Great post, I also believe that timing skill is an art form. It came from experience watching and generalizing behavior of the market, which in turn gives you the ability to expect what the marketâs about to do next, although not correct most of the time but itâs a great tool which no other technical skills can be better. sg20
Oh Hell. Trade anyway you want to. Although I recommend if it ain't going up don't buy it. Keep it simple.The only thing that keeps you in the game is good money management. Or you could have like start with a billion end with a million.Seriously your money management should keep you from wiping out before you change your losing ways. Some say greed is good,but greed will cause more failures than any faulty trading method. Two basic rules. 1. Don't get greedy. 2. Keep it simple. Of course none of the above applies if you are a 200 I.Q. Quant.
I been trading before the invention of the home PC. Back testing was a long tedious process, even as simple as a moving average was tough, let alone charting by hand 30-40 markets. I learned price action whether I wanted to or not, first on daily bars. then with PC for day trading. Methods have changed to becoming more difficult as time has passed. but not more profitable for many. Everyone wants to start with the most difficult way to trade first, day trading instead of long term trading whether commodities or stocks. The most money to be had is long term trading and the least "per trade" is day trading. Seldom does anyone count in commissions, but THIS expense in day trading is one of the biggest percentages of ones' losses whether in a winning or losing trade. But, those who are starting and full of dreams, don't want to hear this, they prefer the "action", thinking that more trades the better, buy as the market moving higher, sell as the market is going down, the "feel good" trades. So whether I am doing monthly, weekly, daily long term trading or trading five minute bars on ES, my methods of entry are pretty much the same. The only difference is in ES my stay is one point 80% of my contracts. Long term reward to risk is seldom less than four to one, with commissions being less than 0.005%, in day trading however, reward to risk for me factors out 1.1 to 1.375 and commissions are 15.4%. 1) Here is the most important area, do simulated trading for 2 months, and if you can't be profitable four out of five days for each week, don't start trading. Don't be one of the many horror stories that you lost $80,000 in two years and you need to get it back, cause it is not going to happen. You are going to have to get it back from others who are too eager to start losing. 2) Setting a good stop, that is accomplished by back testing your winning trades, go back 1000 plus trades and finding out the optimum amount of risk needed, how much did the trade go against me before being profitable trade. 3) Set target by back testing 1000 plus trades, how far did majority of them go before backing off. 4) Every trade has 50/50 chance of being winner, it is only after 1000 trades whether one feels this changes. I am amazed at how many new traders come into this game and take it so litely that they can compete against the most experienced, read a book, do very little back testing, open an account and trade. Money must come cheap for many who entry. Or the dreams of being accomplished will be easy, lying on the beach by 11:00am. 5) I do not trade in direction of current trend, I have discipline of excellent entries counter to trend. I need the market to expand too much in one direction. 6) There are no simple rules for trading, this is a tough business and it is a business, you lose your money, you are out of business, THAT is plain and simple. Once you learn how to trade, you look back and think "why could I not figure this out my first year"? Too many have dreams of grandeur. My way of trading is by no means the only way to success and applaud all who have worked hard and continue to strive to become better at our craft. Handle 1) Trade in direction of broader market (.i.e the direction of the higher timeframes) 2) Set a good stop (i.e if going long, the stop should be below support, if going short the stop should be above resistance. 3) Set target at next major support (if short) and next major resistance (if long). 4) Enter only at low risk. That means enter if and only if you can get in at a price that is relatively close our stop when compared to your target (i.e. risk/reward should be better than 1:1)
I agree. I have seen traders with a list of over a 100 things they expect to need for success, and they still lose. Some here on ET. If only it were that simple.
IMO the only way to really know the potential is to understand the fundamentals, the structure of each market, the supply/demand figures, and the history of prior bull or bear markets. For example, oil went up massively in the 1970s, for more in % terms than in this bull, yet you say it was "totally uncharted territory". Not really - a 5 fold move in 5 years is something that has happened before, not just in oil but in many commodities. Of course this does not tell you how far or how long the move will go. But pretty much any time in the last 3-5 years, an overview of the oil market fundamentals has been enough to suggest that a move to $100 was at the very least a reasonable possibility. Pick up "Hot Commodities" by Jim Rogers, it goes into this stuff in detail. Also, I don't really agree that owning oil at $80 was a huge amount of risk. Why was it any more risky than owning it at $15? The volatility of oil has been within historical norms. It's like saying the Dow was a lot of risk at 5000 in the mid 1990s, just because it had gone up a lot. In fact the risk was just normal, and the reward was very high. You have to relate the price to future expected supply & demand, not to past prices. The demand from the developing world is going to be going up and up for a long time. It is going to take a long time even to *find* a lot of extra oil, let alone to then drill, build wells, and extract it. Speculative excess can certain cause temporary pullbacks, as happened in 2003 around the Gulf War, summer 2006, and Q4 2007. But it's the long-term outlook that will affect the price in the long-term.
try hand charting market profile on spus using 1/2 point boxes,or any other hand chart u will see price direction , it'll force u to catch every move and timeframe,u will earn by osmossis at worst