I was reading The Signal & The Noise recently by Nate Silver. The book really reinforced the idea that trading is about a constant process of forming a hypothesis and then tweaking it based on unfolding data. So a constant process of hypothesis development, observation of events and adjustment based on evaluating conditional probabilities by the process of approximation. Since price is continuous, the PM action is a pretty important aspect of the process. Whether you collect the information to infer probabilities through news or Price Action is a matter of preference and ability.
Correct. It's always helpful if trades based on something other than price are noted beforehand or during, but they're usually noted afterward. This is not particularly helpful when one is trading real-time. Discussion of probabilities is always interesting and even useful, but at some point one has to transmit the order, preferably before the entry is long gone.
I never said anything about trading non-recurring news based Setups. This is a discussion about how to interpret price action after the fact for the purpose of development. You keep interjecting in an effort to espouse a price action theology that is out of context relative to my original point.
I'll get to how my "journal is organized" in a moment, but first I want to say something about your comment about mistakes. I guess I make them, but I really don't dwell on them. I look at this trading business as DbPhonix says describes it and as Wyckoff said before him: The busines of trading is to find a trade. I spend the morning looking for a trade or trades. Most of the time, my trades make me a profit. The few times I take a loss, the loss is so small, and the price activity just prior to entry always indicates that the trade is there, so if buyers look like they are stalling at R and sellers emboldened and I get short, and then just as quickly buyers reassert themselves or sellers abandon the cause and price starats the other way, I get out. Where is the mistake? The mistake would be to not get out, to hold on hoping I had been "right." In my view, if I took the trade, I was right. If the market does something else, that just means that traders changed their mind. If you are doing this the way I understand it, then there should be few opportunities to make mistakes. As Wychoff describes it in part three of his course, I think, "Chart Reading enables one to detect and profit by judging the future course of price, by weighing the relation of supply and demand from price movement alone - By accurately judging this supply and demand, you are able to determine the trend of the whole market and you always aim to select the most promising opportunities and make no commitments without sound reasons and you avoid undue risks." I paraphrase of course, but if you go to his course you will find soething very much like that. When I trade, there are sound reasons and I enter very near the danger level (it is my affinity for this concept that interested me in that series exchanges between you and DbPhoenix), and if price challenges the danger level, I get out. If I manage to keep my wits, I sometimes find thata it was a false alarm, and that I should and do get back in. None of these actions, to me, are a mistake. It is all very sound. In fact, as often happens, the market starts acting in a way that confuses me, and I have no idea what is going on, and I find myslef unable to judge tha balance or imbalance between supply and demand, and in those cases I just stay out. No mistake here either. I can only think of two mistakes possible: 1) If I were to stay in a losing trade after price has traded through the danger level, that would be a terrible and foolish mistake; and 2) If I were to take a trade where there was no trade with an edge to be made, e.g. if I were to buy without a prior indication of demand/support or sell short with no prior indication of resistance/supply. I guess a third would be the cutting profits short idea, but that is a tough one: I always let a trade go at least to the next level of S/R unless I see a HL/LH to indicate that the tide is turning against my trade. Now, as for my journal, here is what I consider my complete trading journal: My journal is in three parts, with a ring binder devoted to each. The first is the easiets: I have a print out of Wyckoff's course, Wyckoff's Studies in Tape Reading, aka The Day Trader's Bible, and one other which I will refer to as "Its Not the Journey It's the Path." These, you might say, form my "canon." These are to my trading and my continued development as a trader what the Bible is to a devout Christian. I refer to them often, have re-read each more than once, and certain sections, e.g. Wyckoff section 7, Chapters 4 & 7 of "Studies ...", and sections 4, 19, and 20 of "Journey ..." I have second ring binder, which I recently replaced with a large 4 inch binder that I will continue to grow in to. In this binder is a print out of my morning prep, charts, trades, blotters, and end of day recap - examples of which, in abbrieviated form, you can find in the "If You can Draw a Straight Line" thread. The third and final binder is more of a "Dear Diary" type of work. It is there that I record interesting observations, charts, books or articles I see referenced here and there that I may want to read in the future, book reviews or reports of the books I have read, quotes from discussions here in your journal and a few other select message board journals that I find intersting or useful, and, usually once a week, a more personal look at what I'm doing and how I am doing it. If I were a school boy, you could say that the first notebook is my textbooks, the second notebook is my laboratory manual, and the thrid notebook is my classnotes. Taken together, they are providing me with quite an education.
Thanks RN. Upon some reflection: The anxiety is not particularly high, although things are not serene either. I am not anxious by nature and neither am I very risk averse. I believe the anxiety occurs when I enter a trade despite being unclear on the context and the freezing up occurs when my attention is taken up in trying to recall the context instead of focusing on the PA. For me, the session from Friday highlighted the the important of knowing the story inside out - this is something in my control and there is no excuse not to have this memorized instead of having to recall the markers of the hypothesis during the session, or to build a brand new hypothesis on the fly. All of this can be done during prep. So my immediate goals are: 1) Solid preparation on the context front 2) Patience to not participate when things are unclear
Making a method which suits our personality is very much important because we are very much aware of our portfolio money and thus we need to trade according to out equity for holding the trades.
Friday like events are very rare and you could choose to sit those out, your first job is to not trade unless you have a clear setup, your 2nd is to trade when you do,the longer your at it the more setups you will recognize,as in the longer you stay in biz by following rule 1 and 2
Since you follow the Straight Line thread anyway, you may want to check it pre-open each day to see if I've noticed anything of interest, as I did on Friday (I haven't kept track of how often this occurs, but it isn't frequent by any means). That will give you the time to review the context and perhaps clarify potential entries based on your methodology.