High Probability Setups

Discussion in 'Technical Analysis' started by bearmountain, Dec 10, 2010.

  1. Regarding bid-ask footrpints, Tradestation and IB use snapshot quotes, however other data vendors I find of value.

    For an intraday trader, could you please elaborate on the statement 'If you get the big picture wrong at the beginning , then the devil will always follow you wherever you go. '

    Do you mean determining early on in the day, if it is range bound day or trend day? Thanks.
     
    #31     Dec 13, 2010
  2. He means: Most people do not understand the big picture; as a consequence averything that is more detailed that they do is not going to bear fruit.

    Another conventional saying is" "garbage in; garbage out."


    Et is mostly Garbage in; garbage out as you are finding out.

    A person with a garbage orientation cannot understand mostly anything that passes his way.

    Notice how many people in ET try to prove something is wrong.
     
    #32     Dec 13, 2010
  3. jjf

    jjf

    Hi there Bear mountain.

    JH sums up my thoughts for me very well indeed.

    ie ... if you are attracted to trading as a noobie because you want to make lots and lots of money , then this tape of desire will continuously replay within your mind at some deeper level and you are going to attract a whole lot of hurt and confusion.

    Every conscious decision you take will be guided by instant gratification
    in order to fulfill the original desire. After all, your mind is only fulfilling the task that you gave it

    If your predominant goal is to learn how to manage risk, the journey CAN be entirely different.... note I wrote CAN not WILL.... but you are off to a good start.

    Of course details are vitally important and of course we all must pay absolute attention to them, it goes without saying.
    But without the correct top down macro thinking in place first, then the details will never fall into line for you.
    You will always find the details are fighting each other and your trading will always be a passage of hurt frustration and confusion.

    This is most probably the reason for the very high failure rate in Trading.

    IMO to become a successful Trader we each need the capacity of original thought backed up by the mental strength to follow through to the point of success.
    Pro Golfers and Pro Tennis Players to name a couple, would understand what I mean .... They live in a singular win/ loss world.
    You might think that they live to beat the other player and that is the apparent outcome, but the reality is that they train to master themselves and thereby master the game.

    It is very hard to master trading, I imagine it will take a lifetime.

    That is what I continually tell myself .... I am a perpetual student of the markets
    If I am a perpetual student, then it follows that I cannot add to my own aging process, nor can I get ahead of myself by claiming mastery over price and therefore triggering my own trading demise.

    The difficult problem for noobies to overcome is only themselves.

    They arrive at the front door of trading with only second hand experience from a highly manipulated world.
    Firstly from their upbringing and then from their schooling and their peers and finally from the commercial world.

    In short, they are Lab Rats.

    In order to make their own journey even more difficult [impossible]
    they tell themselves that they are really motivated, very bright [they even have a piece of paper to prove it] and then the final kick to their own gonads .... they tell themselves they are "type A" girlyboys and girls.

    All that garbage needs to be knocked out of them before they can take control of their mind for the first time in their life.

    And so what do they do ... yes indeed they seek out the company of other Lab Rats at watering holes on the net. [ET, TL, Trade2Win etc]
    In no time at all they are locked in deadly verbal combat with other Lab Rats all desperate to defend their chosen right to utter stupidity as they slide down the slippery slope of failure.

    Each ridiculous utterance reinforces the rubbish in their minds at the very time they should be finding the courage to empty their heads and begin the task of gaining control of themselves.

    This process is not to be at all confused with the exhaustion programs of Seals, SAS etc. These programs are designed to complete missions and bring you back alive after you have unquestionably accepted a mission into the the other fellows backyard.
    This is very different to trading. For starters you are in the company of other equals all trained in the same manner.

    I notice that a link has been established between TOPGUN and trading [most probably to attract Types A into spending money on training courses].
    TOPGUNs have a serious technical advantage whilst Retail Traders have none.

    We Retail Traders are ALONE in an ever increasing sea of technical advantage stacked heavily against our success. Not because someone is out to get us, but simply because we are standing in the wrong place at the wrong time.
    Therefore it stands to reason that if we are in the right place at the right time then market momentum will sweep us along into profitability

    And that is our daily challenge.... how hard can this be.

    Our biggest advantage is the power of our minds.
     
    #33     Dec 14, 2010
  4. +1

    I like this. In fact I came up with an indicator similar to this for pullbacks from HH, and LL's based on % from high, rather than touching a band, but the concept is similar...

    (the concept was to find scalping opportunities/pullbacks)

    but also...

    I also wanted to add in a momentum (directional) crtieria with this so find intraday trending stocks.. (This avoids getting signals of stocks pulling back, but not really doing anything.)

    Do you have any advice for doing this? the ADX seems laggy, and not equipped to handle this intraday.
     
    #34     Dec 14, 2010
  5. jjf

    jjf

    Haven't looked at ADX for years.

    All I require of the setup is to alert me when a pullback occurs.
    As I mentioned the setup is a dumb instrument and kept deliberately that way.
    I really have no plans to raise it's iq or widen it's scope.
     
    #35     Dec 14, 2010
  6. Fair enough. Pullback implies trend or direction though. How do you find the direction? or do you?

    A stock can be drifting horizontally, dead, and still make a signal. Or do you not look for direction?
     
    #36     Dec 14, 2010
  7. jjf

    jjf

    I trade naked futs [ES and Fx]
    Direction of the next price wave and the number of tics at risk are critical.
     
    #37     Dec 14, 2010
  8. In this presentation, price action maestro Al Brooks does a good job explaining high probability setups. (About 24 minutes into the presentation.)

    http://www.moneyshow.com/video/vidN...ADE7F0785A9761&OBT_fname=lvot10futuresmag.flv

    He trades 5 min bars, so 80 bars during RTH. I believe he says in a typical day there are about 30 trades, but traders starting out should focus on just 1-3 high probability setup trades a day.

    I mean, essentially he is saying that one should be able to 'weigh' the odds of a trade.

    Thoughts please? Thanks.
     
    #38     Dec 21, 2010
  9. wrbtrader

    wrbtrader

    Why does he have a moving average on his charts when the introduction saids "no indicators" ???

    He should at least just say "one indicator only" regardless to the role of the indicator in the trade methodology.

    Regardless, getting to your question, most traders that tend to take a systematic or objective approach to their trading usually "weigh the odds" (as in know several possible destinations after departure) of their trades regardless if they're mechanical or discretionary.

    In reality, the few profitable traders go through periods of being complacent, bored, lazy or whatever you want to call it. That's when there's an increased number of trades where not weighing the odds is occurring. Simply, a profitable trader that wants to remain profitable especially when overall market conditions change (it's always changing) must get back to knowing the possible destinations after departure or weighing the odds. There's a few commentaries about this "weighing the odds" or "knowing destination after departure" in a few well known journals here at ET by traders that have one time or another shown consistent verified proof of their trading results (e.g. Lescor).

    Mark
     
    #39     Dec 21, 2010
  10. jjf

    jjf

    I had a quick look at minutes 24 - 30 of this tape.

    What he is saying is that you establish the risk FIRST by assessing your pro stop and then setting your entry on a "take it or leave it" basis.

    ie if you establish that 5 tics is an optimum risk on ES the entry is +/- 5 tics from your pro stop... not 6,7,8 etc but 5

    Although Al Brooks made hard work of this tape, essentially he covered the subject.

    I will say, that the longer you think in this manner of probabilities [contrary to your up bringing most probably] the more it will be ground into your DNA and the less you will consciously think about it.... like riding a bike.

    This concept of thinking in probabilities as opposed to goal setting absolutes, is the reason why most people will always fail...... in essence they all try too hard, not to mention focusing their energy in completely the wrong direction.

    It is more than probable that you could agree with me and still fail miserably, simply because in the back of your mind you think that positive thinking will get you to where you want to be.

    Until you let go [ego, fear etc and what other crap people have jammed into your mind] you will never make room for the comfort of probabilities.
     
    #40     Dec 21, 2010