Mental break-down from TA

No, you're not, because you have no plan beyond selection.

You seem not to have any idea whatsoever what a trading plan is, but rather than find out, you insist that you have one.

A trading plan tells you exactly what to look for, exactly where to enter, exactly where to exit. It tells you how much to risk and when. It tells you what your win rate is. It tells you what your profit:loss ratio is. It tells you what your maximum drawdown is. Do you have any of this? No. Because if you did, you wouldn't be confused. You'd know exactly what to do in any given set of conditions because you would have planned for it.

So, no, you're not being honest with yourself. You're telling yourself you're prepared when you've hardly begun the process. And trading in the meantime, to boot, as if you're going to learn how to trade by osmosis.

You've listed a number of things to look at, but this isn't a plan. This is only a collection of ideas. All of that has to be translated into something that you can test in order to find out if it is profitable. Without that, you're just guessing and hoping that everything turns out for the best.

 

Ok, so let me see what yours looks like.

 

The reason you are feeling frustrated is that at some level you believe that TA should be showing what will happen in the future.
However, TA only shows what happened in the past.

p.s.I only use support/resistance lines, the rest can be seen from the price action.

 

wow, holiding RIMM for at least a week I will have a break down myself, you need better filter, anyway if you think long

 

if you think short

 

Nathan,

Good reply. I am working on some answers. I will post again soon.

Regards,

Mike

 

12:44 Kiwi: I had an order in at 208 then (1 over the resistance) ... damned thing got to 209 then went back to 230+
12:44 Guy: kiwi, what the people offering the advice fail to grasp....maybe because it has been so long since they where in that stage. Is that the advice sounds good but lack specific ways to get there. It is generalized and confuseing for a new person to come up with what they are asking. IMHO
12:45 Kiwi: yes there is truth in that
12:45 Kiwi: but
12:46 Guy: people are saying the same things...but they are the same underlying generalizations said another way
12:46 Kiwi: what has been revealed here is how far cm is away from actually having a plan .. lc was harsh but cm is maybe moving towards a plan ... with some prodding maybe
12:46 Guy: 'accept losses', 'don't worry about being wrong'
12:46 Guy: easily said, how do you change a whole life's worht of programming though?
12:46 Kiwi: lol ... u are right
12:47 Kiwi: the only way to change it is to follow lescors advice
12:47 Kiwi: build a plan
12:47 Kiwi: then after its tested
12:47 Kiwi: trade it very very very small
12:47 Kiwi: and over time your brain will rewire itself
12:48 Kiwi: u can help it but u probably need to follow this prescription to get to the point whatever help is given or not
12:50 Guy: I can appreciate what you are saying
12:51 Guy: I can see where CM comes from though - totally
12:51 Guy: because I am finding it extremely difficult to nail down a plan and describe it to a level I think is sufficient
12:51 Kiwi: I see that 2. the trick is he needs to get to the next place and then the next. this is harsh but it might work.
12:51 Guy: maybe that is part of his problem too

 

Yes, but one could argue that "History repeats itself". If this is true in trading, then you should be able to predict price direction to some degree.

 

A discussion on Trading Plans and a template at another location (apologies mods).

You can predict price to a degree but what must always be accepted is that you can and do predict (off this formation there is X% chance of a move to Y before it retraces to Z and stops out) but its always only a chance.

Say you are buying retracements to resistance. You know that for the first two retracements there is a 70% chance it will get 70% of the way back to the high before breaking the resistance by (say) 5 ticks (so ur stop is at 6 ticks). You should know what X Y and Z are for each possible setup you consider (guys lets stay with a non-intuitive setup based model while Cm tries to build an acceptable trading plan??)

We argue about prediction but probabilistic predicting is what an entry does - the key is not to get trapped into wanting the prediction to be right (IMHO, roberk).

There are lots of ways to be right in trading but you only need one CM. At the moment your plan reveals how far you have to go but its still better than having nothing.

 

Isn't this a simple answer? To profit from my activites in the market, I have to be faster than the others. If I want to buy, I have to be fast enough to get in at the price I want before prices go up, and to sell, I have to be fast enough to get out before a reversal or stand on the side and watch.

I do not believe so. Good trading is not synonmous with “speed”. There is the “speed” of the decision making process, i.e. the reaction/analysis time in understanding the market and then there is pure speed of execution. Let’s distinguish the two. Foremost your decision making process should remove as much subjectivity as possible from what you are watching. This allows you to act without overanalyzing the situation and in turn creating doubts about the validity of the signal you just witnessed. How do you do this? By anticipating the signal.

This is an NQ trade today(see attachment). Mind you today was an easy day to trade, lots of directional bias but if you didn’t know what to look for and WHEN, the risk/reward you assign to certain entries may have been violated and you would’ve been out with losses. Here is a chart of the NQ today: This is a trade setup, study it carefully as it occurs frequently on directional long days. This a start. Add this setup to your arsenal and wait for it. Its only going to occur maybe 10-12 times a year in the SIFs.

Four “things” have to happen in order to generate my signal, can you venture as to what they are (I’ve already told you one of them on the chart)?

In any further discussion, I will refer to speed in terms of your ability to execute your decision, not in terms of how fast you get your data of how quickly you are able to click buttons. “Speed” of network execution really doesn’t matter as the market will offer multiple opportunities for you to enter the price you want. I don’t scalp, so my comments do not apply there.

With the above in mind, I ask someone to disagree with me regarding the issue of timeframe ~ it is my belief that the shorter the time frame, the higher the execution costs and the greater the tendency for a trader to overtrade. For this reason I do not trade under a 5 min timeframe. I not do practice scalping, hence, I cannot talk about it. What I do know about is recognizing intraday 5 and 30 min price “rejections” and “acceptances”. I also know how to position myself at those levels and never in between.

Let me define what I consider a setup like the above posted: A trade opportunity that allows a risk to reward of 2 or better via prior experience of seeing this setup occur and result with statistical significance. You have to find your own setups and trade them. Its really that simple. The key points are: don't trade when you can't explain your setup and never violate the rules of exit and entry. In order for your series of trades/setups to work over time ~ you simply CANNOT FUCK THEM UP. This is all discipline and only you can prevent yourself from being an idiot. Easier said than done.

A plan is a formal capital preservation document in order to execute REPEADETLY that series of setups. Capital preservation plan + a series of setups = Trading plan. Note I have over 17 good quality setups that I’ve been able to generate through LOSING in the market. I made the mistake of not back-testing very much during my learning curve, but, I kept (and still keep) very good records of my setups and why they did or did not work. I recommend you do the same ~ these records will become a part of your trading plan.

"how you will facilitate this transfer of capital; and from whom you will be profiting off of... how will I profit from this set of data, as opposed to someone else?"

I dont think I understand the first part. I trade in VERY small size (100 - 200 max), getting in/ out is never a problem for transfering capital. Who I profit from depends on my timeframe. If I'm scalping, I'm taking $$ from other scalpers and MM's, if position trading, I'm taking money from other investors, and long term traders. How I profit from this data, again goes back to holding period. For example, when scalping, Trader A who can read the tape better than trader B will make more money because he acts FASTER on the data given and understands it. I could be wrong though.

No. You profit from a change in price. Period. The timeframe is really irrelevant but the amount of time spent AT a certain price IS. Did you get that? What causes a change in price? ~ First let attempt to generally answer this question and then lets work on defining areas where price is likely to be accepted versus rejected (i.e. support and resistance in combination with volume). Once you have a good understanding of volume at these levels then we’ll go into what “others” are doing and why. You need a good understanding of price/volume analysis in order to start understanding MM’s and other longer term market participants.

"This is a warning sign that you cannot ignore. Lescor, Mschey and others (as well as myself) have asked you to write down a response to illiquid's post (essentially a trading plan). It appears like you still have not done this. Why? "

I first must ask, Whats the difference between a system, a method, a plan, and a strategy?... Please tell me if I'm right about the following:

* System - A software package bought from a vendor with years of backtested data. Many traders flock to these "Magic bullets"...That's why I dont have/ use a system.
* Method - A "check list" of what a trader does before entry and before exits.
* plan - Samething as a strategy
* Strategy - A way of trading (scalping, swing, position trade) combined with a method

Hopefully I cleared some of this up.