Sometimes a trader doesn't even realise he has been already working in the right direction therefore he keeps changing directions wrongly, perhaps throght asking questions on forums like ET. Results: Learn nothing. Learn some right things. Unlearn some wrong things. Learn some wrong things. Unlearn some right things. Combining any of the above.
"Gurus" always trying to blame the student. If I can't learn from someone because they're a bad teacher or because I'm a bad student, the outcome for me is the same. Trading (and kung fu movies) seems to be the only place where people don't answer with specifics. Well, and certain salesmen, but generally speaking if I ask a salesman a specific question and I get a vague answer I assume I'm being played and I leave. If you're worried that helping someone might ruin your "edge," what's the point of even giving hints? If you visit guitar forums, for example, and someone asks a question about like how to use a diminished arpeggio or something, you get specific answers. There's none of this "do what the notes tell you to do" nonsense. And sometimes there are people who are good at things but are unable to explain it to others. And in that case, you can't really learn from them, either. So I don't care why I can't learn from someone, I just care if I can or not. Maybe they're a master trader and make 5 figures per day but can't teach. No problem. I can't learn from them. Maybe they're not a successful trader but are just looking for students to pay a monthly fee for their "lessons." No problem. I can't learn from them. Maybe they just want to see how long they can keep my attention but have no intention of teaching me anything. No problem. I can't learn from them. But either help or don't help. Fortune cookie nonsense only keeps noobs in suspense for a while, although I guess that's its purpose, especially if you're a "guru" selling something or somehow making money from the people you keep in suspense. The only other situations that are left are the people who intentionally mislead people asking questions, and the people who honestly think they are helping but are not yet profitable traders themselves. The vagueness. The obfuscation. The platitudes. None of it is helpful. But the people who do those things already know that, and perhaps that's why they do it.
Now let's get back to the discussion at hand. Price can only do 6 things. Are all price patterns just after the fact identifications of combinations of these 6 things? Price makes a HH, a HL, and another HH. It's now retracing but still above the previous HL. Should you get ready to go long? Is it going to keep making higher highs? Should you get ready to go short? Is it done making higher highs? Should you sit out? Is it about to start chopping? If your answer is "there is not yet enough information to decide," please be helpful and mention what additional information you would need.
What now?Price either retraces and continue to go long or reverse.There are only 2options. p.s. i thought price can only do 2 things
Probably irrelevant or off topic: http://www.wikihow.com/Ask-a-Question-Intelligently http://forums.mozillazine.org/viewtopic.php?t=260935
For me, there is not enough context. But first let me back track a bit. I would say about a year ago various people were talking about S&R. I could never see it, certainly not real time. Which levels were important, which weren't and why, yada, yada, yada. I decided to just watch a couple of futures real time, a couple hours a day, would look at the full charts at the end of the day just to see what happened. At some point, occasionally, I started to see S&R real time. The more I watched and opened my mind to the possibility, I slowly started to see more. I also read a few books, articles etc... that talk about how the market works. When I started to notice that I wasn't surprised but what price did next, that kept me going, when I noticed a certain price level and saw price stall and reverse from that level, that kept me going. What really makes me feel that I am on the right track is when I am watching PA and it pops into my brain what I read in a book or article and I am seeing it real time on the chart. That's what I believe it means to start owning an idea, proving it to yourself, watching it unfold real time. That is happening more and more. Am I ready to quit my day job, no. Am I consistently profitable, no. Do I care, of course. I am not doing this because it so much fun waking up at 3:00 in the morning. But I do believe its possible to be consistently profitable trading. The other thing and I think it's bigger than the mechanics of trading is the mental side of it, at least for me it is. Our own mental bias while we trade has an enormous impact on what we do while trading. As I write the above sentence it seems so obvious that it should go without saying. Really pay attention to what "conversation" is going on in your head while trading/watching the markets. Write it down, is it really in-line with how the market works? The market is never wrong. If you can't align your thoughts with the prior sentence you will not have consistent success in the markets. You've mentioned a few times, you want to know what the market is going to do next, there is no way to know. The problem with knowing what the market is going to do next is, if you are right, your ego gets inflated and you won't be able to objectively respond to the market in the appropriate manner, and if you are wrong, self-doubt will take over and you won't be able to objectively respond to the market in the appropriate manner. When they say trading is easy I believe this means that the actual steps you need to take are simple, the hard part is the mental baggage that gets in the way. Prior price action is everything, based on what you have shown, I don't have enough info. Context of prior PA (for me) is required to create a framework. You show HH's and HL's but is that after it broke below the LOD and the latest HH is just retracing back to the LOD? Or is it after price has bounced off the LOD of the day, or surpassed the HOD. The hardest part (for me) is to watch PA and feel that I should be able to catch every move. The smartest thing, is to wait until PA and context line up. Easier said than done. The more I watch the more it starts to make sense to me. Play with different chart types min, tick, volume. I look at a 5 minute chart and I can't really make heads or tails of it, I like to see the more fluid movement of a volume chart. I do like time based charts because I usually can see S&R more clearly. Some of the things I have read or heard and now finally OWN: Nobody knows what is right for me. Stops save the most precious capital I have, my mental capital. The market is always right. You have to have a system that you believe in. If someone can dissuade you from trading by a post on a forum then trading is not for you. That I don't understand even 50% of what Jack Hershey posts, and that's ok.
Larry Williams started this thing about price patterns and then other continued formalizing the subject. For example Michael Harris published a book I now forget the title for identifying and classifying price patterns. In his blog and website he has tons of examples of how to check the robustness of these patterns and his software price action lab identifies most formations up to 6 bars I believe. The thing to understand is that some patterns are used for long/short runs and some for mean reversion. A DB can signal mean reversion or runs. The only way to find out is to test it on many markets to see how it has behaved there. Answered above. You need to find a sufficiently large sample of these patterns and see if there is an edge for runs or mean reversion.