The following are direct cut and paste from http://www.webtrading.com/phantom/chapter5.htm. From my interpretation, yes, my quote is exactly what Phantom is implying. You however made the assumption that "price action" meant staring at the tape. Well, that depends on your time frame. For me as a daytrader, yes, I watch the tape. Phantom, however, to my understanding, is a position trader and so he most likely allows for larger error against him than I, but that is defined in his own determination of what is considered price action for him. Did I quote Phantom verbatim, no, but that is also why I didn't put quotes around it. However, I did not come up with the idea myself, he did, so that's why I notated him after the statement. If you would like, I could put my statement, and then say, "my interpretation of what Phantom is talking about." However, I do believe that I have his thinking and idea correct. Ok, here is the stuff. Let the market tell you your position is proven correct but never let the market tell you that your position is wrong. The market will tell you when your position is a good one to hold. Most trader do the opposite of what is correct by removing positions only when proven wrong. Think about that. Your exposure and risk is much higher if you let the market prove you wrong instead of your actions removing positions systematically unless or until the market proves your position correct. You never want to be in a position, which is never proven correct. If you only get out when the market proves you wrong it is possible to have higher risk due to the longer time period required to prove your position wrong. We will further clarify these thought for you further into the book. IN A LOSING GAME SUCH AS TRADING, WE SHALL START AGAINST THE MAJORITY AND ASSUME - WE ARE WRONG UNTIL PROVEN CORRECT! (We do not assume we are correct until proven wrong.) POSITIONS ESTABLISHED MUST BE REDUCED AND REMOVED UNTIL OR UNLESS THE MARKET PROVES THE POSITION CORRECT! (We allow the market to verify correct positions.) What makes this strategy more comfortable is that you must take action without exception if the market does not prove the position correct. Most traders do it the opposite by doing nothing unless they get stopped out and then it isn't their decision to get out at all as it is the markets decision to get you out. Your thinking should be - when your position is right you have to do nothing instead of doing nothing when you are wrong! Most traders keep their position until it proves to be wrong for them. I say don't keep any position unless it proves to be correct.
My good friend ortega, You didn't get it yet. EliteTrader should award you a special prize. nononsense
I am certainly open to new knowledge. If I am wrong in my interpretation, I will certainly admit my mistake. Please let me know my error. From your statement you seem to know what he is talking about. Who knows, maybe you are him. I am glad you have brought this to my attention. Please tell me what I am not getting. Thank you for your time!
I have taken off Phantom of the Pits after my statement. I do not want to state a person's idea if it is not what he/she is saying.
Dear ortega, I simply laughed a bit - you misspelled "Phantom" - you wrote "Phatom". I could not pass up the oppurtunity to have some fun. Be good, nononsense
Well, I guess obviously I missed what "you" were talking about. Damn, I wish you just would have said that, but I'm sure you are even getting a bigger laugh out of this now! All those precious minutes of my life wasted trying to state my point. Oh well! Alright, thanks for alerting me to the misspelling.
Ortega: this is "welcome to elitetrader.com". You will soon find out what value there is in reasonable posting to ET... it is near zero recently.
I agree 100%! 99% of all of the indicators regurgitated on this site are all LAGGING indicators. By the time they do there little "cross over" , etc. and given you a signal, the stock is gone and the opportunity vanished.