IF setup X or pattern A is clear then it will be used as a trap then it will become obsolete , this what i am saying static rules and setups cant make u money always ...
A trader walks into a bank to deposit money he made from trading (I know it's all done electronically today but this is only for the story)... Teller: How may I help you today? Trader: I just killed it in the market by following my trading plan and would like to make a deposit. Teller: Whoa there. Slow down. First of all, who was on the other side of your trade? Trader: I have no idea. Why does it matter? I made money. Teller: Because if a big scary hedge fund was on the other side it is IMPOSSIBLE for you to have made money. Trader: Before I reach across the counter and strangle you, let me break it down. I only focus on price. It tells me everything I need to know. If my trading plan which I created through years of blood/sweat/tears says to do something (enter/exit at loss/exit at profit/how much to trade) then I do it. I only control the process not the result. Nothing else matters. Is that simple enough for you? Teller: No. I don't care who you are. The squid is too powerful... Trader: If you don't deposit this check in the next 5 seconds I'm going to lock you in a room and play alanis morissette songs 24/7...
+1, +1 for the first 2 posts on this thread. It's not about knowing "who" - as in counterparty who - is on the other side of your trade. It's about understanding what exactly you are trading off of, the "why" you expect to make money on whatever trade you just placed. Do patterns and "setups" sometimes repeat themselves? Sure. But knowing why they work in the first place, and why most eventually deteriorate is pretty much the name of the game. Just being able to describe a pattern/setup's parameters is not enough. The successful traders that don't understand this are the ones that eventually end up "teaching" how to trade instead, and the biggest signal that your method is on the verge of becoming/already obsolete is that it was taught to you or is being taught to others.
David denies Goliath choice of weapons, fearlessly runs towards the giant, stuns him then chops his head off with Goliath's own sword, wins the battle, the war, and a Kingdom, then falls victim of the ruler's pride, and loses BIG. His son Salomon, using his father's "secrets" goes on to build the richest kingdom the world had ever seen, and on his deathbed his last words were: "All is vanity." "2 follows the 1, 95% before the 3."
That was so freakin' funny. Good thing my tea's still brewing or there'd be a mess to clean off the screens Nothing can make you money on a trade always, but my static rules and setups make me money way more often than not and my maximum loss on a trade is at least half my minimum profit. That's my secret edge. Ammo gave you the proper answer about who's on the other side of your trade, which is that it really doesn't matter, because there are so many participants using so many time frames and entry/exit triggers, that someone on the other side of my 5-min chart setup that you believe is losing money because I'm now making money, may have sold to me at huge profit from a longer hold or a different time frame and is moving on to something else now.
Whenever you enter a trade you are predicting direction, unless your system just generates random signals.
I guess "on the verge of" is a rather subjective time frame because the methods I've been using with consistent success many months are the methods someone tried to teach me a couple years ago, which are the same methods he was using for many years, and happen to be the same methods I can read about in a trading book I own that was written over ten years ago. I guess when these methods become obsolete, I'll identify the new patterns the market is latching on to. You know why these basic methods aren't obsolete yet? Because it's nearly impossible to change human nature in a few lifetimes, and because so many traders keep making the same mistakes over and over and over again instead of following these proven methods.