This is the first time I've encountered someone (else) who trades this way. I understand what he's doing. He has levels in mind, probably well in advance. I began exploring these trade ideas a while back and have incorporated them into my overall plan. These are very high reward/low risk entries. I've shown the overall concept several times here on ET. There's a bit of context involved; it's not just a level itself, but the price behavior that leads into it. I'm not going to elaborate on this at all. This is NOT in any book I've read, but anyone who notices price behavior patterns and who loves to ask "Why did price stop and turn there?" will catch on to this tactic. It's all there for the taking if you dig deep.
@kut2k2 I am definitely one of the traders that connects with the metaphor of managing a trade like driving a car. I do agree though that some entries are more optimal regarding the capture of a specific movement. My reason for stating that an entry isn't the end-all is because what happens afterward makes or breaks the trade. Even the worst possible entry long into a strong downtrend can be salvaged for a few ticks loss if closed right away. Whereas a great entry with a ton of instant favorable excursion could still be turned into a much larger loss if managed horribly. Although we have a different hierarchy of verbalized priorities, I find that I agree with the essence of your most recent post if I understand you correctly. When I talk about entries being less significant, I tend more to think of the entry as a specific set-up that needs to trigger, or how many ticks exactly a retrace needs to be before an entry is considered. I find acute mechanics like those to be of relatively low importance. The bigger level picture of understanding the movement you're trying to join and capture, which is more what you're referring to when you say entry/exit. -- i.e. entry direction, how to let it run, when to exit if/when initial hypothesis changes/concludes are what is most important to me as well. Basically I would say that as a trend-follower, you need to understand the essence or model of the trends you're trading, since no two trends will look exactly alike in price distance, time duration, or volatility. I know that successful trading entry/exit mechanics can be set up, but everyone I know who has gotten to that point first develops an accurate conceptual awareness of the movements or phenomena they're trying to trade. Great discussion!
I took a bite but its obviously not so simple. If I think of where a 5 min trendline could go from the lows during the overnight, his long happens when price drops well below this line, but at the same time, its not that close to either of the two other support lines I could draw. Likewise, the short at the top is much higher than where an upper channel line might go, and I see no other resistance to the left if looking for a horizontal line. You're more than welcome to PM me the secret sauce since you said you won't go into it here!
Yes it is. I never meant to imply that entry strategy is the most important part of the trading plan. It isn't. My belief is that entry strategy, exit strategy and risk management are equally important. None of them should be emphasized at the expense of the others because they are all necessary for a successful plan. Most trend strategies fail --and even the successful ones have a low winrate-- because of poor entry strategies. This is why entries shouldn't be given low priority. Btw, I was too harsh on trade management. On further reflection, I've come to realize that Let Winners Run is trade management, not an exit strategy. So, a necessary part of the overall plan.
I don't think it's based on charts. Once again yesterday he mentioned that those trading from charts alone are at a distinct disadvantage. I don't think he uses DOM/T+S stuff either. Certainly doesn't seem as though he's glued to a screen with extreme concentration watching the Ladder tick from the way he posts in skype. I do have a very vauge idea of some things he might be looking at, but it's only a guess at this point. For now I'm content just copying his trades and growing my account and getting my losses back! I've never seen anyone come close to his ability in realtime. Closest i've seen on ET is schizo and volente.
guys: I've had an insane number of PM's asking if they can join the skype room. I can't do it. He doesn't want to run a chatroom. It's literally just someone who initially invited me to skype to prove to me and another loser that it's possible for a few days and he kind of just carried on . He only comes on every few days or so now anyways. Sometimes less. Seems to spend all his time playing golf with celebrities from what i can gather! I always fear that he'll just stop bothering coming in at any minute as it is! Don't want to ruffle his feathers bringing more people in. Besides, you're not missing much. There's nothing really to learn. He barely shares anything about method. I just copy his trades because I lose money with my own analysis, and make money using his! Most people wouldn't want to just blindly follow someone anyway!
The issues with questions and systems like this are multiple--- primarily--anything will work in the markets some of the time--including random entries. This creates the illusion that the system "works"--- and it then attracts a following who "believe" due to their own success but this success was nothing but a lucky streak. So when they start to lose, they blame themselves for not following the system, psychology, or a host of other personal reasons when the truth is that it is the system that has failed --- Smart traders understand this and will morph the system so that it works again for awhile until things change again then the traders will change to other instruments, systems, ideas to stay one step ahead of the market. In addition, price based systems are focused on the result ( price movement) and not the cause of price movement therefore they are fatally flawed when used alone. Hindsight bias is extremely seductive. Always remember this. You can thank me later. good luck! surf