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Based on my own experience as well as working with hundreds of traders over the years, I have come to the conclusion that there are three major components to winning in the stock market. An excellent Method, a customized Plan that fits YOU, and the right Mental Approach. While mastery of each of them is paramount, building the right Mental Approach seems to be the most challenging to master for the majority of traders. Without a winning attitude and the proper mindset, even the soundest of all methods will lead to lost money. In fact, a winner is more defined by mental make-up than by method. This is why the trader with a winning attitude and a faulty approach can still produce positive results, while the trader with a loser's mentality will stumble and fall, despite an excellent approach. Don't think so? What do you actually think causes one trader to play six winners in a row, and another to experience six consecutive losses? How is it that one trader can use a daily newsletter and win, while another uses it and loses? What do you think differentiates the person who buys XYZ and wins, from the person who buys the same XYZ and loses? The difference lies in the Mind, plain and simple. One of the most revolutionary axioms I have ever come across is this: "As a man thinks in his heart, so is he," and this universal truth is just as applicable to traders as it is to anyone else. Monitor the attitude of a winner and you will find a level of confidence and certainty that is almost beyond belief. And while most people will make the mistake of assuming that winners are confident and certain because they win; the truth is that winners consistently win because they are confident and certain. No method, however sound, will work for the trader who mentally pictures himself losing before each trade is placed. And no amount of Money, however large, will save the individual who secretly harbors the belief that, "Whatever I touch, turns to mush." As choice-making individuals, we must choose a winner's mindset. You can never fail, or even feel like a failure, if you recognize the simple fact that you are not your results. You create them, which means that you posses the power to alter them if you happen not to care for them. There is room at the top for all dedicated traders, but the first step is to actually believe that. The second is to start acting like it. Think the part, then act the part and the rest mysteriously takes care of itself. But don't take my word for it. Just try it. Jared Wesley
Good Morning All: If the title sounds a little confusing, it was meant to. The issue to be discussed today is not just 'when' to trade. There are trades that can be done any time the market is trading. That does not mean that you should be trading all day long, it just means that the times you pick to trade can be any time, IF you know what to trade. These next three articles will discuss this issue, and are geared toward the 'intraday trader', not the swing trader. When to Trade What, Part 1 of 3 The comment above said that trades can be done any time of the day, does that mean even lunch? Yes. While it is often much discussed 'not' to trade lunch, part of that statement is left off. Do not trade lunch, unless you know how to trade it. Lunch is the time when many traders get into trouble, because they do not realize that many things will not act the same during lunch as they do during 'non-lunch' times. The first issue to consider is the volatility and target expectations. If you could give a 'volatility rating' to the market, or stocks in general, it would look like this. If things move '1' during lunch, they move '3' between 2:15 and close, and move '5' between open and noon. If you do not realize this, targets will be unrealistic and lead to frustration. Before Open: So how do you focus your time? For many people, the time spent between 8:30 and 9:30 may be the most productive (all times are Eastern, New York, market time). Preparing your watchlist, forming a gap list, and starting a market bias can be key to how your day goes. Get ready for the open by picking the best of your favorite stocks, the best of your daily watchlist, and the best of your gapping stocks and know how you will play them, if at all, before the market opens. The First Five and Thirty Minutes: Very few traders realize the power of reversal times, or the power of having the knowledge of how to trade each part of the day. Most traders, who play trends and breakouts, should not even be playing the first thirty minutes of the day. Look at your records. The chances are that you have a very low batting average for trades taken during the first thirty minutes. The only trades that should be taken during the first thirty minutes are based on gaps or other very special strategies. The 9:35 reversal time is one of the most reliable, yet few traders realize its power. Many get stopped out of plays, rather than profiting from, the 9:35 reversal. The above chart shows an example of a price pattern that gapped bearishly, sold off hard for less than two minutes, and turned around so quickly, most traders who mistakenly tried to short the move down suffered losses. Knowing that this flurry move down offers a buying opportunity on a regular basis when played on the right stock can turn potential losers into big winners. Once the five-minute reversals are over, many stocks have solid moves into the 10:00 reversal time. This reversal time can run anywhere from 9:50 - 10:10, but the power move usually comes closer to 10:10. Trends between 9:35 and 10:00 are usually very reliable, if backed by a strategy. However, 10:00 or 10:30 are the reversal times that often set highs or lows for the day. Stocks that do not reverse at these key times may go on to be 'power trends'. Closing Comments: Traders who do not have clearly defined trading plans will not make it in this business; it is that simple. All plans should pay close attention to 'when' trades are being taken and factor in the power of reversal times. Next week, we will look at the power of these two critical morning reversals, and the arrival of lunch. Paul Lange
Good Morning All: If the title sounds a little confusing, it was meant to. The issue to be discussed today, is not just 'when' to trade. There are trades that can be done any time the market is trading. That does not mean that you should be trading all day long, it just means that the times you pick to trade can be any time, IF you know what to trade. That is the point of this article. When to Trade What, Part 2 of 3 That was the opening paragraph last week in part one of this three part series. In the last letter we looked at some 'pre market' organization, and we discussed the first reversal time, 9:35 (all times are Eastern, New York, 'market' time). We then mentioned the next two reversal times, 10:00 and 10:30. This week, we will talk about those two key times, as well as the beginning of the 'lunch hour'. Next week we will conclude with part three. There are 9 micro reversal times. 4-5 of them are major and critical. Also, understanding HOW to use them and HOW they interact is imperative. Let's look at the morning reversals, 10:00 and 10:30: There is also a minor reversal time at 11:15. It is simply amazing how many traders do not use the reversal times to their advantage. This probably spawns from the fact that many traders do not even know or understand them. If you are one of those traders, you are going to learn something that will change your trading career in the next couple of paragraphs. A picture says a thousand words, so look at the charts below. These are the three five-minute charts of the QQQ from the LAST THREE TRADING DAYS, period. We generally give the reversal times a window of 5-10 minutes on each side. The key is when the Pristine Buy or Sell setup occurs, at the approximate time. The yellow 'stars' show the two major reversal times we are discussing. They are all happening 'right on the money', though they do not need to in order to be effective. Second, these charts are simply that last three days. They are not the result of a special search. If you continue this exercise on your own, you will be astonished. Most other days are even more amazing. Note, that the 10:00 and 10:30 major reversal times form a reversal, every time, and one of them usually sets the high or low for the day, or at least for the morning. This is typical of what you will find every day. Again, no effort was used to find these charts for this article. The only time this is not 'amazing' is when we have 'power trend' days that do not really reverse at all, and that is because the very definition of a power trend day is that the market carries a trend one way all day. Sometimes these days don not begin until the 10:00 reversal time puts in the first reversal, but these power trend days are rare; usually one every other month. Don't believe it? No problem, go take a look for yourself. Go print out a bunch of five-minute charts. Print them from the market, the futures, or your favorite stocks. Print some from this week, some from a month ago, some from two months ago. It does not matter. Then go through and draw vertical lines at 10:00, and 10:30. You will be shocked and amazed that virtually every day, you have drawn lines though the high and low of the day, or at least the high, until much later in the day. And you thought trading was tough. The next time period to look at is the beginning and ending of lunch. These times can change a little depending on if the market is 'trending' or choppy. Generally, the last true move ends around 12:20. We often count lunch as starting at 12:00, but if there is a strong trend in place, it may follow through until 12:30. On strong trend days, the last reversal around 1:30 often sets the trend back in place. If it is a choppy market (80% of the time), lunch may stay choppy, until the 2:15 reversal time. This one is usually in stone, and the whole lunch concept, as well as the afternoon reversals, will be discussed next week. Closing Comments: Traders who do not have clearly defined trading plans will not make it in this business; it is that simple. All plans should pay close attention to 'when' trades are being taken and factor in the power of reversal times. Next week, we will look at the power the lunch and after noon reversal. Paul Lange Vice President of Services Pristine Capital Holdings, Inc.
"How long will it take for me to become a profitable trader?" Boy - if I had a dime for each time I was asked this question, I would have one large collection of dimes. But I think I've done my work well. The majority of people who have sat in on my workshops and listened to me speak over the last couple of are no longer asking this question. So if you ever catch yourself wanting to ask this question, then please pay close attention to what I'm about to share with you here. Because once you understand the poisoned thinking from which this question comes from within you, you will be thankful that you now see things from a much more useful perspective. We are always, from an early age, comparing ourselves with others. From our upbringing and various influences on our thought processes as we grow up, we develop certain metrics and rules in order to determine what is 'right', 'wrong', 'fair', 'unfair', and unfortunately when we are 'good' or 'bad'. Stop doing it. Realize, that you are unlike any other individual or soul on this entire planet....or in the universe. So how can you compare yourself with others? It's like comparing apples and oranges. There are no comparisons because you are simply 'you'. You are not like anyone else. Period. So how long it took other traders to make a 'good' income at trading is completely irrelevant to you. And, if one thinks about it, what possible good could come of putting a 'standard' or an 'average amount of time it takes' out there as YOUR measuring stick simply because someone told you it was so. There are so many fallacies at work in a statement like this that it's ridiculous. If someone were to say it took 11 months, for example, for the 'average' trader to 'make it', what does that mean? Define an 'average trader'. Define 'make it'. And then ask, "What data do you have to support that 11 months is the average?" Did every single trader in the world give the person making this statement specific feedback on how much time it took them to 'make it'? NO! It's NOT POSSIBLE! The very criteria that would go into such a poll is subjective and thus makes the results entertaining, at most. Most of the truly amazing traders seem to 'disappear into the sunset'. They enjoy their privacy. And if they are amazing traders, they will be NO PART of such a silly 'poll' to help new traders provide themselves a measuring stick with which to measure their progress. They understand that this type of 'information' will not serve any trader. Think about that. Now, wouldn't you feel silly if you had actually measured yourself against some standard that was communicated to you which has no way of being based in reality? And even if it was, realizing that using it for yourself as a measuring stick is like comparing apples with oranges? Worse - I know people who have QUIT trading because of articles like this. What possible good could come of it? If you are just starting out, the thought of losing for 11 months before you 'make it' is pretty daunting. So it doesn't serve that person. If you have been trading for 8 months or thereabouts, chances are you will psychologically ruin yourself as you get closer to the 11 month mark and I can almost guarantee that you will not 'make it' by then simply because of human nature and the stress/pressing you will put on yourself. And, God forbid, you are past the 11 month marker already and you will make yourself feel like a complete idiot. Kurt Capra Contributing Editor Instructor and Traders Coach
The chart and question shown was posted at the Pristine Facebook Group. Below is my posted answer. The concept of being extended is difficult for most, if not everyone at some point for several reasons. I will discuss reasons generally and then in some detail. However, a complete understanding can only happen in class, but let's start here. Extending means stretched out and suggests a return to a more "normal position." However, to most technical traders and investors, the word extended invokes the belief that the trend is close to over. Being extended has little to do with trends ending. Actually, extended initially suggests that the trend will continue. The first step to clearing up the difficulty to understand extended is to realize that most taught methods of defining extended are based on completely subjective measurements. These have little to no consistency to define the end of a trend. Many times, they don't even result in a retracement to a believed normal position. This leads to confusion and of course a lack of confidence in the method. Exactly, what the question is communicating in the example using a moving average (MA) as a measure. There are various technical tools to measure extended, but we'll discuss MAs now since that is what was used. As with all technical analysis tools there are choices to using them like the settings. Different settings will give different signals or measurements and then setup different beliefs based on them. For example, if we use a simple 20-period moving average verses an exponential one we will see those MAs at different levels. Which one is the right one? Prices may appear to be extended from the simple type since it moves slower than the exponential. What if we use a 10-period moving average instead of a 20-period? Prices may appear to be extended from the 20-period, but they are not from the 10-period. The 10-MA is averaging in the more recent prices were as the 20-MA is also averaging in the older prices as well and will be slower and further away. Depending on what you have been taught or read, you will have a different set of beliefs about what is extended and possible. If you are convince to change the MA type or length, your beliefs change. Soon you'll be second guessing all of them. Been there? Next, I am sure you have seen what is seemingly extended in one time frame that is not extended at all in another. For example, the 5-minute time frame may appear extended, but the 60-minute move has just started. In an example like that, traders focused on the 5-min. can be fearful of continuation patterns or breakouts and require a retracement. However, retracements often do not occur leaving those watching see the move become more extended. In fact, the chart and question is how to handle such situation. Without an understanding of how to interpret and combine multiple time frames anyone would be confused. Lastly, and this comment is likely to raise a few eyebrows, but addresses a deeper understand of what the question relates to. The belief that prices are extended - even in a higher time frame - and that a trend is unlikely to continue is false. It will leave you scratching your head as you watch the extended prices become even more extended. Here is the key and what I hope is a light bulb moment for you. Historically, prices will continue trended higher until the Pristine Price Void (PPV) is closed, Major Support (MS) is violated or resistance is created. In other words, there is no objective reason to think the trend will end, so don't. Pristine Trend Analysis is based on the concept that a trend will continue to a price reference point were traders will sell at. Without that reference point (a Void) to sell at, traders are just guessing at what is extended and where the trend may end. I wrote about this in a Chart of the Week (COTW) titled, "You Have Been Setup to Fail as a Trader." The distance to a moving average alone is incomplete information and misleading. Adding additional indicators like oscillators will add to the confusion. There are hundreds of these indicators to choose from and when you add the choices of the settings possible, the combinations are endless. It's no wonder why there is mass confusion about technical analysis based trading. Clearly, extended is a subjective idea if based on a single concept like the distance to a moving average. Students of the Pristine Method® learn to use Multiple Time Frames, Trend Quality, Relative Strength and Weakness, Support, Resistance and the lack thereof (Pristine Price Void), the influence of the Market or a Sector, Market Internals, Inter-Market Analysis and others. There is a lot to learn to become a professional in any field and technical trading/investing is no different. If you are trading stocks, a futures contact like the S&P 500 e-mini, a commodity or a Forex currency pair based on generally accepted technical analysis tools. Odds are that you are thinking that there is no way you will ever understand price movement. You can and it does not have to be complicated. However, it does require the right education. All the best, Greg Capra President & CEO Pristine Capital Holdings, Inc.