>> So my question is, how do I learn to read the market without any indicators? Indicators tell you what the stock has done. They can show you useful things like support and ressistance as well as the current trend but they predict nothing. In addition, the periodicity that will work going forward is only known in hindsight. Similar to gaussian's advice, the average retail guy should sell OTM puts for stocks he'd like to own at a better price and sell covered calls on stocks that he owns that he would be willing to sell at the strike price written. Anything beyond that requires a higher level of option knowledge and experience. >> I'm a novice options trader... In and of itself, that indicates what you should not be doing now --> Trading options! AFAIC, the best thing that you can do now is fahgettabout for now. Read a few option books then read them again. When you understand the language and usages of options, it will be clearer to you what strategies are more suited for your risk tolerance. If you have to ask how to do it, you shouldn't be doing it. Some of the posters here might be making as much money as they claim to be making . I'd love to be able to do that but that's not gonna happen. But I know enough to grind out some additional income in my retirement to avoid spending down my savings. "A man just has to know his limitations" and function within them. So learn your lessons, figure out your abilities and settle into your niche. While you'll get lots of good info from this BB, you won't find your niche from it.
I would not say that indicators are completely useless. They are just a graphical way to read and quantify price and volume changes over time (I would also add breadth as the third "raw data" type). Yes, you are only looking back at past events, but as Mark Twain said "History does not repeat itself but it rhymes". On top of that, you can use them to see what everyone else is seeing, in order to predict the zones where volatility could increase (for instance if the 50day average is about to cross the 200day average, I would expect the market to be more volatile in that area).
It's amazing how many different indicators you can make out of the same data series. It's like when politicians cite statistical data..
Let me see if I can help you out. I'm the Junior Principal of a Closed Equities Trading Firm. Most of what you are reading here? Is by people who can't trade well, and have no idea what they are talking about. For instance? Options are perfectly viable. In fact? I'm so sick of hearing "Never go near options" and "Options don't work" and "Options are a suckers bet" ... as well as statements like this I just ran across: "I'm a coder and data scientist. I have been working on trading for over 2 years. Spent lots of money. Every trainer i have paid lies. Because, there's no profitable system. If there's, nobody will teach you what it's." Bull***. In fact, I'm so sick of it, I'm going to start another thread, and journal a process that my Partner and I have agreed to demonstrate to aspiring traders. And I'm purposely going to use options, just to demonstrate that the above is complete bullcrap. To demonstrate ... that for your first tip? 1) YOU REALLY need to start ignoring people on trading forums. And what the heck, that can include myself. You need to start learning to weigh data objectively, for yourself, as to what works (mathematically, so as to remove people's opinions). It'll help if you have some training in rhetoric. But there are as many strategies to trade profitably, as there are profitable trading firms on this Planet. Good god, our library of strategies has about 35 strategies in it, and God knows there are more. Strategy? Is actually simple. More on that in a bit. Its not a matter of finding the right strategy. It's a matter of deciding what you want to do. Which leads me to my next point ... 2) How you want to trade? Is dependent on you. What you need, is not the "strategy", but principles to develop your own way. Those principles include that you cannot look at a SINGLE trade, as proof that you did anything right or wrong. But that groups of 30 and 40 trades, will tell you the story. You need to grind out an iteration of trades. You need to decide the accuracy rate, not to figure out how how hot you are at picks? But to determine your math advantage (You can be 99% accurate? But then when you lose, you'll HAVE to accept you'll get hit hard on your risk reward ratio. Conversely, there are plenty of traders who are only 35% accuate? But when they win? They win BIG, and thus, print money over the long haul while the endure many small losers. Your Accuracy Rate only matters, to determine your math advantage you need to be aiming for). 3) Don't get stuck on strategy. Just don't. Look through these forums. These forums are FILLED with people arguing strategy. What works. What doesn't. I'm going to give you a little bit of advice. It all works. And none of it works. In other words? If you ignore the aspects in point #2? Then nothing you do will work. That's what is imporant. Entrances? Are not that important. But for some reason, new and aspiring retail traders get HUNG UP on entrances. This is something my senior partner at our Closed Firm says all the time about new retail traders. They are so hung up on patterns, and entrances? They have no idea what to do, once they are in a trade Strategy? Is actually easy. IF ... you accept the principles in point #2 4) You will have to endure discomfort. Trading, is about learning to endure discomfort. That's why most fail. In fact, my partner has a term for the endless cycle that most aspiring traders get hung up on. He coined the term: "Method Hunting". The find a process. They work it. The win for a while. Then they have a few losses. The take this as proof that "the system doesn't work" (Instead, what we know in the Quant world as ... statistically normal Drawdown that you must undergo). And then? Then they go and hunt up another "method" to find that works. Rinse. Repeat. They do that 1,000 times. And thus, his term: "Method Hunting". Don't get caught up in that trap. Know that all trading, by definition? Is knowing that you'll have periods of Drawdown. And the "Indicator" trap, is almost the worst one of all. Buffett is arguably one of the single greatest traders to ever exist, with one of the best track records. And completely, what we call (obviously) ... scaleable. He has had years, where he didn't make any money. Therefore? He had to endure discomfort. Thankfully, it's easier to be a small trader, and you can be more nimble, and do different things with risk. But at the same time? You WILL have to endure periods of discomfort. That's just the way it is.
After more than 10 years in the stock market, I settle down to trend following. I use 50 days and 150 days simple moving average(source Stan Weinstein). Why not 200 days SMA? At anytime, more than 80% of the stock track the 150 SMA that's is more than sufficient. Just do a simple screen on stocks the number of days they stay above the 50 days SMA and you will find more than 60% will drop below the 50 days SMA within 20 days. To increase the odds of winning, buy after a stock that stay above the 50 days SMA for > 20 days and be mindful that 30% of these stocks will drop below the 50 days SMA. Setting stop loss, entry and exit is an art and it takes a lot of practice. I read 4000+ of NYSE stock charts after each trading day. It wouldn't take long after a few years of chart reading and the sense of the market becomes clearer. At the moment, some REIT, Home Construction, utilities are still trending. To cleanse our subconscious, I only wear the "honest" mask.
Here's the thread I just started: https://www.elitetrader.com/et/thre...egy-trading-journal-that-shows-profit.337303/
whether is options futures or non leveraged products you need to have some idea of markets. how can I be helpful to direct you if you do not know where you want to go, where is your destination?
In the grand scheme of things, there are only two trades: Trend continuation Trend reversal Buy pullbacks in the strongest stocks with risk management (vice versa for shorting). Only try to learn trend reversal once you master trend continuation...remember trend reversal makes up a small subset of trades because most of the time markets are trending in some time frame. start by spending 100’s of hours analyzing trends...ask the question what indication shows itself in the early part of a trend .... hint ultra strong momentum.