[dla133]

Thanks DB,

Wise words indeed.

Here is my thought process so far.

I want to trade a market that is liquid. FX seems to do that but it may be too liquid for me and my little skill. I have seen the FX markets move 400 - 500 pips quite a lot. Indexes are also liquid but seem in my eyes a little less volitile.

I don't know if I have got this completely wrong but here goes.

The more volitile the price movements, the better trader you need to be to react to those movements. So since I am still learning and my skills will be slow, I need a market that moves a little slower so I can keep up.

Am I on the right track with this thought process?

Cheers
Lee

[DbPhoenix]

Originally Posted by dla133 »

Thanks DB,

Wise words indeed.

Here is my thought process so far.

I want to trade a market that is liquid. FX seems to do that but it may be too liquid for me and my little skill. I have seen the FX markets move 400 - 500 pips quite a lot. Indexes are also liquid but seem in my eyes a little less volitile.

I don't know if I have got this completely wrong but here goes.

The more volitile the price movements, the better trader you need to be to react to those movements. So since I am still learning and my skills will be slow, I need a market that moves a little slower so I can keep up.

Am I on the right track with this thought process?

Cheers
Lee

If you've spent more than ten minutes on message boards, you must know that my answer is going to be "it depends", or, better still, "yes and no".

The core of W's approach is to find the best opportunities at the time one can expect them to move and to limit one's risk to the fullest extent possible at the time of and during the trade. You're on the right track, but you need to think long and hard about risk.

You have a lot to think about and a lot of prep to do. But there's no hurry. The market will be here whenever you're ready to go for your first ride. Take your time and go step by step. That way, there'll be no fear, no anxiety, no panic.

[dla133]

Thanks again DB,

To give you a better understanding of my journey so far, please read the following.

I started my investment journey with Mutial Funds inside what we call in the UK an ISA Wrapper. Basically all your investment including returns is TAX FREE. Once I became comfortable with these (Getting used to watching my account rise and drop in £1000's) and believing what I was doing was right. Since then I have had a fair bit of success even with this current bear market. Rather than become fearfull of loosing my capital, I see opportunities to invest at reduced prices.

I then wanted to look at ways to invest/trade to earn around £15,000 a year. I can only trade early in the morning or last few hours in the evening because of my full time job. This money would allow me to invest the maximum allowance inside my ISA account each year (including my wifes) without putting undue stress on our finances. I have placed trades in the FX market and stock market via spread betting, won some and lost some. Over the last 2 years I am probably down around £3000 (this shows how amateurish my approach is since I can't even tell you what I have lost).

What I am about to say my shock some people and make others nod in agreement. Each time I traded I had no belief in what I was doing. I would sit and hope I was right rather than believe I was right. When the trades started going against me I would loose faith in what I was doing and trade out. So many times as I traded out, the market would then go in my favour and I would loose out. Fear was may greatest enemy as I had no belief in what I was doing. I used indicators, read books, listened to other people untill my mind was a complete and utter trash can.

Now the good bit

Since reading some posts in this forum I feel a light has come on. That is trading via price and volume action. Looking for supply and demand. Guys in the past made very successful careers in trading way before all this fancy technical analysis was around by purely reading the tape. Understanding what the market is doing right NOW, rather than what it was doing yesterday. I know it seems obvious but, we are trading in the NOW not in the PAST. Yes history can give us key areas of market behaviour (Support / Resistance) but it can't predict what will happen in those areas in the future. Actually watching the market action in those areas in real time is the only way to know what is going on at that precise time. Who is in charge the BULLS or the BEARS?

When reading Wyckoff and other similar material, it all seems to make sense. So I am going to start my journey again, with BELIEF in what I am now doing rather than HOPE and FEAR.

With the help of some experienced people on this forum I am confident I will become a far better trader. Will I actually become a successfull trader, who knows?

Finally to give a little analogy.

I used to do quite a lot of weight lifting in the past and would read all the modern fitness books on how to train. They would give all the fine details about different specific exercises. I tried all different approaches and saw very little improvement over a 2 year period. I then discovered old weight training books by guys who trained years before steriods and fancy machines. They basically told you the only way to progress was to add weight to the bar eevery time you trained or do more lifts with the same weight. They advocated big basic lifts using the entire body, rather than small individual exercises for individual muscles. This all seemed to make sense to me and so of I went to the gym with real belief in what I was doing. I made more progress in the next 6 months than I had made in the previous 2 years.

What I am trying to say here is that my belief is that understanding Supply and Demand is the basics of trading and without that you will make very little real progress.

Sorry for going on here quite a bit but you can hopefully see how excited I am to actualy feel I am now on the right track.

Cheers
Lee

[DbPhoenix]

Remember first of all that daytrading is not the ultimate goal of every market participant. There is no generally-held belief that you have not arrived until you're a daytrader. Granted it all appears romantic and sexy, but it is primarily little more than busy. Playing World of Warcraft would keep you just as busy and it would be a lot easier on your pocketbook.

Keep in mind also that many of those who go on about the riches to be found in daytrading aren't actually trading, or, if they are trading, they are making little or no money (eventually they disappear, with or without fanfare, and one learns after a while not to pay a great deal of attention to the claims made on message boards).

Therefore, rid yourself of any notions that if you're not daytrading, you're not really trading. Traders can also trade daily charts, or even weekly. And if you can't be at your computer during the trading session, daytrading -- or intraday trading -- just may not be for you.

Since you have experience with mutual funds, you know all about patience. And given your particular tax situation, frequent trading will likely generate more frustration than it's worth, certainly more than is necessary. Consider, then, a postponement of your trip to the real-time world as well as all the paraphernalia required to go there and work there. Once one has decided to make a big change, he naturally wants to get on with it, and as quickly as possible, which is why so many people go from the one extreme of long-term investing to the other extreme of intraday scalping. You appear to understand that there's more to it than buying a charting program, subscribing to a streaming datafeed, and opening a brokerage account. You also appear to understand that there is a process through which one must go, either now, fresh and with a clean slate, or later, after a string of disappointments and failures.

Therefore, at least entertain the idea of EOD (End Of Day) trading. Not only will this not require you to be in front of your computer all day every day, it will neither require you to wait an intolerable amount of time for your work to pay off. While some have compared EOD trading to watching concrete set, doing it the "Wyckoff way" is something different, waiting until just the right moment to take the trade, then reaping the benefits (or getting stopped out) almost immediately. Gringo, for example, proposed two trades in the EOD thread, one of which he took and one of which he didn't. But both ripened within only two or three days. For someone with a full-time job and family responsibilities, two or three days is a mere blip.

Of course, if you're desperate to daytrade, why not? The best way to learn what you're in for, and up against, is to try it. But if you have a life, and many things to occupy your time, you may find that EOD trading is just the thing. Far faster than the mutual fund route if you approach it as Wyckoff would, but without all the pressure and anxiety of intrady trading. The same principles apply, the same procedures, and often greater rewards.

And you don't even need a real-time feed.

[dla133]

Thanks again DB.

I look forward to posting my progress over the next few years. Notice I say years not days as I already know this will take a long time before I will see the fruits of my labour. EOD trading may be better for me, only time will tell. My intension is too give myself around 3 hours a day to watch, analyse, and learn. I will look at real time data while the markets are open and also look at the EOD data and write my thoughts accordingly. The live data will be for possible short term scalping and the EOD for a more long term approach. Which one I will finaly settle on will be which one I feel more comfortable with. People may say you shouldn't look at both as its too much for a beginner. I say unless I look at both how will I know which one I prefer.

I hope that with the help of this forum and guys like yourself sharing your experiences I will find my own path to success.

Cheers
Lee

[MRW]

DB, while reading Wyckoff's Determining the Trend of the Market by the Daily Vertical Chart, he mentions putting a ruler between price points to gauge the rate of price ascent, and compare it with other rises.

I know you've written about supply/deamnd lines extensively, but did Wyckoff make any other direct refences to constructing and/or using trendlines?

Probably due to a lack of experience on my part, I've been leery of trendlines as they seem to be a sort of "artifact" created by the chart at times, and not as substantial as support and resistance areas/levels.

Perhaps there's a thread elsewhere that addresses this?

Thanks once again!

[lewtz]

My take on it is you can use them as a warning sign. Typically the break of the first bar shouldn't indicate that there is a reversal, but that price is at least slowing its trajectory. However, once you break the second one, there is a heightened chance of reversal that is occurring or will occur. However, like I said, it's just an interpretation. Here's a chart for demonstration:

[firewalker]

@ MRW, @ Lewtz:

This post might also interest you:
http://www.traderslaboratory.com/for...47-post60.html

It's about supply/demand lines.