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Best way to learn in a high volatile environment
Started:November 14th, 2016 (05:10 PM) by SoftSoap Views / Replies:935 / 35
Last Reply:November 16th, 2016 (09:21 PM) Attachments:2

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Best way to learn in a high volatile environment

Old November 15th, 2016, 11:18 PM   #31 (permalink)
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@SoftSoap

You began full time trading during one of the longest stretches of low volatility I can remember- is this a blessing or a curse? I don't know the answer but I do know that you have to learn to recognize sings of increased volatility and you need to be looking for them every single day or they will find you- what I mean is, don't ever get complacent with the current normal. Look at today- we chopped all day and then in about 8 minutes it all changed. One needed to understand that it changed and needed to know how to react immediately. These types of days are far more "regular" than you are used to and you are 100% correct in that if you want to stay in this game, you better learn how to behave given what's unfolding. (Trading known upcoming news events is a calculated gamble, separate from day to day trading- no one can tell anyone the " best" way to deal with those so I'm passing on commenting there).

Every minute of every day I am asking myself who is on the playing field. (Locals or OTF) Getting this right is better than half the battle as it sets your expectations. I personally do my best when days have big directional volatility but on occasion I will get a shock early in the session. I'll be expecting little volatility only to see a fade go really deep really quickly or I'll load up only to find the markets not going anywhere and I'm stuck with excess inventory. This is unavoidable but what you do once you recognize the condition at present will make or break you. If your trades are just not working, you have likely misjudged the day type- change what you are doing and when something sticks, press it until it quits working for you. If you are getting tagged on every retracement only to see the direction continue- add to your trade on the next one and see how it feels. If the market races through your first target, pull your limit orders on your second target cuz it's likely to continue to build steam. Never ever ever never continue to try the same trades until a loss limit is hit!!! They are not working for a reason- change your approach until you make something work.

I'm sure I didn't answer all your questions and I didn't get a chance to read this whole thread but saw I was mentioned. Feel free to ask more questions as your post was long and had many parts and I'm old and can't remember

*** BTW- this is exactly why guys trading with fixed point targets and set risk per entry never get very far ahead. It's also precisely why indicators don't "work" as one can't expand an expected future volatility of a stochastic calculation based on the last 14 bars on thier chart.


Last edited by Inletcap; November 15th, 2016 at 11:35 PM.
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Old November 16th, 2016, 07:37 AM   #32 (permalink)
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Inletcap View Post
*** BTW- this is exactly why guys trading with fixed point targets and set risk per entry never get very far ahead. It's also precisely why indicators don't "work" as one can't expand an expected future volatility of a stochastic calculation based on the last 14 bars on thier chart.

Shorter @Inletcap: the market changes.

(It's totally hilarious that I can say something shorter than someone else. I thought I would just take the opportunity, rare as it is. )

But that's a very good post, and the part I quoted is extremely good.

Bob.

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Old November 16th, 2016, 09:16 AM   #33 (permalink)
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Shorter @Inletcap: the market changes.

(It's totally hilarious that I can say something shorter than someone else. I thought I would just take the opportunity, rare as it is. )

But that's a very good post, and the part I quoted is extremely good.

Bob.

You did it Bob- A three word summary post!!!!!! The add on at the end (what you quote) seemed like it needed to be there for deeper thought even though it was not part of the question...

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Old November 16th, 2016, 06:17 PM   #34 (permalink)
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SoftSoap View Post
I'm adding this to my routine psychology prep, I don't have anything in there about over trading.

- The best trades set up and come to you, there's no need to chase them. [I've personally gotten in to more trouble in the markets forcing a trade, feeling I had to get in there and trade.]


Funny you mention this because you've said this to me on the ES thread on more than one occasion, it is actually the reason I tagged you in here

This one is a bit of a struggle for me. My philosophy has always been that if you can figure out why something is the way it is, you will understand it a lot better. So are you saying to only forget the 'why' during trading hours, and then figure it out later? or to drop it altogether?





What would you recommend as things to learn so that you can have a good idea of what 'the other guy' is doing? Wouldn't you need to know the 'why' to be able to do it properly?



Thank you for sharing your experience!

The why doesn't really matter, it's the when and where in the markets that are important. Again, it's natural to ask why something is happening as we all want to logically deduce what is happening in our environment.

That's completely normal mental behavior, but (IMO) it doesn't really apply to the financial markets. I don't care what the ____ # is, all I care is that it moves the market and provides me an opportunity to enter / exit, exit / enter and/or profit. Once you train yourself to look at it that way the noise is filtered out and the focus becomes clearer.

As for the "Other Guy" that was a loosely used term for when will the other market participants (whomever or whatever "they" may be) make a move or adjustment? When will they cover, take profits, stop themselves out or add to their position?

The way I interpreted what Miller was saying is always be thinking that the market is very dynamic and we have to not only focus on our own position(s) and P/L, but what the market is telling us. I view it as a feedback loop that we must pay attention to and respect.

When the tide changes and the Jellies must adjust will [you or they] be the Jelly swimming against the tide only to tire out and fall to predators? I hope that doesn't sound to much like talking in riddles, but if you visualize the shifting of the ocean and tides, it should give you a mental picture of what's happening beneath the surface.

You miss 100% of the shots you don't take. - Wayne Gretsky
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Old November 16th, 2016, 09:15 PM   #35 (permalink)
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Inletcap View Post
@SoftSoap

You began full time trading during one of the longest stretches of low volatility I can remember- is this a blessing or a curse? I don't know the answer but I do know that you have to learn to recognize sings of increased volatility and you need to be looking for them every single day or they will find you- what I mean is, don't ever get complacent with the current normal. Look at today- we chopped all day and then in about 8 minutes it all changed. One needed to understand that it changed and needed to know how to react immediately. These types of days are far more "regular" than you are used to and you are 100% correct in that if you want to stay in this game, you better learn how to behave given what's unfolding. (Trading known upcoming news events is a calculated gamble, separate from day to day trading- no one can tell anyone the " best" way to deal with those so I'm passing on commenting there).

Every minute of every day I am asking myself who is on the playing field. (Locals or OTF) Getting this right is better than half the battle as it sets your expectations. I personally do my best when days have big directional volatility but on occasion I will get a shock early in the session. I'll be expecting little volatility only to see a fade go really deep really quickly or I'll load up only to find the markets not going anywhere and I'm stuck with excess inventory. This is unavoidable but what you do once you recognize the condition at present will make or break you. If your trades are just not working, you have likely misjudged the day type- change what you are doing and when something sticks, press it until it quits working for you. If you are getting tagged on every retracement only to see the direction continue- add to your trade on the next one and see how it feels. If the market races through your first target, pull your limit orders on your second target cuz it's likely to continue to build steam. Never ever ever never continue to try the same trades until a loss limit is hit!!! They are not working for a reason- change your approach until you make something work.

I'm sure I didn't answer all your questions and I didn't get a chance to read this whole thread but saw I was mentioned. Feel free to ask more questions as your post was long and had many parts and I'm old and can't remember

*** BTW- this is exactly why guys trading with fixed point targets and set risk per entry never get very far ahead. It's also precisely why indicators don't "work" as one can't expand an expected future volatility of a stochastic calculation based on the last 14 bars on thier chart.

Wow, that is really good advice. I can't say I'll be able to apply this all at once but I sure as hell will refer to this and try to apply it as much as possible.

I love the 'get down and get back up' mentality. I think sometimes I might take falls too harshly and expect that I won't fall with the same move ever again. But you are right that you have to keep changing until you won't get knocked down by a move.

Cheers!

Cheers!

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Old November 16th, 2016, 09:21 PM   #36 (permalink)
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CenFlo View Post
The why doesn't really matter, it's the when and where in the markets that are important. Again, it's natural to ask why something is happening as we all want to logically deduce what is happening in our environment.

That's completely normal mental behavior, but (IMO) it doesn't really apply to the financial markets. I don't care what the ____ # is, all I care is that it moves the market and provides me an opportunity to enter / exit, exit / enter and/or profit. Once you train yourself to look at it that way the noise is filtered out and the focus becomes clearer.

As for the "Other Guy" that was a loosely used term for when will the other market participants (whomever or whatever "they" may be) make a move or adjustment? When will they cover, take profits, stop themselves out or add to their position?

The way I interpreted what Miller was saying is always be thinking that the market is very dynamic and we have to not only focus on our own position(s) and P/L, but what the market is telling us. I view it as a feedback loop that we must pay attention to and respect.

When the tide changes and the Jellies must adjust will [you or they] be the Jelly swimming against the tide only to tire out and fall to predators? I hope that doesn't sound to much like talking in riddles, but if you visualize the shifting of the ocean and tides, it should give you a mental picture of what's happening beneath the surface.

Sounds like thinking about 'what the other guy' will do' is a fine art. I think I'll add this to the things I should ask myself during a trade (still a WIP). Although if I were to think about it right now, I don't know that I'd be able to answer it. But you'll never know unless you try right?

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