Open your DOM during normal market hours, and look at the inside bid and offer size, and look at the size one tick higher and lower. This is your answer. Should also note how often you observe a spread of more than 1 between the inside bid and offer, that will obviously be factored in.
The following user says Thank You to josh for this post:
I think psychology in trading is over-rated. The starter of this thread completely lucked out on one trade and made 9K and also brought back two nasty intraday drawdowns past 1K and turned them into lemonade. Good for him But he didn't start reaching for the psychology section of the library until he got the red hot poker for allowing a bottomless stop.
You don't need psychology to tell you to stop doing stupid things which never work mathematically over the long term. You need common sense and emotional maturity. If you have to start digging into Mommy/Daddy issues in this game, you're done. Go find a normal job where you don't get money taken from you for every little mistake you make.
I understand that you'll get warm fuzzies reading that stuff. But you're going to wind up thinking too deeply about something which is rooted far more in simple discovery of basic statistical and probability methods rather than attempting to open up a Pandora's Box of what makes you tick and reaching an epiphany.
I recently said this in another thread and it bears repeating. Most of you aren't any better than picking 30-50% winners in the long-term. If you are then you're most likely scalping your A off to get higher than this. [note: there's nothing wrong with scalping your A off just so you know it's a singles game, not a double, triple or home run game] . So if you're consistently below 50% winners, your solution to trading better is not necessarily to increase your winning pct, but to understand how to get better RR ratios *while* keeping your loss per trade fixed and low.
You can avoid digging into childhood memories of mean dogs (small Douglas Zone book joke) by not trying to mix your trading strategies in mid-stream. That is, you go for the single with the high pct win or you go for the bigger win knowing full well that your odds of winning are much lower what our threshold of negative human emotions can normally withstand.
Let me throw a curve ball in here while I'm on a baseball metaphor roll. If you trade multiple contracts and take half off at some point and let the other half "run" (whatever thay means), then you're really trading TWO systems in one account *at the same time*. I could have very well described two traders with separate accounts. The 1st one is a scalper, always exiting at a specific point and the 2nd one is allowing at least one market reaction to occur in search of greater rewards before exiting. Unless this is fully understood, then no wonder there is emotional conflict popping up sooner or later.
The main problem above, both from a math and emotional point of view is that you're constantly holding your largest risk at the point in the trade where you have the least evidence/confidence of its eventual success (i.e., the beginning...sound familiar to my first post on this forum?). If you're a "half-offer" then you're taking double hits when you're wrong no matter which trading hat you intended to wear. It's a pickle to be sure, but there's other solutions where losers are much smaller and winners can be much larger so your recovery factor is VERY high. This is where the majority of you should trade, given that you already know that scalping is not your forte.
I'm not trying to be mystical here. You simply need to emotionally accept that it is in your best interest to take a first entry sooner in a move than you're normally comfortable with and add as others see the obvious. This kind of trading does not need to take deep retraces to add or tolerate leverage going against you any more than a normal stop amount upon adding (what many of you would define as an add point, a typical swing high/low, is a common mistake which causes disinterest after a few attempts). Otherwise, you're better off going for all-in / all-out trades with 1.5 to 1.8 net RR ratios, trying to capture that 50% of the time in either trading ranges or within the price legs of a strong trend. Either way, both methods share the same theme: low tolerance for non-shallow, corrective moves.
[I have to stop here. My fingers are tired from tapping on this so -called "miracle device"...aka iPad]
Last edited by SteveH; June 24th, 2012 at 01:14 PM.
Reason: Added content
The following 6 users say Thank You to SteveH for this post:
Mathematically explain to me them why 90% of people cannot trade successful and among these are some of the most intelligent humans?
Explain to me why a trader can have a proven successful system, that thay have been given or developed them selfs. Back tested and proven....but still cannot follow a trade plan and follow simple rules?
" I will follow my rules, I will take my stops, I will be disciplined and i will work with the market....NOT AGAINST IT! Professional mind control is the key"
Last edited by greenr; June 24th, 2012 at 02:30 PM.
You do not define "successful", much less have stats based on an objective definition of the word to show that 10% are, and even then, you have no easy way to define "intelligent." In other words, your first sentence is based on anecdotes only, which means you really have no case.
Also, what proven successful system do you have with objectively defined rules? If you had such a thing, why in the world would you trust a person to trade it and not simply make it a bot? And if you have such a system, why not just trade it, and why would you sell it or give it away?
But this depends very much on the market on any given day, yes? And so what is your advice for deeper, more corrective moves, or generally when the market is not rocketing? Don't trade? Go all out and reverse and play it more as a range?
Your post here seems to focus only on risk management; however, as important as risk may be (probably most important), determining the entry as an "early" entry as you say requires more experience and market awareness than most possess. Further, it seems to run counter to your entire premise, which is to add to a market which is going one's direction. If one is doing this, isn't the last thing on his mind to get an "early" entry, which is by definition counter to current momentum?
Thanks for the post Steve, looking forward to your thoughts and reply.
Yes 10% is a vague figure, but it has been proven by most brokers....?
I don’t have hard evidence but this is a known fact
Intelligent means high end doctors and college professors
My words were purely a point, trading is 80% physiological. Some people just so happen to get bought up with the right mentality, but again very few
99% of people who i see trading, know how to trade and most are good traders. But they lack the self control and understanding due to physiological factors involved. BOT`s dont even come into this equation, a BOT trades a purely simple signal based strategies. They will never be able to trade like humans this is completely off topic.
Rules such as following a simple task like sticking to a daily stop loss, a determined stop loss per trade, max draw downs, waiting for trade triggers and sticking to limited trading times. If you need a shrink to trade then yes you are in the wrong business.......i never said you need a shrink. I am stating you need to understand the physiological bias naturally created in the human brain
This is why so many people fail in this business
Every professional on here that have been trading for over 5-10 years will tell you even to this day they have to keep on top of their physiological issues to keep them self’s on top of their game. In face i have just got back from New York were in meet some local commodities traders and they backed this up for me stating that trading is a mental mind game......"its obvious"
You can use all the statistics and probabilities you can think of, this will not make you a successful trader!
If it does you are very lucky and one of few or you were bought up by other professionals in this business that understand the mental mind state needed to be a trader