[Dinerotrader]

Originally Posted by thalestrader »

I am constantly perplexed when I see folks try to short fierce rallies or buy precipitous declines (though at the same time I am quite thankful for such folks, as there actions feed the rally or decline in my favor).

I guess that was me on my last short I posted here. At least I was able to put food on the table for your family on those trades.

I am struggling trying to decide if I should focus on breakouts or reversals. I see both occur and produce great trade potencial. I was reading Paul Tudor Jones in the market wizard book series last night and he said,
"....the very best money is to be made at market turns. Everyone says you get killed tyring to pick tops and bottoms and you make all the money by catching the trends in the middle. Well, for twelve years, I have often been missing the meat in the middle, but I have caught a lot of bottoms and tops."

After I read these types of things I think I should be looking at reversals more. But of course, there is a large group of amazing breakout traders also. I guess you either have to figure out how to play both of them which might be hard to manage or you have to just pick one and refine your ability to pick them from price movement.

Thanks for your thoughts Thales.

[thalestrader]

Originally Posted by Gabe2004 »

The problem with trading is that we as humans have a special relationship with money. That is why we are reluctant to pay to study how to make it in trading and that is there are so many people who have no clue who try to teach others how to trade. I doubt thta this will change but fortunately there are successful people around who are willing to share their wisdom and experience.

I am responding to Gabe's post here, rather than in the pnl thread where he had posted it so as to not throw Brownie's thread off for a second consecutive weekend.

I have spent thousands of dollars buying software, indicators and systems, and thousands more on books, courses, classes, "mentors," etc. Nearly all of it was money I would rather have donated to the local food bank.

The problem is two-fold: First, I suspect that most of those "successful traders" who profess to teach others to trade are not at successful at trading themselves. I have tried many of these self-professed gurus over the years, and almost to a man each and everyone was a fraud. Either he refused to make any before the fact analysis or real time calls, or, if he did, it became very plain very quickly that the method he was teaching was flawed and prone to endless draw down.

As recently as two or three weeks ago I posted a screen shot form an email I received soliciting would-be forex traders to join a mentoring and coaching service. The video was of a "live trade example" showing a "profitable live trade." The problem, for the would-be Forex Coach, was that he traded using an fxcm demo account, and the demo server ID number was clearly visible in the video. Yes, he had a "demo profit." And some might say, "well who cares if it was a demo platform or real, he took the trade and it would have been profitable had you followed his advice." Well, the problem is this: He probably has two demo accounts, and he easily could have taken a simultaneous long and short on the GBPUSD in two separate demo accounts. He simply shows his prospective students his "live" profitable trade rather than the losing trade. As I said above, frauds, almost to the man.

The second problem with paid services, schools, systems, softwares, etc. is that all of those who profess to teach others to trade leave out the emotional training required to be successful. Anyone with normal intelligence can be taught to apply a technically sound trading method in as little as an afternoon. Very few who learn to apply it will do so profitably. The problem is not the system, but the trader's own soul.

Take, for example, some of TRO's simple "systems" that he posts here at TL. I have no idea if he trades them himself or not, but many of his simple approaches, coupled with the emotional discipline necessary to implement them with both sound money management and proper position sizing, will lead to an overall profitable result.

In fact, bakrob99 posted his method earlier this week - very simple and straightforward - and very similar to an approach I myself deploy (the main difference being that bakrob99 enters on pullbacks while I wait to enter on new highs/lows). I know for a fact that if one were to learn bakrob99's approach and use his suggested money management strategy, the method will be overall profitable. Anyone here could learn the technical implementation rather easily. But very few who try it will have the emotional discipline necessary to attain bakrob99's success with it.

Trading can be taught. The principles of emotional discipline that are required to succeed at trading likewise can be taught. I know that I have helped some folks who were struggling set themselves on a more sure footing. I know that many here at TL have learned from and become better traders by studying the contributions of DbPhoneix among others.

In spite of my largely disappointing experiences with would be educators, I have managed to learn in important ways from others. I have learned from Linda Raschke. I have learned from MIke Reed. I have learned from contributions from Ed Seykota and several members of his trading tribe. Trading can be taught. The all important principles of emotional discipline can be communicated to others.

However, the individual trader must him or herself undergo the practice to inculcate and habituate his or her soul to act as those principles dictate. I can tell you that you must let your profits run while cutting your losses short. I can tell you that you must stop trading after a couple of losses and take a break so as to keep your discipline intact. I can tell you that the only way back to equity growth if you know your approach is sound is that you must have the courage to trade through the inevitable draw downs rather than abandon what you have learned in search for a new method.

I can tell you, but I cannot make you yourself act accordingly. Most of those who peddle trading education do not even tell you about the discipline necessary (likely they themselves are unaware of it and it is that very lack of awareness that has led to their own trading failure). And if they mention it, none will be willing to demonstrate it in real time by calling trades and managing trades according to their method and demonstrating the necessary discipline.

Originally Posted by Gabe2004 »

It is funny that people think (and I did too) that trading is easy and it is going to make us rich with hardly any effort. It is far from it but then what proffession is there that you can master in a short time and make a fortune with it? - There is no such profession. Read about the 10,000 hour idea to master anything.
According to other people I was good at what i did (after college) and calculating how much time it took me to master what I did - low and behold - 10,000 hours and I went through 2 such cycles so far. Trading will be the 3rd one and it does not seem to be any different than the previous two. It was just ignorance and arrogance that led me to believe that I can do it better and faster than most people.

It is a humbling and frustrating experience.
I am not where I want to be (prefectionist, you know ) but I am very close.
I like to call trading THE NEXT NUT THAT I HAVE TO CRACK.

Take care

Gabe

Gabe, your post was excellent. You are likely closer than you know to really breaking out. Keep developing your focus and your discipline. Your new found respect for the importance of position sizing is positive evidence of the level you have reached. I'm pulling for you.

Best Wishes,

Thales

[thalestrader]

Originally Posted by Dinerotrader »

I am struggling trying to decide if I should focus on breakouts or reversals.

If you focus your attention upon properly identifying support and resistance, then you will ultimately find that your current struggle is over a false choice, and here is why:

While not every breakout is a reversal, every reversal can be traded as a breakout.

Best Wishes,

Thales

[Gabe2004]

Originally Posted by Dinerotrader »

I am struggling trying to decide if I should focus on breakouts or reversals. I see both occur and produce great trade potencial................ ................
After I read these types of things I think I should be looking at reversals more. But of course, there is a large group of amazing breakout traders also. I guess you either have to figure out how to play both of them which might be hard to manage or you have to just pick one and refine your ability to pick them from price movement.

Thanks for your thoughts Thales.

I have the same problem.
It seems to me that there are more reversals than breakouts and I have been hurt (financially by many BOs that did not pan out.
My solution is to mainly look for reversals but keep part (1/3) of my entry position around potential BO areas just in case the BO occurs.

Gabe

[Gabe2004]

Originally Posted by thalestrader »

While not every breakout is a reversal, every reversal can be traded as a breakout.

Hello Thales.

I don't understand the above. Could you elaborate a little?
I thought that BOs are continuation pattern if looked upon in the smallest timeframe one trades in......

Thanks

Gabe

[Gabe2004]

Originally Posted by thalestrader »

Gabe, ............ You are likely closer than you know to really breaking out. Keep developing your focus and your discipline. Your new found respect for the importance of position sizing is positive evidence of the level you have reached. I'm pulling for you.

Best Wishes,

Thales

Thanks for the kind words Thales.
This is just further proof for me that the nut is about to be cracked.
The other day a friend of mine said that he is impressed with my conviction that I will master trading.

FALURE IS NOT AN OPTION.

Thanks again

Gabe

[thalestrader]

Originally Posted by Gabe2004 »

I don't understand the above. Could you elaborate a little?

I could, but where would the fun be in that? See if you or someone else can post a chart demonstrating what I mean first.

Best Wishes,

Thales

[Dinerotrader]

Originally Posted by thalestrader »

If you focus your attention upon properly identifying support and resistance, then you will ultimately find that your current struggle is over a false choice, and here is why:

While not every breakout is a reversal, every reversal can be traded as a breakout.

I was thinking about my post about deciding between breakouts and reversals and I realized that you, Thales, trade reversals quite frequently when S/R holds and price reverses. Here is an example from this thread a while back. Once I realized this I came back and you had posted what I quoted above. It just hadn't clicked yet. Thanks for your patience.