The ability or methodology to (consistently) exploit the markets gyrations for profits? It could be a lot of things and come in many shapes, but that's the essence of it, right? I'm heading out of the house now so I don't really have time to elaborate, but for this example you quoted the point was that traders often blame psychology when the real issue is that they don't know how to read the market and should be working on that instead. What's your definition of a real edge?
As long as one is following the rules, it doesn't matter when they're drawn. Does that make it easy? Of course not. People jump into trades or avoid them for reasons that have nothing to do with the strategy or tactics, usually fear. Exiting a trade due to the break of a line is no different than exiting due to a certain level of adverse incursion since both decisions are made according to the trader's risk tolerance. The market couldn't care less. The trend channel on the NQ, which I drew last July, is what it is and has been. If one understands auction market theory and mean reversion, he knows what to do with it. If he doesn't, he may have other ways of playing a potential trade. If he's just guessing, he alone is responsible for the consequences.
True. A "career trader" isn't going to get very far by blaming his shortcomings on a guru or a mentor or a vendor or a book or a course or whatever. Either he is willing to put together a consistently-profitable plan or he isn't. No one can make him do so. Except perhaps his employer.
DBP--- Why don't you explain how auction market theory provides an edge? you have a major misunderstanding or are misapplying ( as many false gurus do) the definition if you think it provides an edge. I am tired of the constant misleading use of academic terms in order to appear credible. The market goes up and down. Is that an edge, also? H
As for this morning, and due to the continued fascination with this, particularly among those who don't know what auction market theory is (or, apparently, Market Profile, which is based on same) and have no interest in reading about it, I'll show you how it works in practice. The first chart is a zoomed-out hourly chart. This represents the end of a sloping downtrend that began at the beginning of March which in turn is the tail end of an uptrend that began in its present form last October which in turn is the end of an uptrend that began in 2009. One can see that price is nudging a supply line, or, if you prefer, a trendline, as shown. One must, of course, understand trend and how to draw a trendline. This is part of auction market theory. The chart to the right is a 15m chart showing where we are right now, 90m before the open. One can see that the uptrendline, or demand line, has been broken. So far, there has been no reversal but rather a segue into a trading range. Given the location of price with regard to the 4wk trendline, one goes long if price breaks out above this, preferably on a retracement, or short if price breaks down below this, preferably on a retracement. If the trade doesn't go, he scratches. And that's it. I'll update as we get closer to the open if necessary.
Again, a misuse of terms to appear knowledgable in this field You are describing what HAS happened. What you do is descriptive, not predictive --- and that's what fools the noobs---- how does this provide an edge? Ps--- I guess on a simulator there are no commissions. Otherwise with a real account, scratching means making money since you cover your commission. These chart artists are real entertainment but hugely hazardous to real trading.
No, I'm describing what's GOING to happen, unless price stays in this range for the rest of the session. If that occurs, there will be no trade for today. As to how it provides an edge, that is in the material for which I provided a link, including the definition of an edge. And "scratching", for these purposes, means getting out immediately if the trade does not go in the expected direction, up if long, down if short. This is not complicated.