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No Ifs or Buts, Just Observe and Trade
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No Ifs or Buts, Just Observe and Trade

  #1 (permalink)
Market Wizard
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No Ifs or Buts, Just Observe and Trade

Here is my disclaimer that I read before I trade:

Trading at best is a 50/50 proposition and has enough uncertainties of its own, especially nowadays that the market behavior is as unpredictable as ever.

All the gurus, legit and phony, self-proclaimed, and those driven by their readers to actually start believing they are gurus predict the markets using so many caveats like "if this happens and that happens, then this should happen but if that happens then this may happen and that might happen. Is the outcome of their analysis any better than a coin toss, just adding further to the the uncertainties.

Aside from scalping that no one has come forward to show his trophy won for that style of trading, the markets respond mostly to the following 3 factors in today's global connectivity and have little to do with anything else, These are:

. Seasonality events, for those commodities that are cyclical like agricultural and interest rate related products
. Geopolitical events, specially for oil, minerals, and currencies
. Natural events, applies to most everything depending on severity and when or where they happen

Markets are traded because of supply and demand, anytime this balance is disturbed prices move until there is balance - EC 101.

So, forget about the perceived rules and predictions and prophesies by the so called gurus and those who think they know better than what your common sense tells you. Volume, market profile, psychology, levels, are all meaningless since the results of any trade you place would be based on what happens in the future not based on what happened in the past. The current price is all inclusive and is the only thing that matters. You move with the price and stop with the price until it starts moving again.

So, instead of trading based on a bunch of ifs, buts, should, would, may, and might just shut up and trade by making your trading decision based on what you observe, your intuition, your common sense and act upon that. The most important is to recognize and have a plan for your escape route when you are wrong. The thieves have a escape plan before they rob the bank.

In trading, you can only predict your reaction to whatever market action might be. ("might" is not a caveat here).

Trade what you see not what you guess(or guessed for you).

Cheers!

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  #3 (permalink)
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aligator View Post
So, forget about the perceived rules and predictions and prophesies by the so called gurus and those who think they know better than what your common sense tells you. Volume, market profile, psychology, levels, are all meaningless

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So, instead of trading based on a bunch of ifs, buts, should, would, may, and might just shut up and trade by making your trading decision based on what you observe, your intuition, your common sense

I am all for being a discretionary trader.

But you are advocating that trade decisions should not be made on Volume, Market Profile, "Levels" (Support/Resistance) ... makes no sense.

I already know you believe Psychology has no place in trading (based on your other thread). So I am sure that you have never not followed one of your rules, never not executed precisely as your plan laid out, never maid any type of emotional mistake, never had any type of indecision, etc - because all of those would be psychological responses, which if I've understood your threads - you do not believe in.

I write this post just to try to get more details from you. As I said in your other thread, I think that there is more similarity than not between what you and I believe about trading. It's just that you (and a few others) don't like to use the word psychology, where I do.

With regards to volume, profile, and support/resistance, well like everything there is no simple answer, no right/wrong, no black/white. I've been saying this for a long, long time - it doesn't matter if you exchange Profile for CCI or a moving average, if you try to turn it into a black/white right/wrong concrete yes/no proposition, green/red, etc etc, then it will never work.

You can look at my old thread:
https://futures.io/traders-hideout/7364-random-line-theory.html

I demonstrated how easy it is to assign value, or worse - predictive value - to a line that was generated randomly. You can lump a lot of things into this category, whether they be price action, trend lines, profile, etc - because all of them are based on context, and there is an element of bias with every decision we make. The key is not to discard all trendlines, price action, profiles, support/resistance or etc, but instead to try to work on being aware of the bias and other psychological impacts of how the mind works, learn from past behavior and make smarter decisions in the future.

Profile makes a lot more sense to me than trading a random line, but they are similar in many ways. Whether a random line or a value area generated by profile, but simply provide trade locations for you to generate trade ideas from. In other words, they provide a way to frame the market. Every trade decision you execute is a result of some sort of bias which you have formed about the way you have read or perceived a chart.

At some point, your research and analysis would hopefully lead you to clearly find that Profile works better than a random line for these trade locations. While it is easy for me to say that Profile makes a lot more sense than a random line, trading is a personal thing. Profile may make no sense to you, just as psychology apparently doesn't. You cannot use something and have the necessary confidence in it (a psychological component) if you do not understand it. So you may instead use some other methodology or indicator as a means to frame the market and provide the context necessary to form a bias and trade idea.

It is not enough to simply will yourself into trading success or will yourself into following some sort of plan or rule book. There is a psychological component. This is obvious to anyone reading all the journals on futures.io (formerly BMT) as I do.

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  #4 (permalink)
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Big Mike View Post

But you are advocating that trade decisions should not be made on Volume, Market Profile, "Levels" (Support/Resistance) ... makes no sense.
.
.
Profile makes a lot more sense to me than trading a random line, but they are similar in many ways. Whether a random line or a value area generated by profile, but simply provide trade locations for you to generate trade ideas from. In other words, they provide a way to frame the market. Every trade decision you execute is a result of some sort of bias which you have formed about the way you have read or perceived a chart.

At the beginning I said this is MY disclaimer. I am not advocating anything. I also said "scalping aside." What I really said was that one can only make profitable trades based on what happens in the future not the past actions of the market. S/Rs are there to be violated. The following screenshot is your Tweet example of the monthly AAPL market profile next to a simple monthly bar chart. Can anyone point out information on the Profile chart that is not already in bar chart and that would hold true for initiating a profitable trade a month from today? That is my point. Yes you can frame what happened in the past but when it comes to extrapolating into the future everybody is using all those if, may, might, should, would, etc. caveats. Because they are talking about things that they have no confidence in. Thus, the psychology of no confidence and the need for a "professional".


Quoting 
I already know you believe Psychology has no place in trading (based on your other thread). So I am sure that you have never not followed one of your rules, never not executed precisely as your plan laid out, never maid any type of emotional mistake, never had any type of indecision, etc - because all of those would be psychological responses, which if I've understood your threads - you do not believe in.

I have never said none of the things that you are "sure" of did not happen to me. I have done all the mistake average person does and perhaps more. Without repeating too much, what I said regarding trading psychology was:

" If one has acquired the skills, education, mental, physical, and resource capabilities demanded for a specific job he will most likely be successful and there is no need for a "professional" when he makes a mistake. He knows how to fix things."

But that is a big if and has nothing to do with medical psychology.


Quoting 
I write this post just to try to get more details from you. As I said in your other thread, I think that there is more similarity than not between what you and I believe about trading. It's just that you (and a few others) don't like to use the word psychology, where I do.

Of course we are different, otherwise we are all robots from the same assembly line. Trading psychology IMO is like any other business psychology and it all boils down to having confidence in what a trader does which again, I hate to repeat but, it boils down to the big IF statement above. What follows that big IF, the word "Acquired", is the difference between having confidence and not having confidence.


Quoting 
I demonstrated how easy it is to assign value, or worse - predictive value - to a line that was generated randomly. You can lump a lot of things into this category, whether they be price action, trend lines, profile, etc - because all of them are based on context, and there is an element of bias with every decision we make. The key is not to discard all trendlines, price action, profiles, support/resistance or etc, but instead to try to work on being aware of the bias and other psychological impacts of how the mind works, learn from past behavior and make smarter decisions in the future.

I am not ignorant and have traded since early 1970s and have seen it all. I think I understand Random walk theory also, my post graduate thesis at UF was on developing statistical models to predict Radon emanation and flux from reclaimed phosphate mines being used for urban development. Plus, several projects on probabilistic and statistical treatment of nuclear cross sections and reactor core design. Trading has been my hobby all this time, from calculating moving averages with a slide rule to the current technology, because I had become a technical analysis junkie.

However, there is a difference, my statistical work dealt with variables that could easily be explained by the laws of physics at certain boundary conditions, unlike variables that make up the markets. That is why the mathematical models for the markets never hold true in short term trading. However the Newton's law of motion holds true universally. That is why I said "You move with the market and stop with the market until it moves again." If there is a hint here, is that most short term trading money is in price momentum trading and little else.


Quoting 
Profile may make no sense to you, just as psychology apparently doesn't. So you may instead use some other methodology or indicator as a means to frame the market and provide the context necessary to form a bias and trade idea.

Hopefully, the above statement is not presumptuous and is meant as a general statement. Market profile does not involve any calculations needing education beyond high school to understand it. It is just another way to chart prices in relation to volume.

There is a need for bias when there is uncertainty. Trading in the direction of the price movement needs no bias. Stay with the price until it slows down, and jump out fast if the price pulls a trick on you.


Quoting 
It is not enough to simply will yourself into trading success or will yourself into following some sort of plan or rule book. There is a psychological component. This is obvious to anyone reading all the journals on futures.io (formerly BMT) as I do.

My simple response without pontification is that the psychological component is nothing but lack of confidence which has to do with the word "Acquired" in the BIG IF Statement above.

Cheers!

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aligator View Post
I am not ignorant and have traded since early 1970s and have seen it all. I think I understand Random walk theory also, my post graduate thesis at UF was on developing statistical models to predict Radon emanation and flux from reclaimed phosphate mines being used for urban development. Plus, several projects on probabilistic and statistical treatment of nuclear cross sections and reactor core design. Trading has been my hobby all this time, from calculating moving averages with a slide rule to the current technology, because I had become a technical analysis junkie.

Slightly off topic, so I apologize @Big Mike , but as it was brought up and I am a CE from UF that now designs developments around phosphate mines and borrow pits, is there problems with them and radon. Or did you just observe background noise of radon.

Back on topic... I think you will find if, may, should, caveats everywhere you look. Your example of trading with momentum is taking a short term bias in the move while also leaving a caveat to jump out if price stalls or plays a trick on you. Not saying the method is wrong, I just think that every method has a general bias and a if statement to get in or out. I know in my profession I present everything with math with a bias that it will work but caveat the hell out of it with shoulds and mays cause you can't predict everything.

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My 2 Cents-MP is a indicator no more no less, Confidence is a must IMO, I like this ie. How many men will walk up to the most beautiful woman in a room of hundreds and speak to her? Psychology plays into the picture with the Algos eating other algos and who has the deeper pockets(who will assume more risk)bc in the end we know where its going,but its path to get there is the difficult part! Hence this is my search for my best strategy, the one that will yield more returns

TRADE WHAT YOU SEE!!!!!!!!! dont trade what you believe or trade in hindsight of indis just my opinion

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BobbyJ View Post
Slightly off topic, so I apologize @Big Mike is there problems with them and radon. Or did you just observe background noise of radon

Elevated levels of background Radon in disturbed phosphate mines has been an environmental concern. We did extensive sampling and modeling.


Quoting 
...trading with momentum is taking a short term bias in the move while also leaving a caveat to jump out if price stalls or plays a trick on you. Not saying the method is wrong, I just think that every method has a general bias and a if statement to get in or out. I know in my profession I present everything with math with a bias that it will work but caveat the hell out of it with shoulds and mays cause you can't predict everything.

In math we know 2 plus 2 is 4, and will never say if it equals 5 or 3 then I should do this. The bias in designing a bridge is based on known facts such as material behavior, loading requirements, environmental impacts, ,etc. then one would add a margin of safety for unknowns. But, you know its orientation and what is going to look like when it is finished. There is no guessing which way the traffic will flow, you already know.

I am not defending or against a certain trading method. All I am saying is to use a method that has a chance of success given that no one can tell what the price will do in the future.

Of course there is bias in everything around us, I am reminded of that when I roll off the bed at night with a downward bias but with painful certainty. However, the outcome of a dice roll is always uncertain, but if you load the dice it always rolls a 7.

A hobo always knew the outcome when he jumped on a train that was moving, it could be a short ride or a long one all the way to the Mason-Dickson line, he has already accepted the risk of getting caught. There was no bias, he did not have the option to ride a motionless train. So, trading the price momentum is an example of not needing to know what happened in the past and one can jump off when the conductor shows up. The risk is a broken leg and not a bias, but the neck is saved.

Enough levity for the day, can hang in there forever with no bias.

Cheer!

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