’s easy to use. And there are other brokers where small bets can be made to gain the experience one needs to keep oneself out of trouble when larger sums are being put to work.



Six charts on a single, second monitor was too many things for me to respond to in real time. Even charts for four different tradables wasn’t really workable. So I spent the rest of the morning working off a single chart. Bought a couple of things and nearly as quickly got out, because the trades weren’t working, reminding me once again that I don’t really like day-trading except for futures contracts where trading for a single tick can be profitable. But that kind of trading really is just gambling unless one is running a serious, disciplined campaign, and I’m retired and looking for a hobby, not a job which is what trading quickly can become.

I am happy to report that the basket trade experiment I’m running at Fidelity is making money, but no better money than just buying the ETFs that track the industry group, i.e., the gold miner majors and minors, i.e., GDX and GDXJ. Do I like the easy access to buying/selling in fractional shares the the basket program allows. So I’m going to stick with it for a while longer.

I bought my first stock when I was ten, doubled my money in a couple of years and made the mistake of thinking that investing was easy. But I really, really, really don’t like doing the research and due-diligence that proper stock investing requires, nor do I like the hype that accompanies making bets on individual companies, most of whose products or services I never use. Hence, I couldn’t care less whether they survive or not, and I firmly believe most of them won’t survive due to emerging macro-economic factors, like the increasing irrelevance of the US in global markets. That’s a minority view. But that’s the bet I’m willing to make, that the US economy is weak and dying, hence, not worth risking money on.

So, what to trade? Currencies, commodities, and countries, right? So that’s my current plan other than to keep rolling a ton of T-bills until the US defaults and/or bank bail-ins are imposed, at which time, we’ll all be impoverished, and all this investing/trading stuff will be revealed as the house of cards it was.


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Pete and Charlie - thanks for your thoughtful replies. I have been “investing” for years, mainly holding index ETFs along with a few company stocks that interested me. These are the foundation of my accounts and I have done well over the years. I also have followed and tried many of the systems suggested in the Mechanical Investing forum and have done well with some of the screens for short periods of time.

The screens are like my garden. Some are perennials, some are annuals. They bloom for a period of time and then stop working. The perennials may come back in the future. The annuals bloom for a particular set of circumstances, but never bloom again.

These days, after retiring, I like to “gamble” with a very small percentage of my funds. I like to explore. Like Quill, I spend the majority of my time screening stocks. I have been using the Mechanical screens as a starting point and applying the techniques discussed in this forum to sift for companies that may be amenable to swing trading. I also use Schwab, TOS, Barchart, and Stockalyze to create custom screens.

I have watched and read many of the educational videos/articles on position sizing and stop loss setting. I haven’t yet settled on which techniques to use. However, due to some swing stock winners that changed to losers, I am convinced of my need to sharpen my risk management skills. Thus my question about risk management techniques you may use.

Thanks again to all on this forum. I am enjoying this swing trading experiment.

Good Profits to All,



I’ve never benefited from paper trading. It simply doesn’t reflect reality in any way, shape or form. Absent the pull and tug of greed and fear, it’s easy to behave rationally. You need to learn about how you will react in different scenarios, just as much as anything else. You can’t do that unless you’re really in it. At least, I can’t.

I don’t day trade, but I do trade options for pennies. Even that can keep you awake when a surprise positions zigs when it “should” have zagged. Other ppl aren’t effected psychologically. You just need to find out who you are…

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