FIRST, there is actually no predictable pattern or stuff like that. Why? Because price moves by simple trial and error method, nothing less and nothing more. All the bets are tested on real market. And that is why the supports and resistances all over the charts, either intraday or the positional trader's chart. Price actions are not predictable. No pattern is a predictable pattern, no matter what. No technical charts and their signals going to work to meet any reasonable expectations because they all depend on some secret ingredient : predictable pattern. SECOND, stoploss is actually a fixed loss, not something that stops loss. Fixed loss is not the wisest idea at all. THIRD, when i say physics i mean the momentum on the chart. Of course the momentum can take off or die. The beauty is whenever you enter a trade on a fresh momentum it will make an attempt to take off. And then the take off may succeed or die. The dead momentum is mostly above the conventional stoploss. The dead momentum is a signal to exit the trade with minimal or no loss, unlike the fixed loss by stoploss theory. FOURTH, this posting basically is about transformation from dead patterns to live momentum. Sounds more practical? Well, its actually a blend of practicality and art. There is some amount of creative imagination needed to choose your momentum. FIFTH... considering that stock trading is one of the most risky and nasty ruthless business... ROI anything less than 10% per month is not worth it. If someone tell you 2% is a decent one... just kick his ass. This view point gives clue whether we are successful in trading or not. If someone tell you he is a successful trader, ask what is his ROI per month. SIXTH.....LEARN, UNLEARN and RELEARN. And never stop this learning process. "Let go" OR "Be ego". (SEVENTH, if you are psychology savvy... the general trading psychology is... "Trial & Error method or approach") LAST but not least... 99% of traders cannot appreciate this post. That makes me truly Elite. I have no intention to be with the crowd. I will not be surprised if no one likes this post. Any business (including stock trading) demands two aspects : knowledge and creativity.
Prediction is one of the biggest pitfalls in chart reading. If you want to know where prices will be on your dog's birthday, ask your dog not the chart.
What matters is how little can you lose if your predictions are wrong vs how much can you gain if you gain a position and are able to hold on to it. If your losses pyramids, you're sure to lose it all sooner or later. It's a matter of definition, but there is some prediction in an edge, but in trading, you need risk management too.
"Wave" implies prediction about what's about to happen next. If price was completely random, it could be anything at any moment, ie. random between 1 and 100. If that was consistently so, you could arbitrage that away very quickly, thus trends must form in an efficient market.
Really? I thought catching waves implies observation about what is happening now. Do surfers predict waves into the future, or do they see them forming in the present and try to catch a ride at an opportune moment. I don't surf, but I'm guessing it's the latter.
Restate my assumptions. One: Mathematics is the language of nature. Two: Everything around us can be represented and understood through numbers. Three: If you graph the numbers of any system, patterns emerge. Therefore, there are patterns everywhere in nature. Evidence: * The cycling of disease epidemics * the wax and wane of caribou populations * sun spot cycles * the rise and fall of the Nile. So, what about the stock market? The universe of numbers that represents the global economy. Millions of hands at work, billions of minds. A vast network, screaming with life. An organism. A natural organism. My hypothesis: Within the stock market, there is a pattern as well... Right in front of me, hiding behind the numbers. Always has been. 9:18 Press return