How do you know if those lines have any merit if you didn't back-test them or have statistics on their validity? You're basically discovering their validity in real time risking real money. If you want the larger swings - I fear the DOM might be a distraction, to be honest. I'm seriously questioning the validity of DOM in the first place on a market as ES. But that's a controversial issue and others will probably disagree. Support/resistance may or may not be a distraction, too. When does it hold? When does it break? When is it a fake breakout (very common on ES). It's not easy, but I think back-testing will give you more answers. Of course, the difference between back-testing and a live chart is that a live chart is moving. On a dead chart, it's always easy to see that support/resistance held after the fact. Just my 2 cents of course and I certainly do not claim to hold all the answers. I still struggle with consistency myself.
I believe that patterns do evolve anyway. So I better be quick at discovering and exploiting patterns. They may not have statistical significance but I'll study them anyway. I am just learning through experience, observation & repetition ... That's a weak spot. Maybe I should learn real backtesting. It's still a good tool to have as a trader. I am still going to daytrade "swing". By DOM I mean prints at the bid ask spread. Just trying to gather little signals for entry confirmation. Not sure the value added is worth the hassle but I am still trying to get a feel. ... I said "get a feel" ... Asking the right question without clear cut answers, Is definitely better than having answers to the wrong questions. Speculation is inherently uncertain. We still have to accept this. But if we can get a little edge, consistently, and compounding it, Then we're doing it right. Too precise a plan is a fragile plan I believe. Better get the principles right, the strategy right and adapt the tactics. Thank you very much for your feedbacks.
Yes - but on any given day, certain patterns are far more likely than others. For example, we can say for certain that an Outside Day is a rare pattern. In absolute terms - it's happened quite a few times, but in % terms, it's fairly rare. At the end of the day, one might say that we're all just guessing on a future outcome (from a few seconds into the future or more), but there's a difference between flat out guessing and an educated guess. To make an educated guess - we need data/records/statistics. At least that's how I see it. This one was quite good, actually: https://www.elitetrader.com/et/threads/trader-plan.344562/
Maybe you should give him something more concrete to chew on, like throwing out some charts with statistical annotations.
I think every individual trader needs to compile this stuff on his own. That's the only way you could truly verify, trust it and imprint it on your brain. And yes - it's a very time consuming process. But basically, whatever idea you have with regards to entries/exits/signals/a specific behavior: back-test it (manually if it cannot be done automatically) bar by bar and note the results in a systematic manner. Doing this - you may discover that a specific pattern is useful or you may discover it's not useful at all (also a useful discovery). A lot of stuff that's in trading books or taught by gurus generally don't work well enough.
By the way - maybe I'm just not creative enough, but I get the feeling that a lot of stuff is very hard to back-test programmatically and can only be done manually/visually.
I understand what @Laissez Faire means. At least I have my understanding of it. It’s about rules and frequencies. Like what’s the frequency of X knowing Z. What’s the likelihood of a lower low, Knowing we’ve made a higher high ?
A little bit like that : https://www.pinnacle.com/en/betting...esnt-close-or-limit-accounts/N6RJX78P6NRD6ZYK A better way to assess the efficiency of a betting market is through the comparison of betting odds and real results.