Markets, stocks etc are for the most part irrational, random, volatile, unpredictable etc. Many will disagree, but be honest with yourself, can you predict price in 5 minutes, 5 hours, 5 days, weeks....., No! From one minute to the next, hour or day, we can only guess or calculate a probability. "It might go up, if it doesn't it will go sideways or down" is our best opinion. So all these opinions about for example bitcoin, "In ten years a billion dollars". Or... "In a short time bitcoin is going to zero because its a ponzi on steroids". Never mind what currency or market, we don't know what will happen next. For even experienced traders, 50% of predictions or calls go wrong. Trader A may decide to go long, and he's right for the first x time period then there's a reversal. The best we can do is using our own methods or system is place a trade and stop the trade asap on some type of profit and not allowing it to overtake with unreasonable losses. But then as is frequently the case, as soon as you exit it then reverses again to go in your initial direction. There are probably scores of profitable systems about which work on your probabilities. But making a call is futile from the point of view, within seconds of placing a trade it can easily reverse hard and blow that trade up if without taking prompt action to kill it. What we may call as a trade makes no sense to 99% of the trading population as everyone is using a different gauge for how they trade or timeframe. Why do some make continual trading calls? Dunno! Filling in the day? Ego? Boredom? Trying to prove yourself right? Take for example a discussion on support and resistance lines. Frequently price will undershoot or overshoot. In hindsight it all looks logical. But traders expect S/R to be honoured which sometimes they do, sometimes they don't. That's trading! Price looks logical in hindsight but somehow our brains forget that the majority of traders and trades fail. Somehow the market has this uncanny intelligence, what looks obvious gets immediately sabotaged. Yeah, trading is a mystery, as soon as we think we have it sussed it morphs. When it comes to occupation uncertainty, trading must rank near the top.
Call it dumb x 100! Good trading is reactive not, predictive. Play stupid games, get stupid prizes. You should know by now, trading as long as you have, that the hardest thing to do is guess what is going to happen next in the financial markets. Also, it does not matter in the greater scheme of things because stock trading is a game of percentages, like the Las Vegas casinos. Blackjack has a casino edge of only about 2% yet, the casinos are reaping millions of dollars from the blackjack tables. If you have a trading system with a positive expectation or edge, you can be your own casino vs the legions of uninformed stock traders guessing what is going to happen next. The uninformed stock traders would be the gamblers by analogy and you will be the house or casino.
Of course. For the markets to function at all, there must be uncertainty about every trade (otherwise, nobody would take the opposing side to your trade... and then would be no trade/market). Traders need to figure out the "understanding" and learn the "discipline" that puts their plays into the realm of "50% +" success... then manage risks.
Yes I can. I don't have to make a prediction on price all the time, since I am not trading all the time. I just wait for the instances where I am able to predict the price, then I trade. Hopefully, you are following what I am saying.
I think people are confusing trading and social media, deep in their mind and don't know it. As if trader tweets or some Instagram notoriety is going to make you a better trader because other people think so, or that you show something "great" once, it is a representative of your entire prowess. Seems like 7th grade thinking. It is another (modern) emotional hurdle for traders. The fact that people can't introspect and see the stupidity of it, the waste of time of it, does not bode well for surviving the trading ThunderDome.
My prior trading method/system have been bashed the last couple of years, I've taken a good hiding. So this forced me to re think a lot of things pertaining to trading. Because I trade full time at home, I've slowed my trades down and been able to spend considerable time in deep study of price action without the destraction of being employed by the boss - and come up with an entirely new way of looking at the markets. It wan't a straight transition from one method to another, it was gradual, over several months, ie I'd come up with a new idea and scrap it, doing this a few times until where I am now. For a long while now I've traded crypto via ETFS. Swing trading. About 3 days ago I looked at bitcoin as I usually do each day. My new system said it was a partial buy, ie it met some conditions but not others for a long trade, at the very bottom of its recent drop. So I took a reasonably large long position right near the bottom. Immediately it went my way. Since then, it continues to move in my direction, it continues to meet my expectations of what it should do, but I go to bed at night knowing I can wake up in the red again. The point I wanted to make, we have a trading system but due to a thousand circumstances, breaking your rules sometimes works, sometimes doesn't. Just manage the trade and take your loss no matter what. Your trading system at its best can result in losses. Breaking your trading rules when you take a trade can result in losses. There are no differences. If you see an compelling opportunity, usually our experience is all we have to guide our decision. The initial trades one places are the most dangerous, you are fully exposed with money dangling in outer space with zero profit. The larger the trade the more danger/risk but higher reward if you are lucky. The longer the trade moves in your direction the safer your trade becomes as your position grows fatter. But never become complacent, you'll want to get out with the least amount of drawdown and that in its self is another challenge one needs to meet. A quick diversion in the theme of this thread...... Many on ET decry trading crypto because its a ponzi. My opinion, crypto is amongst the best and safest. There are no company news announcements like earning reports. Crypto is frequently uncorrelated. Crypto in my very real frank opinion is the closest instrument into pure TA / price action. It seems to honour price action rules quite unblemished. It carries excellent volatility. Isn't that all a trader can ask for?
What you are saying, you trade infrequently but only very high probability? High probability trades usually imo are only found with experienced traders. Ie, You've studied extensively and know the quirks. Trades get tail winds when many conditions line up.
But the question is when do you know how to react. For me, the very definition of "reaction" is a "failed prediction". That said, I agree making only predictions is an exercise in futility. But reacting only to what's already happened is no better either IMO. You need to be able to predict in order to be able to time your trades, eg. when to get in and out of the trade.
Reactive trades are kind of safe trades, you wait for a number of conditions to line up as per your trading system, eg breakouts when price crosses a previous high. The problem with reactive trades, most often they are obvious trades, safe trades where lots of others are too watching and they are 'following' trades, following the crowd. Imo, the rewards are not as high as high risk leading predictive trades, but these have high failure rates, eg low win rate.