Which brings me to Trading Principle Number Four: Know when to stand ass-side. Real traders mostly scoff at the academic notion that markets are random. But in fact, if the volume is sufficiently low, or the price uncertainty is sufficiently high, or if market makers just want to fleece you of the cash in your $2K account, the markets ARE random. This is one of the fundamentals of Trading Without SCT. Learn how to quantify the conditions for randomness, or to measure randomness itself, and stand aside until you see trending resume. And know how to quantify that, as well.
Who said that? Yes, but Jack does not have a VuDu level at which he says "smoke 'em if ya got 'em". Whereas I have expended cornsiderable analytical effort developing stand-aside measures. You have to know when to go post on ET and when not to.
Here's an IQ test, SCTer's. Would you rather have RealGuasians (top pane in grey) that almost ALWAYS signal a move before it STARTS, or Jack's Guasians (bottom pane in black) that SOMETIMES signal a move when it is OVER?
Excuse the interruption, but I would like to propose Trading Principle Number Five: Aways use a stop. The only exception is for SCT traders, for whom it is safe not to use protection, as they aren't trading anyway. Everyone else, before you go dipping into bitch market, roll on your stop! Why is a stop like a rubber? Because you never know what you're getting into. Stops are an essential complement to Principle Number Six. See if you can guess what that is.
Thou Shalt Not Covet They Neighbor's Wife ... ...nah, just funn'in wich you guys. How's about dis one ... Your Trading System must be Binary. You can only BUY or SELL, and even then only when the conditions are optimal for doing so. That makes sense, and the concept of buying or selling follows quite well that of always having a stop in place, don't you think? P.S. I had no idea you were going to be so serious and contribute such a wonderful body of knowledge to the ET Trading Lexicon. If I had known, I would have tossed-in a few cuss words to spice up the thread a little.
Oh, it's worse than serious. We are in some danger that our shrink (the prick charges each one of us separately) will reintegrate us into a "whole" personality. I think we will be immeasurably shrunken, like a cannibal shrinks the head after removing the skull. But here is my version of Trading Principle Number Six: Think of the stop, not of the entry. WTF good is a stop between you and likely support and resistance? You just made a shitty entry. You want the stop to be on the OTHER side of S or R from your entry. ALWAYS hit TRADE when price hits S or R. That way if your stop is hit there is little likelihood that you'll be sorry you were stopped out. Why is this Trading Without SCT? First, they don't know stops. How could they? They don't know S and R. The channel is S or R, you say? Then why do they have different terminology for the only three things price can do near a channel extreme: reverse before it, reverse at it, or penetrate it. Duh! That's really fucking informative (read, tautological)! When you know S&R you can generally predict those events, not name it afterward as if that conveyed any useful information. SCT is an IQ test.
And so, since this thread is dying a natural death, no doubt much to the relief of our beloved moderation, let me elucidate Trade Principle Number Seven: Never reverse. Whatever chart time frame you trade on, a faster chart almost always reveals that the trade you're in dies before the next trade starts. For example, I trade in one-minute. But fifteen-seconds shows the birth and death of one-minute trades. And the best exit before death, and the best entry before birth. Obviously not SCT, because they say "Always reverse." Thanks Magna, I don't care what eveybody says about you, you are a good sport. Now I'm done.