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Just thought I’d check in and share some thoughts on trading. One of the main things that has helped me improve in the last few years is understanding that you must learn to recognize the prevailing market conditions and use a strategy that works in those conditions. Many traders don’t understand this. I used to use one major type of setup and go for a particular number of ticks , like maybe 20 or 30. The problem is, some days the market isn’t giving the type of volatility where bigger targets are easy to hit.
Some days, there are very powerful, high volume moves being made. On those days, much bigger targets make sense. Trade management also has to be different than on a low volume day. On some of these strong days, I might stay in a trade until a swing high or low is taken out..or stay in until my 20 or 30 EMA is breached. I never used to do that, so I would never have those big winning days. Those days are what compensate for the inevitable losing days. Some people seem to think that they won’t have losing days. Most likely they will.
On the volatile days, price will often break through support and resistance levels. These are days where you trade with the flow and strength of the market. On a weak, low volume day, the opposite occurs. Price tends to fail or at least bounce off lots of s/r..even little price swings formed in real time. My mistake was using the same trade techniques as I did on the strong days. What would happen is that price would just bounce off these levels and most all my trades would get stopped out. I guess I’m a little slow because it took me a while to realize that I just needed to wait for the little swings and support/resistance areas to get hit, and then play little reversal scalps. On these I just look for about 10 to 12 ticks. You just want to catch that little bounce off the levels. If I’m wrong, my stops aren’t very big. Now, while 10 ticks on something like NQ seems small…you can nail a lot of these and end up with a 50 tick day. I now use this technique in the afternoon session of the Equities, when volume is lower. Just reversing off the price levels. I will probably do a video soon showing exactly how I do it. So, think of the big trade winners as knockout punches and these little scalps as jabs. They add up!
Now a day can seem like nothing is happening, then all of a sudden the market explodes..usually because of some news that just came out. (that may be not have been expected.) So..I’m always watching any changes in momentum and volatility. I can eyeball that without needing any indicators. The bottom line is..trading is a bit like Golf. If you are someone who always hits a high ball, you’re fine when the wind is at your back. But when the wind is blowing in your face, you need to punch the ball low into the wind or else your ball will go nowhere. Also, you need to know how to play different shots from different conditions like sand trap shots. In Trading, you need to understand the conditions you are in, and adjust your strategy to compensate for those conditions.
Hope everyone has a great New Year and wishing everyone great trading for 2020.
Thank you. This kind of came about from reviewing lots of trades the last 6 months on video and on the charts. Can't tell you how many times I'd be up 10-12 ticks, and then they would turn around and reverse.. Don't know if that's the movement the algos are doing..but if you can't beat em...join them.
Thank you. I used to have this idea that if one didn't catch a large percentage of a given move, then it wasn't "good" trading. You had to somehow endure being up a lot on one trade and hold on during all the stalls, the shakeouts, the pullbacks.. and patiently wait for it to hit some big target. I don't worry about that anymore. There are many ways to go about this.
