Hi, long time lurker, finally got an account because... I have questions that I can't seem to find an answer to. I've read A LOT on trading, and studied A LOT of charts -- and no matter what, I can't seem to find an edge. This irks me for a few reasons. 1. I read and hear of a lot of people who, despite the odds, are doing pretty well from actively trading using charts. 2. The skeptic in me says that since I can't find a statistical edge, they must mostly be BS'ing me and others. This is possible but it's also possible I'm thinking this just to feel better about sucking. 3. I'd really like to get good at this, and I think I'm the problem but I don't know what to fix. I'm a very logical person. Probably to a fault. If I can find some rules to follow, I have no problem following them. The biggest issue I see is that at any given point in time, I can argue both ways for a given market. Which makes sense, everyone must have a reason to either buy, hold or sell. Which brings me to Al Brooks' book. I've read good things about it, but I'm having a hard time with it because when I try to apply his teachings, I end up seeing both sides of the trade. One trendline ends up consisting of multiple trendlines. And once you see the fractal nature of it, it's very very hard to pick a direction. I'm guessing I need to go with the predominant trend to better my chances, but that seems kind of nuts given that a 5 minute chart is all over the place, so who cares what the hourly or daily or weekly chart says? Am I overthinking this? Should I just go with the long term trend? As an introvert, I would LOVE to become a good trader. Good enough to replace my current job, even if I earn (much) less than what I currently make. Markets/charts have a certain magnetic quality for me -- I can't stop watching, I just want to figure it out and it's just the biggest puzzle! Thankfully I haven't lost much in my training, maybe that's my problem -- too scared to lose too quickly. For you successful traders out there, any suggestions? I don't want your system, I just would like to know that there ARE statistical edges for me to find, instead of spinning my wheels looking the rest of my life. Thanks in advance!
Imo, the shorter the time frame, the more difficult it becomes. But need to be reasonable here, trading a 1 yearly bar stock is not what I mean. The second point, and a large number of traders will disagree, there's a huge amount of randomness in prices. I'm not gonna labour the point because I have no intention of proving my point and educating anyone, but you need to be able to trade through noise / randomness / fake trades /skitterish mkts. As for Brooks book, he's designing his methods for very short term trading which as mentioned is difficult.
Appreciate the input. Does volume have anything to do with your last point or is that a dead end like it seems? Volume seems like it's only important after the fact.
If you are referring to his Bar by Bar book, you are unfortunately making this hard on yourself. His price action video course is the source to learn his PA concepts.
Most of the books don't teach you 2 most important things : - when not to trade - precision entry. Either they don't teach it at all, or they teach you to enter very late. By the time you enter, the war is over. Why they don't teach the important things? There are 2 reasons : - because they don't know how to trade but they know how to write and talk - they know how to trade but they don't want to disclose the 2 most important things. Even if the book discloses all the important things, a trader needs to spend thousands and thousands of hours & sweat blood to develop his own holy grail.
Brooks seems to do both, but he's still waiting for confirmation before entering the trade, which does sacrifice much of the move in many if not most price channels. I have tried trading the extremes, but they are volatile to say the least. Hard for me to determine/place effective stops.
Volume is another contentious subject where everyone has their own theories. But besides contentious theories, volume as a type indicator sometimes works, sometimes doesn't. My opinion again, when there's action in any trading instrument, there are a large number of REASONS why there is action. One would think rationally that everone wants to make a profit in a trade. Not true! Some are trading sincerely, others are trying to play games. Volume is both buyers and sellers and remember, others are trading for strange often illigical reasons. Some may be trading because they fat fingered or revenge trading or maybe pure out and out gambling / guessing / hoping. So, volume may look like it indicates a buy while in fact, much of volume is subjective and or random / happening by chance. For a fact, there are plenty of trades created in order to fake a signal, smash down price in order to buy cheaper and vice versa. (Looks obvious as a sell when it really is a buy) So, volume is a tricky issue and rarely consistent.
This matches my experience. Pullbacks do seem to generally be on lighter volume, but a light volume pullback can turn into a high volume reversal pretty dang quick.
Yes, then you get the Christmas season / Santa rally where often price runs very nicely on light volume.