Thanks... something I'm earnestly trying to master is filtering the breakout setups with volume and velocity. However, it's still a work in progress...
You arent the first and certainly not the last-JH exists just like the exhaust from the CLS550 sport, just like poop after a nice dinner, just like a hangover after a good night out with friends etc etc etc I could make it a one page post but u get the drift....
Good example - after watching the market like a hawk for over 5 years now only moves I have seen have been in direction of the setup-news followed the set up. Not saying it cant happen but imagine the opposite too making 75k in a day on a 50k account. Few years back i was short on a setup in AKAM and it was just a day trade that was in the money by about $1 and it dropped almost $5 in a heartbeat after they came out with earnings right in middle of the day-one happy camper -still remember it witha bright glow Too bad its only happened once while in the trade.
The simple answer.....you don't and you don't have to think about it... Treat each trading day as the ONLY day......be grateful at the end of the day that you can do the same thing the next day.... And may the forces be with you... NiN P.S....I had a beautiful trade today.....then had my arse delivered to me ....and I did everything I was supposed to do...AAHHH!!!! Tomorrow is another day....
Once in a while it happens. I often somewhat hedge some of my option plays and have often missed out on big moves like a $50 pop in GOOG. However last week, I took a 20k loss to get rid of option I had on AAPL and got out just in time for a 60K gain. I ended up with a 45K plus day. Certainly not my normal trading day, but it nice to once in a while not just "wish I had that stock" when a big move happens.
This is why traders should restrict themselves to very liquid markets. Futures are ideal. Of course, you can still get caught in nasty moves, especially in the ags. A newbie with a 50k trading account could trade 2 ES in relative safety. If folk insist on trading stocks when they are learning, at the very least they should avoid leverage. Don't get me started on people who gamble buying cheap call options close to expiry and then get a reg T call when they are assigned. That is another foolproof way to blow up. (and of course they then start to carp about how they thought options were "limited risk". Not funny.)
The adaptation is necessary if you wish to move trading beyond pattern recognition. Any instrument will behave in a distinct manner depending on what location it is in in the overall trend. I would suggest that one needs to spend at least 5 years with one of the futures contracts you mention to see most of the conditions. All of this filters down into intraday trading. Anyone who just looks for patterns will have very mixed results. Double tops for example. People who base their trading around double tops will have had a very hard time in the recent conditions, and without understanding why. Equally those who play breakouts will be getting hurt if they are shorting. Similarly those who use oscillators. In 2003/4 and 2008 again adaptations needed to be made due to volatility and range. The trading plan needs to incorporate how to deal with the special issues which those markets presented. First, risk management must be taken care of. This will necessitate a reduction in position size due to liquidity issues and ranges. Next, a plan must be laid for dealing with the reduced reaction times. Finally, the trader must understand when not to be frightened by the speed of movement. There were some vicious shake outs which could scare improperly developed traders. The condition in April this year was very similar to summer of 2007, and unless a trader had been through the former they would be unlikely to spot the imminent collapse, given that most traders were getting used to the new bull market. The education process takes decades, however I'd postulate that five years is enough to see the majority of what is required, and understand the locations in the largest timeframes. Five years is also enough to flush out chronic bulls, chronic bears, stubborn traders, and those who cannot handle fast markets (or very quiet markets, see overtrading).