I just don't have the patience for this. Hats off to you. Perhaps if I didn't have automation as a back stop, I would be more inclined to be this tenacious, and would subsequently be better at manual trading. More to the point of the thread, I was a very good drummer in my day. Went to Music school straight out of high school, but found it very boring. Didn't really find my chops until I was out on the road away from the damn books, and twirling my sticks in front of people, which is what it's all about anyway. Playing the drums was very natural, and it just kind of happened easily, probably because it just didn't feel right to not be playing 8 hours a day when I was young and improving. Again, I don't have that kind of patience with trading. Maybe automation has made me complacent. Who knows.
Hi Mark, Thanks for the response, I had a vague type of impression or guess there may have been a difference. This helps put the concept into words which makes it more clear.
First, I studied charts in my preferred trading time frame (5-min) and made notes about the price action environment leading into price pivots that led to strong moves. Why do price support and price resistance occur here and not there? At what point does a trend appear to be starting another push? What happens when a trend reverses? Do the same things seem to happen again and again, far more often than something else happening? What defines chop? When breakouts fail, does the price environment or the time of day provide clues that the breakout might fail instead of run hard? I got very specific, until I eventually learned to choose levels at which price is likely to find S/R, studied ways of entering and managing such trades, and every day after the close of market, made detailed notes about entries, survivability of stops, minimum targets, how much heat was taken on each trade before it became profitable (if it became profitable). I gradually defined rules to keep me from trading in chop. I made notes about what happens just before ranges, flags or triangles break out. How long does the consolidation normally last at various stages of a trend (young, middle-aged and mature)? After a few months, I determined that out of all possible trades available to me each day (valid setups with entries, stops and targets by the rules), on average a certain percentage of them resulted in a minimum profit target or better without hitting the stop loss. It was a win percentage of over 60% and my average profit target was at least twice my average loss. I consider that high probability. It's a strong edge. All this was done manually end of each day, though I was still trading live. My problem was I wasn't trading all valid setups, so the "edge" was diluted. There were some trades that fit my plan, but inexplicably failed. This caused me to hesitate on trades and miss many good ones. I always want a reason for something and eventually I began to notice a pattern to the failed trades. Once I could define the setups that looked good according to my rules, but failed very regularly, I learned to recognize the price environment surrounding these failed setups and began to trade them in the opposite direction. These eventually turned out to be my highest probability setups in that they produced large, fast profits at least 80% of the time. It's the persistence, hard work, and attention to detail that pays off. Many traders have extremely consistent trading behaviors that fail to produce a profit. For example, some traders put on a trade, move their stop to break even too soon, get stopped out, watch the trade run without them, chase an entry right about at the point the price push is ready to make a normal retrace, then get stopped out of the trade for a loss or another break even. There are traders who do this with such consistency that they can transform their behavior to produce high probability trades. They have but to recognize the setup and entry they desire, wait for price to move in their favor (without yet putting on the trade), then place a limit order at the price they initially planned to enter. Price will pull back to their entry and lift the order (that's where they're stopped out b/e all the time), then price will make the move that they normally end up chasing. I was one of those traders for a while. I had a bad habit of moving my stop to b/e too soon, getting stopped out of quite a few trades nearly to the tick, then watching the trade run hard without me, or I'd chase an entry and get less profit or nothing at all, or sometimes a loss out of it. My trading roomie said, "It seems that price comes back to that entry level a lot with this style of trading." It was a big Aha! moment for me, but it took someone else saying it out loud for that to sink in. So the only gifts and talents involved here are pattern recognition and stubborn persistence. I agree. Making strict rules based on my back testing resulted in the eventual (it seemed to take forever for me to get there) ability to simply trade setups and manage them according to my rules for that exact reason. There are no excuses, no wringing of hands and gnashing of teeth, it's all very mechanical now. Here comes the setup. The entry signal is X. Order placed at X. Stop placed here. Minimum profit target zone is there. Hey ho, let's go!
in roman times an actor worked for peanuts,now an actor can make 20 mil per movie ,this puts them at the top of the food chain,all the dough makes them not ordinary,yet they are doing the same thing as the ancient romans......take away the dough and trading is just a game,without the dough,if you told someone you sit and play video games on your computer all day,every day,..they wouldn't be impressed..but that's all it is..treat it like a game and it becomes a lot easier...once you've become proficient at the game,add the dough....k.i.s.s......i feel anyone can do it,the game is easy,the money freaks everyone out and heightens all the emotions ,,that's the hard part.. don't think about the money...emotions stay normal
Come on, ammo, admit it, when you've got full size on and The Move hits the tape, this is you: http://www.youtube.com/watch?v=AHV2tWbVXOg&feature=related
Hello NoDoji, thank you for the detailed response. It sounds like a big part of the gift and talent is also recognizing the environment or conditions to validate setups or warn against setups that will fail. My next step will be to work on figuring out how to recognize chop vs non-chop market conditions. "Setting a market order at original desired entry position" -- I have seen this a lot too. It seems like price is more likely to cross a point several times before making a strong move to a different level.
Trading talent comes down to 3 things: 1. Pattern recognition. This is the most important skill, without it you can't discover exploitable edges. There are different ways to spot patterns - quant/scientific approach, or discretionary/artistic approach, but you need to be good at one of them or you will fail. 2. Emotional control/detachment. If you are a highly emotional person, or very impulsive, you will fail at trading. The more like Spock you are, the better. 3. Passion for the game. If you find trading and markets boring, you probably won't succeed, and why bother succeeding at something boring anyway? Move along. As for how important gifts and talents are - they are hugely important. Someone without natural talent for pattern recognition, emotional control, and markets, will take years of hard work to become remotely good. Someone interested in markets, with great pattern recognition ability, and emotional control, will generally become profitable within a few months to a year, and will be significantly profitable within 3 years at most. That is a huge difference. If the latter type of 'natural' is hard-working too, they can become worth $100mill plus within 10 years if they want to. If they are lazy or more interested in enjoying life, they will still generally be able to make decent 6-7 figures fairly consistently over the long-term. The plodder type will never have those options. Talented traders start with grubstakes and are making 6 figures in their first year or two, and millionaires (unless they spend too much or blow it on bad business investments) within 3-5. Untalented traders labour at institutions earning salaries, and may save their way to semi-wealth, but are never going to make big scores; those dumb enough to try going solo blow up or bleed to death within a couple of years, then give up and go back to employee status.
The narrative describing your trades suggests something other than the application of a basic set of objective rules.