[gifropan]

I find most traditional advice on trading seems not to work but trading literature is full of them. Perhaps someone can shed some light on my predicament. Below are some examples. Please feel free to suggest some of your own.

Always go with the trend.

There seems to be no clear way to define "the trend" and if your are successful in seeing a trend its already too late.

Buy low sell high.

You buy low it goes lower, you sell high and it goes higher so this does not work.

Cut your losses quickly

Road to ruin.

Run your profits

You stay too long in a profitable trade the you give it all back.

As you can see I am quite frustrated and disappointed with trading. Can anyone give me some encouragement and reason to continue?

Thanks

[sep34]

Ahh the frustration stage...been there, it is normal and most will experience it.
Also I agree all those addages can seem trite, but there is some wisdome behind them, which becomes evident as you progress with your trading endeavor.

Originally Posted by gifropan »

Always go with the trend.

Simply understand what the Supply Demand situation is so you can determin what type of trade you are getting involed in. Type of trades (Trend continuation trade, Counter trend trade, Trend reversal trade, by the way there is diference between counter trend trades and Trend reversal trade and most traders dont undertand the difference, at times even seasoned traders too).
So the importance of understanding the trend is so you can understand what price is doing, therefor you will be better informed and you understand the current price action and now you can begin to implement your trading plan with eyes wide open as opposed to operating in the dark.

Originally Posted by gifropan »

Buy low sell high.

In an uptrend buy the pullbacks in a down trend sell the rallies...as you can see the above paragraph about understanding the supply/Demand situation i.e. Trend is crucial else you wont know to buy the pullbacks or sell tehr rallies.

Originally Posted by gifropan »

Cut your losses quickly.

If you make mistake trade get out and... cut your loses.
If your long and your analysis changes and you are no longer bullish get out.. cut your loses

The key is for your loses on average to be smaller then your winers.

Originally Posted by gifropan »

Run your profits.

Again the key is your average winners should be larger then your average losers.


As you can see understanding the supply Demand/Situation "trend" is at the heart of the "traditional trading advice" as you call them.

Understand the current supply/demand situation and be able to see the supply/demand shifts as they occur in real time then trading will suddenly be much simpler.

[ckait]

First thing a trending market is making higher highs and higher lows. You must know what time frame you are trading. If you are trading a 2 hour chart a trend will mean something different than a two minute chart. So try to pick entries that are the most favorable to your time frame. If a time segment is going to keep trending what is the limit of the amount that it can go to keep the trend intact I personally like to trade around 80% of the hourly and thirty minute.

[BlowFish]

OP all bar the last two comments concern correctly understanding market structure, price action or whatever you want to call it. Trading trends (which don't occur that much of the time) require a completely different approach to trading ranges. You can trade one or other or both if you have the correct strategy. Many People trade only one or the other and the advice they give pertains to there favoured approach. It's usually completely inappropriate for the other side of the coin.

Forget about trading for now learn a bit about 'market structure' to get a framework that makes sense to you. There must be 100's of ways of detecting a trend none perfect, all effective if used correctly. Personally I like using price action and simple geometry (trend lines). It is possible to trade without an understanding of price action which is one of the reasons people use 'indicators'. You might like to search out Joe Ross' law of charts, a free download that describes basic price action pretty well imho.

[86834]

Originally Posted by gifropan »

I find most traditional advice on trading seems not to work but trading literature is full of them. Perhaps someone can shed some light on my predicament. Below are some examples. Please feel free to suggest some of your own.

Always go with the trend.

There seems to be no clear way to define "the trend" and if your are successful in seeing a trend its already too late.

Buy low sell high.

You buy low it goes lower, you sell high and it goes higher so this does not work.

Cut your losses quickly

Road to ruin.

Run your profits

You stay too long in a profitable trade the you give it all back.

As you can see I am quite frustrated and disappointed with trading. Can anyone give me some encouragement and reason to continue?

Thanks

The trend is your friend, but in day trading you need to learn how to guage price action and momentum in the market. You have to remember that support and resistance levels are not set in stone, they are merely points where you can enter the market, but price action and momentum will determine how you use the level. So for example if price is trading quickly to the upside, momentum in the market is high and there's high volume to add fuel to the fire as well as strong open interest to the upside, then in this case you shouldn't be looking to sell a resistance level above you, if you did you would be standing infront of a steam train trying to fight the market. In this situation the highest probability trade is to wait for the level to break and turn to support and then use it as an entry point to get onside with the trend and momentum.

Even when volatility is low, you're still looking to stay on side with the trend, buying support into an up trend and selling resistance into a downtrend. I've attached a chart that i took from wednesday last week of the emini spoo. Here you can see the trades i took that day with explanations of why.

As for cutting your losses quickly... it's not the road to ruin. Remember that a lot of the books out there are based on swing trading, but it doesn't matter what style of trading you're into, the principles stay the same. An example of this would be the other day when we reached the high of 2009 in the emini sp500, we traded up to it on the back of very strong economic data, so even tho i had a quick short at the high, the best trade at the time seemed a be a break above the level where stops would start getting hit, shorts would get nervous, and the chances were that the market wouldn't look back once broken. So we high ticked the level which failed to produce a follow through, market traded off, then at the time if we high tick it again it should go with a bang, so on the second break i got long off the high using a 5 tick stop, the market failed to follow through. So seeing as the the market failed to follow through on the second high tick, i didn't need my stop to get hit to know i was wrong, i just scratched the trade and the market ended up trading off. In trading you need to fickle and think fast on your feet.

As for letting your profits run, this is also true. If you're in a position and you have no reason to get out of it, then why get out? When you lack the ability to read how price is trading and momentum then you have no way to gauge the strength of your position. For example if you're long, and after 5 points price starts to struggle to trade higher, the open interest on the book is leaning more towards the offer, and there are very large parked orders on offer that won't lift no matter how many times they get high ticked, then you gotta start thinking to yourself to this move is coming to an end.

Learning how to read price action and momentum is key to being a consistent day trader, but unfortunate it's also the hardest aspect to get a feel for and the only way to learn it is to put in the screen time. There are no indicators that are going to do it for you, you gotta put the hard work in.

Welcome to the hard knock life of trading

You'll get there in the end as long as you put the hard work in.

[gifropan]

Originally Posted by 86834 »

The trend is your friend, but in day trading you need to learn how to guage price action and momentum in the market. You have to remember that support and resistance levels are not set in stone, they are merely points where you can enter the market, but price action and momentum will determine how you use the level. So for example if price is trading quickly to the upside, momentum in the market is high and there's high volume to add fuel to the fire as well as strong open interest to the upside, then in this case you shouldn't be looking to sell a resistance level above you, if you did you would be standing infront of a steam train trying to fight the market. In this situation the highest probability trade is to wait for the level to break and turn to support and then use it as an entry point to get onside with the trend and momentum.

Even when volatility is low, you're still looking to stay on side with the trend, buying support into an up trend and selling resistance into a downtrend. I've attached a chart that i took from wednesday last week of the emini spoo. Here you can see the trades i took that day with explanations of why.

As for cutting your losses quickly... it's not the road to ruin. Remember that a lot of the books out there are based on swing trading, but it doesn't matter what style of trading you're into, the principles stay the same. An example of this would be the other day when we reached the high of 2009 in the emini sp500, we traded up to it on the back of very strong economic data, so even tho i had a quick short at the high, the best trade at the time seemed a be a break above the level where stops would start getting hit, shorts would get nervous, and the chances were that the market wouldn't look back once broken. So we high ticked the level which failed to produce a follow through, market traded off, then at the time if we high tick it again it should go with a bang, so on the second break i got long off the high using a 5 tick stop, the market failed to follow through. So seeing as the the market failed to follow through on the second high tick, i didn't need my stop to get hit to know i was wrong, i just scratched the trade and the market ended up trading off. In trading you need to fickle and think fast on your feet.

As for letting your profits run, this is also true. If you're in a position and you have no reason to get out of it, then why get out? When you lack the ability to read how price is trading and momentum then you have no way to gauge the strength of your position. For example if you're long, and after 5 points price starts to struggle to trade higher, the open interest on the book is leaning more towards the offer, and there are very large parked orders on offer that won't lift no matter how many times they get high ticked, then you gotta start thinking to yourself to this move is coming to an end.

Learning how to read price action and momentum is key to being a consistent day trader, but unfortunate it's also the hardest aspect to get a feel for and the only way to learn it is to put in the screen time. There are no indicators that are going to do it for you, you gotta put the hard work in.

Welcome to the hard knock life of trading

You'll get there in the end as long as you put the hard work in.

But how often does this happen that you buy the support and you get stopped out and then the market reverses and your original position would give you a healthy profit. Then you next time you give a wider stop and the same thing happens. An alternative is to attempt two or three trades in the same direction near the support and you get churned out in a tight range loosing more ticks than the actual range itself. When do you decide that the support is broken and you should give up the long side trades.

[86834]

In answer to your question about how often do i get stopped out before the market goes where i was expecting it too... pretty rarely to be honest, and i only use a 5tick stop per trade. That's not to say i don't have losing trades, everyone has loosing trades, just some more than others, but i very very rarely have a loosing day, but i still have them.

I understand that you're frustrated, we've all been there, but you seem to be looking for a set rule. There are no set rules that are the same every single time you enter a trade. I know it isn't what you want to here, but that is the truth of trading and it is what it is. You have to develop a feel for how the market is trading. You have to also remember that day trading is the hardest discipline in the trading world because there are so many time frames above you, so you need to be aware of all the time frames and where you are in relation to them, as well as anything else that may effect the market such as economic data etc (people who were using an array of indicators that told them to short just before the consumer confidence figure will know what i mean lol)

I'm not trying to put you off or anything, but don't underestimate what you're trying to accomplish. Learning to trade is hard, really, really hard, and it will be a long time until you're proficient to do it full time. Speak to any full time trader on these forums and you will see that we've all walked the long right of passage before we eventually got there. Regardless of what some stuff advertises, you ain't gonna be a millionaire this time next year. This time next year you're probably going to be thinking to yourself that you've finally cracked it, only to find out that you haven't... You have to remember what you're dealing with... you're active in the global financial markets, so once the romantic view has been removed, you're trading on a field full of banks and professionals. Put it this way, you wouldn't decided that you could all of sudden become a top lawyer by reading a couple of books and a forum would you? Or you wouldn't get up one day and decide that you want to be a professional football player because you want to earn lots of money. If trading was easy to master, then everyone would be doing it.

As with the lawyer example, if you put the work and time into it then you can become a lawyer, and that's the same with trading, but it takes hard work, time and dedication. There's a post somewhere on here from a full time trader who stated that it took him 8 years to get where he had and it cost him a marriage.

It can be done, and if this is what you really want to do then don't give up on it because you will get there, but you have to take it for what it is. My advice is to put your levels in and watch how price trades all day for as long as you can, then you'll start to see what i was on about in my previous post.

It is what it is.

[DbPhoenix]

gifropan,

Whether the examples of trading wisdom which you've provided "work" or "don't work" depends entirely on how well the trader understands what it is that he's working with. To apply them as if they were laws is much the same as selecting a car based on its color and how many cupholders it has.

If you haven't defined "trend", you're going to have difficulty going with it.

If you haven't defined "low", you're going to have difficulty buying it.

If you haven't defined "high", you're going to have difficulty selling it.

And so on.

It's up to you, then, at minimum, to determine how an auction market works, how the shifts and imbalances in supply and demand move price, how to determine when those imbalances are mostly likely to result in a profitable trade. If instead you elect to settle for applying a variety of indicators, drawing lots of lines, taking calls in chat/trading rooms, etc., then whatever success you happen to achieve, if any, will not likely meet your expectations.

As for where you go from here, I suggest you look at the stickies for the Market Profile Forum beginning here and for the Wykoff Forum beginning here. If either of these resonate with you, then read the rest of the stickies, then explore the rest of the forum(s).