Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Watching a single market immersively and with intense focus allows you to absorb a few things that would otherwise be lost. Firstly, your creative side of the brain gets into work once its territory is fixed. Fixating on one market also gets your subsconscious to see the repetitions faster and it uncovers the subtleties that novices would’ve missed – all these clues that are missed by the herd form your edge. Importantly, like in school, continuity ensures that we relate to all the chain of previous things we have observed, noted and learnt by heart. And other skills improve, like I outlined before – the patience of waiting for setups, and your mind stays clearer.
I took the Second Break short at the EMA and it reached my target VERY quickly - dropped like a stone. However the market’s super-obliging mood made be a bit high.
On the next trade I shorted without a real setup and it was very frustrating to take a full 10 tick stop on what could’ve easily been a scratched trade. AND I also took this as a personal affront and immediately shorted again on my next trade when I should’ve been waiting – basically trying to vent ‘through the P&L’. This could actually happen again - it is such a seemingly set pattern that I keep ‘taking lessons’ but never actually learn! Atleast I have improved upon this escalating into a downward spiral / account blowout. Or so I hope. I am still short from 1.1260 for the past couple of days on my swing trade and have been carrying the position overnight.
Equities vertical ascent, 6E vertical descent is the play.
No matter what setup is setup (pun intended), remembering two things is very helpful:
- Trading is an art, never an exact science. Firstly the trading style must fit your personality, as a rough example - just like a shredder cannot play a classical guitar well.
- Overall Context is more important than the ‘setup’ or ‘rules’.
Here the issue is of subtlety. The moment you try to fit the ‘rules’ there comes a certain rigidity and a stiffness which makes you feel you cannot bend. However, nothing is really set in stone – everything is changing, the structure is undergoing change, the evaluation changes with the current ‘now’, now becomes the ‘just before’ and that is used to determine the possibilities. You cannot simply use a rule like bunch if dojis detected near EMA, enter! Thus, trade only when the conditions are fully supporting it, without a doubt (this does not mean 100% probability).
What happens when you scalp with the risk tightly controlled?
- If you consistently exit losers and keep taking valid trades then earning a 'salary' will not be a problem.
- You quickly realize that learning to recognize CONTEXT is important and your 'art' side of trading keeps getting better.
Is it an aggressive uptrend where you can go long at dicey double doji breaks?
- You realize that scalping is essentially no different from long-term investing - all timeframes are interchangeable, and smaller timeframes do not really mean easier risk control!
- You learn that staying out of trouble is much easier on your psyche than getting in a then massaging your way out.
- You realize that there is no "best way to trade / secret way to profits" rather you realize that there are many solutions in the real world but all of them revolve around YOU and that correct answers do not exist because you are working on problems that do not have defined answers but the market acts a a guide or teacher as you learn at your pace in your own way and finally one day, as you are basking in the sun, thinking, you realize that the holy grail is you and you smile gently as you realize that you will always continue to grow...
Reflecting on how I was when I was a 'trader' when I started out and how I am now...
Earlier I had a 'vocabulary' to explain market movement. The whys and wherefores - did not matter that the market did the opposite many times!
Now, the following I realize, if I may humbly borrow a quote from Sir Issac Newton:
"I do not know what I may appear to the world, but to myself I seem to have been only like a boy playing on the sea-shore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me.”
Bringing up Issac Newton I was suddenly reminded of another of his quotes
"I can calculate the motion of heavenly bodies but not the madness of people."
Isaac Newton was one of the smartest people to ever live but was not a smart investor!
Back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he ' could calculate the motions of the heavenly bodies, but not the madness of the people .' Newton dumped his South Sea shares, pocketing a 100% profit totaling Ł7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price - and lost Ł20,000 (or more than $3 million in current money. For the rest of his life, he forbade anyone to speak the words 'South Sea' in his presence.
The most helpful part of a journal is you can confide the worst mistakes and the bad decision control that sometimes happens.
Writing down your experience about failures reduces your stress response and immediately improves attention in subsequent trading.
Whenever I did NOT write about the failure - either I was disinclined to portray myself negatively or I even did not want to 'waste' time over this reflective activity - I would be trading with high cortisol (stress hormone) levels , and when faced with the next decision it would be automatically stressful! Usually the whole thing has ended in a downward spiral aka account blowout. Whereas after a journaling session after I had reflected on the failure I was then normal, calmer - even the cortisol levels were probably lower. Writing about failure also allowed a sustained attention span required of sitting and watching the charts.
Also, I allow my creativity and humor to be regained - expressively writing about the complete experience did now downplay it for me but helped me recover from the loss, and most importantly, less anxious over the next trade decision.
The idea sounds cool but is one of the most difficult to implement. Somedays, it’s just taking the time to do it and for other days the emphasis on projecting the self like this scares me into not fully penning down the gory details.
Journals are of course the best place to collect these stories. Entries consist of subjective 'colored googles' meshed with 'objective reality' and reading them at appropriate intervals reinforces points that would not just be completely lost, but the realization that would dawn from the simply penning down your thoughts puts us into an aware state conducive to better trading, which otherwise would be a wasted learning opportunity that vaporizes without the journalling, instead leading to repetitive destructive patterns.
And what, then, does 'technical analysis' or a 'method' provide?
The markets, basically PEOPLE, consider everything. Decisions are serious matters so this makes sense. Thus the factors affecting the 'market' (people) are already reflected in the price and hence shows the behavior of market participants.
Prices moves in a certain direction (one of the three states - up, down, or sideways). The aim is to identify the trend in its infancy and keep trading until the reversal or sideways action takes place.
The markets aka people have a good memory, - the patterns of past situations can be reflected upon and viewed in the present too.
Thus these are the laws affecting the market and these remain unchanged. This is basically technical analysis - and it is a guide, tool, help.
It is not a predictor, magic wand, crystal ball or even the sensible 'know and identify the secret footprints of big money'.
Here is what the chart looks like after we apply our method:
It is a bit presumptuous perhaps to think that we can compute a risk/reward ratio before a trade. That must be an impossibility.
The only component that can be computed AND CONTROLLED is how much you are willing to lose on a trade. Even then you could skew that number maybe because you hesitated and held on for a larger loss, exited at the worst possible spot (common for newbies), or the market gapped against your stop.
Here the concept of trading as an emotional game ON TOP OF setups is a subject in itself.
Thus, add to that some personal flaws e.g. all setups 1 to 5 are valid longs, but my emotional plays would be -
Emotion Management:
Setup 1. At 1 I would be hesitant because the market is not yet trending - this setup needs skill to spot, lot of chance to miss it (I noticed it).
Setup 2. Easy setup to go long at, but there can be significant slippage at the entry bar which shot up like a rocket. Added to that the retracement began immediately and enduring a -8 MAE for a target of +10 is nerve-wracking.
Setup 3. This was not actually a setup - or rather it was too grey and there was no buildup to go long, but at this point I would have been super optimistic and would have gone long only to have taken the full -10 stop loss later.
Setup 4. This was a perfectly valid long setup (the previous clustering action too was perfectly valid - a long could've been entered on break of either box, the first one would have had a -9 MAE (shrieks!). However having lost on setup 3 it will be interesting what I would've done. If I was watching the P&L statement I would've said to myself - the market seems misbehaving today, don;t give up the profits you already have accumulated, don't be greedy! Trading means taking risk at appropriate points and if I was a proper trader I would've gone long here.
Setup 5. This was a no brainer actually - almost everybody would've gone long here after the market swooshed down through all support levels violently this trade was actually a textbook variety and a 'gift'.
So you see, plain trades if you consider the system alone, but add the color of emotions and it is not so easy as it looked, but technical analysis formed the bedrock of the process, so I vote YES.
I would REALLY love to win a NinjaTrader license so if you find this useful (no compulsion), PLEASE PLEASE PLEASE vote for my journal entry here:
