What are the questions you ask yourself in order to eliminate false positives?

I realize for experienced traders it might be second nature and may not be doing it consciously but I am curious what are the questions you ask yourself before getting into a trade in order to eliminate false positives?

 

1. Do I feel lucky, well do I?

2. Am I really a punk?

 

1) WTF am I still doing trading?

 

That by definition would happen after the fact. The positive gets one into the trade, the false positive gets one stopped out, exits or reverses depending on skillset.

The closest thing to eliminate false positives would be to know when not to trade. There is a timezone everyday that has the greatest occurrence of what you would call "false positives". Best not to trade during this zone.

There is also a price zone that happens during two-bar combinations, also another 'best not to trade' zone (depending on skillset).

 

1 Have defined signals.
2 Ask yourself if this is a defined signal.
3 If it is, take the trade and observe your trade management rules.
4 If it isn't or you're not sure, don't take the trade.

 

I mean a setup could have all the looks of a good entry except for that one factor or small detail that makes it a false positive. How do you filter those out?

 

If the small factor or small detail is part of a complete dataset based on the methodology of your system, then this makes your false positive into a False.

If the results of your methodology gives more results than 'isTrue' or 'isFalse', then it's not based on outputs that are coupled with the granularity of the market. The outputs 'isFalsePositive' and 'isTrueNegative' can be placeholders of intermediate and indeterminate states.

In others words, not as ends in themselves but more as 'isBetween' two states of finer and finite resolution.

 

Price action is inexact, there is an element of discretion, when to apply it comes with experience watching price development. Any trade may or may not work, no matter how perfect the setup looks.

I had a trader friend years ago who used to say..."The trades that make me the most nervous usually turn out to be best ones."

 

I look again.


(And, because I trade OPM, I look again and again and ........)

 

I don't, that should already be taken care of. Asking yourself questions before taking a trade is a recipe for disaster.

There's no such thing as a false positive with trade signals.