You two are making this much more complicated than it is. If while you're observing you note that a particular cluster of behaviors occurs often enough to be worth investigating, and if you notice that price behaves a certain way 80% of the time when this cluster is present, and if you backtest this phenomenon and find that it also pans out 80% of the time, and if you then forwardtest this and come up with the same result, and if you then simtrade it and your results are consistent, then you can assume that when you trade it in RT that this particular phenomenon will perform as expected 80% of the time. This of course does not work if the computer does it for you. For example, yesterday, when price (a) hit the midpoint of the LT TC then (b) formed a DT then (b) moved sideways for an hour-and-a-half then (c) dropped below 16 then (d) retraced to 16, the probability was high that if I placed a sellstop below 16 that price would scoop me up on the way down. The probability that traders would suddenly decide to rocket higher late on a Friday afternoon was slim. But, if that had been in fact what they did, a scratch would mean the loss of a point or so. As it was, the trade was worth 50pts. If every trade you take has a 50/50 chance of success, then your trading session will likely be anything but relaxed. But one of the primary objectives of observation, backtesting, and forwardtesting is to find those phenomena that demonstrate a greater -- preferably far greater -- than 50/50 probability of success. A retracement after a reversal or a breakout is one of these, depending of course on the context surrounding the reversal or the breakout.
Observations for the week. Reviewing what my plan is: When I sit down to trade go thru the daily, 60 min, 5 min time intervals and put boxes around ranges, channels around trends. Add the 50% of a fib retrace to any significant leg. Project out the extremes of the boxes and channels, and note the 50% of the boxes and mean of the channels. Notice the prior days high and low, and the overnight high and low. That produces a 'busy' chart with a variety of extremes and predictable boundaries. Take a screen shot of that and stop and think about what might happen, what the market behavior is, etc. Make notes. Hit the 'hide drawings' button and clean up the chart for trading. This is an application of the dictum: "What is the mrkt doing? Where is it at in what it is doing? Where and when do I want to enter?" Wait for an extreme to enter. While waiting be 'actively inactive' by watching behaviors and posing "if... then..." for example, "if it's going from this extreme of a range to the other side of the range, then it will act in an expected way, and is it doing so? Why or why not?" Stay engaged especially if day trading. If I'm not alert enough to stay engaged, I should not trade that day. When price is at an extreme, I usually start mechanically surfing there (with SLA) and let the market tell me what to do. I occasionally take a discretionary trade (like a SAR at an extreme rather than waiting for a retrace). Manage the trade by trying to stay in at least to the midpoint of the value area, or to the other extreme. I'm usually 'all in' now. I'm working on how to think about multiple contracts. If I exit, wait for another predictable boundary and start surfing again. At the end of the trading day take another screenshot and compare to the prior screenshot and the notes and expectations. At the end of the week go to the monitor and record the trading stats for the week. ___________________________ Observations from this week. When I put in my predictable boundaries, on some days I skimped looking at higher time intervals and missed some key ones. Other than than once or twice I just missed seeing some that Db posted. So I can improve. As I developed this notion of randomness in between predictable boundaries, on Thursday pre planning had us wandering well in between boundaries and midpoints. So I just sat out and waited. I liked how that felt.
Thanks Db, I didn't see your post until after I posted my plan... we had rain and thunder (of all things) so made the post and turned the computer off without cking.
Assigning some arbitrary math % of thisâ¦, or thatâ¦, whatever - working â will fuck oneâs account if they are hanging in a losing trade and trying to play these âoddsâ Unless PA is volatile.., and price ends up coming back and saving their ass - of course ======================= The mkt is uncertain Every moment / outcome is independent and unique of every other moment / outcome No one knows - ever (insider info not withstanding) It only takes 1 trader to negate your trade ====================== Either you believe one way â or the other ===================== DB... This is one - we'll just agree to disagree I'll take 50/50 every time... and trade accordingly - and relaxed RN
Thanks Db for pointing out I was making things more complicated than necessary, and I apologize to Niko for doing so. Likely has something to do with having trading in other ways and still unloading some of that. What I want from this public journal is input from those I respect who might see things that I'm missing. Another thing is to practice journaling as a process, in such a way as to self correct better when Db is not teaching. It's important. Don't want to sidetrack into nitpicky stuff.
No need to do so Hooti, this is what posting is all about, being able to contrast your beliefs with those of your peers. Once you get into the subject of trusting your judgement with money on the line at the right edge of the chart, having the wrong set of beliefs tends to screw you up big time. That is why even if you mail a copy of a perfectly good trading plan to someone who believes in Efficient Market Theory will do him or her no good at all. FWIW, your reflection made me think a lot, I like to be skeptic about my truth and listen to other people, so it was great having the opportunity of discussing that with you.
When I wrote out my trading plan with AMT I thought of it as finding the predictable boundaries, the extremes, and then mechanically surfing my way into the 'right side of the market' via SLA. However, just thinking that way I've slid back -- and am not applying SLA properly, instead the 'surfing' concept has turned into over trading. So re-framing falling into a surfeit on surfing! Amazing how our minds can slide around somethings.
The above experience of sliding to the side in my trading because of a conceptual error reminds me of one of my favorite quotes from Redneck: "See.., thatâs just it.., and what many donât get â this business isn't like any other.., where one can simply work harder and eventually things fall into place Trading; If one is not doing the exact correct things â over and over â then one is big time screwing themselves and moving farther away from success." In other business, and other parts of life in general we can charm our way through we can force our way we can out work the competition we can out smart the others or we can just play the odds and gamble. It's a version of the holy grail of trading, where I think I'll become something special, or find something special that others are not seeing or can not see. Charm, force, work, smarts or just luck will see everything fall into place. [...or doubtless that next indicator I try will do it, or book I read.] "doing the exact correct things â over and over" It's a habit, a routine. A plan. Every now and then with some self correction!