predicting volatility without direction for a profit? Guess it's kinda like a type of wagering in football, where you determine expected total points (between the two teams) instead of who wins or loses by the allotted point spread.
How do you see through this and learn or know how to change your approach? I see the comment from Jficquette above (thanks) - what do you think?
<a href="http://imageshack.us"><img src="http://img132.imageshack.us/img132/8251/optical3nc5.gif" border="0" alt="Image Hosted by ImageShack.us" /></a>
Without the ability to accept one's losses, a trader will lack the ability to CUT losses, resulting in account death.
Charts work, but they only work reliably under the same conditions that moving averages and just about anything andeverything else works. If nothing else they can give a clean entry into a trend. I never buy a trend just because it is a trend without that kind of entry. Buying into a steady uptrend randomly is not a dramatically skewed risk:reward profile. Try and understand what is happening rather than look for 5 waves in a triangle etc If it is that perfect it has probably been painted. As someone else touched on, look at what happened before a big mover took off. I look for my own chart patterns, and only a few are text book patterns. e.g. I don't look for a "double bottom" per se I look for somebody smashing a stock down, seeing it rebound , smashing it down again, seeing it rebound again. He would conclude that this is probably as low as he can force it - so what is his next move? (note this is not your standard text book double bottom - what precedes it gives clues, but Bukowlski is right - the closer the two bottoms the better. To my mind indicative of deliberate action with a purpose rather than random) Most people look at a stock at a high and how it got there, I am more interested in stocks at a low and how they got there. The game is played the opposite way round from the face value and any information that got as far as me must be disinformation.
NB The above is illustrative and is not applicable to all stocks and all markets. What works in microcaps does not always apply in large caps and vice versa and what applies in emergimg markets does not necessarily apply in mature ones and vice versa.
Follow the index futures for 5-7 years tick by tick day by day. Ignor all financial news just focus on your intraday charts, use money mannagment rules. Use self control. After 5 years you will get the hang of it.
Bert, If I may offer you some very simple advice,it is to stop bullshitting around with chart patterens,technical indicators,candlesticks and god knows what else..The answer is much simpler,and you have already discovered the most important part,but the inner seeker in all of us wont let us see the truth. Human beings tend to Seek the Miraculous...It simply doesnt exist,yet i can not tell you how many times,no matter what i say,no matter what evidence i provide,they refuse to listen to what i am saying.They will only hear it..... As a corralary,I happen to teach and train people in the martial arts.I studied with a very famous master in tai Chi,which is one of the more mystical martial arts.Students alays approached him and asked how he acheived such tremendous power.Hi reply was simply,pracuoce the form 100x per day an focus on staying relaxed and rooted.No matter how many time he said the same thing over and over,the student would ask "No, No what is the secret?" The answer never changed,and the student went on seeking.. i dont know if you have watched the Ultimate Fighing on TV,but the best thing about it is that it has demystified the mystical.it is now VERY clear what works and what doesnt work.There are a few outliers of individuals who possess extraordianary talent who stand out and can do things their own way,but in 99% of fights,its clear as to what is the most effective style and approach.... Trading is combat....You make a mistake,and the penalty is severe.Make too many mistakes and you go the way of the dinosaur. I have puposely left the "answer" vague,but i do promise you there is an answer.And its much simpler than you think.I was the ex head trader of emerging maket derivatives at a major investment bank,and the truth is,after I left and went out on my own,I couldnt trade my way out of a paper bag. I now have close to 30% returns non levered(i am risk averse)and it wasnt until i abandoned my belief system and treated my trading as i do my training(martial arts),that I turned things around. I do believe there are no victims,only volunteers...
tao, I appreciate your post. I must confess, though, other than garnering the notion of repetition in anything needed to succeed, I am fuzzy on what you're trying to say. The problem, as you even alluded to, is repetition done in the wrong fashion leads to extinction. When I speak of candlesticks, I'm mainly referring to just looking at the price and volume action. I rarely, if ever, use any indicators. Is this still BS to fool with? Thanks.