Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

DbPhoenix

How To Do It

Recommended Posts

In order to profit from trading price and volume alone, one must forget nearly all of what he thought was true, and that presents an insurmountable obstacle to a great many people.

 

If, for example, one insists on focusing on how he can make it "work" with mathematically-derived indicators (stochastics, MACD, CCI, OBV, blah blah blah), then he blocks the process through which he would otherwise understand it and profit from it.

 

If he focuses on where and how to make mechanical entries and exits rather than understand the dynamics of demand and supply, then he blocks the process through which he would otherwise understand it and profit from it.

 

If he focuses on setups and patterns as gimmicks rather than as manifestations of changes in the balance of buying and selling pressure, then he blocks the process through which he would otherwise understand it and profit from it.

Hire yourself to do a job

 

The job is just to sit there and watch price move, to watch the buying and selling waves, the pokes and prods and feelers cast by buyers and sellers looking for a trade, not to create or test a strategy, not to make money, not to learn the "secrets" or the "tricks", just to develop a sensitivity to buying and selling pressure. No indicators, no MAs, no nothing but price bars/points and volume bars. This is analogous to meditation in that if one finds himself thinking about entries rather than focusing on price behavior, he should start over from the beginning. Eventually he will get tired of doing this and focus on the behavior in order to get through it.

 

 

Make notes of what you see and what you think you see

 

Don't rush to draw conclusions. Throw away your crutches and focus on what the auction market is really all about. The market is not out to get you. The market is not out to trick you. Buying pressure is buying pressure. It lasts as long as it lasts according to who wants what. Ditto for selling pressure. Rather than focusing on avoiding getting screwed, focus on the pressures and the imbalances between them. Don't trade. Don't conclude. Just watch.

 

When you get tired, stop. Come back. Begin again. When you're done, review your notes. Look for those areas in which change took place. Formulate some hypotheses as to why those changes took place in those areas and not others. Don't force the Ah-Ha. Just let it come.

 

Begin with what appears to apply to whatever market you're trading. If it's in a trend, focus on retracements and continuations (a continuation being the logical result of a successful retracement). If it's in a trading range, focus on reversals. And so on. Develop the strategy thoroughly, with all the accompanying tactics. Test it via replay, "reading" the chart from left to right. If your suppositions don't pan out, then go back to observation. If they do pan out, move on to simtrading.

Trade it

 

But understand always that whatever you're doing may not apply to every trading day. If you decide to focus on breakouts, for example, and the entire day is range-bound, then you're very likely going to have nothing to do. This is not your problem. Use the time for something else. But don't force trades. Don't see what isn't there (many novices fall into this trap when they've been working on reversals and insist on seeing reversal setups where none exist, e.g., on trend days). In time, you'll have a variety of strategies to cover most situations. But the key words here are "in time".

 

There is no inconsistency between tuning in to the buying/selling dynamic and defining setups with specific entry and exit points. A lower high, for example, says something about the balance of buying and selling pressure. Now at what point does the probability of a reversal become sufficiently higher than that of a continuation that the trader will go short instead of long (or vice-versa)? A drop of so many ticks? A break of a TL? A break of an MA of some sort (if he just has to use one)? And once one has determined that, how far does he allow the price to go against him -- if it does -- before he bails? And what is a reasonable target? And where is my pastrami on rye?

 

Changes in the balance between buying and selling pressure manifest themselves in recognizable and repeated ways, e.g., double bottoms, lower highs, bull/bear spikes (hammers et al,, if one is into that), but whether any of these are worth taking will depend on the context, what one wants, what one is willing to settle for, how much risk he's willing to assume, whether or not he's willing and ready to fade himself, etc. Sometimes the changes in balance are so rapid and so violent that the trader might think that only a loon would get involved. And sometimes the changes are so subtle and so quiet that waiting for the trade to resolve itself would put most people to sleep. Therefore, the trader has to decide under what conditions he's going to trade and during what portions of the day (or year) -- if not the entire day (or year) -- he's going to trade.

 

Which may be why so many beginners prefer just to buy when the green line crosses the red line and sell when the red line crosses the green line.

 

The degree to which one experiences anxiety before and during the trade is in direct inverse proportion to the amount of preparation he has done; in other words, the less prepared you are, the more anxious you will be (many people start the day anxious and stay that way until the final bell).

 

Trading according to buying and selling pressure entails looking for those areas which are most likely to attract attention and activity, which is why understanding the nature of support and resistance is important. Those areas where the most people traded the most shares/whatever in the past are most likely to ignite activity again, partly because all those people have something to gain or lose at those levels, but also because even those who did not trade at those levels or in those areas can see that those levels and areas attracted the business of others at the time and may do so again. Some of these levels or areas or zones – if one is trading stocks or ETFs – include the previous day's (week's, month's, year's) high and low, and if one does nothing but sit idly by until those areas are tested, he will likely save himself a lot of money.

 

The opening high and low can also be a rich source of opportunity. I say "can" because one must also consider volume: if there's lots of activity, there's likely to be lots of opportunity. Targeting these opportunities in advance is simple. Sitting on your hands until the opportunities actually present themselves is considerably more difficult. But if one knows well in advance what he's going to do and where he's going to do it, and has some understanding of the nature of probability, he has nothing to be anxious about.

 

A great many traders just cannot reconcile the facts that each moment is unique and the outcome of any given trade unknowable with the idea of determining the probabilities of success of a particular "set-up", or cluster of behaviors. One must know what he's looking for and what to do with it if he finds it, which are the purposes of backtesting and forwardtesting. But he cannot trade successfully by staring into the rearview mirror. He must look forward, armed with his knowledge of how likely it is that his trades will succeed, and trade in the moment. Otherwise he can literally spend years examining charts and dwelling on couldawouldashoulda.

A good friend of mine, Julian Snyder, wrote a book for traders called
The Way of the Hunter Warrior
. Recently I asked him about the use of such a metaphor for trading, and he conceded that it's total nonsense in the light of what he now knows. "You have to trade without ego, and any contest elevates ego," he said.

 

I like to think of trading as sailing. Here you harness the forces that are there. You take into account the wind direction and velocity, the currents, and your destination. You've got your charts to guide you and you constantly adjust to nature's forces, sometimes pointing into the wind, sometimes running before the wind, sometimes tacking, but always in partnership with your boat, your crew, the wind, and the currents. Sure, storms can come up, but you can always let down the sail and anchor and wait out the storm. You work with the forces that are there, the forces that are much bigger than you, but you enjoy the journey, the day, the sport, and you're confident you can get to your destination, your port, your safe harbor.

Ruth Barrons Roosevelt

Edited by DbPhoenix

Share this post


Link to post
Share on other sites

Rarely do any of us grow up learning how to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way. In the trading environment, you will have to make up your own rules and then have the discipline to abide by them.

 

The problem is, price movement is fluid, always in motion, quite unlike the highly structured events that most of us are accustomed to. In the market environment, the decisions that confront you are as endless as the price movements you intend to take advantage of. You don't just have to decide to participate, you also have to decide when to enter, how long to stay in, and under what conditions to get out.

 

There is no beginning, middle, or end - only what you create in your own mind.

 

MD

Edited by DbPhoenix

Share this post


Link to post
Share on other sites

Fit yourself into the flow of the game... Some players approach the game of poker simply as a game, the way you might play Chinese checkers, or Old Maid. They can be observed playing their own cards and nothing else, staring hard at their hand, brows furrowed, never glancing up, strugglnig along. It's as if they are playing in a vacuum. Still others do the opposite, trying to dominate all parts of the game, force victory, muscle over the game with various aggressive maneuvers... Do either of the above two approach work? Yes, intermittently. A better approach - one that experience shows works more frequently - is to try to fit yourself into the flow of it...

 

Larry Phillips

 

 

attachment.php?attachmentid=39970&stc=1&d=1439857891

observing.gif.ae6b89686400ea54861c13647084333b.gif

Edited by DbPhoenix

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date : 21st October 2021. Market Update – October 21 – Stocks & USD slip on big Earnings Day. USD (USDIndex 93.55) cools a tad and again tests 2-week low (93.47) Yields stronger again, Equities closed up, but FUTS are down (Nikkei -2% on stronger YEN and Yuan). Big day for Earnings – TESLA beat but revenue numbers disappointed some. Oil up on drawdown. Evergrande – Bad News $1.7bn sale of 51% of HK unit to Hopson OFF, $1.7bn sale of HK HQ OFF, $83.5m coupon default triggers tomorrow. Good News $260m bond coupon, extended by 3 mths US Yields (10yr closed higher at 1.63) & – now 1.6533% Equities moved ground higher USA500 +16 (+0.74%) at 4536 (NASDAQ –0.05%) – Big movers – Verizon +2.41% & ABBT +3.3% (PayPal – 4.91%) – USA500.F back to 4500. Asian equities weaker. New VIX contract at +1.49% at 19.60 USOil up on drawdown n strong demand at $82.00 after EIA inventories showed -400K vs build of 2.1m Gold holds at 4-day highs – $1785 FX markets – a recovering USD – EURUSD 1.1646, Cable down from 1.3830+ to 1.3800, & USDJPY – off 4-year highs and pivots at 114.00. European Open The December 10-year Bund future is down -16 ticks, US futures are also in the red. DAX and FTSE 100 futures are both down -0.45 and US futures are also in the red, with the NASDAQ underperforming again, after already closing slightly lower yesterday. Indices remain at high levels, but tapering concerns, the global energy rout and supply chain concerns are capping the outlook for global growth. Markets will continue to watch earnings reports and central bank comments, especially in the UK where officials clearly are laying the ground for an early lift off. Meanwhile the announcement of Weidmann’s departure has raised hopes that the ECB will push even more to circumvent the no-bailout clause permanently – after the end of PEPP, which already helped BTPs to outperform yesterday. Today – US Initial Jobless Claims, Philadelphia Fed Business Index, Existing Home Sales, EZ Consumer Confidence, EU Council Meeting, Fed’s Daly, Waller, RBA’s Lowe, Earnings: AT&T, Intel, American Airlines, Southwest Airlines, ABB, (bottleneck problems) Vivendi, Hermes, (beat) Pernod Ricard,(beat) Barclays, (Revenue big beat) Unilever (Sales miss). Biggest FX Mover @ (06:30 GMT) AUDJPY (-0.50%) Rejection of 86.25 this morning as Yen lifts after a very weak October. Faster MAs aligned lower, MACD signal line dips and & histogram slips significantly lower, RSI 40.00 off OS level, H1 ATR 0.189, Daily ATR 0.817. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Meet a maverick on Blockster   Blockster is a cryptocurrency social platform.   Blockster connects everyone within the blockchain industry into one place—all the cryptocurrencies, the teams behind the projects, as well as, the traders and investors. Communicate and network with the very core of the blockchain industry, and stay ahead of the market trends via Blockster.   Get insightful posts, reviews, breaking news, interesting comments, and latest updates from the world of cryptos, from Azeez Mustapha: https://blockster.com/AzeezMustapha46102 
    • Nice article send in here, do sharing other such articles and also share your experience of Forex Trading.
    • Never tried Forex Trading with software,  I am still learning. But someday, I would like to give it a shot. 
    • Date : 20th October 2021. Market Update – October 20 – USD bounces from 2-week low, Stocks & Yields higher. USD (USDIndex 93.70) recovers from test of 2-week low (93.47) Yields stronger, Equities closed strongly on good Earnings, Netflix beat big time (Subs 4.38m vs 3.86m. – globally now 213.6m) Squid Game watched in 142 million households in 94 countries. Biden expects a deal on infra budget, Chinese housing prices slow, and NK fired more missiles (non-ballistic today) into S. China Sea. US Yields (10yr closed higher at 1.6350) & touched 1.662 earlier – now 1.6495% Equities moved higher gaining momentum USA500 +33 (+0.74%) at 4519 (NASDAQ +0.71%) – Big movers – J&J +2.34% & APPL 1.18% – USA500.F higher into 4503. Asian equities higher (Nikkei +0.76%) VIX closed down again at 15.57 (a new 8-week low – VXN – (which measures Nasdaq volatility) – at lowest since February 2020) USOil down from 7-yr high, at $83.00 after private inventories – trades at $81.00 Gold holds at $1775 now from yesterday’s high of $1785 and low of $1767. FX markets – a recovering USD has – EURUSD 1.1640, Cable down from 1.3800+ after CPI data at 1.3785 & a weaker YEN, USDJPY – 4-year highs – 114.70. Overnight – UK CPI a tick weaker than expected (3.1% vs 3.2%) PPI in line. German PPI much stronger than expected @ 2.3% vs 1.1%. European Open – The December 10-year bund future is down 35 ticks, underperforming versus Treasury futures. Yields moved broadly higher across Europe yesterday and while ECB officials are doing their best to keep rate hike speculation at bay, they are fighting an uphill battle, especially as the BoE is preparing for an early lift off on rates. The surprise misses for UK CPI could dull the expectation. Today – EZ Final CPI, Canadian CPI, ECB’s Elderson, Fed’s Bullard, Earnings – Verizon, Tesla, IBM, Abbot, AMSL, Nestle (already out – a big beat especially for Pet food Division) Biggest FX Mover @ (06:30 GMT) NZDCHF (+0.40%) 5th consecutive day higher today (from 0.6425) breached 0.6600 earlier, and testing 0.6630 now. Faster MAs aligned higher, MACD signal line & histogram trending higher, RSI 65.00 OB but still moving higher, H1 ATR 0.0008, Daily ATR 0.0054. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.