IMO Nysestocks was pointing to a specific technique built around a realistic view of how the markets operate. As he admits he didn't discover it independently but it was shown to him. His posts reflect his stupor for it (new, efficacious discoveries, of potentially great reward, in a field of endeavor which caused pain in the past are always emotionally destabilizing), the conflict between his desire to tell everybody about it and the realization of possibly compromising it, and certainly a fair amount of vanity. The technique he used I never got but I suspect it was a rather mechanical setup with no clear target indication and probably more like scalping. More important than the setup is the exhortation to look beyond the official, textbook, view of price dynamics. IMO a worthwhile pursuit is to understand exactly the how and the why of price movement in realistic terms. Because without a valid interpretative framework one could watch price for years without seeing anything. Of course we are talking about stops running, about TA signals failures, about how different partipants operate. It's also about redefining the concepts; I must have picked up from some stupid book that a retracement is "search for support/confirmation". What an idiotic notion is that? A retracement is a shakeout of late entrants! And it's vastly different because you can now relate where the victims entered and based on what! And where their Stops were because price accelerates through them! And how to do be on right side the next time! Yes. The stops may not be known exactly (unless there's foul play...) but with retail traders you have a bunch of, in the vast majority, losing 'traders' whose operation tactics are broadly speaking KNOWN! They are discussed openly, based on simple notions and heavily influenced by emotion. That makes them predictable. (And if you have the fortune to have consistently lost money in the market you have a powerful edge: you know how losers operate) Keep reasoning around the central idea of stops running and, for example, the lateral phase which follows large moves is no longer "distribution" as indicated in textbooks, because large positions are better exited against stops runs, where else do you find counterparts? The lateral can now be viewed as market stalling after all stops have been run ...precisely because all stops have been run! Get it? Speculative reasoning such as above is probably something we could all feel comfortable discussing openly. The precise setups is something each could elaborate privately. After all one of the great competitive disadvantages of retails is the absence of reasoned, critical discussion and reliance on superficial notions that don't pass the the BS detector test. - ras 72
Let me try one more time. It has nothing to do with a specific strategy or style. Imagine you know someone who looses money in the market and trades liquid products. Let's say you get a text every time he opens and closes positions. Now the questions: How do you make money with this information?
Sometimes the best stop runs or whatever you want to call them occur with a large amount of volume trapping a large amount of traders. I would say they are more common when price isn't trending strongly. If there is a strong trend then just go with it. Trends work. I definitely "do not" know. No argument there. I really shouldn't refer to what I see as stop runs, because really I have no idea if they are stop runs or just a natural occurrence due to the nature of the marketâ¦â¦.a vacuum, a lack of sellers/buyers, etc. Example: Price has been going down all morning, then it finally makes a double bottom and a really pretty obvious green bar closes right at the pivot high. Everybody in the world sees it & finds it irresistable, so they go long for the breakout of the double bottom & the beginning of an uptrend. About 1/2 the time this is a valid setup, and about 1/2 the time this turns into a trap. Stops are taken out below the double bottom. A trader needs to know when to take this type of trade, when not to take it, and when to go in the opposite direction. (The reason I say this may not be a stop run is because maybe every amateur in the world bought that pretty green bar, but the pros just aren't interested in buying at this time. So if everyone is already in that wants in, then it's just natural that price goes down. If the pros are interested in buying they would be able to fill their orders below the double bottom when the amateurs liquidate). 1. I use the same stuff as everyone else concentrating on highs & lows, and typical technical analysis such as trendlines, channels, supt & resist, etc. I also use volume quite a bit. I do not trade strictly on technical analysis though as I don't believe in trading that way. I use it as a framework to analyze what's happening. I use any clues I can find to make a decision which may or may not be in line with the official technical analysis interpretation. 2. Is price direction up, down, or sideways? Is there any reason it should stop going up, down, or sideways? Trade accordingly. On the chart I included, depending how you look at it, you could say the traders trapped themselves into bad trades, or you could say they misread price action. Depends how you look at it.
You can - in a myriad of ways. Read 13 against the bank to get the prospective. Btw, this was just en example to illustrate.
RedDuke, Look. I fully understand the running the stops and the Kansas City Shuffle ("everybody looks right, you go left") thing. And the awkwardness of movement of the heavy set guys. So, your question (BTW, are you serious?) makes me wonder if we are playing the same game. May I inquire for example what's your effective leverage. And maybe also RedTankEra and AbbotAle, if they are willing, who appear to be on the same page as you, and looking like they're going about confidently with their straightforward guide principles? I play 1:400 EURUSD (minimum f=0.125, so 1:50 effective) and I need or want, precise entries, tight stops; not any random counter sentiment entry. (Yes I know I could reduce leverage and stop worrying) To make this clear. I strongly felt yesterday 20130923, that EURUSD was going down after the blast on 20130918. How? Because it paused after the up move to let impulsive participants in, long, above the symbolic 1.35. Because I watched the reactions off the lows on the 19th and the 20th ...and I thought there was a haste to those bounces, as though they were eager to get going back up, trying to exorcise nightmarish thoughts of being stopped; and that blatantly betrayed fear! And fear calls for a stops run. In the end I missed the opportunity to go short because I was away from my computer yesterday. Now I'm watching it move down as anticipated. I'm ok with it. Am I going short now? Ohh my dear friend, you can bet everything you hold dearest that I will NOT go short now! I could get shaken out. I prefer to wait for the stops to run, and the end of the down move and then I'll look for a long entry. Is the 'thing' you're trying to communicate me something like that? - ras72
Mac, I have actually thought over this post for a couple of daysâ¦, and no matter how I slice it⦠I end up at an impasse Would you be open to revamping/ simplifying things Sir If so.., Iâll throw some thoughts out and we can see if any of it sticks If notâ¦, no sense wasting your time Not in any way meaning to sound like a jackass either RN
The obvious that's not so obvious is.. (I realize that's another thread but this one is more civilized) When a classic signal fails. This alerts you that a good group of traders are trapped, which leads to countless stops at market. Naturally for the above, you must understand what classic or well known signals are, and what failing means and how it's defined. No reason to obfuscate the answer.