um I think they have already looked ahead (hopefully they have) in designing their system and it’s rules. May wanna write this down. It is Ok to look at PRESENT market action in decision making and it is ok to look AHEAD in anticipation of what will likely happen IF you are looking BEHIND at what HAS happened. It is called extrapolating Present and Behind into the unknown future based on probabilities extracted from observing past PA. Def from vocabulary.com “The verb extrapolate can mean "to predict future outcomes based on known facts." For example, looking at your current grade report for math and how you are doing in class now, you could extrapolate that you'll likely earn a solid B for the year. Another meaning of extrapolate is "estimate the value of." You could extrapolate how much your antique watch is worth by finding how much similar watches sold for at recent auctions.” In trading this sort of thing is done when a trader shorts at the top of a range and goes long at the bottom of a range as opposed to going long at the top of a range and shorting at the bottom. He is simply extrapolating from past and present PA in ranges and looking forward and placing bets on the likely outcome. Most (and it is a high percentage) BO attempts of the top or the bottom of a range fail. Eventually one will succeed but until it does decision making can be facilitated by extrapolation. One is not completely “shooting in the dark” so to speak. We extrapolate a trend will continue (at least for some time) based upon PA in previous trends. Markets generally have inertia and we place bets upon that principle when we trade trends. In a bullish trend to be clear there are both bullish and bearish pressures at work. These pressures create the inertia. The graphical view of those pressures at work is recorded by the chart. The inertia is extrapolated into a sort of look-ahead bias that begs to have bets placed as long and not short. Traders lose over and over placing bets against inertia thinking the trend has to stop and a reversal has to be forthcoming and imminent. Remember, the chart will record when a major reversal happens and not just a minor reversal in the form of a pullback. Until then the trend is intact, the pressures are bullish, the inertia is upwards and the best bets are LONG. Strategies fail when context in which the setups for the strategy change. Setups should be designed for strategies within context and not context free. Bear channels in a smaller TF are really just bull flags in a larger TF with a probable eventual SUCCESSFUL BO direction being north. SO A TRADER just keeps shorting at the top of a bear channel because the inertia is down in the channel. The pressure is down. That is what the chart is recording. When he looks at a larger TF he sees a bullish trend that has a flag forming (this flag IS the bear channel on the smaller time frame). What does all this tell him? Well it should indicate to him the context is bullish and that the bear channel is really a bull flag and bull flags usually resolve in a continuation of the bull trend. So he is expecting a bullish BO of the bear channel to take place. But he knows that as the flag is forming in the smaller TF that the strategy to use and the setups to employ that will give the best odds are bearish ones. So he shorts and shorts the bear channel at the top over and over until there is a bullish successful BO then he reverses his direction and employs long strategies and setups. If he gets caught short when the successful BO of the smaller TF bear channel occurs he exits with a loss, doubles or triples up in the opposite direction of the larger inertia TF and presto he soon has recovered his loss and back in profit quicker than a lizard’s tongue after a mosquitoe. He has capitalized on bearish inertia in the channel AND on bullish inertia on the larger TF flag. Source: animals.mom.me “While lizards are primarily diurnal, and do not consume many mosquitoes, they will capture them opportunistically. Frogs and toads are more often nocturnal or crepuscular and certainly consume mosquitoes; however, mosquitoes probably donot make up a significant portion of their diets.” context...context...context very important in extrapolation and any forward looking bias development and the placing of bets in strategies using specific setups. The same entry setup in a different context will usually render different results. But we know this right? If we don’t know it analytically we know it experientially. ¿Correcto?
Newbie struggling traders may not have clear cut goals and may be too much affected by emotions and lure of profits. They usually lack a strategy or plan. They may over trade . Whereas successful traders will have clear cut well defined goals and are not much affected by emotions . They know when to stop trading so the chances of over trading are bleak in case of a successfu
Beginners and experienced traders can first be differentiated on the basis of the effort both put while trading. Where experienced traders go through every news and market update, beginners start to trade by keeping a watch on the economic calendars. New traders find it difficult to control their emotions while trading, whereas for experienced traders emotional discipline is not a big issue. Experienced traders have developed deep understanding of technical analysis over time but for newbies, it is a tough job. The account size may also vary for both of them, with the new traders mostly trading on a smaller amount of capital.
From what i've seen Successful traders seems to basically always know (somehow) where the market is gonna go, often being able to catch close to the low tick and run it for the majority of the move, intraday (day traders) They don't seem to believe in charts/TA (but I don't know what they DO use to decide when to open and close trade tbh. They'll never share these secrets, but they will rule out things, such as time+sales, DOM etc etc)
Let me give an example from the world of commodities. Prop trades are almost always fundamentally driven. At least it gives the general direction. A lot of money is spent on research, to get an S&D together, to arrive at in-house surplus/deficit estimates. A retail trader/investor might pick up numbers from the news outlets, but these numbers are either stale or just inaccurate. Also, fundamentally, a commercial trade house is in essence a spreads trader. Buying physical, selling futures during procurement, upon resale comes the price fix (buy back the futures and selling the commodity). This basis play is more important that outright bets on prices. Charts are only looked at to know what the retail punters are watching, trades are never ever initiated if one indicator says XYZ. If a large long or short gets put on in a spec book, to even get risk approval, it has to be a fundamental play. This applies for all fundamental plays, no exception. Sure once in a while a chart pattern like H&S comes along, but before one jumps in and sells, it has to be in line with the overall fundamental house view. In all that, it's always a team effort of the whole trading desk and always backed up with research.