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Interesting. Casinos are designed to have the odds against you. You have to lose. Short term trading is only hard for people because they don't really understand how the market works, and they are given things like indicators that work against them, and they trade the wrong things. In Forex, often times, the broker is the market maker. That is a conflict of interest. In futures trading, the broker is not the market maker. There are many market makers that make the market liquidity, and they have no idea who you are. Markets move through long cycles of going up to being overvalued, and then, falling back down to being undervalued. The path to each is very rough, especially on the short term. But, on the short term, if you are not following the trend, you will get wiped out. You need to work on becoming a better trend follower and never give up on it. Most indicators were designed to trade countertrend, like the stochastic and rsi, and candlestick patterns. They lead people the wrong direction. If you trade countertrend on short term trading you will get wiped out. If you become a really good trend follower, trade early into trends, find the optimum way to trade with trend, become very picky about the trades you pick, and so, you don't trade too much, and, you don't have too tight of a stop loss, you will win most of your trades.
There are several things in your post I disagree with.
Trend following is only one way to trade. You may have meant trade in the direction of the trend, which is probably more relevant, but still not an absolute.
There are more than one way to use indicators. Take RSI, for example. Two period RSI has been popularised by Connors as the tool for trading regression to the mean. On the other hand, fifty period RSI is a perfect trend following indicator - bullish when it crosses above 50 and vice versa. Bollinger bands are another example.
Your statement If you become a really good trend follower, trade early into trends, find the optimum way to trade with trend, become very picky about the trades you pick, and so, you don't trade too much, and, you don't have too tight of a stop loss, you will win most of your trades. Winning rate is not the decisive statistic of a strategy. In fact, most trend following system have a low winning percentage. It cannot be considered separately from the RR ratio.
Finally, about this: Short term trading is only hard for people because they don't really understand how the market works, and they are given things like indicators that work against them, and they trade the wrong things. I wish it was that simple...
I like your joker picture. I guess I'm trying to say that people make it too complicated. They want to make a lot of money fast, so they trade a lot. They feel pressure. If they just had a goal of say, trading 10 or 15 times a month and finding really good times to trade. They tend to have a small stop loss placed at support or resistance, like they can time when a pullback will continue. Then, they get their stop loss hit over and over. They are told that they should lose all the time, and get good at losing. But, they lose so much that they lose their account. They then think they are no good at following the trend. So, they start to countertrend trade. They are pretty much guaranteed to lose countertrend trading. They have to learn this hard way. Because markets move in long term swings, not in the short term, there is no overbought or oversold on the intraday level. There is only overbought and oversold on a very long term basis. I realize that a lot of why the statistics are so bad is because, people start 400 dollar accounts and trade full lots of mini contracts. You can't win with that kind of risk. You have take small risk for your account size, and be able to take a reasonable hit, showing that the trade was truly wrong. I went all of last year never losing a short term trade in NQ futures. I was trading a mini contract in the NQ futures. I kept it simple. I looked for when the market started to make new highs. I trade on corrections. I waited for a reasonable correction. I had a big enough account size to account for trading that size. I didn't have a stop loss on a support. The most draw down I had was about 200 dollars all year. I had a target to trade this many times per month. I wanted to make this much per month. I didn't have big dreams. I didn't care if I made a lot of money. If I made a couple of percent a month, that was great. I wanted to only find the best entries. When a trade went straight for me, I tried to let it run. When it had a harder time, and too 200 dollars draw down, I waited for it to come back and took it out around breakeven. Sometimes, I trade based on the direction of the initial range breakout. I didn't use any indicators. Sometimes, I saw the correction with a fibonacci retracement level in my mind. I waited to see strength from the buyers off the correction. I avoided news events. Anyway, I believe its possible for people to do really well trend trading. I believe its not possible to do anything trading against the trend. They are told this is not true. They can be successful countertrend trading. But no one ever is. Really, I'd rather be long term investing. That's the way I make most of my money trading, and with anything else I do, like options or short term futures, I just add the profits over into my long term investing. In that area, I buy with no long term risk, and collect dividends. I buy stocks into maximum fear. I drop out on when the market becomes expensive. In other words, in that kind of trading, I'm trading against the long term swings in the market that happen when the market gets cheap or expensive. Those don't happen on a daily basis. They happen over months or years. Now, what I said about there being no overbought is true on an intraday basis. But, I think the market can get expensive or cheap on a short term basis. I have a method to see whether I think its expensive or cheap that I use. If the NQ futures are 200 dollars above from the 200 sma on the 5 minute chart, it is expensive. I don't want to buy into that. Over time, the markets will run back to the 200 sma. However, it certainly may not happen today. So, if I want to trade that, I use options, in the TQQQ. I buy a limited amount, with low risk. I hold them. I don't get scared and shut them off. When that market makes its way back down to around the 200 sma, I shut them off. Sometimes, that makes a lot. Sometimes, it could even take a small loss. But, most of the time, it makes money. If you try that in day trading, and can't hold overnight, you may make some money one day. But, its likely you will get wiped out the next. Most people are trying to trade countertrend. They make a little money for a while, like maybe a month. They then get into a wipe out trade, and they hope it will come back. They lose their account. It may not be impossible for someone to make money countertrend in day trading, but is so difficult, my guess is, no one has ever succeeded doing it.
Then we agree. It may be gambling but the gambler with the edge comes out ahead over time.
As for indicators, they indicate what has happened in the past.
A visually pleasing representation of what price has done.
Price moves first, then the indicator.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
I agree. At least, though, trading is a form of gambling where you can make money, year after year after year. In a casino, if you keep playing, you lose, period. The high probability way to make money in markets is long term. However, not picking individual stocks, but trading in something like an index etf or a high dividend etf, so that you have built in diversification. In the end, we can always expect the stock market to go up, forever. Not only that, it will exponentialize its movement over time. We will see a 30000 Nasdaq, a 100000 Nasdaq, most likely in our lifetimes. This will make for some big money from long term investors who don't take long term risk like trading on margin, but simply own shares and collect dividends. There will also be crashes. But, they look like little corrections on the monthly chart. Short term trading is difficult for people to take, psychologically. It can feel like playing high stake roulette. But, people tend to be trying to take too much out of it. If they could make 50 percent a year, year after year, they could really make a lot of money on their money. That's only a few percent a month. It doesn't take many trades. That makes you one of the best traders in the world. They live with unrealistic expectations. They keep trying to beat the system, but the system beats them. If they make money year after year, they are a professional trader, from my opinion. If they lose money, they are an amateur trader that pays to trade and makes no money. Retail trader is an outdated term that tried to belittle smaller traders making them feel like they couldn't succeed. If you think you're going to fail, you probably will. Anyway, its tough to make money short term trading. Especially, when you have too high of expectations, or pressure, like you think you need to make a living from it. If you go about just thinking that you want to build more capital over time from all your various trading endeavors, you will do much better. You are not trying to get rich quick. That doesn't happen. You get rich slow, like all the other rich people. If you want to get really rich, you'll have to pass it down through the generations, and while you will not be rich, you're offspring will be really rich. Then, they will get spoiled and wonder why poor people don't pull themselves up by their own bootstraps, and say, what happened to all their money. Why doesn't their great grandfather just invest in stocks? Anyway, just kidding a bit there. Nice conversation. Have a good one guys.
Trading, Blackjack & Poker are ALL gambling. You are betting on an outcome that you have no control over.
In all 3 games, if you control your risk and manage your money well and only place it at risk when the odds favor you, over time you WILL make money. I have played all 3 games and know this to be true.
In trading they call it an "edge". In poker, it is called "pot odds". In Blackjack, it is called "the count". But it amounts to the same thing: putting your money in play ONLY when the odds favor you.
Persistence! Nothing in the world can take the place of persistence.
Talent will not ... nothing is more common than unsuccessful men with talent.
Genius will not ... Unrewarded genius is almost a proverb.
Education will not ... The world is full of educated derelicts.
Persistence and determination alone are omnipotent! Calvin Coolidge
I have very little experience and that is demo only, there is no reason why my thoughts or experiences will be of much to interest to anyone here but I offer them anyway so you can see the early thoughts of someone who does not know much but has read a few books and has a couple of friends who trade successfully.
So far, I think -
1. Indicators can be useful for quickly seeing whether there is a decent trend in different time frames
2. I do not really trust indicators for entering trades, maybe also not for exiting them but less sure of that part
3. I prefer the indicators (minority, I think?) that are not really based on or derived from moving averages
4. I am instinctively rather mistrustful of indicators and instinctively wish to minimize their use
5. I am interested in support and resistance and less dismissive of indicators that help to show it, though I am aware S/R is seen mostly from swings high/low by prices, rather than by indicators (there is perhaps some overlap?)
6. Different things suit different people
These are my early thoughts, for what they are worth (maybe nothing). We may all laugh at them and return to the thread a few weeks or months later and see if I changed my mind about any/many of them?
i think a lot depends on your trading timeframe. if you are a very short term trader/daytrader, then the indicators that you find on most trading software is only useful when looking at historical charts and lag in real time. those indicators might work with swing trading over several days or weeks. sort of like trading long in a bull market ... LOL
I think your thoughts are fine, especially this last one.
Over the last several years on this forum, I have read a lot of different opinions. Quite a few go something like, "If you do x, that's no good. There's no value in x, only in y. You have to do y." (I've done something like that too. ) I have also seen a very few traders who have done well with x, and with y, and even with z. Most who try any technique, no matter what it is and how great it sounds, typically change because it doesn't work for them. Some drop out. Some tell us about the accounts they have blown up, some simply stop posting. A few succeed, and while a few things probably never work, the successful people may use, between them, an amazing number of totally different things, whether x's, y's or z's.. How is this possible? Maybe because it's not the "x", but the person who is trading that matters the most.
I don't say this to be discouraging, and certainly not to plug my particular "x". I don't think that just anything will work, but quite a few will. What does work, consistently, includes things like the trader being objective about that is actually happening (not what you want or hope), keeping control of losses, and basically managing your own emotional reactions -- if someone does those things, then they may find an "x" that will work for them. It may not be the same as someone else's.
So, do you need the right "x"? Not really, at least not by itself. Do you need the right mindset, the right psychology, the right attitude? Yes. A good x is good, and you will need one, but the thing that is most important is to have your head screwed on straight when there is money involved, which, to put it bluntly, is the thing we all have trouble with when it matters most. If you have a good method, an "x", you still have to put it to use and keep your application of it rational, when price starts to go against you and your survival instincts want to take over (and you kind of go crazy, as we all tend to do.)
Good luck with your trading. Once you have enough confidence in whatever your x is, I suggest taking a step up from pure no-risk sim to something that will put you face-to-face with the risk of trading. This can be dangerous advice, because it involves exposure to loss, but that is an essential part of what trading is about. This could involve using the micro contracts, which have very small money amounts, or trying one of the evaluation type funding programs, or simply trading live with just one contract (only use one contract anyway, in all cases as you start) -- but, when you feel ready, realize that getting off sim is a step that needs to be taken. And expect losses. They are what tell you what you need to change to get better. So don't put more at risk than you can afford to and still be comfortable with whatever comes.
Again, good luck.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
) I have also seen a very few traders who have done well with x, and with y, and even with z. Most who try any technique, no matter what it is and how great it sounds, typically change because it doesn't work for them. Some drop out. Some tell us about the accounts they have blown up, some simply stop posting. A few succeed, and while a few things probably never work, the successful people may use, between them, an amazing number of totally different things, whether x's, y's or z's.. How is this possible? Maybe because it's not the "x", but the person who is trading that matters the most.