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A belated hello, and my journey
Started:April 11th, 2012 (01:55 PM) by keymoo Views / Replies:5,529 / 23
Last Reply:October 12th, 2016 (06:19 AM) Attachments:0

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A belated hello, and my journey

Old April 12th, 2012, 10:55 AM   #11 (permalink)
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keymoo View Post
...I've noticed double tops in price in the past where the second top is on much lower volume, and the market just drops like a stone. Volume, for me, is an essential piece of information when trading futures....

Nice first post.

Just wanted to pick on one thing which is that volume divergence is obvious after the fact but at the time price is re-testing the high its never clear and even if there is volume divergence it doesn't tell you whether the market will drop away or just back-off and regroup for another push.

One further thing I would say is that trying to add things to your trading method can result in what Don Miller refers to as TMI.

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Old April 13th, 2012, 08:11 AM   #12 (permalink)
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ONE method

Hi keymoo

Thanks for sharing your story. I'm sure many in the forum have been through a similar journey in their path to become consistently profitable traders. Over the years I have been lucky enough to be exposed to a variety of methodologies from plain candlestick charting (what I call price action) to market/volume profile, volume footprint, VSA, cumulative delta etc. What I found is there is a huge overlap in terms of concepts and framework between these, however the terminology is different.

An example off the top off my head is relating market profile to price action trading. Market profile aficionados view the market as an auction process where price is either in balance (consolidating around value area) or out of balance (trending to find new value area). These traders will tend to watch levels that have either spent a lot of time trading at a particular price (acceptance areas) or single prints (rejection areas). This information is displayed as a vertical histogram with letters which each represent a 30min trading period. A price action trader using candlesticks on a smaller TF such as 5min will look at areas of tight consolidation where there is a lot of price bar overlap (acceptance areas) and swing highs / lows (rejection areas). Others examples between market structure and price action include - type of day, other timeframe participant (higher TF in price action), type of open etc, the list goes on. The key thing to understand is not which method is better, but which method displays the information in a way that makes sense to you. Every trader will have their own opinion on which method is superior based on their belief structure. However, the more you study, the more you will find examples such as the ones above, in terms of cross-over.

The point I am trying to make is that like most things in life, the simpler you can make trading the better. Ultimately your success as a trader will be down to how well you can execute your trading plan and I have found a indirect correlation between complexity in terms of number of stimuli and flawless execution, so I choose ONE method and break it down to its simplest form. Then become a MASTER at it - understand its nuances and behavior as well as you can. Although I have studied and like to understand different approaches and how different traders look at the market to see how they correlate, ultimately I don't combine multiple methods. For me, having studied many over the years, I decided to trade 1 market on 1 timeframe displayed as a candlestick chart with ONE indicator (a 20ema), as it fitted my beliefs.

With regards to adding VSA principles to price action, I personally didn't find it gave me an edge. Although many will disagree, I found little edge in adding volume information to price action. For me, the times when volume is most important is during breakouts and climaxes, when volume tends to spike. This can give clues as to the potential success / failure of the move, however I didn't find it gave me enough of an edge to warrant adding that extra layer of information, as I can always just click on the relevant bars to see volume information on NT if I need to.

My advice would be to find ONE method that resonates with you and spend as much time as you can becoming acquainted to it. The reason so few make it in this business is they fail to do the work required - simple as that. They get sidetracked as they become frustrated and disheartened from having losses in the market. Rather than working on themselves and sticking with ONE method, they jump around looking for the magic bullet. Be prepared to dedicate enough time and money, along with hard work to ONE method and you stand a reasonable chance. If you study psychology, position sizing, technical analysis, business planning etc, you only need to look at a few of the top educators to see the amount of work this entails.

Good luck on your journey and I wish you much success, enjoyment, prosperity and fulfilment from this business
JJ

Trading is: Having the KNOWLEDGE to know when the odds are in my favour, having the PATIENCE to wait for that moment, then having the DISCIPLINE to handle the trade properly when it goes in my favour and properly when it goes against me
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Old April 16th, 2012, 08:51 AM   #13 (permalink)
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Thanks for the informative reply JJ. I do agree with your statement that most methods of reading the charts convey similar information but in different ways. I am beginning to notice that indicator based systems give off so many false signals to become almost useless. So, with this in mind I am focusing my efforts on Al Brooks and Wyckoff. I have found volume to be useful in my trading especially in trends, I will also keep an EMA on my charts as a visual reference aid, not a trading signal generator. I am also going to broaden my trading education my studying in depth the "classics" so that I may know what other market participants may be thinking. I have already completed some of this by reading Edwards & Magee and Martin Pring.

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Old April 16th, 2012, 11:02 AM   #14 (permalink)
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From what I see, indicators, support and resistance, price action, and divergence produce a 33% success rate over time. Sure they can enjoy periods of better performance but that is relatively short lived. Obviously my statement is very general in nature and have not tested everything in existence. However, I believe my comment is true more times than not. So with that in mind I have come to believe that in order to be successful I must select a market that has large winners in order to make any money. Again, my comments are very general in nature and someone will most likely take exception.

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Old April 16th, 2012, 11:19 AM   #15 (permalink)
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MWinfrey View Post
From what I see, indicators, support and resistance, price action, and divergence produce a 33% success rate over time.

That's wonderful. So all you have to do is to reverse them, and you have a 66% success rate.

"...the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader." - Mark Douglas
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Old April 16th, 2012, 12:43 PM   #16 (permalink)
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MWinfrey View Post
So with that in mind I have come to believe that in order to be successful I must select a market that has large winners in order to make any money.

A market like, hmmm let me think, Crude Oil? ;-) I don't think I would survive long on that market, I'll leave that one to the pros.

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Old April 16th, 2012, 12:45 PM   #17 (permalink)
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keymoo View Post
A market like, hmmm let me think, Crude Oil? ;-) I don't think I would survive long on that market, I'll leave that one to the pros.

I see. So in other words, other markets are not traded by the pros.

"...the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader." - Mark Douglas
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Old April 16th, 2012, 01:21 PM   #18 (permalink)
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That's wonderful. So all you have to do is to reverse them, and you have a 66% success rate.

But of course.......not. You're a funny guy.

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Old April 16th, 2012, 04:47 PM   #19 (permalink)
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Hi Keymoo,

Thanks for your informative post...I've been down that road too! As a matter of interest what markets do you trade?

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Old April 16th, 2012, 05:46 PM   #20 (permalink)
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RabC View Post
Hi Keymoo,

Thanks for your informative post...I've been down that road too! As a matter of interest what markets do you trade?

I have pretty much traded everything going except stocks and options. I am now focusing on EURUSD during the European morning and the TF during the US morning, or maybe the ES. Just two markets right now and only one at a time. I post my trades on my blog, click my home page icon if you're interested.

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