trending or range-bound. If you could forecast which of these two modes the market was in with good probability, you were golden. Now I'm thinking that question is secondary, maybe irrelevant. The chief question now is: how do I forecast volatility? Am I getting closer to enlightenment?
I don't think you are far off with your first question. If you think different, let it not be recent market conditions. Every strategy will have down periods.
I got smoked today because I kept getting into trades that went into the money at first, but because I was waiting for stronger moves that never came, the trades turned into losers. I can identify profitable trades and S/R levels, but I figure that by getting a good handle on volatility, my exits will improve dramatically.
I don't forecast vol, but I do use it to tell me if we're trending or rangebound. I'm sure I'm not the 1st to do this.
I would say this. Having some deep intellectual understanding of volatility is not what trading is about. Trading is about finding ways to ring the cash register. The problem is it is impossible to know what comes next. Trading is messy and your method of managing trades needs to account for that.
Not really. If you have the chance read Paul Tudor Jones interview on Market Wizards. Read it several times and you should get the main point. He constantly talks about losses, losses, and losses. Once you nail the mathematical concept of losses in relation to your trading philosophy...then you are half way there.