>One day I realized that technical indicators in >general don't work in the long run. <snip> >Spend some time looking at the ways price >reacted in different situations, make a system >around that . I would strongly agree with the "think different" camp here. While my experience differs from some that say the charts are not enough, IMO there is no indicator that will lead to riches. Learning the markets is probably the hardest job you can find though it certainly can be rewarding. Keep it simple and remember it's all about the people (or perhaps spheres according the that guy selling the holy grail on ebay) JB
Each person must develop his or her own strategy. I think for someone to say that indicators, etc. don't work is inappropriate. That's like saying you can't time the market -- and if we all believed that -- we wouldn't be traders. For me, one of the skills I continue to develop is knowing when to use certain indicators and when to ignore them.
If You Meet the Buddha on the Road, Kill Him There is a very interesting book by the above name. Killing the Buddha on the road means that no meaning that comes from outside ourselves is real.
you keep searching because you haven't find it but if you find something or someone that seem more clear to you than the rest then it worth it to focus your effort in that direction, keep your eyes and ears open knowing that the riddle will be solved soon.
Well... I'm tired of breaking even. Regardless of strategy I've broken exactly even after commissions for over a year now. Lately I'm focused on divergences: either CCI, or MACD and Stochs. 2-3 min for entry with 10-15 min trend. (Or similar tick charts). Divergences seem very clear to me but need filtering. Filter by significant support/resistance? Only trade with 15 min trend? Combine with candlestick setup? Double divergence on both timeframes? Something else? But whatever the strategy, it appears to be a roughly breakeven game unless you do one of two things: 1. be right OFTEN 2. figure out how to add to your winners without getting hit by your own pyramid. This seems very difficult to do in day trading because the trend rarely lasts very long. Possible third option: POP says to put on a full position and pull off in stages quickly if things don't act exactly right. Tough change for my psychology. My biggest weakness is an inability to exit (win or lose).
FireWalker, actually, try putting on half a position at first, take it off right away if it doesnt do what you expected. POP talks about this later, the true implications of rule 2 (putting on a partial position at first), that way as soon as your position is proven correct, you can add on the second half of your position. If you're break even trading same size for winners and losers, you'll start pulling ahead as soon as you start doing that, rule 2 is big!!
If you've been breaking even for a year, you've done better than most. Perhaps you should look at futures. At least there, all the technical work you've done should pay off, since there are no fundamentals per se.
1. Combination of indicators (some price/time, some price/volume/time) in agreement. 2. Know when NOT to take the trade - even if you've got an alignment of indicators, it's clearly risky to take a long trade when you're just short of a resistance level (or a short trade when just above to hit a support level) unless there's a good indication that market sentiment is with you - better to miss a few trades than enter too many high risk ones. 3. Once in, manage the risk of the position - there are a lot of people that always argue for the all-in, all-out approach. They'll talk about how the optimal profit is produced that way. However, it's typically the optimal theoretical profit that assume you made an optimal entry and an optimal exit - neither of which can be known except in hindsight and I've never figured out how to trade in hindsight. No real strategy will ever produce 100% winners. So exiting by halves has always seemed to work well for me both on a practical (reducing % of losses by helping turn them into breakeven or net gains) and a psychological basis (taking some winnings off the table in Vegas and putting them in my pocket every once in a while is always satisfying). Is it "optimal" - not if you look backward after the fact at what the "optimal" entry and exit "could" have been but who the flip cares - you can't trade history, didn't get in at the "optimal" place anyway and couldn't see into the future at the time to know where the "optimal" exit was going to be. And realistically you only care that you're profitable anyway because you can't put "theoretical" or "backtested" dollars in your pocket. If you've been breaking even overall for the last year or so - you're way ahead of most people new to trading. Which means that you probably just need to work on your position and risk management techniques to move into the profit zone. Good luck.