Well a golden short oportunity missed in the es. Bell rang, ding ding ding, started down pulled back to ma's @ 1003, tempted strongly to short judging by bar analysis. Looked at trin, tick no confirmation. Missed a beautiful 11 handle move to 992. I did focus on PA bar by bar. A light bulb went off in my head as I now have a strong indication of what PA is about. I am curious though as to how they can have such a drastic move with no tick/trin confirmatioin? Trin readings were .39 ish, tick -200 ishand trinq .82 Can anyone explain tick/trin contradicting this move? Thanks Good Trading, metoo
Regardless of your current experience level in trading, everyone had to start at the beginning. I suspect that the emotions and anxieties were pretty much identical for all traders early in their development. And since then, each trade has gotten easier as your confidence has grown. That's what a learning curve is. Today I'd like to share two related ideas that should move everybody a little bit further down their learning curve. This will be good for the new-comers as well as the experts, but the traders near the middle of the learning curve will benefit the most. In a nutshell, to become a great trader, you have to do to things. First, master the internal ego. And second, defend the external ego. 1. Master The Internal Ego, So You Can Learn The idea is a simple one - you must precisely recognize what is keeping you from taking your trading success to the next level. The vast majority of the time, it's your ego getting in the way of your self-education. This isn't the arrogant or over-confident type of ego. Instead, it's more along the lines of a defensive, protective ego - the "I don't need any help" ego. The problem is, that kind of self-shielding ego is what prevents real learning. Let's take a closer look. We're all human, and being human, we don't want to admit that we are wrong about anything, including trades. The ego wants to uphold an ideal version of ourselves that allows for only successes and not failures. Many traders collectively lose millions of dollars trying to protect the ego's version of reality. Your goal should be to trade without ego, or without personal judgment of your self worth. Trading is a business, and the businessmen who do the best at it are the ones who treat as such. It's not a reflection of them personally. In fact it's usually just a reflection of a mostly-mechanized trading system. In order to make money trading, your goal is to keep losses small while letting winners run. Your ego is not equipped to do that naturally, but a mechanical trading system is. That's why we're such big fans of proven trading systems. But aren't you up against traders with a ton of experience and great trading systems? Absolutely. But remember, everyone follows the same learning curve, and nothing is free. You'll have to spend time and effort to get good at this. How do you do that? Learn! The reality is that you chose to enter each and every trade. Examine why the losing trades failed, and why the winners were successful. This can be painful, at least initially, since the ego is built to deflect blame yet accept praise (this is why we said the ego can create problems). That's a trap. If you find yourself saying "that was a good trade entry but..." then stop yourself immediately. Either everything before 'but' or after 'but' is inaccurate. If you rationalize or justify poor trades, then you'll never learn from them. This is an important reality - the ego can prevent real learning. If you can learn to accept some failure without being emotionally devastated, then you'll be a good trader. In fact it's been said that the world's top traders aren't necessarily geniuses - they're survivors. They lasted longer because a rough trade (or a string of them) didn't spook them out of the game. In other words, they didn't take losses personally since they realized perfection is impossible. In so doing, they learned a great deal just by being able to stay in the game longer. 2. Keep Your Trading Private, So Others Can't Crack Your Confidence So how much can other people affect your trading? There's not enough space here to even really begin. However, there is one characteristic that seems to separate the great traders from the average ones. The great ones realize what kind of problems that a lack of confidence can present, so they don't even risk a shattered ego. How? They keep their trading activities to themselves. While the amateur trader will often tell friends, neighbors, and total strangers about trades he may have entered, it's all too often a setup for disaster. Call it Murphy's Law if you want, but one of the 'sure-fire' trades you just entered and told your neighbor about will turn against you soon. And like clockwork, the neighbor will ask how it panned out. You have one of two options at that point: tell the truth, or lie. You could lie to the neighbor and say the trade went fine. However, even though the neighbor may not know any better, the damage to our own ego is still a reality. How? Being forced to deceive also forces us to acknowledge that we may have inferior skills. Instead of just accepting a losing position, we're forced to conceal the trade to protect other's perception of us. The irony is that the lie can cause even more damage to our confidence than just accepting the loss. Speaking psychologically, our subconscious minds can rationalize some incredible stuff that doesn't necessarily have to be true, so don't give it an opportunity to rationalize your decision to stop trading. You're better off not saying anything than saying something you know to be untrue. On the other hand, you could tell the truth to your neighbor and own up to a bad trade, but that would also negatively impact your confidence. You see, our perception of how others see us has a far greater impact (for better and worse) than our perception of ourselves. It may not be fair or logical, but it's a fact nonetheless. And when we fail publicly - even at our own hands - we start to internalize and misinterpret external data, whether or not it's accurate. In other words, our damaged ego affects our judgment. For instance, the neighbor may ask "How much did you lose?", while the trader may hear "Why didn't you use tighter stops?" The neighbor may ask "Why did you buy it in the first place?", while the trader may hear "Can't you do adequate research?" The neighbor may say "Better luck next time.", while the trader may hear "You have no business being in the market." You get the idea - enough of those innocent questions and the trader is no longer trading. Or worse, the trader has changed his or her trading patterns in an effort to regain some confidence. And all because he opened the door to his ego! The only real defense against such an attack is to simply not share the details of your trading with others. There's nothing wrong with telling others you trade, but in no way will detailing your trading activity enhance your return. In fact, it may potentially do the opposite. If you profess a trade position to someone else, you have made a subconscious commitment to it - maybe one you shouldn't have. If you know someone may ask you about that position later, you're more apt to hold it, even if it's a loser you'd normally get rid of. By not sharing your trades with friends and colleagues, you allow yourself to make mistakes free of criticism. You allow yourself to fail. You allow yourself to focus on finding better trades rather than proving someone else wrong. When you don't have to worry about protecting your psyche, you can shift the focus from defense to offense - a necessary trait for all traders. Price Headley - CFA, CMT, President & Founder of BigTrends.com. Price has been widely quoted by Barron's, CNBC, The Wall Street Journal and USA Today. Price is also the author of the new book, Big Trends in Trading: Strategies to Master Major Market Moves.
Confidence â Ego turned inward â used to benefit oneâs self Ego â Confidence turned outward - used to impress others / or to oneâs own determent Keep oneâs private matters â private Both make good sense Regards RN
Tick/Trin have nothing to do with Price Action. Nothing. The only thing relevant is the price bars on your screen. Try learning a 5 min bar chart, and remember the old saying, "Beware the man who owns 1 gun. Chances are, he knows how to use it VERY well."
Redneck trader : After reviewing your comments I had to review the ego article again to make sure I got the same thing out of it that you did. Your point and that of the article are well made. I've had a chance to do some research and seriously considered everyone's comments and contributions. I've also reviewed past trades and am beginning to see a pattern of mistakes and identifying what should have been done or not done to make the trade successful. I've aslo been reviewing a lot of charts identifying successful setups. I've aslo removed indicators from my charts as has been suggested by many here. August 12 ym setup made a believer out of me regarding indicators. At 9:30 open both 60 and 30 min. signals were pointing down from over bought territory. This gave me an incorrect bias about the market. Ym started out down retraced up and never looked back and of course the indicators turned back up. Lesson learned. There is one thing that puzzles me though when previewing premarket activity. It is becoming more apparent to me that the best am setup is usually between 7 and 8 am but i've read that it is recommended that you not trade premarket activity. Why? I understand the volume is not significant yet but I clearly see large momentum moves during this time period. As a matter of fact I read that some traders only trade the am session and are done for the day by 10:30 or 11:00 am. If anyone could comment on trading premarket activity I'd appreciate it? Thanks again to everyone for your help and support. metoo
Metoo: I too am just starting out. I think we're in a similar position as far as having worked a long career that ended a few years ago, enjoying myself for a couple years and now looking to make a living through trading to fill out our needs beyond what my nest-egg can provide. Also having been hurt badly over the past year by letting a broker manage the egg. I just started learning about active trading a couple of months ago and I have a long way to go until I'll be at the point where I feel I need to be to generate an income from trading. First and foremost, if you've lost as much as you say you have then slow down. You need to learn a lot more about risk management and money management. One of the major things I've learned in this area is to use smaller trading size during my learning process. You can't make much money on 100 shares or 1 contract, but you can't loose too much either as long as your make probler use of stops and other risk management and money management practices. My immediate goal is to learn enough through education and practice to be able to be profitable at a low level on a week to week basis for several weeks running - then I'll ramp up the share size to reach my income goals. For now a bad few days is a couple hundred dollar loss and not thousands. I've also felt the excitement of ending a week a few hundred dollars up - not because $300 will provide a living but because I traded well that week and it shows I'm progressing along my path. Being able to "trade well" for a meaningful consistent period is a precedent to risking larger amounts of money for me. You can also start on simulator, or paper trading, especially if you're switching to a new platform (I think I read you're moving to TradeStation?). It does take a while to learn to hit the buttons right and that is what simulator is for. But you also know that fills on simulator are too good to be real - so after that you need to trade live with small size (before going large). Education wise I started with books. I'm now taking classes with Online Trading Academy. Yes I know that many here will tell me it is not worth the cost, but for me it is as I think the live classes and direction are very worthwhile for me. I was skeptical of the value at first but have found there program very beneficial to my process. Yes they are expensive, but seem much more genuine than many of the internet only courses and guru's out there. Their basic class is a good foundation and in their XLT program I'm both expanding on that and learning some good strategy. Through these programs I've learned answers to many of the questions you're asking. Again, I know that many will bash my choice of an expensive educational program. I've invested $10K in that - but it will be very valuable if it prevents me from spending $25K on losses as I learn my way to successful trading, or even if it gets me where I want to be 3 months faster than following other paths. The proof will be in the pudding so I''ll have a better story to tell, either way, in a few months. Trade well.
Cruiser1: Yes many have pm me and offered assistance or advice. There are some great people here. Your point is well made regarding education. If it prevents major losses it will be money well spent. Many, many traders have confided in me their losses. Many lost as much if not more than I did starting out. I guess its a huge learning curve. I do hope they are focusing on price action. I've been doing better since regrouping and getting priorities in order. The main thing I can tell you asways use stop losses and be careful. Good Trading To You Sir, metoo
Note To Self: Great Article People who become interested in trading for a living are often drawn to trading because they want freedom and they are interested in multiplying money. While initially most traders are drawn to trading because of the promise great monetary gains and freedom from the rat race, most traders come to realize that trading is essentially a balance of risks and rewards. Each trader must decide whether or not a particular trading system or money management system is appropriate for his risk level. For every trader the question remains "how do I maximize my returns?" I would like to present three ways that you can increase your trading returns. Of these three methods, I believe that only one is appropriate for the majority of traders. It's up to each individual traders to decide which method, if any, they are willing to employ in order to maximize trading returns. So, let's begin with the first method of maximizing your trading returns. 1. Take a Large Position This is the simplest, and most well-known method of increasing returns. Many traders understand that if the trading system has a positive expectancy (the system will make money in the long run), that it is possible to take larger positions and see increased profits. This method only works if the trading system has a high win percentage. Taking a large position will spell disaster if the trading system experiences too many losing trades. Taking large positions with a trading system that loses often (50% or more) will not work. Either the account will lose all or most of the money during a drawdown, or the trader will pull the plug on the system, or both. Emotional hurdles are most likely to pop up when the risk per trade moves beyond the comfort level. When risking a high percentage of the account on a trade, if the trade goes in the wrong direction the trader may second guess the trade and decide to pull the plug on a losing trade early. Even if the trade goes in the expected direction, the trader may decide to stray from the original plan, by exiting the trade before the profit target is achieved. Most traders will eventually run into psychological issues when risking too much. Some traders may find it difficult to hold on to trade, knowing that there is a large percent of the account at risk. Most traders will eventually run into psychological issues when taking large positions, and for this reason this method is not recommended. 2. Increasing the Frequency of Trades Another method of increasing your returns is to simply trade more often. While this method is not as well known as the first method many traders are aware of the fact that taking more trades may mean greater returns. Increasing the frequency of trades is one way that traders can accelerate time. An example may best illustrate how increasing trading frequency can accelerate time. Let us suppose that two trading systems - the gap system and the runaway system - have identical statistics. Both trading systems are expected to yield 2 dollars for every dollar risked. Let us also assume that the gap system takes 5 trades per day and that the runaway system takes only 5 trades per month. Overall, we would expect that the gap system will make much more money over the long run than the runaway system, simply because the gap system trades more frequently. In fact, if the runaway system made 3% after two months, we would expect that the gap system would make the same 3% after two days. This is an extreme example, but it illustrates the point - if all things are equal, the system that trades more often will make more money than the system that trades less often. While it is true that trading more often might lead to higher returns, it is also true that many traders will run into problems when trading frequently. Trading frequently means spending more time in front of the computer, as it is generally more time consuming and difficult to trade a higher frequency trading system. Sooner or later most traders will decide to either automate this type of system or suffer from burn out from spending so much time manually trading such a demanding type of system. Most traders are attracted to the freedom and the money that is possible when trading for a living. A trader loses this freedom when constantly managing a high frequency trading system. 3. Find Trades With Greater Reward Than Risk For most traders the best method of maximizing returns is to find those trades that have a reward that is much greater than the risk. Waiting for these high reward to risk trades may be ideal for most traders because this method of trading does not have the negative aspects of the previous two methods. Trading high reward to risk setups does not involve the strong emotions that are common when taking large positions that risk a large percentage of the account. Likewise, the extreme vigilance that is necessary when trading very frequently is not needed when trading high risk to reward setups. In fact, many high risk to reward setups take a while to unfold, and thus the trader is not tied to the computer. For most traders, waiting for these high reward to risk trades is probably the best approach to drastically increase the returns on a trading account. Most traders have the psychological wherewithal to stick with a trading system that provides big rewards. The common traps that are associated with taking large positions (emotional distress during drawdowns) and high frequency trading (burnout and overtrading). So, this is by far best of the three techniques traders may use to increase their account size. Walter Peters, PhD is a professional forex trader and money manager for the DTS private fund. In addition, Walter is the co-founder of Fxjake.com, and often coaches other traders. If you would like to learn more about Walter's trading strategies, take a look at Walter's upcoming webinar.
Nothing wrong with taking a large position. But it would be wrong to jump right in with a large position without learning to trade in a consistently profitable way first. I'm learning and trading small positions. My percentage weeks ago wasn't very good. I was loosing more than winning, and having bigger losses than wins. Now with a lot of training, research and learning I'm winning more and losing smaller when I do loose. I'm still trading hundred share lots (more or less). If I'd started out with 1,000 or 2,000 share lots then I probably would have quit as I would have lost lots. Despite a lot of losing trades I haven't lost that much, and have made up a good portion of it in the past couple of weeks. I'll continue small positions until the percentages are working for me consistently over a time frame I'm comfortable is meaningful (may very for different trade plans). After than I'll start scaling up until I've reached my profit goals...and maybe beyound.